Conference files, lot 60 D 627, CF 361
Summary Minute of a Meeting at the Department of State, September 25, 1954, 10:30 a.m.1
Participants
- State Department
- Defense
- FOA
- Governor Stassen
- Mr. FitzGerald6
1. Political Aspects of the Talks
Secretary Dulles outlined the political aspects as follows:
- (a)
- The chief problem is to reach agreement with the French concerning Indochina. We have supported Diem who is not perfect but is at least a strong nationalist and largely due to U.S. influence, has recently broadened his Cabinet to include the sects. (b) The French have not been backing Diem and some colonial interests seem to think they could do business with Ho and that it would not be too bad if the Diem Government fell and the Communists took over. If such policy should prevail there is no reason for us to give further support to the French in Indochina.
- (c)
- The first objective then is to seek agreement with the French on a political program, failing which there is no point in our discussing further aid. If agreement on a political program is reached we should be able to reduce the magnitude of our aid but it is doubtful that we can cut it out entirely. Among the points to be considered would be military costs involved in keeping the French expeditionary forces in Viet-Nam or elsewhere.
- (d)
- There seems to be general agreement and a desire on the part of Congress that we grant support direct to the Associated States.
Secretary Dulles then used some notes he had taken of conversations with Chancellor Adenauer last week7 in which the Chancellor had suggested that we not cut off all aid to France but that we regulate the flow according to the behavior of the government. The Chancellor thought Mendes-France was not a Communist tool but could be led to play the Communist game. He thought that if aid were cut off too quickly, Mendes-France might feel forced to work with the Communists. Secretary Dulles noted that he was inclined to agree with Adenauer’s analysis.
Secretary Dulles said MDAP would come to a complete stop as far as supporting the French in Indochina but some funds might be reserved for Viet-Nam. Under Secretary Smith noted that if the French leave military equipment behind in Indochina we may be under obligation to re-equip French forces deployed in Metropolitan France.
2. Economic Aspects
Mr. Stassen then outlined some basic financial facts in the situation, citing our total aid expenditures to France for the first six months of this year as $427 million which he then broke down. He noted that this was the largest flow of dollar aid to any country in the world. Mr. Stassen asked that he be informed as to the rate of dollar flow to France desired and asked that no definitive commitments be made with France as the problem needs continuing study and consultations with Congress. He suggested that we be pleasant but leave ourselves in a position to loosen or tighten our controls at a later date.
Secretary Dulles asked how the flow could be cut if desired. Mr. Stassen replied that the flow could be immediately controlled through payment or reimbursement on our advancements in connection with equipment being manufactured in France for the Indochina theatre. To Under Secretary Smith’s question concerning French payments promised for the Indochina war, Mr. Stassen replied that the French, were up on their payments involving the expeditionary forces but way below on their expenditures in support of a Vietnamese military establishment. Mr. Stassen noted that the French have received from the U.S. about $200 million out of the $385 million this year. One portion of this is a $70 million advance payment. He also noted that the French have disbursed much of this money in French francs.
Mr. Stassen and Mr. Dulles commented on the importance of the financial picture in France and noted that the main effect of any typing [Page 2068] up of aid would be psychological, that is, it would discourage capital which might begin to pull out of France and the franc would probably begin to fall. It was noted that the Bank of France, however, is in a good position at this time.
3. Military Aspects
Admiral Carney stated that it would be difficult to consider training and support of indigenous forces in Indochina unless some political stability obtained. He also emphasized that the U.S. equipment in Indochina should be returned to U.S. control.
Secretary Dulles then inquired about the military equipment in the North, to which Admiral Carney noted that it appeared the French schedule will be met. However, he said we should seek the cooperation of the French in assisting American shipping in both Haiphong and Saigon. He said 225,000 tons were in depots and that 225,000 tons were in organic equipment. He said the Navy is keeping its shipping in excess there but that he thought it was necessary to have a reserve in the event additional space were needed quickly. Under Secretary Smith commented that the picture concerning evacuation of equipment from the North was much better than had been expected. Admiral Carney said that the United States would like to regain control of the equipment in the hands of the expeditionary force for redistribution elsewhere.
Under Secretary Smith said that he would like to see the French keep four divisions in Indochina and reassign some of the equipment there to the Cambodian and Vietnamese military establishments.
Admiral Carney said the equipment can’t be removed legally by the French and the ultimate use of this equipment will have to be determined later, depending upon the outcome of political agreement with the French. He said the situation was a touchy one and we would like to remove as much equipment as possible without precipitating the French.
4. Recapitulation Political Economic Defense Aspects
Secretary Dulles said the key to the situation is whether political agreement can be reached concerning Viet-Nam and whether agreement can be reached in London and until we know the answers to these two questions we cannot come to final decisions. He said he would not want to commit the United States until we see what kind of government we are going to have to work with.
Admiral Carney observed that there was no use of training troops in Viet-Nam until we know what we are going to get but noted that we could reach a decision to go ahead in Cambodia.
Secretary Dulles and Under Secretary Smith agreed we could go ahead with Cambodia.
[Page 2069]Mr. Stassen commented that the FOA people were in agreement that Diem was honest, courageous, but lacking administrative experience and that Michigan State was sending four people of its best to help him at his request. Mr. Stassen noted that if we channeled aid directly through Diem it will give him prestige not only with the Vietnamese but also assist him in his dealings with the French.
Secretary Dulles asked if the Vietnamese wanted dollars, to which Mr. Stassen replied in the affirmative saying they need dollars for imports and general budget support. He also commented that dollar aid through Paris would be disadvantageous.
Under Secretary Smith observed that one of the problems would be that the French would try to control dollar aid to the Associated States.
Mr. Stassen then noted that the Communists often play along with commercial interests until they gain complete control and that this is exactly what is happening now in North Viet-Nam.
Secretary Dulles cited Senator Mansfield’s appraisal of the situation in Indochina which is in support of our analysis and noted that the Senator’s views would carry a lot of weight in the Foreign Relations Committee, especially with the Democrats.
Mr. Stassen again asked for an estimate of how much cut-off aid was desired and when.
Mr. Hoover asked about the rate of build-up of French balances.
Mr. Stassen and Mr. FitzGerald stated that there had been a steady build-up in the French balances for the past six months. Under Secretary Smith said the flow of aid to France should be diminished. Secretary Dulles said we would like to see the reserves of the Bank of France come down. In this connection he said he did not know how much of a cut in aid would be required to achieve this result.
Mr. Hoover noted that this course of action would really hurt the French. Secretary Dulles stated that the dollars and gold reserves should go down and he would like to see capital start moving out of France. Mr. Hoover asked if this could be done by taking stock here rather than by abrupt cut-offs. Mr. Stassen said it could.
Mr. Robertson asked about the aid to France committed prior to July 21.
Mr. Stassen replied that much of this was in advance payments to which we have offsets coming back. Mr. Stassen then outlined the magnitude of the aid to France, noting that there was a total of $21/2 billion total assistance, the largest single part being military end items. Mr. Stassen also urged that we withhold payments on the basis of the need to study the problem in consultation with Congress.
Admiral Carney said that there was no point in going into detail concerning Defense training until some agreement had been reached at a political level with France.
[Page 2070]Under Secretary Smith said that in our dealing with the French in these talks we should not be unfriendly but that we should make no commitments; that we should be a little cool but not too cool and indicate to the French that we would talk with them again in the near future on concrete details.
- Drafted by Lewis M. Purnell of PSA. Circulated as document ELaC Memo 15, Oct. 4.↩
- Consultant to the Secretary of State; Under Secretary of State from Oct. 4, 1954.↩
- Walworth Barbour, Deputy Assistant Secretary of State for European Affairs.↩
- Rear Adm. William R. Smedberg, Director, Politico-Military Policy Division in the Office of the Deputy Chief of Naval Operations (Plans and Policy).↩
- Charles A. Sullivan, Director, Policy Division, Office of Foreign Military Affairs, Department of Defense.↩
- Dennis A. FitzGerald, Deputy Director for Operations, Foreign Operations Administration.↩
- For documentation on Secretary Dulles’ trip to Bonn and London, Sept. 16–17, see volume V.↩