THE PRESIDENT'S DAILY BRIEF 20 JUNE 1974

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006007988
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 11
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: June 20, 1974

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ThE PRES1DEN'S DAILY BRIEF
June 20, 1974
PRINCIPAL DEYELOPOENTS
(Page :;)
The Lao Communists are still well, out in front po-
litically,in the.ten7Weekold coalition government,;.
but the noncommunists are ,finally showing tote':
signs of life. (Page 2)
Moscow!s international economic position ia,es:pected-'
to improve Conaiderably.over the neWt few. years as.-.
a result of largo hard-,currency, surpluses in its
balance :of payments with the .West. (Page 3)
A Study by the intelligence community on Prospects
for the Caribbean (eixiuding Cuba) reaches th000n-
clusion that A troubled future for the area is in-
evitable. (page 4)
Republic of China/
(Page 6)
Prime Minister Rumor 'won agreement last night on
an economic austerity program for Italy. His
Center-left coalition governmant remains in place.
(Page 7)
A note on Spain appears on Page 8,
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LIOS
The Lao Communists are still well out in front
politically in the ten-week-o/d coalition government,
but the non-communist side is finally beginning to
show some signs of life. Aided by Prime Minister
Souvanna's parliamentary maneuvering, non-communist
ministers in the coalition cabinet have succeeded in
at least temporarily deferring cabinet action on two
important proposals which Lao Communist leader Sou-
phanouvong recently pushed through the Joint National
Political Council.
? One of the proposals sets forth Communist domes-
tic and foreign policy priorities for the new coali-
tion. The other lays the groundwork for a system of
press censorship. The non-communists have also been
able to delay Communist efforts to secure the new
coalition's recognition of the Viet Cong's Provisional
Revolutionary Government. These belated maneuvers
aside, the non-communists still have a long way to
go to counter the opposition forces effectively.
FOR TILE PRESIDENT ONLY
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USSR
Moscow's international economic position is en-
pected to improve considerably over the nent few
years as a result of large hard-currency surpluses
in its. balance of payments with-the:West. Earring
a major shift in Soviet trade policy or substantial
purchases of grain abroad, the USSR's' hard-currency'
surpluses for /974-75 could amount to more than one
billion dollars annually... Rising prices, for Soviet ?
enports 0 oil., minerals;:and'other raw Materials .
as well as a.sharp fall in grain purchases follow-
ing last year'S record harvest should combine to.
produce MosCowlsImproVed situation.: The antici-
pated hard-currency surpluses Will end more' than a
decade of Soviet deficits.
, The Soviets?axe.iikelyto?exploit theirl
Strengthenadmonetary'Position in several' wayst
? -? . .
--They will
bargain hard when paying.casivand-
will'he reluctant to accept unsubsidized loans
high.interest-ratea.
--They will be more selective in choosing trad-
ing Partners, playing one off, against the other
in -an effort to obtain the technology; goods;'
and terms they seek.-- .
--They.May postpone orcurtail enPorts.of some
traditional, sources Of hard .currency--diamonds
'.and gold, for example7-in the expectation
both.deMand and prices' will remain high. :
It is not likely.that MOscow over thenext
year or so ? will use its hard-currency reserlies-to
accelerate significantly imports of machinery and
equipment.. ,A significant upsurge in imports over
'a short time woUld'be hard to manage,..mainly.be-
caUse 'of the difficulty in adjusting Soviet.eco-
nomic plans and because of the long lead times.in-
?volved?in implementing large investment projects.
1n:time, however, the Soviets can be expected to
adjust both their plans and domestic economic CK.?
pectations to utilise more fully their strengthened
international monetary situation. Meanwhile, they
will probably place these hard-currency surpluses
in interest-bearing deposits in Western banks. '
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l'OR THE PRESIDENT ONI
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IKE CAREFAN
A study by the intelligence community on Pros-
poets for the Caribbean (el:eluding Cuba) reaches the
conclusion that a troubled future for the area is
inevttable,/'
Long a protected colonial preserve, the Carib-
bean is being. swept by nationalitm and by the spirit
of assertiveness common throughout the underdeveloped
World. The cOuntries of:thexagion"are characterized
by/Small land areas, a general lack of natural re-
seurces, end populations largepnoUgh to burdelyecon:
/amies but too smalltoproVide:maiket$ of tcale
/-
Socio-political problems arteMOUnting, and the
risk.cf-turbulence.isIgOwing,-The: basic problem
.
will be one of too many peopleandtpo fev-LoppOrtuni-
..- _ .
Frustrations OVer:SOCial',and4,olitiCal4n4Ui4
ties,:uneMploymentand;p0Opdblic services are
Creating -a climatee*loitabie,lbY:radicals'and dema-
gogues, The trendtOward perSOnelistauthoritarian-
ism will continue,, and poWer::will be retained 'by in-
creasingly repressive maanS*,-There are likely to
be crises ofveryingintensity and duration, but
they will probably reMain-/ocalicerL
_
Outside influences-ate-:generally constrained
by the region's Strong insularity
--China end the: USSR-will triv:to increase theirl
Official presence andtheit.-:influence within
the limits of, opportunities offered, but the
region remains :a low priority for them.
."---Cuba is carefully cultivating its neighbors,
but its influence will grow slowly, particu-
larly as long as it is a :Soviet client.'
The US is the major influence on the area.
Various points of Conflict with the US will develop,
but few are likely to pit a united Caribbean against
the US. However, the contradictory needs and inse-
curities of the countries, and, in many cases,' the
personalities of their leaders, will make them diffi-
cult to deal with. .
(continued)
TOR THE PRESIDENT ONLY
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--An adversary relationship is predictdble on
the terms of US investmant in the Caribbean (US
private investment totals $3..4 billion), especi-
ally for the highly visible etractive industries.
--Chances are good that the US can retain its
military facilities in the area, but at greater
cost.
. .
--The US will'remain'an important market for the
area's products, and the DS will continue to .
supply a significant portion- of the region's
ports, ? .
--The political fragmentation. ofthe re4iOn, the
lack of self-confidence by local governmants,_
and a desire tO aVoid.oven sYmbolic connection:::
with: the colonial.paSt:will continue to compli
cate US-Caribbean relationt'wilIbe'easier
to deal bilateraily, with fragmeniedstates.
But because:the:image of independence will. be:
an overriding requirement for:the.new countries,.
they will often be more pentfotable
through international'organiSationd, especially
in such matters as.aid:and assistance'.. ' :
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REPUBLIC or CHIA
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ITALY
Prime Minister RuMor'a three-party coalition -
government agreed last night on an economic austerity
program. After nine ehaky days,. the center,-left;gov-.
eminent remains in place, less because ofits-own
efforts than because:.
--President Leone refused to accept Rumor's
resignation.
--Italy was given permithsion to use its gold:
reserves as collateral for foreign loans.
--Italians became more aware that there i3 no..
alternative to a center-left -government and
that the economic situation is serious.
The terms Of the agreed program have not yet.
been announced; it is e::pected to contain stiff taii
hiked and credit restraints to curb imports and in-
flation. The Socialists had been resisting Credit.:
-restrictions because of Concern that recession and
unemployment would result,
,
; ? The Socialists introduced a prOblesi during the
negotiations on June 12 when they .pressed for the
institUtiOnalication of consultations between the
- center-left government and the Communist Party on
major issues; largest party, the Christian:
Democrats, had ?always resisted--and presumably did -
again--giving the Communists .0-.? formal role in: the
decision-making process. ?
The; Socialist' attempt to secure a larger role.
for the Communists may have been inspired by the
: gains the left made in the ?Sprclinian elections- early.
this we*..:. The Socialists have heralded 'these re-
sults as fresh !evidence of a nationwide swing to the
left. They.may.alsO,have been motivated by ,a desire -
to asdociate. the .Communists with what will probably ;
, be unpopular belt-tightening Measures, since the ??
Socialists and Communists Compete for the Votes of
the same. general portion of the eiectorate.
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Spain: The US embassy in Madrid reports that
? /Don Juan, the pretender. . to the throne, is expected
r- to issue a statement this weekend calling for 'greater
liberalization in Spain. The declaration is. reported
to have the support of the Spanish Socialist Party,
,/ the Communist Party, tome military officers, and
Opus Del?the influential Catholic 4:Y.Pxganization?
all of Which regard recent develop:lents An Portugal
as a model for Spain to follow./Even rUntors of an
impending declaration will have an impact on the
government, which is already debating the degree of
liberalizati6n, that it should allow. ? Those who are
opposed to liberalization-limy use Don Juan's declara-
- tion and his association with the opposition as an
.excuse to postpone reforms on :the grounds that con-
cessions at this time will only whet the apposition's
appetite for?More,far7reaChing change?.
FOR THE PRESIDENT ONI..}'
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