Foreign Relations of the United States, 1952–1954, Indochina, Volume XIII, Part 2

751G.5/7–2754: Telegram

The Ambassador at Saigon (Heath) to the Department of State

secret

Saigon, July 27, 1954—7 p.m.

345. Repeated information Paris 130.

1. At this early date after the Geneva agreements, we are unable to see the exact dimensions of the necessary aid program from FY 1954 and FY 1955 funds. However, we envisage that as in the past this aid will need to continue in the three forms of military end items, Associated States military budget support, and economic aid. Probably first will decline, and latter two need increase (See Tousfo 106 sent Paris USOM 25).¹

2. As we at present see it, economic aid will be urgently needed for refugee work, rehabilitation, and reconstruction. We are unable as yet to place a figure on the amount needed, but believe that refugee work alone will absorb more than the 25 million at present assigned to USOM. Balance of funds needed will depend upon amount of economic aid that French will make available, and capacity countries to absorb aid and what US is trying to achieve in area. We doubt that even relatively firm information these points will be available for congressional action on Foreign Aid bill.

3. Budget support for Vietnamese Forces will need to be continued, and there is nothing in the Geneva agreements that would prevent our giving such aid. Previous government was planning military budget of 25 billion piasters (720 million dollars) for 1955 (see Embdesp 23, July 19, 1954),² but we doubt that program for effective use such large sum could have been worked out. Cambodia and Laos will probably need increased budgetary support for armed forces. In summary, needed budget support from US for 1955 will probably equal or exceed 385 million dollars for 1954, since French aid to Associated States for this purpose will probably be very small at best.

4. We are unable comment on need for budget support French Expeditionary Force (FTEO). However, would point out that in past such support was based on need keep FTEO as fighting force in Indochina. At present, must balance need to keep FTEO in Indochina to maintain order, and the certain adverse political repercussions of the FTEO remaining. As we understand the French position, the FTEO will remain. However, we might let FTEO remain at French expense rather than ours, and let it become discreetly known that we are no longer giving budget support to French forces in Indochina.

5. As we read the agreement,³ military end items can continue to be supplied, e.g., for Vietnam, such matériel as is worn out or used up may be replaced (Article 17 b). This would permit a very intensive training program, for example for there will certainly be enough equipment and matériel in South Vietnam, after evacuation of the north, for training all of the troops that can be made available. For Laos and Cambodia, additional equipment to meet legitimate defense needs can be brought in.

6. Article 17 prohibits introduction of reinforcements of arms and ammunition, except for replacement. This applies only to Vietnam, however, and not to Cambodia and Laos. We presume this means that imports are prohibited, and that there is no ban on introduction of additional arms and ammunition manufactured within the country. Only present facilities for such manufacture are within Viet Minh Zone. There is no ban on establishing such facilities in Vietnam area.

7. We are more and more convinced that to be really effective our aid must be channeled directly to Associated States and not through France.

We would have to have more control in order to make this aid effective, including auditing, a direct voice in allocation of foreign exchange (which we would be largely providing) and import licenses, etc. We should have direct part in planning military and economic programs. We should train national armies to extent allowed by terms of truce.

8. Above preliminary thoughts forwarded in view fact aid appropriations not yet voted for FY 1955. We see need for aid to Associated States excluding FTEO at approximately same level as that in FY 1954 and envisaged for FY 1955, although not in same form as envisaged. If elections in 1956 are to have favorable outcome, and we believe there is chance for such favorable outcome, but only with strong direct US assistance, total aid must be at about same level as envisaged and administration such aid must be more flexible.

9. This is joint Embassy-USOM–MAAG telegram.

Heath

1. Not printed.
2. Not printed.
3. The agreement on cessation of hostilities in Vietnam; for text, see vol. xvi, p. 1505.