THE PRESIDENT'S DAILY BRIEF 27 JULY 1973

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0005993886
• 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 27, 1973

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The President's Daily Brief
27 July 1973
45
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z
Exempt from general
declassification scheduk of E.O. 11652
exemption category 5B(1).(2),(3)
declamified only on approval of
the Director of Central Intelligence
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FOR THE PRESIDENT ONLY
THE PRESIDENT'S DAILY BRIEF
27 July 1973
PRINCIPAL DEVELOPMENTS
Insurgent forces are closing in on Phnom Penh.
(Page 1)
Communist concessions in the Laos negotiations have
brought the two sides closer to agreement. (Page 2)
The North Vietnamese now have fewer logistic forces
in Laos than before the cease-fire, but retain a
substantial capability to infiltrate men and supplies
through the country. (Page 3)
The other EC members have made some progress in over-
coming France's resistance to accommodating the US
on a number of issues.. (Page 4)
Only one month after being revalued, the mark has
again risen to the top of the European joint float
band. (Page 5)
On Page 6 we discuss President Allende's current
efforts to ease political tensions in Chile.
Israeli Defense Minister Dayan is advocating an ac-
tivist policy that other Labor Party leaders say
amounts to "creeping annexation" of the occupied ter-
ritories. (Page 7)
FOR THE PRESIDENT ONLY
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CAMBODIA: Phnom Penh Area
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FOR THE PRESIDENT ONLY
CAMBODIA
Khmer Communist forces are moving closer to the
capital. The heaviest fighting is a few miles south
and southwest of Phnom Penh. The Communists are
maintaining steady pressure, concentrating most of
their effort along Route 3. Some insurgent elements
are now only five miles from the capital's airport.
Others have closed with the army's 7th Division ten
miles northwest of Phnom Penh. Thus far, the divi-
sion has held its own.
The insurgents are trying to erode govern-
ment strength and tighten the ring around
the capital, even though these tactics
leave the Communists vulnerable to air and
artillery strikes. They have not yet
launched ground attacks on poorly defended
installations closer to Phnom Penh, or
tried to interdict Routes 4 and 5--the
capital's vital supply lines.
The government has ordered a "general mo-
bilization" and is implementing the new
conscription law, but these measures will
probably have little immediate effect.
1
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FOR THE PRESIDENT ONLY
LAOS
Chief government negotiator Pheng Phongsavan
claims that his Communist counterpart made signifi-
cant concessions on July 24. The Communists are
said to be willing to drop their demand that Sou-
phanouvong be appointed sole deputy prime minister,
and are no longer insisting that the Communists be
given the defense or interior portfolio. They also
have reportedly agreed to postpone any demarcation
of zones of control until after a new government is
formed.
In return for these concessions, Pheng said
that the Communists continue to insist on one key
demand--that they have a veto over the operation
of joint inspection teams that are to verify the
withdrawal of foreign forces. Pheng expressed the
view that Souvanna will accept this demand in order
to get a new government formed by August 15.
Still other sticking points remain to be
resolved. Pheng acknowledged to the US
charge, for example, that the two sides
have not yet agreed on the stationing of
security troops in Vientiane. In addition,
? Pheng has said nothing about any decision
on the fate of the irregulars and their
bases.
If Pheng cannot iron out the remaining
issues, Souvanna will once again take
personal charge of the talks. The Prime
Minister wants a final agreement soon.
He may quickly accept Communist terms on
the remaining issues.
2
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FOR THE PRESIDENT ONLY
NORTH VIETNAM - LAOS
Hanoi has reduced its forces in Laos by about
25 percent since the cease-fire in February. Its
63,000 men still in Laos include some 36,000 combat
troops--whose numbers have fallen only slightly in
this period.
A major reorganization of Hanoi's rear services
structure in southern Laos accounts for most of the
decrease. A reduction in support troops by 19,000
includes the shift of some 13,000 men to the new
logistical corridor inside South Vietnam. In addi-
tion, the North Vietnamese have disbanded several
units and reduced others, probably sending the men
home for the rainy season.
With 20,000 rear service personnel remain-
ing in the panhandle, the North Vietnamese
will still have a substantial capability
to infiltrate supplies and men through
Laos in the coming dry season, even if no
units return from South Vietnam. The cur-
rent upgrading of the road system will
ease the task, and the cease-fire environ-
ment will be less demanding.
3
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FOR THE PRESIDENT ONLY
EC
At meetings in Copenhagen and Brussels
this week the other EC members made some
progress in overcoming France's resist-
ance to accommodating the US on a number
of issues.
The political consultations in Copenhagen fo-
cused on plans for President Nixon's visit to Eu-
rope in the fall. French Foreign Minister Jobert
initially contended in effect that Europe should
express its "identity" by refusing to develop a
concerted approach to the visit. He later con-
ceded, however, that the EC should choose subjects
for discussion and that the visit could be the
starting point of a US-European dialogue. The po-
litical committee will now work toward developing
a consensus on the issues the Europeans will raise.
The French remain adamant that defense matters
must be kept separate from community discussions
and addressed solely in the NATO forum. The EC
countries' permanent representatives to NATO will
coordinate on the defense aspects of the President's
visit.
The division of preparations between the
NATO and EC forums argues against the
development of a single all-encompassing
Atlantic declaration.
The later EC Council meeting in Brussels re-
jected a French proposal that the coming multina-
tional trade negotiations be held up until the dol-
lar had returned to its parity of February 12.
Paris also seems to be softening its opposition to
US demands for compensation to offset trade damage
resulting from the community's enlargement.
4
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FOR THE PRESIDENT ONLY
INTERNATIONAL MONETARY DEVELOPMENTS
News of another large West German trade surplus
in June, together with continuing tight German credit
conditions, drove the mark up against all major cur-
rencies yesterday. Despite substantial support from
the Bundesbank, the dollar fell almost one percentage
point relative to the mark. The mark is now worth
44 cents in contrast to 31 cents a year ago.
The joint float is in jeopardy. The mark has
again risen to the top of the European joint float
band, only one month after being revalued, and the
gap between the strong and weak currencies is widen-
ing. The Bundesbank has had to intervene in several
European currencies to maintain the narrow band.
Bonn has several choices, all of them un-
attractive. It can continue to purchase
dollars and joint float currencies in in-
creasing amounts, but would thereby under-
mine the Bundesbank's anti-inflationary
policy. It can revalue the mark again,
but feels this would only encourage fur-
ther speculation. Or it can break away
from the joint float altogether, a course
it fears would damage European unity.
In any event, the current problems are
demonstrating to the Europeans the diffi-
culty of attempting to maintain fixed
parities without substantial progress to-
ward economic and monetary union in the
EC.
5
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FOR THE PRESIDENT ONLY
. CHILE
President Allende is feeling the heat. In an
impassioned speech on Wednesday, he pleaded with
the opposition Christian Democrats to help avert
civil war by engaging in a dialogue with the govern-
ment. He was not willing to retreat from his gov-
ernment's major principles or programs in order to
get the talks started, but he was conciliatory on
some issues of major concern to the Christian Demo-
crats and the armed forces.
The Christian Democrats reportedly are ready
to begin talks with the government if the armed
forces participate as members of the cabinet. In
his speech Allende denied rumors that the re-entry
of the armed forces into his government is imminent,
but the Presi-
dent
is tending in this direction.
Allende's condemnation of leftist "ultrarevolu-
tionaries" as tools of the far right may indicate
that he is trying to work toward a compromise under
which the military could re-enter the cabinet. He
appears to be trying to break the tough stand of
the Socialists and Communists on this and other is-
sues in order to gain room to maneuver.
In so doing, of course, Allende risks
seriously straining his governing coali-
tion.
Meanwhile, actions by leftist and rightist ex-
tremists and private groups--such as the truck own-
ers' strike declared esterda --ma yet lead to a
military coup.
6
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ISRAEL
Defense Minister Dayan is campaigning for
election to the Knesset this October on a platform
that is likely to affect Israel's policy toward the
Arabs. Dayan believes a peace settlement is a
long way off and favors an activist policy of Is-
raeli settlement and economic development in the
occupied territories. He is threatening to leave
the ruling Labor Party if it does not accept his
views.
Other leaders of the Labor Party--Mrs.
Meir, party boss Sapir, and Foreign Min-
ister Eban--have been decrying this
creeping annexation" idea in their cam-
paign speeches. They point to the eco-
nomic costs involved, the demographic
threat posed by Arab populations to the
Jewish state, and the permanent block to
a peace settlement that annexation would
entail.
To keep Dayan in the party, his colleagues
will have to go at least part way to meet
his demands. In time, Dayan too will
probably make a pragmatic accommodation
with the party leaders.
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NOTES
World Youth Festival: Organizers of the tenth
World Youth Festival opening in East Berlin tomorrow
have taken steps to prevent repetition of embarrass-
ments experienced at the ninth festival, held in
Sofia five years ago shortly before the invasion of
Czechoslovakia. The more militant delegates may
have difficulty in accepting the rationale for US-
Soviet detente, and Pankow is bracing for any inci-
dents Arab extremists or leftist fringe groups may
provoke.
Japan - North Korea: The Japanese have agreed
for the first time to grant export-import bank
credits to North Korea to finance the purchase of
a small plant. The North Koreans have been seeking
such financing for several years, but Tokyo has held
back because of South Korean and US objections. The
Japanese say they intend to finance only small-scale
projects and to move ahead slowly, but further ex-
pansion of trade relations with Pyongyang is likely.
8
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...?
Top Secret
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