Foreign Relations of the United States, 1950, East Asia and the Pacific, Volume VI

ECA Files

The Acting Administrator of the Economic Cooperation Administration (Bissell) to the ECA Mission in France

secret   priority
niact

Washington, May 6, 1950—8 p. m.

Ecato 495. For Blum. Pass to Secretary, Merchant and Wallner. This is joint State–ECA cable. Reference Paris Toeca 528, 537, 538, 542,543,544.¹

1. Reftels indicate that preliminary negotiations with French contemplate channelling of economic and technical assistance to Cambodia Laos and Vietnam only through arrangements which give French veto on policy and operations, with USGovt exchanging notes with French to give formal recognition this arrangement.

2. We consider such arrangement unacceptable in view decision taken by USGovt to deal with and furnish aid directly to each of the three Indochinese Govts, in order that the anti-Communist Nationalist movements in Indochina be accorded, in their own eyes and in the eyes of the world, their true character as genuine NAT movements and not, as world communism alleges, the creatures of “Western imperialism.” Draft aide-mémoire set forth Toeca 542 inconsistent this decision, which has been outlined at length in Deptel 1363 to Paris, repeated Saigon 175, Djakarta 298, Bangkok 246;² Ecato 302 to Paris;³ and considerations set forth Griffin report in Saigon’s 189, repeated Paris 92.⁴ Draft text seems hark back to type arrangement contemplated at time we were considering proposal to sub-allot part of French program aid to Indochina. Our decision not to adopt that proposal was based on adverse political repercussions in Far East which we believed would result from directing US economic assistance to Indochina through French. Now that decision has been made to utilize Far Eastern assistance funds rather than sub-allot French ERP program funds to aid Indochina, it would be most anomalous to follow a course, which at the time we thought would have been politically unwise but legally necessary, now that the legal necessity has been removed.

3. Our recognition of interdependence France and Indochina need not, and should not, be embodied in formal agreement or exchange of notes entered into by US nor should USGovt insist upon such recognition by Indochinese as formal pre-requisite to furnishing assistance to Indochinese Govts. Relationship between French and Indochinese Govts should continue be articulated in agreements between French and Indochinese Govts directly, without US intercession and not in US Aid Agreements. We have faced similar problem in other areas, and have resolved it successfully by formal treatment of aid recipients as independent entities. For example (though analogies are not exact) in case of Belgium and Luxembourg, we have entered into separate bilateral agreement with each those PC’s, notwithstanding Economic Union existing between them. In case of Fed Republic of Germany, bilateral agreement was entered into directly with that Govt notwithstanding reserved powers of Allied High Commission, of which France is a member. Accordingly, see no reason why we cannot follow similar formal procedure in case of economic aid to three Indochina Govts. (Please refer detailed arrangements set forth in HICOM agreement of Nov 10, 1949 set forth Bonn 35 to Dept repeated Paris 45, as illustrative of types of arrangements that might be worked out.)⁵ We have accordingly provided in draft text of bilateral agreement for Indochinese Govts (being sent in separate cable) that each agreement will take effect upon notification to US by recipient Govt, that all necessary legal requirements in connection with conclusion of that agreement have been fulfilled by that Govt.

4. Our aid premised on understanding that political relations between Indochinese Govts and France will rest firmly upon mutual consent. US position based upon belief that only if this decisive factor of consent is present can we assure that Indochinese people will have the will to resist external pressure, and make aid a worthwhile gamble. We do not wish to risk possibility that US signature could be interpreted by the Indochinese and the world as US acquiescence in or insistence upon a permanent subservient status. If this were to be the case, US aid would achieve no useful purpose.

5. We are concerned also about para 3 of proposed aide-mémoire, which as we read it would rule out possibility of setting up, if deemed desirable, a joint commission between Govts of Vietnam and US (with which French experts would be associated) to undertake certain aid operations on joint basis.

6. Re paras 3 and 5 aide-mémoire and para 3C of Toeca 544, we cannot accept French position, for we consider continued insistency by French on narrow interpretation Sec 4 Mar 8 agreements very damaging efficiency and sought-for political effectiveness aid program and inconsistent whole conception progressive development self-government based on mutual consent. No replacement of French by Americans is here involved, for proposal is to supply without cost limited number of technicians additional to, not substitutes for, any technical corps local govts can afford or French likely provide free. Our technicians believed likely assist in building constructive relationship between Indochinese services and French technicians during operations and thus result in a desire for continued French technical advice.

7. French suggestion that counterpart funds accruing in Indochinese program be utilized to defray military expenses, is completely unrealistic and inconsistent with economic rehabilitation aims of US program. On basis present estimates, we have grave doubts that sufficient counterpart will accrue in the Indochinese programs to allow adequate implementation of economic assistance, let alone provide any possible surplus that could be diverted to military expenditures. Also, FYI, Hoffman, in response to Congressional inquiries, has stated emphatically general principle that ECA counterpart funds should continue be held or used for economic aid purposes rather than military expenditures.

8. Believe you should make clear to French that USGovt would be concerned if discussions and negotiations on these matters were to be so protracted as to make impossible the rapid furnishing of tangible aid along lines of Griffin Mission recommendations. We see no reason why initial shipments of aid supplies (especially pub health program) should not go forward before aid agreements concluded.

9. For all of foregoing reasons we strongly believe that discussions looking toward an aide-mémoire should be discontinued, and that every effort be made to persuade the French that an aide-mémoire is not necessary and would in fact be a confusing factor at this time. Questions of substance in which US should be involved can be sorted out with French and Indochinese states in course of negotiation of bilateral agreements.

10. To cover establishment of Economic Mission and departure of Blum for Saigon soonest (via Wash as agreed Blum–Cleveland telecon 6 May),⁶ we approve identical letters to be presented simultaneously by Gullion to Cambodia, Laos and Vietnam Govts and by Bruce to French Govt, within next few days, date to be notified to you. We have made some changes in draft letter included Paris Toeca 543, repeated London and Saigon, which should now read as fols: “I have the honor to inform you that the Govt of US had decided to initiate a program of certain economic aid to the states of Cambodia, Laos and Vietnam. With this purpose in mind, the USGovt is establishing, with headquarters in Saigon and associated with the USLegation, a special economic mission to Cambodia, Laos and Vietnam. This mission will have the responsibility of working with the govts of Cambodia, Laos and Vietnam, and with the French High Commissioner in developing and carrying out a coordinated program of economic aid designed to assist the three countries in restoring their normal economic life.

“It is understood that the activities and competence of the US special mission to Cambodia, Laos and Vietnam will be subject to such agreements as may be subsequently concluded.”

11. Griffin concurs.

Repeated London as Ecato 628 for Jessup; Saigon as Ecato 19 for Gullion.

Bissell

1. None printed.
2. March 29, p. 768.
3. Not printed.
4. March 18, p. 762.
5. Not printed.
6. Record not found in Department of State files.