THE PRESIDENT'S DAILY BRIEF 19 FEBRUARY 1975

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006014725
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 9
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: February 19, 1975

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The President's Daily Brief
le
February 19, 1975
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Top ecret 25X1
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Exempt from general
declassification schedule of E.O. 11652
exemption category 5B( 1),(210/
declassified only on approval of
the Director of Central Intelligence
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FOR THE PRESIDENT ONLY
February 19, 1975
Table of Contents
Portugal: The Armed Forces Movement clearly intends
to remain the dominant force in politics after
the election of a civilian government. (Page 1)
OPEC: The OPEC countries are preparing to invest
more heavily in equities in order to diversify
their financial holdings (Page 2)
At Annex we discuss Moscow's interest in a more
diversified strategic strike force including
a new heavy bomber.
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FOR THE PRESIDENT ONLY
PORTUGAL
The Armed Forces Movement clearly
intends to remain the dominant force in
politics after the election of a civilian
government later this year.
A Movement spokesman told reporters, following
a meeting of the Armed Forces General Assembly on
Monday, that the Movement would be more than a "ref-
eree," but would not become a military dictatorship.
He indicated that the Movement will retain its
existing powers, including ministerial posts, after
the election.
The Movement's role in Portugal's political
future has been the subject of heated debate among
military men for several weeks. Most radical of-
ficers want it to intervene directly in the affairs
of a civilian government and veto any legislation
contrary to the Movement's interests. Moderates
prefer to follow the armed forces' original inten-
tion to return to the barracks following the elec-
tion of a civilian government or after the politi-
cal parties are capable of taking over.
The three coalition parties are also divided
over the Movement's role.
The Communists, hoping to capitalize on their
influence within the Movement and doubting their
ability to do well in an election, want it to con-
tinue in power.
The Socialists and center-left Popular Democrats,
who want to establish a European-style civilian
democracy, support the continuation of the Movement's
influence in politics, but believe the military is
usurping too much power. They are especially wary
since the Movement last week pushed a constitutional
amendment expanding the powers of the military junta
through the legislative Council of State. This
law is being interpreted as giving the Movement a
means to bypass civilian opposition in the cabinet.
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OPEC
OPEC countries are preparing to
invest more heavily in equities in the
West. Their intention is chiefly to
diversify their financial holdings
rather than to gain control of foreign
firms. Equity purchases in 1975 will
remain a small portion of OPEC invest-
ment.
Investment in equities by OPEC states in 1974
was small--less than 3 percent of their investable
surplus of about $60 billion. Kuwait, Saudi Arabia,
and Iran accounted for most of the purchases, at
least $625 million of which consisted of US common
stocks.
For the most part, acquisitions this year
probably will be limited to no more than 5 percent
of a company's shares. As a result of unfavorable
reaction to Kuwait's purchase of a large block of
Daimler-Benz stock, OPEC states are likely to seek
approval of the host government before buying sub-
stantial interest in a firm.
Saudi Arabia and Kuwait, in particular among
oil producers, are showing interest in buying into
foreign financial institutions, presumably to use
them as channels for additional investment. In
preparation for further equity investment-, OPEC
countries are building up their investment-insti-
tutions and seeking more guidance from-Western banks.
Kuwait, the most sophisticated investor in
the Middle East, bought nearly $1 billion in eRui-
tiesj approximately 15 percent of its new- invest-
mentj in 1974 and made use of its own financial
institutions as well as major international banks.
The Kuwait-Ministry of Finance, for example, ac-
quired stock in the Dresdner Bank, which then
arranged the-purchase-of 14.6 percent of Daimler-
Benz for $396 million.
Iran has made only one major equity invest-
ment?the pui-C-Ha-S-e-OT 25 percent of Krupp Steel
for $100 million- In purchasing equities, Tehran
will favor companies that can contribute to Iranian
development programs. Saudi Arabia has been slow
to commit funds to equity investment. With the
advice of American banks, the Saudis 14s _year did
US stocks. This year, they plan Eo put from $500
million to $1 billion--an amount equaling 2 to 4
percent of surplus Saudi revenues--into US equities.
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USSR
The heyday of the heavy bomber in
Soviet strategic strike forces ended when
the Strategic Rocket Forces were created
in December 1959. Development and de-
ployment of strategic missiles progressed
steadily during the 1960s3 by the early
19708, it was evident that the Soviets
were relying almost exclusively on bal-
listic missiles for strategic deterrence,
although they continued to maintain their
aging heavy bomber force.
Now, however, with US bomber develop-
ment and with improvements in US missiles
that make the Soviet ICBM force increas-
ingly vulnerable, the Soviet view of the
strategic balance may have altered. Mos-
cow may now be interested in seeking a
more diversified strategic strike force,
and we have some very tenuous evidence
that the Soviets may be designing a new
heavy bomber.
Why a New Bomber?
US superiority in strategic bombers has long
been of concern to the Soviets. This anxiety, which
can be seen in the size of the extensive Soviet air
defense network and in various Soviet SALT proposals
for a limit on such aircraft, has almost certainly
increased as a result of the publicity given to the
development of our B-1 aircraft.
the Soviets are determined
to develop an equivalent to any combat aircraft de-
veloped by the US. This Soviet desire to "keep up"
suggets that they might consider a new bomber as a
rival to the B-1.
Soviet war doctrine appears to have changed
somewhat in recent years. There is some evidence
that the Soviets may have shifted from an earlier
belief that war--especially a European war--would
immediately escalate to a massive nuclear exchange.
The Soviets now recognize that war could at least
begin without the immediate and extensive use of
nuclear weapons. In a conventional or limited nu-
clear war situation, bombers could have several ad-
vantages over missiles.
(continued)
Al
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Given the present state of US air defense
forces, the chances of a bomber reaching a US target
are probably good. The planned reduction of US air
defense missile forces will further improve those
chances.
The age of the present Soviet strategic bomber
force also argues for the development of a new bomber.
The TU-95 and M-type Bison bombers of Long Range
Aviation are from 10 to 19 years old. The introduc-
tion of a new heavy bomber would diversify the Soviet
strategic attack force and improve its overall capa-
bilities.
Moscow's most recently developed bomber is the
swing-wing Backfire. This aircraft appears to be
well suited for operations against targets along the
periphery of the USSR, and most are likely to be used
in that role. Although under certain conditions
this bomber could be used against targets in the US,
we have no firm evidence on which to base a judgment
as to what extent the Soviets may intend to use the
Backfire in this role.
The Vladivostok understanding, which calls for
an agreement limiting the total number of strategic
delivery vehicles of each party and the banning of
new silo construction, doubtless is causing the
Soviets to reassess their future strategic attack
force. It is likely that their reassessment would
include examination of the relative advantages of a
new heavy bomber.
The Evidence
During negotiations with high-level US repre-
sentatives last year, General Secretary Brezhnev on
several occasions stated that if the US stopped de-
velopment of the B-1, the USSR would not develop a
new bomber that Brezhnev called the "160." 25X1
LOA]
the possible development 25X1
of a new Soviet strategic aircraft.
The interpreter accompanying a group of Soviets
to a Boeing 747 aircraft production plant in October
1974 stated that the Soviet Ministry of Aviation
Industry is designing a wide-body aircraft similar
to the 747 that would be used as a ballistic missile
transport and airborne launch platform. The trans-
lator stated that this aircraft had been designated
the "TU-160."
(continued)
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Brezhnev's remarks and those of the Soviet of-
ficials may have been braggadocio or made to enhance
their government's negotiating position, and the
interpreter's remarks may have been a deliberate
leak intended to mislead. On the other hand, it is
possible that the "160" or the "TU-160" may refer
to a new bomber design of the Tupolev bureau, which
has long been associated with bomber and transport
aircraft designs.
Soviet aircraft design bureaus, including that
of Tupolev, normally assign numbers in sequence to
identify an aircraft and its component parts. For
example, in the early 1950s the Tupolev design
bureau assigned the number "88" to plans for the
TU-16 bomber. The TU-95 bomber, which was designed
in the mid-1950s, was assigned the number "95."
Since that time, the Tupolev design bureau has
created many aircraft designs, and "160" is a plausi-
ble number for a current Tupolev aircraft design.
If So, When?
A new bomber design such as "160" or "TU-160"
is, of course, only one possible option open to the
Soviets. Other possibilities could include modifi-
cation of the Backfire. If the Soviets decide or
have already decided to develop a new bomber, they
would probably not be able to deliver it to opera-
tional forces in significant numbers before the
early 1980s. Past experience indicates that the
Soviets normally require four to five years to test
a new aircraft design. Thus, if they were to build
a prototype in 1975, it would be at least 1980 be-
fore it began entering operational service.
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