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

OCB files, lot 62 D 430, “SEA No. 3”

Memorandum by the Chairman of the Special OCB Working Group on Indochina (Young) to the Chairman of the Operations Coordinating Board (Hoover)¹

top secret

[Washington,] December 14, 1954.

Subject:

• Special Status Report on Indochina (Item 2, OCB Agenda, Dec. 15)

I. General Developments

1. US Agencies are developing more of an area approach to strengthen mainland Southeast Asia within the Burmese, Laotian, Vietnamese land frontier with the Communist orbit. In diplomatic relations, the Philippines and Pakistan are considering recognition. India has just recognized Cambodia. US field missions have been requested to study and suggest ways and means (a) to develop more regional solidarity in mainland Southeast Asia, (b) to work out a suitable relationship between the three Associated States and the Manila Pact setup, and (c) to use specific projects of the US aid programs to promote closer relations among Thailand, Cambodia, Laos and Viet-Nam, including the use of an US engineering firm for such purpose. Washington planning includes consideration in the Special Working Group on Indochina of how developments in Viet-Nam will affect our programs in Cambodia, Laos and Thailand. The OCB Working Group on Southeast Asia is preparing a paper on promoting regional solidarity.

2. U.S. Missions in Viet-Nam, Cambodia and Laos are developing a consensus of views with the respective governments on political, military and economic objectives.

3. The arrangements for putting into effect direct aid to the three Associated States are reaching completion as a result of continuing negotiations in Paris and the three capitals.

4. Collaboration between US and French representatives in the three Associated States is progressing smoothly. The working relationship between General Collins and General Ely on General Collins’ seven-point program is generally gratifying. The issue of coordinating committees is dead.

5. The Vietnamese, Cambodians and Laotians appear to have reached substantial agreement on how to liquidate the quadripartite agreement. While there are still some difficulties to be worked out, there are indications that the quadripartite negotiations will result in new agreements in the near future.

6. However, governmental instability and administrative inexperience seriously retard effective implementation of US policies in Vietnam and Laos. The threat of Communist infiltration and subversion is still precarious.

II. Viet-Nam (This is based on Collins’ 2250 of Dec. 13)

a. Major US Operational Steps Recently Completed

1. Defense has submitted a program of force levels, costs and development of Vietnamese forces. This plan has been transmitted to General Collins. Coordination is now completed.

2. On December 13 General Collins and General Ely signed the minute of understanding on the development and training of autonomous Vietnamese armed forces. This is a really significant development. It means the crash program sent on October 23 can be jointly implemented if Paris concurs and the Vietnamese accept the large cutback.

3. On December 1 Ely and Collins signed the minute of understanding on the recovery of certain items of MDAP equipment.²

4. The Embassy had delivered a letter to Prime Minister Diem proposing immediate negotiations on establishing detailed mechanisms for granting direct aid.³

b. Political

1. General Collins and General Ely continue to make progress in specific matters supporting the Diem government, and developing a land reform program, creating a national assembly and helping the Vietnamese Government with a vigorous propaganda and educational program. However, French official sources in Paris are insisting that we consider a replacement for Diem by mid-January. General Collins in his 2250 expresses misgivings regarding Diem’s chances of success, but reserves final judgment until early January.

2. The Cao Dai and Hoa Hao sects have adhered to the Diem government. The Binh Xuyen is no longer opposing Diem even though its support is uncertain. As a result the formation of a strong coalition, or movements in opposition to Diem, has been forestalled.

3. Diem has appointed a capable administrator for the refugee program and has reportedly nominated Quat as Defense Minister. General Collins considers Quat most able Vietnamese he has encountered, but Quat has not yet accepted due to undesirable stipulations. Failure to bring in Quat is most serious deficiency in Diem’s administration. Diem has also made a tour of some of the provinces and a series of public appearances and statements. He has just issued a conciliatory proclamation on the army whose pacification work he has visited. His relations with Bao Dai have improved. The latter has assured us of his complete support for US policies in Viet-Nam.

4. The Viet Minh have shown by their recent propaganda against Collins and Diem that they fear entirely too much is being accomplished to their disadvantage, according to the Joint Weeka of 11 December.⁴ Defected Viet Minh officials in the past have indicated that Diem is about the only Nationalist Vietnamese Communists have worried about.

5. The French may decide that prospects in Viet-Nam require the mass evacuation of 60,000 French nationals and 3 to 4 hundred thousand Vietnamese beginning mid-January. This could have serious political repercussions on our objectives if too precipitous.

c. Military

1. The issue of the Chief of Staff has been settled, temporarily at least, with the appointment of General Ty as Chief of Staff, and General Vy as Inspector General. The way is opened to begin the key task of carrying out the crash program to develop an army loyal to the central government and capable of exterminating the Viet Minh throughout Free Viet-Nam. However, Diem and General Ty have both indicated serious concern over the drastic reduction in Vietnamese forces.

2. The movement of Viet Minh soldiers out of South Viet-Nam is being conducted smoothly with few incidents. As a progressive elimination of these Communist soldiers proceeds, more areas will be open for occupation and consolidation by civil and military authorities of Free Viet-Nam.

3. Clashes between Vietnamese national army and sects particularly Hoa Hao are disturbing evidences of continued lack of discipline and solidarity among anti-Communist groups in Free Viet-Nam. Diem is determined to bring dissident forces into line—with force if necessary. At the same time control by the central government and provincial governments remains weak throughout the country, while the Viet Minh underground apparatus is spreading.

4. The French Government has informed us that reduced US dollar support will force the reduction of the French Expeditionary Corps to about 80,000 by July 1, 1955, at the rate of 12,000 monthly during the first six months of the year. General Ely has been instructed to submit recommendations on subsequent reductions. He has mentioned 40,000 to General Collins. They both tentatively agree on the combined mission of those forces and the Vietnamese army (Collins’ 2168),⁵ although O’Daniel believes the French can keep 50,000 in Viet-Nam in 1956.

d. Economic

1. The refugee resettlement program is progressing. More than 500,000 have been successfully removed from the north. In addition about 200,000 soldiers and their families have been brought south. Approximately 200,000 of the refugees have been settled in permanent new homes in South and Central Viet-Nam. Plans provide for refugees, displaced persons, and demobilized military personnel.

2. It is becoming increasingly unlikely that the target date of January 1 for the start of direct American aid to the three Associated States will be met. This is particularly important in Viet-Nam. Settlement of the incompleted quadripartite negotiation in Paris and the establishment of individual national banks are the delaying factors. FOA is preparing emergency measures in the event the necessary national institutions have not been set up to insure the availability of sufficient piasters after January 1.

e. North Viet-Nam

1. The US Consulate continues to function, albeit with increasing limitations of an administrative and logistic nature. However, the Viet Minh has made no move during the past few weeks to force the Consulate out.

2. French policy toward the Viet Minh continues to be much less clearcut than their present cooperation with us in Saigon. Mendes-France has signed a letter to Ho Chi Minh defining the status of the Sainteny mission.⁶ While ostensibly that mission has no diplomatic status, no matter what its character is called, it is an important instrument of French policy and a significant contact with the Viet Minh. At the same time the French firms in Hanoi have worked out some kind of a deal with the Viet Minh—the details are lacking.

III. Cambodia

1. General. Cambodia remains in the soundest and most hopeful condition of the three Associated States. The government is relatively stable. The top ministers are competent. The King is energetic and is loyally supported throughout most of Cambodia. General elections are planned for March, 1955. There is a disturbing trend of neutralism among some publications in Cambodian figures.

2. Military. The current operational problem in US-Cambodian relations is the evaluation of Cambodian military requirements and appropriate US aid in the light of our over-all objectives in the area. This subject is covered comprehensively in Ambassador McClintock’s telegram No. 352 from Phnom Penh Dec. 13.⁷ He recommends, with O’Daniel’s concurrence, a force of 34,000 for internal security.

IV. Laos

1. General. The situation is difficult but not precarious at this time. After many weeks without a government, Laos now has a cabinet but not a strong one. The Prime Minister, Katay, is an opportunist and not a strong personality. The government has offered to negotiate with the Communist group in the two northeastern provinces. This has dangerous prospects. Minister Yost has taken a strong stand with the backing of the Department against this development. The Communists still maintain their foothold in the two northeastern provinces. The ICC has done nothing about it because the Indian Chairman is ideologically weak and wobbly.

2. Our current operational problem in Laos is the question of Lao military budget, and small forces and US aid. In a comprehensive telegram from Vientiane (174 of Dec. 10) Minister Yost has analyzed factors of this question in framework of Southeast Asian security. He concludes that there is a reasonable prospect of meeting the threats to Laos if Laotian, French, the US and Laotian neighbors each do their part.

V. Summary of FOA Programs.

1. In Viet-Nam FOA has enlarged its operations staff and has a new director of the USOM. FOA is implementing an expanded and economic technical program reorientated to meet changed conditions. This program is now designed particularly to help improve government administration, establish civil government and security in formerly Viet-Nam held areas, and counter Communist propaganda.

2. In Cambodia a separate FOA mission has been established in Phnom Penh. A new director of the mission has been assigned, and an expanded economic and technical assistance program is in operation. Emphasis in the program is on improving transportation facilities including the construction of a port and road connecting it with Phnom Penh. Priority is also placed on projects providing public administration training agricultural extension service and agricultural credit facilities.

3. In Laos a newly appointed director of a separate FOA mission is expected to arrive in Vientiane shortly. An expanded economic and technical assistance program is underway. The program stresses improvement and transportation particularly to provide better access to Cambodia, Thailand and the Gulf of Siam. A public administration training and advisory project will be undertaken.

4. A table is presented for illustrative purposes showing the tentative preliminary estimate of the costs of our programs for the three Associated States.

[Attachment]

Tentative Cost Estimate of Programs For Vietnam, Cambodia, and Laos in FY 1955 and 1956

(Millions of Dollars)

	Viet Nam		Cambodia		Laos		Total
	FY 1955	FY 1956	FY 1955	FY 1956	FY 1955	FY 1956	FY 1955	FY 1956
Defense Support	*74.5	†80.0	13.2	†28.0	7.3	†17.0	*95.0	125.0
Direct Forces Support	‡140.0	‡193.1	‡30.9	‡69.7	§20.0	§40.0	190.9	302.8
FEC Support	¶50.0	¶50.0					¶50.0	¶50.0
Total							335.9	477.8
Maintenance and Military Supply (MDAP)							||154.0	||154.0

1. This revised version was distributed to the OCB Assistants on Dec. 16.
2. See footnote 6, p. 2280.
3. In telegram 2348 from Saigon, Dec. 18, General Collins reported having delivered the letter under reference (dated Dec. 13). (751G.5 MSP/12–1854) The text of the letter is contained in telegram 2038 from Saigon, Dec. 1, as modified by amendments transmitted in telegram 2337 to Saigon, Dec. 8. (751G.5 MSP/12154)
4. Joint Weeka No. 50, Dec. 11, is not printed. (751G.00(W)/12–1154)
5. In telegram 2168 from Saigon, Dec. 8, not printed, General Collins described his conversation with General Ely on Dec. 6 regarding the latter’s tentative plans for the FEC in light of the proposed decrease in U.S. support. (751G.00/12–854)
6. On Dec. 13, Minister Millet of the French Embassy provided Young (PSA) with the text of the letter (dated Dec. 8). Young’s memorandum of his conversation with Millet and a translation of the letter are in file 651.51G/12–1354. The translation was forwarded to Saigon in telegram 2413 (2181 to Paris), Dec. 13. (751G.00/12–854)
7. The reference telegram, a joint Embassy–MAAG communication, is not printed. It contained an evaluation of Cambodian military needs and an estimate of appropriate U.S. military aid. (751H.5/12–1354)
8. Includes $40 million for Vietnamese refugee resettlement program. [Footnote in the source text.]
9. Based on $125 million total estimate (for the three States). [Footnote in the source text.]
10. Based on $125 million total estimate (for the three States). [Footnote in the source text.]
11. Based on $125 million total estimate (for the three States). [Footnote in the source text.]
12. Includes $40 million for Vietnamese refugee resettlement program. [Footnote in the source text.]
13. Estimate based on latest JCS estimate. [Footnote in the source text.]
14. Estimate based on latest JCS estimate. [Footnote in the source text.]
15. Estimate based on latest JCS estimate. [Footnote in the source text.]
16. Estimate based on latest JCS estimate. [Footnote in the source text.]
17. Tentative figure based on Legation Vientiane’s recommendation of $40–50 million needed during CY 55. Legation Vientiane reports a prospective CY 55 military budget of $62 million, compared to $37 million in CY 54. [Footnote in the source text.]
18. Tentative figure based on Legation Vientiane’s recommendation of $40–50 million needed during CY 55. Legation Vientiane reports a prospective CY 55 military budget of $62 million, compared to $37 million in CY 54. [Footnote in the source text.]
19. Obtained by splitting $100 million figure for CY 55. [Footnote in the source text.]
20. Obtained by splitting $100 million figure for CY 55. [Footnote in the source text.]
21. Obtained by splitting $100 million figure for CY 55. [Footnote in the source text.]
22. Obtained by splitting $100 million figure for CY 55. [Footnote in the source text.]
23. Amount for maintenance and military supply included by Department of Defense on basis estimates received from General O’Daniel on cost repairing and reconditioning MDAP equipment returned to U.S. authorities. [Footnote in the source text.]
24. Amount for maintenance and military supply included by Department of Defense on basis estimates received from General O’Daniel on cost repairing and reconditioning MDAP equipment returned to U.S. authorities. [Footnote in the source text.]