THE PRESIDENT'S DAILY BRIEF 18 OCTOBER 1974

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006007845
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 19
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: October 18, 1974

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The President's Daily Brief
October 18, 1974
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Exempt from general
declassification schedule of E.O. 11652
exemption category 5B( 1
declassified only on approval of
the Director of Central Intelligence
A
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October 18, 1974
Portugal:
Table of Contents
(Page 1)
to export.
(Page
4)
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Mexico: Debate
over how much oil
Fedayeen:
(Page 6)
Turkey-USSR: Turks seeking financial aid. (Page 7)
Notes: China; UK; Australia; Iraq (Pages .8 and 9)
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Mexico New Oil Regions
0 Oil Field Region
\ Potential Oil Region
GULF OF MEXICO
PACIFIC OCEAN
0
556740 10-74
t. ?
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MEXICO
Mexico has unquestionably discovered
large new petroleum resources near the Gulf
of Mexico that give it reserves at least
as large as those of Venezuela, and pos-
sibly much larger.
Revelation of the size of the deposits in the
US press has precipitated a public debate over Mex-
ico's oil-export policy.
the leak has been particularly damaging to
those in Mexico who favor rapid boosts in exports.
Earlier this month, Mexico made arrangements
with the USSR to ship from 450,000 to 500,000 bar-
rels of crude oil to Cuba. The shipments to Cuba
followed the initiation in September of exports of
about 35,000 barrels per day to three US companies.
In September, Mexico also approached several
other US firms and several Latin American countries
about selling oil. Mexican officials stressed, how-
ever, that the sales to the US are only a short-term
deal based on financial considerations and do not
imply that Mexico intends to become a large exporter
of crude oil.
Nationalist and conservationist views receive
strong support from Mexicans generally. In the past,
such views have had strong influence on resource
development policies. Mexico has long restricted
output of many minerals to the levels required to
meet domestic demand. In 1965, it refused to take
advantage of exceptionally high world sulfur prices
and limited exports and future output.
Petroleum policy has been the subject of strong
debate among President Echeverria's closest advisers,
two of whom are also leading contenders to succeed
him as president in late 1976. Secretary of Govern-
ment Moya Palencia is considered friendly to the US,
but he takes a nationalistic position on oil exports.
Moya feels Mexico should move very cautiously, per-
haps exporting a modest quantity of refined products,
while taking care to avoid rapidly depleting the new
deposits for short-term financial advantage.
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Taking the opposite view is Secretary of Fi-
nance Lopez Portillo, who advocates that Mexico be-
come a major oil exporter. Lopez Portillo is con-
vinced that large oil revenues would have a bene-
ficial impact on Mexican economic development. He
has also repeatedly expressed concern about the im-
pact of high oil prices on developing countries.
Echeverria himself would not boost oil exports
to an extent that would endanger future domestic
energy supplies. He has expressed concern about
future supplies and may want to tie oil exports to
the acquisition of advanced energy technologies.
However this debate is resolved, pressing economic
problems will almost certainly result in some export
of oil.
Mexico's foreign trade deficit is increasing
and it is faced with one of the world's fastest grow-
ing populations. The economy requires large new
capital inflows in order to maintain the 8-percent
real annual growth rate necessary to provide the
600,000 new jobs required annually.
Inflation, on the other hand, has become a ma-
jor political issue in Mexico, and the President is
concerned that petroleum development may aggravate
inflationary pressures.
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FEDAYEEN
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TURKEY-USSR
Turkey is moving to give some sub-
stance to recent hints that it intends
to strengthen economic ties with the
USSR. The Turks will begin negotia-
tions in Moscow shortly, in an attempt
to obtain financial help.
Soviet offers of aid to Turkey are nothing new;
preliminary talks have been going on for 18 months.
What is new is Turkey's increased need for assist-
ance. The Cyprus operation has already cost Ankara
about $1.2 billion at a time when the Turks have
been planning to embark on a $4.5-billion investment
program.
The Soviets, undoubtedly with an eye on the
controversy over US aid to Turkey, are pushing for
early conclusion of new agreements with Ankara.
Even so, they have already moved to curb Turkish ex-
pectations.
Since 1967, Moscow has given Ankara long-term
aid amounting to a half billion dollars--all for in-
dustrial projects in Turkey. The new economic agree-
ments likely to be concluded will probably not bring
a major increase in Soviet influence in Turkey,
where the Soviets continue to be regarded with deep-
seated suspicion.
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NOTES
China: Politburo member
?Teng Hsiao-ping reportedly has
been designated to succeed Chou
En-lai as premier. Teng now has
charge of day-to-day administra-
tive matters, including foreign
policy, but Chou remains the
country's number two leader. A
National People's Congress,
which may be held by the end of
the year, is to confirm Teng's
status. Teng and Li Hsien-nien,
both vice premiers, have been
sharing Chou's protocol and ad-
ministrative duties for several months. The two
"moderates" will probably continue working well to-
gether to carry on current policies.
UK: Prime Minister Wilson's new Labor govern-
ment is expected to begin consultations with the
US on the UK's defense review within four to six
weeks. No decisions are likely on any projected
defense cutbacks before December or early 1975,
when the British cabinet plans to inform NATO of
the review outcome. According to a British de-
fense spokesman, the agenda for the consultations
will include a listing of possible defense cuts,
prefaced by a detailed exposition of British rea-
soning and analysis. London has proMised to weigh
the US reaction before any final decisions are
reached. Nonetheless, some reductions in Britain's
NATO-committed forces are inevitable.
Australia: Prime Minister Whitlam has threat-
ened new elections because the Liberal-Country op-
position coalition has blocked ten major pieces of
government legislation since the general elections
last May and threatens to delay an upcoming appro-
priations bill. Similar opposition tactics last
April moved Whitlam to dissolve parliament and
call elections. The opposition, while heartened
that Labor has declined in popularity since the
elections in May, is not anxious to be saddled
with trying to find a solution to Australia's
economic ills and may stop short of prodding the
Prime Minister into new elections.
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Iraq: Zlilitary action in northeastern Iraq
this past week has been limited to bombing and
shelling of Kurdish positions, but Baghdad is gather-
ing troops for an assault. The Iraqis probably are
heeding their Soviet advisers and making thorough
preparations before following up last week's sei-
zure of a mountain overlooking a Kurdish supply
route. In spite of Iraqi losses running as high as
30 percent in recent fighting, Baghdad apparently
plans to continue attacks on the Kurds until winter
halts effective military operations a few weeks
from now.
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