THE PRESIDENT'S DAILY BRIEF 18 AUGUST 1971

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0005992811
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 10
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: August 18, 1971

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The President's Daily Brief
18 August 1971
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THE PRESIDENT'S DAILY BRIEF
18 August 1971
PRINCIPAL DEVELOPMENTS
The international economic situation is discussed
on Page 1.
South Vietnam (Page 3)
The trouble. between Jordan and Syria will be the
most. pressing business at the meeting of Arab heads
Of. state that convenes in Damascus today- ,(Page 4)
Libya Malta/
(Page 5)
/Bolivia
]Page 6.
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INTERNATIONAL ECONOMIC SITUATION
Japan and Canada were the only major countries
to keep their foreign exchange markets open yester-
day, and the Tokyo market opened again today. Euro-
pean governments are keeping theirs closed while de-
liberating on appropriate responses.
In Tokyo, the government has refused to permit
the dollar to float in the belief that a depreciated
dollar would hurt Japanese exports to the US at a
time when the Japanese economy is sluggish. Thea gov-
ernment is also concerned that the ten-percent sur-
charge on US imports will make it more difficult to
get the Japanese economy moving.)
The Japanese probably hope to keep their ex-
change market open and to maintain the)existing dol-
lar rate at least' until some multilateral revision
of the monetary system and exchange rates can be
agreed upon. Tokyo probably realizes, however, that
the present rate is not. likely to be maintained much
beyond the time that European exchange markets are'
reopened. Any depreciation of the dollar relative
to European currencies and maintenance of the pres-
ent yen-dollar rate-would result in de)facto,devalua-
tion of the yen vis-a-vis the European currencies,
bringing a storm of protest .from Europe. The Cana-
dians believe that the rise in their currency against
the dollar by nearly one-half cent' inthe last two
days to a high of 99.3 cents by itself significantly
affects their trade, and they claim that about one
fourth of Canada's exports to.the US will be ad-
versely affected by the surcharge; Canada sold about
two thirds of its-total exports to the US last year;
thus, the Canadians, already' sufferingfrom an. un-
employment rate over six percent, feel they will be
particularly hard-hit by the US moves.
Press accounts of the EC monetary committee
meeting yesterday in Brussels state that the commit-
tee decided the likeliest solution for the Community
-
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in the crisis is a joint upwardfloat'of-the EC's
currencies againstthe dollar. But accounts of a
subsequent meeting of the EC Commission indicate that
this body was having difficulty in forming concrete
proposals onwhich theEC Council could act. The po-
sition-of France, the principal opponent of a joint
flOat.proposal,by Bonn last May, probably will be
determined at the special cabinet meeting scheduled
for this afternoon by President. Pompidou. Under the
present circumstances, Paris will be under greater
pressure to participate in a coordinated EC response.
The UK hopes to coordinate its policy with that
of the. EC, and whatever decision the EC adopts will
inevitably influence the policies of other European
nations,:notably Switzerland. Until these European
policy-making processes are completed, most of the
major foreign exchange markets probablywill remain
closed. A premature opening of the markets could.
precipitate a large, undesired run from the dollar,
partly in reaction tb the news that the US second
quarter balance-of-payments deficit was the worst in
history.
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SOUTH VIETNAM
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ARAB STATES
The trouble between Jordan and Syria will be the
most pressing business at the meeting of the Egyp-
tian, Libyan, and Syrian heads of state convening
in Damascus today. Their efforts to deal with the
problem are apt to generate some heat in view of
the wide differences between Qadhafi, who is press-
ing for sanctions against Jordan, and Sadat, who is
committed to the current efforts of an Egyptian -
Saudi Arabian mission to mediate between Jordan and
the fedayeen. The three leaders win very likely
continue the discussions, begun at their meeting in
Tripoli on 30 July, which aimed at devising .a for-
mula for an agreement between King Husayn and the
fedayeen.
The formal purpose of the meeting is to approve the
draft constitution of the new Federation of Arab
Republics which the three governments have agreed
to establish. The endorsement is expected to be
pro forma, and the constitution will then be sub-
mitted to a plebiscite in each country on 1 Septem-
ber. Little popular enthusiasm for this latest at-
tempt at Arab unity has developed, and this has
prompted the Libyans and Syrians to conduct "educa-
tional campaigns" in an effort to drum up support
for it.
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MALTA
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BOLIVIA
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NOTE?
Pakistani I 50X1
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Top Secret
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