325. Situation Report Prepared in the Department of State for President Johnson ¹1. Source: Johnson Library, National Security Files, Vietnam Country File, Memos and Misc. Confidential. Transmitted to the President under cover of an undated memorandum from Rusk.

Washington, November 23, 1963.

SITUATION IN VIET-NAM

As background for your talk with Ambassador Lodge the current situation in Viet-Nam is as follows:

Summary Assessment. The outlook is hopeful. There is better assurance than under Diem that the war can be won. We are pulling out 1,000 American troops by the end of 1963. The main concern is whether the generals can hold together until victory has been achieved. An immediate problem is an estimated budgetary deficit of roughly $100 million after aid for 1964.

Political. The new “provisional” government consists of a Military Revolutionary Council, with an Executive Committee of 12 generals headed by General “Big” Minh as President; a Cabinet headed by former Vice President Tho as Premier; and a political advisory body called the “Council of Sages”.

Minh and Tho, who are old friends, are working well together. Thus far no important signs of friction have developed among the generals. The uncertain element is the ambitious, emotional General Dinh, who is Minister of Public Security and retains command of the III Corps around Saigon.

The new government has the enthusiastic support of the urban population. The peasants remain apathetic as under the Diem regime, but the government recognizes the importance of moving to win their support.

Military. The Viet Cong incident rate shot up to a new high of about 1,000 per week immediately after the coup, but subsequently resumed to its “normal” level (300-500 per week). The most critical area is the Mekong Delta south and west of Saigon, and it is there that the new government is expected to concentrate its efforts.

The previously low troop ratio in the Delta is being improved. Officers and NCO's are being chosen on merit rather than political loyalty. The dual chain of command which plagued efficiency under Diem has given way to a single chain which will improve coordination of civil and military operations.

The government is expected to correct defects in the implementation of the strategic hamlet program, first by establishing a proper system of priorities for hamlet development from more secure toward less secure areas. Some delay is expected because the government is just establishing a new central organization for the strategic hamlet program, and the new administration will have to shake down at the local level because of changes in province and district chiefs.

Early action is needed to push forward with a fresh, realistic amnesty program to attract Viet Cong to surrender. The new government has not yet had a chance to focus on this problem.

We are pulling out by the end of 1963 about 1,000 of the 16,500 American military forces in Viet-Nam. This was announced on the conclusion of the McNamara-Taylor visit in October.

Economic. The major operational problem we face immediately is how to deal with an estimated 7 billion plaster (roughly $100 million) deficit in the GVN 1964 budget after a United States aid contribution at the 1963 level ($95 million in CIP and $30 million in PL 480). Unless handled properly, this could prevent the generals from consolidating the new government politically.

Secretary McNamara was so concerned at Honolulu that he offered, if necessary, to switch some MAP funds to AID despite a shortage of $12 million in MAP availabilities to meet field requirements. It still remains necessary to conduct a difficult negotiation with the Vietnamese Government to get it to do all it can to meet this budgetary deficit problem.

Relations with Foreign Countries. Our own relations with the new government are excellent at all levels. Ambassador Lodge would like to avoid putting heavy pressure on the new government over the next few months.

Cambodian-Vietnamese relations remain poor. Sihanouk of Cambodia is upset about the activities of Cambodian dissidents in Viet-Nam and Thailand. Viet-Nam is concerned about Viet Cong use of Cambodian territory.

The new Vietnamese Government will work well with Phoumi in Laos. We are pressing it to work with Souvanna, too.

De Gaulle's relations with the new government are strained because he considers the coup a set-back to his hopes for neutralizing Viet-Nam.