THE PRESIDENT'S DAILY BRIEF 15 AUGUST 1973

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0005993903
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 11
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: August 15, 1973

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The President's Daily Brief
15 August 1973
45
7) S-1.tcget
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Exempt from general
declassification schedule of E.O. 11652
exemption category 5B(I ).(21.(3)
declassified only on approval of
the Director of Central Intelligence
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THE PRESIDENT'S DAILY BRIEF
15 August 1973
PRINCIPAL DEVELOPMENTS
Khmer insurgents are preparing for all-out attacks
against Phnom Penh, but heavy casualties and supply
difficulties could make an immediate effort impos-
sible. Although government forces have the edge in
troop strength and firepower, morale may prove to
be the decisive factor. (Page 1)
The price of gold has continued to drop, largely
because of rising interest rates in the US. (Page 2)
The USSR's recent anti-Chinese campaign is a way of
forcing East Europeans to demonstrate their alle-
giance to Moscow, as well as a criticism of Peking's
policies. (Page 3)
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The Egyptians see recent official and unofficial
US statements as signs that the US is growing in-
creasingly worried about the possible political
leverage of Arab oil. (Page 5)
Notes on problems facing Peron in Argentina, last
week's Israeli-Egyptian air clash, and Japan
Indonesia
?age b.
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CAMBODIA
The Khmer insurgents are ordering an ambitious
series of attacks against Phnom Penh timed to coin-
cide with the cessation of US bombing.
The insurgents can be expected to hit govern-
ment forces as hard and as quickly as possible, but
the "instant" all-out effort urged by the Khmer Com-
munist command may prove impossible. Intercepted
insurgent messages indicate that recent US air at-
tacks have inflicted heavy casualties on some units,
and some continue to experience supply difficulties.
Flooding in the area of the capital may also hamper
preparations.
Based on its edge in troop strength and
firepower, government forces should be
able to withstand any attacks the insur-
gents are likely to mount in the next few
days. The defense of Phnom Penh, however,
will hinge primarily on the morale and
pyschological attitude of its defenders.
Government troops are already suffering
from morale problems, and no one can say
with assurance how they will react psycho-
logically to the US bombing haZt. Leaders
in Phnom Penh, buoyed by the recent slack-
ening of insurgent activity, are express-
ing confidence that government forces can
hold their own.
In the past, however, army field command-
ers have taken a pessimistic view of their
troops' willingness to fight without the
boost of US air support. In terms of
measurable physical capabilities, the in-
surgents should not be able to overrun
Phnom Penh at this time. But the army's
morale and attitude--the key factors--are
hard to measure and impossible to quantify.
If a defeatist mood develops within the
army, even moderate insurgent pressure
could cause resistance to crumble.
(
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130
?London Gold Price
1973
March April ' May June ? July August
90
80
? European
70
60
Renewed currency
turmoil begins
Joint Float implemented
554521 8-73
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INTERNATIONAL MONETARY DEVELOPMENTS
? The price of gold continued its sharp drop,
falling to $95 an ounce yesterday.
Rapidly rising US interest rates remain
a key factor, since they induce money
managers and speculators to bypass gold
purchases in favor of investments pro-
ducing interest. The rising rates also
account for much of the dollar's growing
strength with respect to other currencies.
Swiss banks offered unusually large quantities
of gold for sale in London and Zurich at the end of
last week, an action which suggests profit-taking
by small holders. There is no firm evidence yet
that speculators are unloading on a large scale.
Most of the gold buying in the last month has been
for commercial use, in contrast to the speculative
purchases which overshadowed commercial buying from
May to mid-July.
2
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USSR - CHINA - EASTERN EUROPE
The Soviets are orchestrating an anti-
Chinese campaign that seems aimed as much
at forcing the East Europeans to demonstrate
their allegiance to Moscow as .itis at
condemning Peking's policies.
When East European party leaders gathered in
the Crimea late last month, Moscow had to settle for
a thin veneer of unity. To achieve this it had to
forego any mention of China in the communique, lest
the Romanians take exception. Over the past several
days, however, the Soviets and their more submissive
allies have taken the gloves off. They have denounced
Peking harshly and stressed the need to close ranks
against the Chinese apostasy.
Pravda led the way last week with a major edi-
torial charging that the Chinese leadership repre-
sents a force hostile to the Socialist world. Tak-
ing their cue, Moscow's more loyal allies--the Poles
and the Bulgarians--chimed in at once. The Czechs
took the unusual step of reprinting the full text of
the Pravda article, and pointed to its "exceptional
significance."
Not surprisingly, the Romanians have remained
silent but they have begun to squirm,1
The Romanians, of course, have good reason
to be on their guard. They are only too
well aware that the USSR is trying to use
the China issue to forge more Soviet-style
unity in Eastern Europe, and to assert
Moscow's self-assumed right to define the
limits of permissible behavior for Social-
ist states. As contacts increase between
Eastern European countries and China on
the one hand, and Western Europe on the
other, Moscow will find it both more
necessary and more difficult to impose
conformity, and Romania will see that
much more need to keep resisting.
3
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FEDAYEEN
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EGYPT
The Egyptian press and radio have been giving
extensive coverage both to the Standard Oil Company's
appeal for a more pro-Arab Middle East policy by the
US and to Assistant Secretary Sisco's statement that
the world energy situation plays a part in US policy.
Most commentators welcome Standard Oil's
position, but write off the likelihood
that it will have an effect, and dismiss
the Sisco statement as a calculated at-
tempt to stave off Arab moves to use oil
as a form of pressure. They say the US
veto in the UN last month is a more ac-
curate gauge of intention than a statement
by a government official.
Nevertheless, the papers point out that
the comments do show that the US is worried
about the political leverage of Arab oil.
They see the criticism raised by Israel and
Jewish organizations in the US as an in-
dicator of Israeli concern that US poli-
cies might, in fact, shift. Editorials
are warning against false optimism, but
Cairo will be studying both official and
unofficial American moves for any further
signs of change.
5
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NOTES
Argentina: Peron's behavior since his return
in June has thrown increased doubt on whether he is
up to coping with the country's serious economic and
political problems. The naming of his wife as his
running mate in the presidential election has blocked
efforts to achieve a national conciliation slate with
the opposition, and has done nothing to unify the
fractious Argentine community. The wide support he
has enjoyed is likely to dissipate unless he soon
shows greater initiative, forcefulness, and sense of
purpose. There are already signs that disaffected
Peronist extremists may again resort to violence.
Israel-Egypt: The Israeli plane originally re-
ported to have been downed on August 9 after an en-
gagement with an Egyptian aircraft apparently re-
turned safely to Israeli-held territory.
Japan-Indonesia:
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Top Secret
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