THE PRESIDENT'S DAILY BRIEF 16 OCTOBER 1975

• Document Type: FOIA
• Collection: President's Daily Brief 1969-1977
• Document Number (FOIA) /ESDN (CREST): 0006014929
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 12
• Document Creation Date: August 14, 2016
• Document Release Date: August 24, 2016
• Publication Date: October 16, 1975

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The President's Daily Brief
October 16, 1975
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Exempt from general
declassification schedule of ED. 11652
exemption category 5/3(1),(2),(3)
declassified only on approval of
the Director of Central Intelligence
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FOR THE PRESIDENT ONLY
October 16, 1975
? Table of Contents
Lebanon: Serious clashes on Tuesday night between
Christian and Muslim militiamen in the eastern
suburbs of Beirut have jeopardized the truce.
(Page 1)
EC-Portugal: Prime Minister Azevedo's speech to
the nation on Monday emphasized the country's
enormous economic problems. (Page 2)
Israel: Our embassy in Tel Aviv reports that most
Israelis now appear convinced that the Sinai
agreement with Egypt is a positive development.
(Page 4)
Notes: Portugal; USSR; Laos; Iraq-USSR; France-USSR;
Egypt-Syria (Pages 6, 7, and 8)
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LEBANON
Serious clashes on Tuesday night
between Christian and Muslim militia-
men in the eastern suburbs of Beirut
have jeopardized the truce. Although
the fighting tapered off by midday
yesterday, banks and most shops re-
mained closed. Tripoli reportedly
was calm.
Reports on efforts to resolve the underlying
issues indicate that the Christians, especially
the Phalangists, clearly are attempting to shift
the focus of political attention away from the ques-
tion of Muslim-Christian power-sharing to the issue
of Lebanese-Palestinian relations. Phalangist
organization is
prepared to solve its problems with the fedayeen
through the Arab League or UN, it will continue
fighting until control of Lebanese territory is re-
stored to the Lebanese government.
The Palestine Liberation Organization appar-
ently is willing to work out a compromise on the
issue of territorial control. The PLO
will agree to withdraw from any territory that it
has occupied since the fighting began in February,
except the refugee camps themselves. In return,
the PLO wants Phalangist agreement, and a reaffirm-
ation by the Lebanese government, that the Pales-
tinian resistance movement has a right to exist in
Lebanon and be supported by the Lebanese government.
The PLO also believes that the Phalangists will have
to agree to a more equitable redistribution of wealth
in the country.
The PLO claims that at present it has effective
control of approximately two thirds of Lebanon, in-
cluding all major cities, with the exception of
about one third of Beirut. Since the latest round
of fighting began, fedayeen strength reportedly has
increased. Fatah has moved almost all of its forces
into the country and plans to keep them there. Saiqa
has reinforced its forces in both Tripoli and Beirut;
many of these men are reported to be regular Syrian
troops of Palestinian origin.
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EC-PORTUGAL
Prime Minister Azevedo's speech
to the nation on Monday emphasized the
country's enormous economic problems,
in particular the balance-of-payments
deficit. Without foreign assistance,
this year's balance-of-payments deficit
would likely reach $1.1 billion; for-
eign exchange reserves would be ex-
hausted by year-end, but Portugal still
would have gold reserves worth about
$4 billion at the current market price.
The trade deficit will total almost $2 billion
again this year, despite the import surcharge im-
posed last May. Many essentials supplied for the
Angolan refugees entering Portugal will have to be
imported, at the same time as domestic economic
difficulties are hurting exports. Earnings from
tourism are down sharply, private investment in-
flows have almost ceased, and remittances from
Portuguese working abroad are stagnating.
Lisbon's immediate aim is to try to obtain
funds from the International Monetary Fund and the
Bank for International Settlements. Only $50 mil-
lion remains to be drawn on a loan from the Bank
for International Settlements. Portugal has already
used most of its automatic credits at the Fund. It
will continue to press--with European Community sup-
port--for additional funds, including loans from the
oil facility. Such borrowing could cut this year's
payments deficit to about $950 million. Foreign
exchange reserves would then probably last until
January 1976.
Over the medium term, Lisbon will look to the
US and the EC for credits and use its large gold
reserves as collateral for loans from US and Euro-
pean private banks. A gold pledge amendment is
being negotiated for a $150-million loan from a
consortium led by a London financial institution.
For its part, the EC will provide Portugal
with about $175 million from the European Invest-
ment Bank over a period of two years for specific
projects. The Nine will guarantee the loan and
(continued)
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assume the cost of a 3-percent interest rate sub-
sidy, which adds approximately $35 million to the
cost of the program. Two million dollars in direct
food aid will also be provided as part of the Com-
munity's disaster relief effort for the Angolan
refugees.
The EC is trying to expedite the flow of aid,
but funds cannot be transferred until individual
projects are approved, and this is not expected un-
til mid-1976 at the earliest. EC Commission and
European Investment Bank teams will travel to Portu-
gal to help prepare appropriate projects.
The West Germans have already committed some
$28 million in low-interest loans to be used for
investment in small and medium-sized enterprises
and for Angolan refugee assistance. The Nether-
lands and Denmark also are expected to provide aid,
with The Hague expected to give $19 million.
These measures are seen as only a first step
in offsetting Portugal's acute balance-of-payments
problem. Lisbon looks to a more liberal EC trade
policy as a more effective long-term solution.
Negotiations should begin before the end of the
year on the "evolutionary clause" of the 1973 pref-
erential trade agreement between Portugal and the
Community. The EC Commission has suggested a var-
iety of approaches which include an across-the-
board reduction of tariffs on Portuguese goods, ex-
tending preferential treatment for agricultural
products, improving benefits under the Community's
generalized system of trade preferences, and pro-
viding about $400 million in loans under a new
financial protocol. The foreign ministers of the
Nine will meet in December to set specific guide-
lines for these negotiations.
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ISRAEL
Our embassy in Tel Aviv reports that
most Israelis now appear convinced that
the Sinai agreement with Egypt is a posi-
tive development. Politicians and public
organizations are turning their attention
to negotiations with Syria.
Prime Minister Rabin's stock received a healthy
boost as a result of what is generally regarded in
Israel as his skillful handling of the Sinai nego-
tiations. According to the embassy, most members
of the Labor Alignment have swung from lukewarm sup-
port of the Sinai pact to the conviction that Rabin's
strategy in pursuing the negotiations has been vin-
dicated. Labor Party members in the Knesset have
been surprised by the intensity of the attacks on
President Sadat by radical Arabs and the Palestine
Liberation Organization. They have also been pleas-
antly surprised by Sadat's vigorous defense of his
action, and are hopeful that this might strengthen
Cairo's commitment to a moderate policy.
The military has come out in support of the
agreement, with Israel's chief of staff and other
senior military officers speaking publicly in its
behalf. They argue that, although Israel will sur-
render some territory, the agreement may actually
put the country in a better position to defend it-
self, largely because the enlarged UN buffer zone
and the presence of US technicians reduce the
chances of a surprise attack.
Israeli hard-liners, led by the opposition
Likud and the youth faction of the Alignment's
largest coalition partner--the National Religious
Party--still oppose the agreement. They argue that
while Sadat may have changed his tactics, his anti-
Israel strategy remains the same. Many other Is-
raelis remain skeptical of Sadat's ability to carry
out the agreement over the continuing objections
of Arabs who want him to scrap the pact./
(continued)
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There is a widespread expectation in Israel
that Secretary Kissinger will undertake exploratory
talks for Syrian-Israeli negotiations in the near
future. The Israelis anticipate that Damascus will
modify its current hard-line negotiating position
and that Washington will eventually confront Tel
Aviv with some painful choices over the Golan.
Rabin probably fueled speculation along these lines
when he told a television interviewer on Tuesday
that he regarded Syrian President Asad's recent trip
to Moscow as having a political and strategic impor-
tance "of the first order." It is related, he said,
to reassessments being conducted by both Damascus
and Moscow in the wake of the Sinai accord.
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NOTES
The concessions granted by Portuguese army
chief General Fabiao to dissident troops in Porto
on Tuesday may only encourage further rebellion.
The rebels, who occupied an artillery garrison for
over a week in defiance of the regional commander;
have announced that they will meet next week to
"study ways of continuing the struggle."
Many of the soldiers involved in the mutiny
are said to be members of the "Soldiers United Will
Win," a radical organization that issued a state-
ment last weekend denouncing the "bourgeois army"
and advocating the creation of a "popular revolu-
tionary army."
The Soviet media campaign condemning the Nobel
peace award to Andrey Sakharov picked up steam yes-
terday with the first domestic press blast at the
dissident physicist.
The name-calling may be laying the groundwork
for either disallowing Sakharov's wish to go to
Oslo, or, if permission is granted, preventing his
return home. Sakharov already has said that it
would "violate the spirit of detente" if he is not
allowed to go to Oslo for his award. So far, the
orchestration of the anti-Sakharov campaign is
strikingly similar to that mounted against Aleksandr
Solzhenitsyn five years ago. The Kremlin's deci-
sion on how to handle Sakharov's case, which is
likely to be made at the Politburo level, will be
even more difficult now that the prominent, non-
dissident Leonid Kantorovich has been named co-re-
cipient of the 1975 Nobel prize for economics. The
leadership may find it perplexing to charge the
Nobel officials with playing politics in Sakharov's
case, while recognizing in Kantorovich--a Lenin
prize winner--the work of a major, establishment
scientist.
(continued)
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The celebrations commemorating the 30th anni-
versary of the Lao independence movement underscore
the fact that PTITie Minister Souvanna Phouma no
longer has a meaningful role in the government of
Laos.
The communists hustled Souvanna--a founding
member of the original Lao independence movement in
1945--out of Vientiane to Luang Prabang to prevent
him from participating in the mass celebration in
Vientiane. Independence day speeches and commen-
taries in the Lao communist media emphasized that
the community party--the Lao People's Revolutionary
Party--will now govern Laos. Although Kaysone Phom-
vihan was not explicitly identified as the top man
in the party, the fact that he delivered the keynote
address is a clear indication that he occupies the
senior position. In his speech, Kaysone said that
the communists were willing to maintain diplomatic
relations with Washington if the US: respected the
sovereignty and independence of Laos; did not inter-
fere in the internal affairs of Laos; ceased support
for the Lao rightists; kept its promise to "help
heal the wounds of war"--a catch phrase for new aid.
The inclusion of the aid provision gives the commu-
nists a pretext for breaking relations or for fur-
ther harassing our embassy in Vientiane at any time.
Iraq has received Scud surface-to-surface mis-
siles from the USSR.
The Soviets have been preparing for some time
to send Scuds to Iraq, which is expected to form
three Scud battalions--possibly with three or four
launchers for each battalion.
Scuds based in
Iraq could not reach Tehran, but several important
airfields in western Iran would be within range of
the 160-mile missile.
(continued)
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The Soviets yesterday requested the postpone-
ment until tomorrow of a second day of scheduled
talks between visiting French President Giscard
d'Estaing and General Secretary Brezhnev. Late
last night, a spokesman for Giscard in Moscow said
the final round of talks on Saturday also has been
canceled.
Brezhnev, President Podgorny, and Premier Kosy-
gin all met the French President at the airport on
his arrival, and all three participated in the first
day of talks Tuesday. With the exception of the
postponement of talks--Foreign Minister Gromyko
also canceled his session with French Foreign Mini-
ster Sauvanargues--the full protocol amenities have
been observed. One possible explanation is that
Brezhnev, who has had an unusually heavy schedule
of public duties in the past ten days, had become
over-tired. He has met with Portuguese President
Costa Gomes, participated fully in the three-day
visit to Moscow of East German party boss Honecker,
and talked with Syrian leader Asad. /
Egypt
Syria
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