451G.0031/3–2952: Telegram
The Minister at Saigon (Heath) to the Department of State
1908. Rptd info Paris 656. Re Leg desp 427, Mar 1.
Leg and STEM reps discussed with Janot, HC Econ Counselor, prospects for April 18 Fr Assoc States trade discussions. Janot just back from two-week visit Paris. We were interested in possibility that conf might afford Fr occasion to give AS some glimpse of gradually increasing freedom of trade in harmony with evolutionary concept in polit field.
Janot replied that, far from affording opportunities for any assurance [Page 92] to AS, if industrial and export interests metropolitan France were unable obtain substantial tariff preferences covering wide range Fr imports into IC, they might initiate press campaign against entire concept metropolitan France spending blood and treasure defend Assoc States from communism. In general, Janot had brought back strong impression that not only man-in-the-street but substantial portion politicans all parties were completely disillusioned and anxious to have France pull out soonest. If press campaign sparked by big interests got underway Janot convinced no Fr Govt wld be able to keep Fr troops in IC and war wld be over within two to three months with IC lost to communism.
According Janot Fr business interests never really accepted final text of bitterly contested Articles 3 and 4 of the Pau Convention on foreign commerce (Leg desp 616, April 11, page 21)1 and have maintained their support IC War only in hope that negots based Article 4 this convention wld result in giving them substantial trade preferences. Janot aware such preferences might be harmful to development Fr trade with Japan. He hopes, however, both Fr business interests and Assoc States might be willing accept compromise based on preferential margins being gradually reduced in the future. Janot fearful however, Cambodia may use occasion to reopen entire question of quadripartite control over customs and regies. Another object of Janot’s visit was to press his suggestion for transformation of Fr auth hereby substituting Embassy (or equivalent without the name) with attached mil and econ missions, for High Comm Secretariat which exists in form and numbers substantially as it did in colonial days.
Comment: We endorse Janot’s idea for Embassy: It is one of things Fr have in their power to do which wld go far to remove ingrained Viet suspicion without materially affecting Fr interest. Doubtful, however, if Fr Govt on Letourneau’s advice will do any such thing.
Important Fr industrial financial interests led by Bank of IC have undoubtedly been influential in maintaining Fr effort. If metropolitan interests are not appeased at forthcoming talks quite possible undesirable repercussions on IC effort may result.
Leg believes Janot pessimistic forecasts not attempt blackmail US into acceptance metropolitan Fr position or into urging AS to accept it, but is honest fear adverse consequences to common effort fight communism. If conf lays down a tight system of preferences constricting [Page 93] IC trading area and opportunities unduly, development of a viable middle class in these countries will be deferred, together with the rise of stable polit institutions derived from a healthy middle class. If France able prevail on Assoc States to accept any arrangement which in essence wld seek to perpetuate Fr econ hegemony over Assoc States econ, Bao Dai Govt wld be weakened in eyes both its own adherents as well as fence-sitters. Thus, same vicious cycle which underlies polit development dogs econ. Because of nature of home support for IC war, and need to develop cohesive Fr Union, Fr seem able to continue here only on terms which make it difficult for them to succeed.
Leg wld appreciate Paris assessment Janot’s somewhat alarmist statement.
We assume that when US can properly offer its views it wld probably urge both sides to compromise.
- Despatch 616 from Saigon, Apr. 11, 1951, transmitting information on arrangements regulating economic relations between France and the Associated States, is not printed. (651.51G/4–1151)↩