Foreign Relations of the United States, 1952–1954, Indochina, Volume XIII, Part 1

Conference files, lot 60 D 627, CF 165

Texts of Letters Exchanged by the Ambassador in France (Dillon) and the French Foreign Minister (Bidault) at Paris, September 29, 1953

secret

[Washington, undated.]

US–French Supplementary Aid Agreement On Indochina¹

The agreement consists of six letters exchanged between Bidault and Ambassador Dillon on September 29, 1953. The three letters attached cover the full text of the agreement:

1. French letter setting forth the political and military undertakings of the French Government in Indochina (“Step 1”)

2. US letter setting forth the amount, terms and conditions of supplementary aid (“Step 3”)

3. US letter acknowledging a French letter which sets forth procedures to verify expenditures on the war in Indochina (“Step 6”)

[Attachment 1]

English Translation French Letter “Step 1”

Paris, 29 September 1953.

My Dear Mr. Ambassador: With reference to the exchange of views which has taken place during recent weeks between the Government of the United States and the Government of the French Republic concerning the additional aid necessary for the financing of the military operations in Indochina, I have the honor to confirm to your Excellency the information contained in the memorandum of September 3, 1953 of the French Government which indicated the plans, programs and policies of the French Government for the intensified prosecution of the war against the Vietminh by the forces of France, Cambodia, Laos and Vietnam.

At the moment when the Government of the United States is considering the possibility of such additional aid, I consider it equally useful to state briefly the intentions of the French Government as follows:

1. France is firmly resolved to apply fully its declaration of July 3, 1953,² by which it announced its intention of perfecting the independence of the three Associated States of Indo-China.

2. In the view of the French Government, the purpose of the additional aid in question is to enable it to put into effect the strategic and tactical principles of a military action program in Indo-China, the terms and timing of which are set forth in Annex No. 4 of the memorandum of September 3. As outlined in the aforementioned document, the strategic plan of the French Command consists essentially of retaking the offensive with a view to breaking up and destroying the regular enemy forces. Convinced that the military problem in Indo-China can be settled only in conformity with such a plan, the French Government confirms that it intends to carry forward vigorously and promptly the execution thereof. In accordance with the basic strategic concepts of the Navarre Plan, the French Government has already commenced to build up the Associated States forces and is proceeding to despatch French reinforcements to General Navarre.

3. The French Government will continue to facilitate exchanges of information and views on a continuing basis between French and United States military authorities and will take into consideration the views expressed by the latter with respect to the development and carrying out of the French strategic plans without in any way, of course, detracting from exclusive French responsibility for adoption and execution thereof.

4. The French Government is prepared to provide to the United States Government all appropriate information regarding the type and amount of expenditures necessitated by the military program.

5. The French Government considers that the increased effort which it intends to make in Indo-China under the conditions set forth in the memorandum of September 3 will not entail any basic or permanent alteration of its plans and programs concerning those of its forces which are placed under the command of the North Atlantic Treaty Organization.

I avail myself [etc.]³

Bidault

[Attachment 2]

Step 3

Paris, September 29, 1953.

Excellency: I have the honor to refer to Your Excellency’s letter of September 29, 1953,⁴ to my reply thereto of the same date,⁵ and to the memorandum of the French Government of September 3, 1953. This memorandum, together with its annexes, outlines the plans, programs and policies of the French Government for the intensified prosecution of the war against the Viet Minh by the forces of France, Cambodia, Laos, and Vietnam.

I. In accordance with the request of the French Government, the United States Government has carefully considered these documents with a view to determining the contribution which it could make in support of the additional military effort, with a view to helping to bring the hostilities in Indo-China to a satisfactory conclusion within the foreseeable future. In consequence of this consideration and in light of the request of the French Government and of the understandings set forth in our exchange of letters under reference, as well as in the following paragraphs of this letter, the United States Government will make available, prior to December 31, 1954, additional financial resources not to exceed $385 million, or its equivalent in French francs, in support of the additional military effort of the French Union in Indo-China. This amount is additional to: (1) the $460 million in aid described in the memorandum handed to the French Government by representatives of the United States Government in Paris on April 26, 1953;⁶ (2) the economic aid program to the Associated States; (3) the item of $85 million appropriated by Congress for the United States fiscal year 1953/54 for artillery, ammunition and semi-automatic weapons for the French forces under the command of the North Atlantic Treaty Organization; (4) any dollar funds that may be made available to France from United States fiscal year 1953/54 appropriations for basic materials development, overseas territories development, and technical assistance; and (5) it is likewise additional to the end-item assistance to the French Government and the Associated States out of past or currently available United States appropriations, after the adjustments required by Congressional action and by the present augmentation of financial aid to France have been made. The end-item assistance to be made available for Indo-China operations and referred to above has been discussed and will be determined by the United States Government in the near future.

II. This commitment of the United States Government is made upon the understandings derived from the above-mentioned exchange of letters, dated September 29, 1953, and from the memorandum of September 3, 1953.

III. It is understood that the total amount of United States assistance described in paragraph I of this letter is the full extent of assistance which the United States Government will be able to make available to the French Government and to the Associated States for the calendar year 1954 from the United States fiscal year 1953/54 appropriations. It is further understood that there will be counted as a part of the additional United States assistance described in this letter ($385 million or its equivalent in French francs) releases of counterpart (except for the counterpart of any of the types of special assistance described in paragraph I (4) above) accruing during the calendar year 1954 in the Special Account of the Credit National from dollar aid allotments to France from United States fiscal year 1952/53 and prior appropriations, to the extent that such releases increase the total of countervalue receipts in support of the French military budgets for the calendar years 1953 and 1954 above a franc amount equivalent, at the rate of exchange current at the time when the franc resources are actually realized, to the aid described below in this paragraph which has been or is to be made available in support of the French military budgets for the calendar years 1953 and 1954 from United States fiscal year 1952/53 and 1953/54 appropriations. The amount of this aid is $1,070 million, made up as follows:

(a) $485 million of assistance from United States fiscal year 1953/54 appropriations, composed of $400 million for Indo-China and $85 million for French forces under the command of the North Atlantic Treaty Organization;

(b) $217.5 million of budget-supporting offshore procurement already effected from United States fiscal year 1952/53 appropriations;

(c) $367.5 million of defense support aid from United States fiscal year 1952/53 appropriations. The franc resources to be realized from this latter amount of aid will, of course, be net of the 10 percent counterpart set aside for the use of the United States Government. This net amount is calculated at $330.75 million. Thus when counterpart withdrawals for military purposes from the Special Account of the Credit National in the two calendar years 1953 and 1954 taken together exceed the franc equivalent of $330.75 million computed at the rate of exchange at which the counterpart is deposited, additional accruals during the calendar year 1954 will be counted as a part of the amount of 135 billion francs of additional assistance described in this letter.

IV. In its memorandum of September 3, the French Government has estimated that during the calendar year 1954 the plans outlined in the aforementioned memorandum for increasing the forces of the Associated States will cost a total of 195 billion francs, of which it is planned that the Governments of the Associated States will finance 60 billion francs (the equivalent of 6 billion piasters at the present rate of exchange). On these assumptions the sum of $385 million referred to above, or its equivalent in French francs, is considered by the United States Government to represent the full amount of 135 billion francs requested in the memorandum of September 3, which stated that the complete execution of the recommendations of General Navarre was subject to the grant of this additional aid. It is of course understood that in the review in detail of the cost of financing the various components of these plans, savings might be developed which would reduce the amount of additional aid required. Any savings developed would be applied first to reimburse the French Government for any expenditures it may have to make in order to meet any shortfall in the proposed contribution by the Associated States of the equivalent of 60 billion francs, and thereafter to reduce the ceiling figure of $385 million in additional aid described in this letter.

V. The United States Government concurs in the proposal made by the French representatives that the process of refining the estimate of costs, together with the development of procedures for determining the requirements for funds and for making the additional aid available, should be worked out in detail between representatives of the Governments concerned, and should be carried on continuously throughout the calendar year 1954. It is understood that the procedures to be worked out will be based upon the principle that the United States Government will provide the financing for agreed franc and/or piaster expenditures (outside the 60 billion francs referred to in paragraph IV above) relating to the National Armies of the Associated States, as such expenditures actually arise, up to the aforementioned maximum of $385 million computed at the rate or rates of exchange current at the time when the expenditures are made. Any changes in costs which may result from any adjustments in the rates of exchange will of course be taken into account in determining the amount of United States financing to be made available, provided, however, that the total amount of the additional United States assistance described in this letter will in no case exceed $385 million.

VI. Should, for any reason, the French Government’s plan, as outlined in the memorandum of September 3 and Your Excellency’s letter of September 29 referred to above, prove incapable of execution or should other unforeseen circumstances arise which negate the above assumptions or understandings, the United States Government would not consider itself, insofar as the additional aid referred to above is concerned, committed beyond the amounts it had theretofore made available to the French Government, and it would desire to consult urgently with the French Government as to the future course of action.

VII. The United States Government has reached its decision to increase its assistance for Indo-China in the conviction that the heroic efforts and sacrifices of France and the Associated States to prevent the engulfment of Southeast Asia by the forces of international Communism, and to permit thereby the emergence of the free and independent states of Cambodia, Laos and Vietnam, are in the interest of the entire free world. It is also confident of the ability of France, with the ever-increasing assistance of the Associated States, to bring this long struggle to an early and victorious conclusion.

I avail myself [etc.]⁷

Douglas Dillon

[Attachment 3]

Step 6

Paris, September 29, 1953.

My Dear Mr. Ambassador:⁸ I have the honor to refer to your letter of September 29, 1953, which reads as follows:⁹

“I have the honor to refer to the letters which are being exchanged under today’s date between the Minister for Foreign Affairs and yourself concerning the plans of the French Government with respect to its military effort in Indo-China and the contribution to be made by the United States Government in support thereof.

“During the conversations leading up to the afore-mentioned exchanges of letters, representatives of our two Governments undertook an exchange of views regarding the procedures for making the assistance available and for accounting for the utilization thereof, with particular reference to the requirement which must be met by the United States Government under its foreign aid legislation of establishing a clear and precise record concerning the uses to which the assistance has been put.

“In this respect, the French Government, after having examined carefully the problem raised by the United States Government during those conversations, is prepared:

• “1. To provide to the United States Government all appropriate information regarding the type and amount of expenditures financed by the assistance for Indo-China. It is understood that this information will relate not only to the costing of the program but also to the expenditures actually effected. Representatives of the two Governments will consult with respect to the degree of detail necessary to enable the United States Government to meet the requirements of its foreign aid legislation and agree upon the details to be furnished.
• “2. To designate qualified representatives, who would work together with the designated representatives of the United States Government in examining from time to time all relevant French documents for the purpose of confirming the reports rendered with respect to the utilization of the assistance made available by the United States Government.
• “3. To receive in Indo-China the designated representatives of the United States Government for the purpose of observing and reviewing from time to time the utilization of United States assistance. The French Government is also prepared to provide other information and facilities as heretofore provided under Article IX (3) of the Economic Cooperation Agreement between the United States and France, dated June 28, 1948, as amended.

“It is understood that the procedures to be worked out in accordance with the principles set forth in this letter will be applicable to the total amount of assistance to be made available by the United States Government for Indo-China during the calendar year 1954.”

The United States Government has taken note of the position of the French Government as set forth in your letter quoted above. With particular regard to paragraph 2, thereof, the United States Government wishes to confirm to the French Government that any examination of French documents made pursuant to the terms thereof will be for the purpose of enabling the United States Government to satisfy the requirements of its foreign aid legislation. It goes without saying that there is no intention on the part of the United States Government to question the effectiveness of the French Government’s procedures for the payment and auditing of public expenditures.

I avail myself [etc.]

Douglas Dillon

1. This agreement was negotiated at Paris during the period Sept. 10–28 by personnel of the U.S. Embassy and MSA Mission (with detailed guidance from Washington), and officials of the French Government. Documentation on the negotiations is in file 751G.5 MSP. The official texts of the letters exchanged and translations of the French components of the exchange were transmitted to Washington with despatch 938 from Paris, Oct. 2, 1953. (751G.5 MSP/10–253) Despatch 938 also transmitted as an enclosure the official French text signed by Premier Laniel of the French memorandum on additional assistance for Indochina dated Sept. 1 and delivered in final form to Ambassador Dillon on Sept. 3; for an unofficial translation of that memorandum, see p. 70.

   The document printed here comprises the English language texts of the exchange of letters as transmitted with despatch 938 from Paris, Oct. 2. The source text is filed with reference material prepared for U.S. participants in the tripartite Foreign Ministers Meeting at London, Oct. 16–18, 1953.

2. For translation, see telegram 52 from Paris, July 3, p. 634.
3. Ambassador Dillon acknowledged receipt of this letter in a letter to Bidault which constituted “step 2.” Dillon’s letter noted the intentions of the French Government as expressed in “step 1” and repeated the operative portion of its text. (Despatch 938 from Paris, Oct. 2, 1953; 751G.5 MSP/10–253)
4. Reference is to “step 1.”
5. Reference is to “step 2.”
6. See footnote 2, p. 507.
7. Foreign Minister Bidault acknowledged receipt of this letter in a letter to Dillon which constituted “step 4.” Bidault’s letter noted the commitments undertaken by the Government of the United States, expressed agreement with the arrangements set forth, and repeated the operative portion of the text of “step 3.” (Despatch 938 from Paris, Oct. 2, 1953; 751G.5 MSP/10–253)
8. This letter was addressed to Ambassador Alexandre Parodi, Secretary General of the French Ministry for Foreign Affairs.
9. The letter from Parodi to Dillon, quoted here, constituted “step 5.” (Despatch 938 from Paris, Oct. 2, 1953; 751G.5 MSP/10–253)