THE PRESIDENT'S DAILY BRIEF 14 FEBRUARY 1969

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0005976618
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 21
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: February 14, 1969

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The President's Daily Brief
14 February 1969
IS
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LATE NOTES FOR THE PRESIDENT'S DAILY BRIEF OF
14 FEBRUARY 1969
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15 February 1969
LATE NOTES FOR THE PRESIDENT'S DAILY BRIEF OF
14 FEBRUARY 1969
I. MAJOR PROBLEMS
MIDDLE EAST
There is nothing significant to report.
EUROPE
The East German restriction on land travel to
West Berlin by members of the presidential electoral
college went into effect this morning. It was pre-
ceded by a period in which travelers passing through
two checkpoints leading into West Germany were exposed
to "more severe examinations than usual" by East Ger-
man police. They were also handed propaganda leaflets
warning of unspecified consequences if the elections
are held. (Press, 15 Feb 69)
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A lecturer at the East German Inst4ute of Marxism-
Leninism told an officer of our mission j.n Berlin yester-
day that there would be no harassment in the air corri-
dors during the West German presidential election, that
the autobahn would not be blocked, and that there would
be no military maneuvers. To emphasize East German re-
straint, he said "we will not play cowboys and Indians
as we did in 1965" (date of the last presidential elec-
tion). He added that the recent note frpm the East Ger-
man Government to Bonn, the restrictions on land travel
scheduled to go into effect today, and tre current
propaganda campaign are to establish a qp1DR case for
future reference." /7
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SOVIET AFFAIRS
There is nothing significant to report.
VIETNAM
Ambassador Sullivan inNientiane notes that while
the return to Hanoi of the North Vietnamese ambassador
to Cambodia may be related to the Tet holidays, it is
significant that he has usually been in Hanoi each
time major decisions with respect to peace negotiations
have been under discussion, and that these visits have
coincided with those of Le Duc Tho, who arrived in
Hanoi Thursday.
The Viet Cong Tet cease-fire began at 7:00 AM to-
day local (6:00 PM Friday EST). All South Vietnamese
troops are confined to barracks and on the alert
against a repetition of last year. In the first few
hours after the truce, the Viet Cong assassinated a
hamlet chief in the central highlands and invaded the
docks at Saigon to plant Viet Cong flags and take pot-
shots at US guards, but they fled when chased. (Various
press, 15 Feb 69)
President Thieu has decided that Tet cease-fire
for allied forces will be for only 24 hours from 6:00
PM Sunday local (5:00 AM Sunday EST) to ?:00 PM Monday
local (5:00 AM Monday EST). This decision was made be-
cause Gen Tri, commander of the South Vietnamese III
Corps, said 36 hours stand-down would mean no B-52
bombings for two nights, which he felt might be critical
in his sector.
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II. OTHER IMPORTANT DEVELOPMENTS
USSR-GHANA
JAPAN - COMMUNIST CHINA
A seven-man Japanese trade delegation has left for
Peking to negotiate a renewal of the one-year Sino-
Japanese trade agreement which expired at the end of
last year. Two Liberal-Democratic members of the Diet
are in the delegation, and one press report out of
Tokyo claims that Prime Minister Sato has asked them to
sound out China's attitude on the possibility of ambas-
sadorial-level talks in a third country aimed at break-
ing the deadlocked relations between the two countries.
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I, MAJOR PROBLEMS
MIDDLE EAST
There is nothing of significance to report.
EUROPE
Britain's erratic trade pidture improved markedly in
January. January exports rose by $53 million and imports
dropped by $29 million; the resulting merchandise trade
deficit is the smallest for any month since devaluation.
The improvement in the trade balance and predictably strong
performances in certain other elements of the balance of
payments may lead to a three-month (November-January) sur-
plus on current account for the first time since early 1967.
The requirement that importers must deposit half of
the value of certain imports before the goods clear customs
seems not to have had much impact on January imports. If
the deposit scheme, which has been in effect since November,
does begin to exert a braking effect, the chances are good
that there will be continued strong performance in trade
statistics.
SOVIET AFFAIRS
Moscow has extended assurances that Allied rights in
Berlin will not be challenged, but appears to be giving East
Germany more leeway to harass the West Germans.
A Soviet note delivered to Chancellor Kiesinger on 13
February used considerably harsher language than earlier
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notes in protesting the decision to hold the presidential
election in West Berlin. It implied that the East Germans
might be given a relatively free hand to take action against
land access to West Berlin and warned that the USSR would as-
sume "only those responsibilities" specified in the quadri-
partite decisions, i.e., Allied travel only.
In Moscow the Soviets finally accepted a tripartite Al-
lied protest note after having evaded acceptance on Wednesday.
The delay had apparently been used to formulate a reply which
was delivered to the Allied representatives immediately after
receipt of their protest. .The Soviet reply reiterated earlier
charges against the West Germans and gave support for measures
being taken by Pankow: presumably the restrictive measures
which are to go into effect Saturday against land travel by
West German officials.
As part of its campaign to heighten tensions, Moscow
has also launched a spirited rumor campaign. Reports that
Soviet and East German forces will begin maneuvers shortly
to block land access routes to Berlin and that some action
might. be taken to impede air travel are totally unsubstan-
tiated at this time.
Current military activity in the Berlin area seems to
be limited to routine training. Warsaw Pact commander
Marshal Yakubovsky and military representatives from each
of the member countries who had been meeting in East Ger-
many since 10 February, returned home yesterday. Soviet
air exercises west of Berlin, apparently held for the visit-
ing Pact officials, terminated on 12 February
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VIETNAM
No significant shifts of positions were discerni-
ble to us in yesterday's formal presentations by the
Communist side or in the follow-up press conferences.
Xuan Thuy and Tran Buu Kiem soft-pedaled their earlier
emphasis on the priority of political issues in the
same way they have done outside the talks. In effect,
they stuck to their basic demand that military and po-
litical issues will have to be treated as a package.
The Communists described the questions of troop with-
drawals and military bases as "fundamental," thus sug-
gesting they might be prepared to take up military ques-
tions first. The Communists may indeed be prepared to
open substantive discussions with such military matters,
but they have made it quite clear that no agreements will
be reached on these issues without parallel understand-
ings on broader political questions.
President Thieu probably hopes that he has taken
some of the wind out of Vice President Ky's sails by se-
lecting Interior Minister General Khiem to supervise the
pacification and revolutionary development programs. Ky
has, at the least, made a major nuisance of himself re-
cently by politicking for the replacement of Prime Minis-
ter Huong, whom Thieu installed last May to replace a Ky
man. Thieu presumably expects that Ky will continue his
campaign against Huong while he is back in South Vietnam
for the Tet holidays, and he appears to have undercut Ky
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CHINA
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by admitting that Huong is getting old and somewhat frail
and needs help. The Khiem appointment is expected to
take some of the load off Huong's staff, which should
then be able to give him better support.
Thieu's principal motive for giving this additional
assignment to Khiem, however, seems to be his desire to
have a close associate run programs which will have a
great deal to do with the government's political position
in the countryside during any future political competi-
tion with the Communists. Khiem is one of the few top
leaders who seems to have developed a fairly close rela-
tionship with the President.
?The President also sees the government's land re-
form program as offering a major opportunity to develop
support among the rural population./
Thieu's recent refusal to make greater use of civil-
ian politicians in top government posts, as suggested by
Huong, partly reflects his low estimate of the political
value of these men. There are only a handful of politi-
cians in South Vietnam with whom even a significant frac-
tion of the people identify, and the government is un-
likely to acquire a broader political base merely by
bringing some new faces into the cabinet. Thieu clearly
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prefers the government to concentrate on extending its
control over the people--and possibly building its popu-
larity among them--through land reform, by improving paci-
fication and revolutionary development, and by achieving
a more impressive military record.
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II. OTHER IMPORTANT DEVELOPMENTS
PERU
Peru.
At Annex we discuss the background of the dispute with
General Suharto
INDONESIA
has decided to seek Soviet economic and technical assistance
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for Indonesia's five-year development plan, which begins
this April. This decision was taken partly out of concern
that the Western consortium would not meet Djakarta's 500-
million-dollar aid request for this year
During the Sukarno regime the Soviets poured aid of all
types into Indonesia to the tune of over one billion dollars.
Most of this sum is still owed Moscow. The Soviets up to now
have maintained that Indonesia must arrange to repay these
substantial debts before aid can be discussed. They have
agreed only to sell the Indonesians limited amounts of mili-
tary spare parts on a hard cash basis.
PAKISTAN
The government's announcement that the three-year-old
state of emergency will be lifted Monday is the latest in
a number of steps Ayub has- taken to improve the climate for
the "dialogue" with opposition elements that he hopes to be-
gin that day. Opposition leaders will give Ayub an answer
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These talks may ease the situation, but the opposition,
its appetite whetted by the concessions Ayub has already
given, may increase its demands. Although Ayub may yet
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retrieve the situation, speculation in Pakistan is in-
creasingly centering not on whether the President will
go but when and how.
The opposition should be further emboldened by to-
day's general strike. All reports so far suggest that it
was extremely effective, bringing activity in most cities
to a standstill.
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PERU AND THE UNITED STATES
SIGNIFICANCE: The serious impasse between the US and Peru-
vian governments over expropriation of the International
Petroleum Company (IPC) is the culmination of nearly forty-
five years of recurrent wrangling between the company and
the Peruvian government. The IPC issue,
only one although the most
that have from time to time
however, has been.
serious of a number of irritants:
troubled generally friendly re-
lations. Most incidents have
the actual suspension of US
tions taken by the Peruvian
have often been economic--a
involved either the threat or
economic aid in response to ac-
government. The basic issues
reflection of latent but Very
real resentment in Peru over the country's heavy dependence
on the US economy. Peru's present military rulers are strong
nationalists, apparently determined to set the country on the
road toward greater political and economic independence of
the US.
Recent US-Peruvian Relations:
The rioting that greeted Mr. Nixon in Lima on 8 May 1958
was, for Peru, a rare outburst Of open hostility against the
US. Communist "students." were mainly responsible for that
affair. There had been other destructive riots earlier that
year which had not involved relations with the US. Presi-
dent Prado was trying to maintain a democratic government in
a time of serious economic and political deterioration.
Except for a brief but bitter period later in -1958 when
the US import quota for Peruvian lead and zinc was cut back,
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relations with the US were friendly during Prado's tenure.
The military coup that overthrew him in 1962, however,
prompted the US to suspend diplomatic relations and eco-
nomic aid for one month. ?They were resumed after the US
had secured guarantees that constitutional government would
be restored within a reasonable time.
The military government did step down in June 1963,
after Fernando Belaunde had been elected president. Belaunde's
campaign had inflamed the IPC issue to a new intensity, but he
failed to fulfill his campaign promise to solve the IPC prob-
lem within 90 days. He did, however, declare void an arbitra-
tion agreement of 1922 on which IPC's ownership of the La Brea
y Parinas oilfields was based. He thus laid the basis for the
present claim that the company had been operating illegally in
Peru since it bought the fields in 1924.
The IPC issue bedeviled Belaunde throughout the five
and a half years of his tenure. During late 1964 and early
1965, he seemed to be moving toward outright expropriation.
A large part of the US aid program was held up, prompting
charges that the US was using aid to coerce Peru into set-
tling on IPC's terms. In 1966, US aid was substantially in-
creased and these charges died down, but the IPC issue would
not go away.
Problems of a different nature arose in 1967 which were
especially galling to the Peruvian military. Peru's decision
to upgrade its armed forces by buying French tanks and Mirage
fighter planes--despite strong criticism from the US Congress--
raised the prospect that amendments to the US Foreign Assistance
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Act (the Symington and Conte-Long Amendments) would require
a decrease or suspension of US aid. The Peruvian cries of
"economic aggression" were quick and loud. No new US loans
have been programmed for Peru since July 1967 andimplementa-
tion of existing aid projects has been considerably slowed.
Another periodic irritant involves seizure of US fish-
ing boats within the 200-mile territorial sea claimed by Peru.
It appeared for a while in 1967 that this issue also might
.force application of US laws imposing economic sanctions.
The October 1968 Coup
The pretext for the coup was President Belaunde's "set-
tlement" with the IPC in August 1968. The agreement provided
for reversion of the disputed La Brea y Parinas oilfields to
Peru in return for cancellation of the large debt which Peru
claimed the company owed for "illegally" exploiting the fields
for so long. The settlement was instantly attacked by a wide
segment of Peruvians as a "sellout" for dropping the debt and
not including the Talara refinery in the takeover. As the
controversy wore on into the autumn, the President's own party
split over the issue.
On 3 October, the army seized power in a quick, blood-
less coup. Six days later the military government formally
nationalized both the La Brea y Parinas oilfields and the
refinery complex at Talara. Moreover, it reaffirmed that IPC
still( owed multimillion-dollar debt for the "unjust pro-
fits" it made while "illegally" exploiting the oilfields since
1924.
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Factors other than the IPC issue played an equal if not
greater role in bringing about the coup. For one thing, the
split in Belaunde's party all but assured victory for Victor
Raul Haya de la Torre in the presidential elections then
scheduled for June 1969. Haya and the military have a his-
tory of bitter mutual animosity going back more than 35 years
and this was not the first time that the military had used
force to keep him from power.
For all this, however, President Velasco and his closest
military advisers are strong nationalists. Their prompt and
decisive action against the IPC brought them general public
acclaim and a greater degree of popularity than any previous
military regime had enjoyed.
Velasco, however, is not well regarded by many of his mili-
tary colleagues, some of whom have been pressing for a more
moderate course. Velasco has thus far been able to outmaneu-
ver his rivals by playing on the nationalism of the public and
keeping the IPC issue in the forefront, but dissatisfaction with
his leadership has been growing within the military during the
past two weeks.
Consequences
The present military government in Peru is unlike any-
thing in the country's past.
Their plans are still vague, but one thing
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is clear: they are in no mood to be intimidated by the pros-
pect of US economic sanctions. US aid, they feel, has too
often in the past been used to interfere with sovereign Peru-
vian decisions.
The ranking generals are all strong nationalists, though
they vary in the bluntness of the tactics they would use to
assert Peru's "independence." Velasco may be replaced as
President, perhaps soon, but his successors would be military
men dedicated to the same goals.
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