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

851G.131/12–1754: Telegram

The Ambassador in France (Dillon) to the Department of State

secret
priority

Paris, December 17, 1954—6 p.m.
[Received 3:28 p.m.]

2582. Repeated information Saigon 380, Phnom Penh 46, Vientiane 30. Department pass FOA. This is joint Embassy-USOM/F message. Reference: Deptel 2438 to Saigon, repeated information 2215 to Paris, Dec 15.¹

1. Meeting requested by FinMin Faure was held afternoon December 16. Present were Governor Stassen, Under Secretary Treasury Burgess,² Timmons and McGrew (Embassy and USOM/F), Glendinning and Taylor (Treasury). On French side Faure was accompanied by Delouvrier, Wormser (FonOff), Sadrin and reps Min Associated States.

2. Faure opened by saying there were four subjects he wished to discuss with Governor Stassen. They were: 1954 Indochina aid program for French Expeditionary Corps (FEC); 1954 program for Associated States Forces (ASF); aid for FEC in calendar 1955; and offshore procurement. Last subject, which not related Indo-China questions, being reported separate telegram.

3. Faure noted that normal reimbursements under 1954 Indochina aid program have been resumed and he expressed to Governor Stassen appreciation of French Government for this action.

4. With respect 1954 FEC program, Faure referred to recent series of discussions Washington and Paris between reps two governments on this question, beginning with Stassen–Bonnet conversation on November 24.³Faure stated his understanding that program would now go forward on basis originally agreed except that no reimbursements would be made for matériel not delivered into Indo-China before December 31, 1955. He indicated further that French would of course take all reasonable measures to exclude from shipments to Indo-China matériel not actually needed there. Governor Stassen replied that since circumstances upon which original program had been based had undergone substantial change, he could not give assurance at this time that modification re matériel would be only exception it might prove necessary to make. He indicated he could not go beyond this position at present time. Faure said that he of course understood the practical problems involved, and expressed belief that program could be completed in manner satisfactory to both parties.

5. As regards 1954 ASF program, Faure said only one problem outstanding, i.e., question of Associated States defense contribution. He recapitulated figures already transmitted Washington (see Paris Tousfo 316, rptd Usom 60 to Saigon, December 1)⁴ showing reduction in estimated total cost ASF in 1954 from 1953 [sic] billion francs to 168 billion francs, and stated that even more recent estimates, which were still tentative, indicated that total cost would probably not exceed 145 billion francs. Faure pointed out that such a reduction in cost would yield fairly large savings. He said that in these circumstances he wished propose that September 1953 agreement⁵ be executed as written, i.e., that both the “contribution” and the “savings” clauses be maintained and applied. Thus part of savings would go to the French to offset their contingent liability to make up shortfall below 60 billion francs in Associated States contribution and remainder of savings would accrue to US Government, thereby reducing the $385 million aid commitment.

6. Governor Stassen replied that contribution and savings clauses in September 1953 agreement had been based on assumption that savings in question would arise from more efficient utilization of funds. However, the savings now under discussion will result from cessation hostilities. It therefore seems to US Government that question of savings should be re-examined and a new settlement arrived at with French Government, which would meet expectation on part of US public and US Congress that we should benefit from these changed circumstances. US view is certainly that we should seek obtain maximum contribution by Associated States (principally, of course, Vietnam) which they can reasonably be expected to bear without undue drain on their resources. US and French representatives Saigon are undoubtedly in best position to evaluate what amount as contribution should be. It therefore seems advisable to ask them to make such a joint evaluation and report their conclusions to US and French Govts. In light their findings problem of how to distribute total costs 1954 ASF program could be thereupon considered further. In reply to question from French, Governor Stassen made it clear that he does not envisage any discussion of matter with Vietnamese Government at this particular time. For time being consultations would be on strictly bilateral basis between Generals Collins and Ely.

7. Faure stated he welcomed Governor Stassen’s suggestion and that he was willing request General Ely to undertake joint study with General Collins of question size Associated States contribution. Faure said that French Government had only undertaken to guarantee 60 billion franc Associated States contribution on basis that any savings would first be used by French to offset any shortfall in 60 billion franc AS contribution. Faure reiterated that he did not foresee any possibility of contribution by French Government towards 60 billion franc figure. He referred again to 145 billion franc revised estimate of total 1954 costs (expenditures to date have amounted to 108 billion francs) and stated that since it now appeared certain that total savings would be large (approximately 50 billion francs), it seemed probable to him that satisfactory agreement could be worked out which would avoid necessity any French contribution and at same time would assure US Government of considerable savings. Faure underlined French belief that Associated States can and should pay a total of 45 billion francs, and that if French and US hold to such a position, this amount will be forthcoming. He added that of course if US wishes see Associated States pay less, French would naturally have no objection as long as no contribution from France was expected.

8. Re US aid to FEC in calendar 1955, Faure said that although French Government did not yet have full information from General Ely, their opinion at present time is that proposed $100 million US aid figure appears very low in relation to needs. He asked Governor Stassen to comment on how US sees this problem. Gov Stassen said that US realizes that if French cannot contribute more than 60 billion francs toward FEC costs in 1955, this amount plus $100 million US aid (35 billion francs) would mean a considerable reduction in FEC 1955. The US strategic concept is that it is impossible for FEC or AS national armies to constitute force capable of stopping maximum aggressive action from North Vietnam. US position that we must rely on SEATO to accomplish this purpose, and AS a deterrent, and that mission of forces in South Vietnam should be primarily that of providing for internal security of that area.

9. Gov Stassen added that US has reviewed its world-wide commitments, resources and priorities under Mutual Security Program, and that it does not appear that US will be able to make available more than $100 million of aid for FEC in 1955. He remarked that this $100 million figure will be made up partly from counterpart accruing from FY 1953 and previous aid allocations to France, and partly from new dollars drawn from FY 1955 appropriations.

10. Delouvrier explained that irrespective of rate at which FEC repatriated in 1955, total expenditures will approach a figure of 130 billion francs. Deducting from this figure the 50 billion franc French contribution and 35 billion francs of American aid ($100 million), a gap is left of 35 billion francs. Faure said problem is: how can this gap be closed? Referring to fact that General Ely arriving Paris evening December 17, Faure inquired whether it would be possible have further discussion with Governor Stassen on December 18, after French Government had had opportunity to consult with Ely. Governor Stassen said that he would be agreeable to a further meeting on Saturday, the hour to be fitted into the NATO schedule.⁶ He inquired what force goals the 130 billion franc total cost estimate assumes. Delouvrier stated that French will repatriate 12,000 men per month during first half 1955, bringing total strength of FEC down to 70,000–80,000 level as of July 1. For second half calendar 1955, General Ely is bringing a proposal which he has been discussing with General Collins. French remarked that 130 billion franc figure assumes a very low total strength of FEC at end calendar 1955, and that this planning assumption would not necessarily be in accord with recommendations that General Ely is bringing to Paris. French added that perhaps even for an internal security mission, FEC will need considerably more men at end 1955 than are envisaged in plan on which 130 billion franc figure based.

11. Separate telegram follows regarding proposal for consultations in Saigon envisaged paras 6 and 7 above.

Dillon

1. In telegram 2438 to Paris, Dec. 15, not printed, the Department of State advised the Embassy that more guidance on the aid question would be forthcoming after the Stassen–Faure discussion of the subject. (851G.131/12–1254)
2. W. Randolph Burgess, Under Secretary of the Treasury for Monetary Affairs.
3. See footnote 3, p. 2284.
4. Not printed.
5. For the U.S.-French exchange of letters, Sept. 29, 1953, see p. 812.
6. In telegram 2609 from Paris, Dec. 20, the Embassy reported that the Stassen–Faure meeting contemplated for Saturday, Dec. 18, had not been held due to the fact that the French had not had sufficient time to consult with General Ely. (751G.5 MSP/12–2054)