1. ENERGY SHORTAGE: ECONOMIC IMPACT ON EC
PRELIMINARY FIGURES IN A REPORT ON THE ECONOMIC IMPACT
OF THE ENERGY SHORTAGE BEING PREPARED BY THE EC COMMIS-
SION ARE DISQUIETING. AMONG OTHER THINGS THE FIGURES
INDICATE: A 1974 EC CURRENT ACCOUNT DEFICIT OF 19
BILLION DOLLARS; INFLATION RATES OF 10-15 PERCENT IN
MEMBER STATES; A 1.5 PERCENT DECLINE IN REAL GNP AND
ADDITIONAL UNEMPLOYMENT. EC COMMISSION SOURCES FEAR
THAT WHEN THE REPORT IS SUBMITTED TO THE EC COUNCIL IN
LATE JANUARY EC MEMBER STATES WILL RESPOND WITH THEIR
OWN NATIONAL POLICIES AND COMMUNITY SOLIDARITY WILL BE
FURTHER JEOPARDIZED. (CONFIDENTIAL) USEC BRUSSELS 201,
1/11.
2. SHULTZ TO SETTLE OFFSET QUESTION?
AN OFFICIAL OF THE GERMAN FINANCE MINISTRY HAS TOLD
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EMBASSY BONN THAT FINANCE MINISTER SCHMIDT HAS SUSPENDED
STAFF WORK ON OFFSET MATTERS. ACCORDING TO THE OFFICIAL,
SCHMIDT INTENDS TO SETTLE THE OFFSET QUESTION PERSONALLY
WITH TREASURY SECRETARY SHULTZ IN ROME ON JANUARY 17.
(CONFIDENTIAL) BONN 543, 1/11.
3. ISRAELIS SURPRISED THAT SYRIA HAS SCUDS
THE JANUARY 11 EDITION OF THE JERUSALEM POST STATES THAT
ADMIRAL MOORER CONFIRMED ON TELEVISION THAT SYRIA HAS
SCUD MISSILES. AMBASSADOR KEATING COMMENTS THAT THIS
NEWS CAME AS A SURPRISE TO THE ISRAELIS AND WILL ADD
TO THE GENERAL DISTRUST OF ARAB INTENTIONS. SINCE THIS
TOPIC WILL PROBABLY BE RAISED DURING THE SECRETARY'S
VISIT, THE AMBASSADOR REQUESTS ADDITIONAL INFORMATION.
(CONFIDENTIAL) TEL AVIV 228, 1/11.
4. ASAD PLANNING KEY CABINET CHANGES
A WELL-INFORMED SOURCE HAS TOLD USINT DAMASCUS THAT
PRESIDENT ASAD WILL RESHUFFLE HIS CABINET SOON TO
ELIMINATE RESISTANCE TO HIS POLICY OF SENDING A SYRIAN
MISSION TO GENEVA AS SOON AS EGYPT ACHIEVES SOME PROGRESS
THERE. ABD AL-RAHMAN KHLAYFAWI AND ABDULLAH AL-KHANI
WILL BE NAMED PRIME MINISTER AND FOREIGN MINISTER,
RESPECTIVELY. USINT DAMASCUS BELIEVES THIS INFORMATION,
AS WELL AS REPORTS THAT THERE IS STRONG SYRIAN SUPPORT
FOR ASAD'S PEACE POLICY, IS ACCURATE. (CONFIDENTIAL)
DAMASCUS 2, 1/10.
5. CURRENT SOVIET MIDDLE EAST POSTURE
EMBASSY MOSCOW REPORTS THAT THE USSR HAS MOVED AWAY
FROM THE POSITION THAT AN UNSTABLE MIDDLE EAST SITUATION
GIVES THEM THE BEST MEANS OF EXERTING INFLUENCE IN THE
AREA TOWARD A MUCH MORE FLEXIBLE ATTITUDE. AN AGREE-
MENT ON DISENGAGEMENT UNDER THE AUSPICES OF THE SOVIET-
US SPONSORED MIDDLE EAST PEACE CONFERENCE WILL BE IN
THE SOVIET INTEREST, BUT EMBASSY MOSCOW COMMENTS THAT
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THE THORNIER ISSUES THAT WILL ARISE AFTER THE DIS-
ENGAGEMENT PROBLEM IS RESOLVED WILL PRESENT MOSCOW WITH
TRICKIER QUESTIONS REGARDING THEIR INTERESTS. (SECRET)
MOSCOW 440, 1/11 (EXDIS).
6. CANAL TREATY NEGOTIATIONS
PANAMANIAN OFFICIALS, ALTHOUGH NOT COMMENTING PUBLICLY
ON OPTIMISTIC WIRE SERVICE REPORTS REGARDING AGREEMENT
ON BASIC PRINCIPLES FOR A NEW CANAL TREATY, PRIVATELY
HAVE TOLD EMBASSY OFFICIALS THEY ARE PLEASED WITH THE
PROGRESS MADE DURING AMBASSADOR BUNKER'S RECENT VISIT.
EMBASSY PANAMA, HOWEVER, BELIEVES A BASIC SKEPTICISM
CONCERNING US INTENTIONS STILL REMAINS IN SOME QUARTERS
AND POINTS OUT THAT TORRIJOS' OPPOSITION IS SPREADING
STORIES THAT HE HAS "SOLD OWT" TO THE US. (CONFIDENTIAL)
PANAMA 220, 1/11.
7. MOYNIHAN ON US ARMS POLICY IN THE SUBCONTINENT
AMBASSADOR MOYNIHAN POINTS OUT THAT WE ARE NOW ABLE TO
CONTAIN INDIAN CRITICISM OF THE US NAVAL PRESENCE IN
THE INDIAN OCEAN ONLY BECAUSE INDIA WISHES TO PRESERVE
DEVELOPING RELATIONS WITH THE US. REVIVAL OF A
SIGNIFICANT MILITARY RELATIONSHIP WITH PAKISTAN WILL
LEAD TO VOCIFEROUS INDIAN OBJECTIONS TO OUR INDIAN OCEAN
TASK FORCE. ON THE OTHER HAND, US INTERESTS IN THE SUB-
CONTINENT ARE REALISTICALLY LIMITED TO INSURING THE
STABILITY OF THE REGION, WHICH IN MOYNIHAN'S OPINION CAN
BEST BE ACHIEVED BY INDIA'S CONTINUED PREDOMINANCE.
MOYNIHAN ASKS FOR MORE DISCUSSION OF WHAT HE CALLS "THE
MOST COMPLICATED AND LEAST SIGNIFICANT POLITICO-
MILITARY SITUATION ON THE PLANET." (CONFIDENTIAL)
NEW DELHI 506, 1/10 (EXDIS).
8. DOD REDIRECTS ITS MISSILES
USNATO AND EMBASSY PARIS HAVE REQUESTED THE DEPARTMENT'S
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GUIDANCE IN RESPONDING TO QUERIES ABOUT DEFENSE
SECRETARY SCHLESINGER'S JANUARY 10 COMMENTS ON A CHANGE
IN US NUCLEAR TARGETING STRATEGY. (CONFIDENTIAL) PARIS
1001, 1/11 (EXDIS); (CONFIDENTIAL) USNATO 145, 1/11. RUSH
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