Foreign Relations of the United States, 1955–1957, Vietnam, Volume I

388. Telegram From the Ambassador in Vietnam (Durbrow) to the Department of State¹

Saigon, July 1, 1957—7 p.m.

4. Embtel 3698.²

1. Nhu’s current pessimism … believed to stem in part from his exposure for first time to wider range problems mostly in economic field during absence President in U.S. While we have no reason believe Diem shares this pessimism, Nhu’s thinking also reflects certain underlying attitudes of GVN leadership arising from combination of factors and sharpened by psychological let-down following Diem’s trip to U.S. which, while personal triumph, did not bring any dramatic promises or moves that would appeal to popular imagination as new drive forward.

2. After successful political consolidation of past three years GVN is now entering period where it hopes build up, largely through economic means, a South East Asian “show case” that will far out-shine DRV. With this objective in view regime may be frustrated by realization that, despite success of Diem’s American tour, same old problems have to be faced and normal U.S. aid procedures (e.g., planning, study, justification, etc.) followed. There is also realization, recently voiced pointedly by Diem’s brother Luyen, that VN is woefully lacking in trained administrative talent needed to reach its objectives. This problem is accentuated by Diem’s unwillingness to delegate authority and the high standard of personal loyalty required of his subordinates, a criterion which limits group from which able persons can be recruited.

3. An additional complication is that since attempt on his life last February Diem has become more than ever obsessed with security so that this factor has tended to dominate his thinking and color his attitude toward all problems. (Examples: the highland settlements, road priorities, fear of Trojan horse in large French business enterprises.)

4. Despite indications of frustration in Diem’s immediate entourage, there is little reason to believe there is a widespread “malaise.” Certainly the country is at work and much progress is obvious. Goods are in plentiful supply, prices are stable and the rice crop is good. True, credit is tight but this in itself is not unhealthy condition and can be changed when situation warrants. Our economic and military advisors in the field all bring reports of progress and stability. Furthermore, Diem has relaxed somewhat his adamant attitude re French businesses by agreeing to BGI starting glass factory, etc.

5. Even so, the semblance of a state of “malaise” has been enhanced by increasing crop of rumors which according Diem are put out by Phan Quang Dan (opposition leader), bitter French colonialists and French military, Chinese and Vietminh. Additional disgruntlement has been caused by increased taxes and tightening money market due to various factors, i.e. uncertainty Chinese community coupled with deliberate Chinese hold back, tie up of money through higher tax receipts pumped into slow-moving GVN financial system and over-importation certain goods past few months.

6. Present period is one of transition and indecision as to what kind of economic program to adopt and how get this economic program under way. To whip up drive and enthusiasm some new conspicuous achievements are needed such as actual beginning of programs under Five-Year Plan coupled with announcement road-building in plateau area, new industries being started, settlement Chinese problem. Diem obviously conscious this need but seems somewhat undecided how best add new drive to regime. This feeling of frustration, perhaps more than anything else, is believed to be responsible for the pessimism reflected in Nhu’s conversation.

7. Pessimism, frustrations and indecisions felt in varying degrees by VN leaders stem basically from long-term problems that cannot be resolved quickly or easily. These problems are essentially those found in all underdeveloped countries that seek progress. We shall have to live with them and the psychological reactions they engender.

Durbrow

1. Source: Department of State, Central Files, 751G.11/7–157. Secret; Limit Distribution.
2. In this telegram, June 19, the Embassy indicated that reports of Nhu’s pessimism and criticism of South Vietnam’s economic and Chinese policies were confirmed in less extreme terms by discussions with Nhu himself. (Ibid., 751G.11/6–1957)