THE PRESIDENT'S DAILY BRIEF 10 JANUARY 1975

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006007914
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 13
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: January 10, 1975

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The President's Daily Brief
January 10, 1975
Declassified in Part - Sanitized Copy Approved for Release 2016/07/15 : CIA-RDP79T00936A012400010032-4
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Exempt from general
declassification schedule of E.O. 1.1652
exemption category 513(1),12).(3)
declassified only on approval of
the Director of Central Intelligence
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FOR THE PRESIDENT ONLY
January 10, 1975
Table of Contents ?
World Oil: We note likely developments in the
international oil market this year. (Page 1)
Egypt: Sadat's charges that the Soviet Union has
not fully rearmed Egypt may be an effort to
justify to other Arabs his readiness to con-
clude another bilateral agreement with Israel.
(Page 3)
Japan: Japan offset the rise in oil import costs
last year by boosting exports faster than any
other developed country. (Page 4)
South Vietnam: President Thieu is trying to rally
international and domestic support for his
government in the wake of military setbacks.
(Page 5)
France: The French are moving directly to the
development of a multiple independently
targetable re-entry vehicle (MIRV). (Page 6)
Cyprus-Turkey: The Turks are seeking the release
of Turkish Cypriots who found refuge at a
British base in southern Cyprus last summer.
(Page 7)
Note: Ethiopia (Page 8)
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FOR THE PRESIDENT ONLY
WORLD OIL
Barring major new political or mili-
tary developments, we foresee the follow-
ing situations in the international oil
market this year:
--The price of oil to the international com-
panies operating in the Middle East will aver-
age between $10.15 and $10.50 per barrel
through next September, in accordance with
the recent OPEC decision.
--By mid-summer the demand for OPEC oil will
probably fall by at least 3 million barrels
per day as a result of high prices, conserva-
tion measures, the seasonal pattern of oil
consumption, and the continuing high level of
stocks. This estimate does not assume a sharp
drop in US imports, which would be additional.
--OPEC members are likely to maintain prices
by cutting production. Excess production
capacity would then exceed 11 million barrels
per day.
--At the expected price and output levels,
OPEC members will earn about $109 billion,
and their foreign assets will increase by
$55 billion to $65 billion, reaching $135
billion to $145 billion by the end of the'
year.
--Despite efforts to diversify, a dispropor-
tionate share of OPEC countries' assets will
continue to be held in dollars.
--Problems of financing oil deficits will in-
crease, even though additional recycling
schemes are likely to be initiated.
--High oil bills will continue to slow re-
covery from the worldwide recession.
--Saudi Arabia will take 100-percent control
of the Arabian American Oil Company (ARAMCO)
early this year, and most other Arab producers
will fully nationalize their industries soon
thereafter.
--Venezuela also will nationalize foreign oil
company holdings sometime during the year.
(continued)
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FOR THE PRESIDENT ONLY
--The OPEC nations probably will adopt an in-
dexing scheme, tying the price of oil to the
prices of selected industrial. commodities.
The scheme is unlikely to be introduced before
the fourth quarter unless inflation in indus-
trial countries intensifies.
--Oil exploration activity .around the world
is likely to remain at 1974 peaklevels, yield-
ing numerous discoveries.
2
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FOR THE PRESIDENT ONLY
EGYPT
President Sadat's public charges
this week that the Soviet Union still
has not rearmed Egypt fully may be an
effort to justify to other Arabs his
readiness to conclude another agreement
with Israel. His complaint, however,
endangers those military deliveries
the Soviets recently promised.
In the course of an interview, carried in a
Beirut newspaper Wednesday, Sadat acknowledged that
Soviet leaders agreed, during Foreign Minister Fah-
mi's recent visit to Moscow, to provide "a part" of
Egypt's arms demands. He asserted that this will
not meet Cairo's needs for either replacements or
new arms. Addressing his remarks to "every Arab,"
Sadat contrasted Egypt's situation with that of
Syria and Israel. He said Syria has received full
"compensation" from the Soviets for war losses, and
Israel has acquired both compensation and new types
of weapons from the US, while Egypt has received
only "a few arms" and small quantities of ammunition
and spare parts.
Sadat indirectly accused the Soviets of involve-
ment in recent leftist-inspired demonstrations in
Cairo. He said there is "no room" in Soviet-Egyp-
tian relations for interference in domestic affairs,
and that if the left is "exploited for sabotage,"
it will be dealt with like "any other group of sab-
oteurs."
Sadat's complaints are the strongest since his
critical public statements last spring, which prob-
ably played a large part in Moscow's suspension of
arms deliveries between April and August.
Sadat's implicit message to other Arabs may be
that Egypt is justified in taking what it can get
from US diplomatic efforts in negotiations because
Syria gets what it wants from the Soviets. In a
second installment of his interview published yes-
terday, Sadat reinforced this impression. He ob-
served that the Geneva conference should not be re-
convened until the US and the USSR themselves agree
on strategy. He said that, in the meantime, no Arab
should disregard any "opportunity" for "other steps
toward peace."
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JAPAN: Export Trends
LESS
DEVELOPED
COUNTRIES'
South and
Southeast Asia
Latin America/
Caribbean
Africa/
Middle East
'Excluding OPEC States
OPEC COUNTRIES
DEVELOPED
COUNTRIES
United States
Canada
European
Community
Australia,
New Zealand, and
South Africa
COMMUNIST
COUNTRIES
557093 1-75
Percent Increase in Exports
Jan-Sep 1974 over Jan-Sep 1973
VALUE
54
17 VOLUME
15
46 -
48
28
33
6
17
36
5
54
39
77
32
87
88
84
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FOR THE PRESIDENT ONLY
JAPAN
Japan successfully offset the rise
in its oil import costs in 1974 by boost-
ing exports faster than any other devel-
oped country.
Prodded by the weakness in domestic demand,
the Japanese raised exports by 50 percent, to $54
billion. This remarkable achievement, together
with slack demand for imports, produced a trade
surplus of about $1.4 billion despite a $14-billion
jump in Japan's oil bill. The current account as
a whole was in deficit by $5 billion in 1974, com-
pared with a deficit of $100 million in 1973.
The physical volume of Japanese exports rose
15 percent in the first nine months of 1974, with
sales to less-developed and Communist countries
showing by far the largest gains. Export prices
were up by 25 to 50 percent in the major markets.
As a result, Japan was able to increase its trade
surplus in 1974 with every major group of countries
except OPEC.
--The surplus with non-OPEC less-developed
countries nearly doubled, to $9.5 billion--
roughly one third of the overall trade def-
icit of these countries.
--The surplus with developed countries in-
creased by $2 billion, reaching $3.7 billion--
one half of this with the United States.
--The surplus with Communist countries rose
from $30 million to $800 million.
--The deficit with OPEC countries totaled
$13 billion, up from $3.6 billion in 1973.
--Japan, nevertheless, made its most striking
export gains in OPEC countries, nearly dou-
bling sales to $5 billion. Much of the in-
crease consisted of steel products. The rise
in exports to OPEC states offset about one
fifth of the increase in oil payments.
Tokyo has a good chance of realizing its goal
of a $6-billion trade surplus in 1975. Even though
export growth will drop sharply, we estimate that
export value will still rise by 15 percent, while
there will be a small gain in volume of exports.
Most of this latter gain will come from sales to
OPEC and Communist countries. At the same time,
sluggish domestic economic activity will limit the
growth in import costs to about 10 percent, with
most of this increase reflecting higher average
prices for oil and manufactured goods.
4
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FOR THE PRESIDENT ONLY
SOUTH VIETNAM
President Thieu is attempting to
rally international and domestic support
for his government in the wake of recent
military setbacks.
In
Thieu,
the following points:
an address to the
nation planned for today,
will make 25X1
--The Communists have launched a general mili-
tary and political offensive to overthrow the
government in serious violation of the cease-
fire agreement.
--The loss of Phuoc Binh was due to overwhelm-
ing Communist military force and not to inef-
fective government leadership as some opposi-
tion elements have claimed.
the government intends to bolster
public confidence by emphasizing that it retains
strong US support. The pending visit of the US Air
Force chief of staff will be made known publicly.
Government spokesmen also will not discourage ru-
mors now circulating in Saigon that Washington's
Special Action Group has met to discuss possible
US intervention in Vietnam and that a US naval task
force may be stationed off the South Vietnamese
coast. The government will almost certainly en-
courage speculation that supplemental US military
aid will be provided.
The initial reaction to the loss of Phuoc Binh
within official circles has been relatively mild.
Senior military commanders concurred in Thieu's de-
cision not to reinforce the province, realizing
that it would have weakened government defenses in
other more strategic areas and would have imposed
severe strains on resupply capabilities. Although
viewed seriously, the loss thus did not have the
shock impact that the unexpected fall of Quang Tri
City had in the 1972 offensive.
There is more apprehension, however, among mid-
dle grade government officials and military officers
that the Communists will be able to take over other
towns and provinces. At this level, the recent
losses are attributed to a combination of reduced
US support, as well as to inept leadership/and cor-
ruption. The _psychological boost gained by the
seizure ?of Phuoc Binh may increase Communist will-
ingness to test Saigon and US reaction by assaulting
a more significant provincial capital.
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25X1
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FOR THE PRESIDENT ONLY
FRANCE
The French are moving directly to
the development of a multiple indepen-
dently targetable re-entry .vehicle (MIRV).
The MIRV warheads will be installed on the
M-4 submarine launched ballistic missile. The
missile and the MIRV warheads are expected to be
used with France's sixth nuclear powered submarine
25X1
25X1
One of the major goals of France's 1974 nuclear
test series in the South Pacific was to. test nuclear
components for MIRVs.
6
1 ?
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25X1
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CYPRUS?TURKEY
The Turks are currently engaged in
a well-publicized effort to obtain the
release of the Turkish Cypriots who
sought refuge at a British Sovereign
Base in southern Cyprus during the fight-
ing last summer. The British resisted
earlier Turkish representations on this
issue in an effort to strengthen the
Greek Cypriot bargaining position, but
they reportedly are now preparing to
release the refugees in the face of the
well-orchestrated Turkish campaign.
25X1
passed a personal message 25X1
to Archbishop Makarios stressing the 25X1
problems arising because of the refugees. The
message reportedly concluded with a warning to
Makarios that unless there were positive develop-
ments would be forced to re- 25X1
lease the Turkish Cypriot refugees. 25X1
25X1
Feeling sure of their ground, the Turks may
be publicizing their current effort on behalf of
the refugees to gain credit for a diplomatic vic-
tory. Such a success in turn could enable the
Turkish government to show more flexibility in the
forthcoming Cyprus talks. The Turks are still
grappling with their domestic political problems,
and the appearance of bowing to US pressure makes
it more difficult for Ankara to give the kind of
concessions necessary for a settlement.
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NOTE
Ethiopia's Eritrean rebels threw grenades into
the USIS library in Asmara on Wednesday as a sym-
bolic protest against US military aid to the Ethio-
pian government, in the opinion of the US embassy
in Addis Ababa.
The attack came after the library had closed
for the day, and the perpetrators fired warning
shots before throwing the grenades. The attack
may mean the Eritrean insurgency has entered a
phase more directly dangerous to the US presence
in that province. It does not necessarily signal
the opening of indiscriminate attacks on American
nationals or installations there, however.
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Top Secret
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