THE PRESIDENT'S DAILY BRIEF 2 JULY 1971

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0005992729
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 13
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: July 2, 1971

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The President's Daily Brief
2 July 1971
4:7
Top Sec Tel
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THE PRESIDENT'S DAILY BRIEF
2 July 1971
PRINCIPAL DEVELOPMENTS
On Page 1 we comment on the Viet Cong's latest pro-
posal in Paris.
Inflation has sharply accelerated in Phnom Penh in
the past week, with prices of some key items dou-
bling. (Page 3)
Eight new heroin refineries have gone into production
in the Thailand-Burma-Laos border region since the
beginning of the year. (Page 4)
On Page 7 we discuss Peking's commentary on the Chi-
nese Communist Party's 50th anniversary yesterday.
MIG.,19Sare accumulating at China's .Shen-yang plant
(Page 8)
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VIETNAM
The Viet Cong's new seven-point proposal softens
the Communist position on POW release but retains
and amplifies a very tough line on US disengagement
from the war. In addition, it repackages Hanoi's
demands for a political settlement in South Vietnam
in a superficially more attractive form.
Madame Binh stated in Paris yesterday that if the US
sets "a .terminal date for the withdrawal from South
Vietnam in 1971 of the totality of US forces" and
those of its allies, the Communists and the allies
will immediately work out arrangements to ensure the
safety of the withdrawing troops and to release the
soldiers and civilians "of all parties" who are held
as prisoners. Prisoner release, the statement added,
will be timed to end when withdrawals are completed.
The formulation on the prisoner-release question is
new; up to now the Communists have said only that
the POW issue would be "discussed" when the US set
a withdrawal date. The deadline for withdrawal is
even shorter this time than it was in the Viet Cong's
eight points last September, however. More impor-
tant, the demand that the military disengagement be
total, including noncombatants, equipment, and bases,
is as adamant as ever. The inclusion of civilian as
well as military prisoners in the release also opens
up a thorny problem of the Communist cadre held by
Saigon.
There are two eye-catching changes in the new Commu-
nist position on a politicaZ settlement in South
Vietnam. Last September's proposal contained an
elaborate scenario involving the formation of a new
non-Communist "administration" in Saigon excluding
President Thieu, Vice-President Ky, and Prime Minis-
ter Khiem, and the establishment of a temporary co-
alition government on the basis of negotiations be-
tween this "administration" and the Communists. The
new statement retains the same scenario, but Ky's
and Khiem's names are not mentioned, and Hanoi de-
mands only that Thieu and unnamed men in his "bel-
licose group" must go.
Second, the Communists have replaced their insistence
on a coalition government with something less pre-
cise. They now say only that a broad "government of
national concord" will be the outcome of the talks
between the post-Thieu "administration" and the Com-
munists. By implication the Communists are leaving
the specific form of this government open to negoti-
ation. Moreover, the language of this section--and
indeed much of the statement--is cast to convey an
image of conciliation and reasOnableness, without
committing Hanoi to anything specific.
(continued)
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The Communists doubtless hope that their initiative
on the prisoners?coupled as it is with ,a restate-
ment of their basic position on US withdrawals?will
make things awkward for the US Government both at
home and overseas. They may believe that their po-
litical proposals will appeal to many in the US who
are looking for a face-saving way out of the war.
They probably also hope to fuel worries in Saigon
about Washington's longer-term support. The new
formula for a political settlement in South Vietnam,
by its fuzziness and air of reasonableness, is de-
signed both to encourage individuals in South Viet-
nam whose support of the war is wavering and to give
some ammunition to those?possibly even including
Ky--who are already working to build an anti-Thieu,
antiwar constituency.
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CAMBODIA
Inflation has sharply accelerated in Phnom Penh
during the past week. Prices of beef and pork, as
well as of rice on the open market, have doubled.
In addition, the black market value of the Cambodian
riel depreciated drastically in the past few days.
The skyrocketing prices result from in-
creased military spending, depleted stocks
of important items, reduced food shipments
into the capital, and early indications of
a poor rice crop next season. The accom-
panying loss of confidence in the currency
has Zed the Chinese community to send more
capital abroad.
Only. last week, Cambodia's leadership
agreed in principle to all of the fairly
sweeping fiscal and monetary reforms recom-
mended last March by the International
Monetary Fund. Reforms, if carried through,
could eventually help in restoring public
confidence.
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SOUTHEAST ASIA
Eight new refineries exclusively producing pure
white heroin have gone into operation in the Thailand-
Burma-Laos border region since the beginning of this
year, Their pro-
duction had reached at least 7.5 metric tons by the
end of May. This does not include production from
the several refineries that were operating prior to
1971.
The flurry of refinery construction appar-
ently reflects the increased demand gener-
ated by US servicemen in South Vietnam.
Accelerated shipments of raw opium out of
northeast Burma into the triborder, refining
area also reflect the responsiveness of
local narcotics traffickers to the in-
creasing demand for heroin. The shipments
are partly an effort, too, to build up
stocks in anticipation of US pressure to
suppress the trade. By the end of June,
about 300 tons of opium had been delivered
to the triborder area this year compared
with a known total of 123 tons for all of
1970.
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ISRAEL-USSR
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INDIA
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COMMUNIST CHINA
The authoritative editorial commemorating the Chi-
nese Communist Party's 50th anniversary yesterday
was largely a panegyric to the correctness of Mao
Tse-tung's "Zine," together with a recounting of the
political sins of many of his earlier party opponents.
The article was remarkable for its cursory treatment
of the achievements of the Cultural Revolution, which
brought the most momentous purge in the history of
the Chinese party. Although it did severely casti-
gate deposed state chairman Liu Shao-chi, the edi-
torial pointedly ignored numerous other opponents
uncovered by Mao and his radical lieutenants during
the 1966-1968 period, declaring ,flatly that "we will
not go into detail about this revolution."
This gingerly approach reflects the intensity of the
factional and personal conflicts within China's rul-
ing politburo. Mounting political pressure over the
past year on the politburo's radical ideologues 'has
cast considerable doubt on the'ultimate' outcome of
the Cultural Revolution, and much of its history may
even be in the process of being rewritten. The ed-
itorial's condemnation of counterrevolutionaries who
created chaos and sought personal power in the "rev-
olution," its call for exposing conspirators and
renegades still in the party, its praise for the
army's role in restoring order, and its emphasis on
inner party struggle are all apparently allusions
to a recent sharpening of battle lines in the polit-
buro between the militants' who were in Mao's inner
circle and the less tightly knit proponents of rela-
tive moderation.
The editorial also failed to indulge in self-congrat-
ulation over the progress achieved since last year's
anniversary in rebuilding the post - Cultural Revo-
lution party apparatus. This reticence with regard
to the regime's first order of domestic business is
almost certainly because some key central departments
such as the party secretariat have yet to be for-
mally reconstituted, and because four provinces still
Zack party committees. Moreover, the mere establish-
ment of leading party organs in most of China's 29
provinces and special municipalities has proved no
panacea for overcoming the political divisions en-
gendered among the local leadership by the Cultural
Revolution.
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COMMUNIST CHINA
The latest satellite photography showed 423
MIG-19s at two airfields associated with the air-
craft production facility at Shen-yang. This is
the highest number yet observed in the Shen-yang
area.
The accumulation of MIG-19s at Shen-yang
has been evident for more than six months.
The fact that so many have not yet been
flown to Chinese Air Force unitssuggests
that the air force simply cannot absOrb
the new aircraft at the current rate of
production--as many as 50 a month. It
may be, however, that the Shen-yang MIGs
are yet to be equipped with some vital
components. China has been producing
MIG-19 aircraft since late 1964 or early
1965. At least 1,100 of the aircraft are
already assigned to tactical units.
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NOTES
Communist China:
USSR: The latest satellite photography shows
five "Backfire" swing-wing bombers at the Ramenskoye
test center near Moscow, the highest number observed
to date. The new Soviet bomber--formerly designated
KAZ-A--is now engaged in flight testing and aerial
refueling trials. This Mach 2 aircraft probably
will carry one air-to-surface missile. If the "Back-
fire" test program continues to run smoothly, we
estimate that the aircraft could enter production
this year and operational service by late 1973.
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