Foreign Relations of the United States, 1958–1960, Vietnam, Volume I

29. Telegram From the Ambassador in Vietnam (Durbrow) to the Department of State ¹

Saigon , August 13, 1958—2 p.m.

263. Reference: Deptel Circ 1043, May 5, Para 5.² Objectives all US activities VN to help government deter Communist aggression, enhance internal security, broaden base of popular support, and grow toward self-support while maintaining economic stability. Having recently completed MAAG and USOM program presentations and USIS country statement, I am satisfied that these major instruments of our foreign policy are addressed to right priorities, support our objectives successfully and are being fully coordinated. Aid levels requested, though large, are conservatively estimated. Represent minimum needed to enable VN maintain necessary security forces while avoiding political, social and economic retrogression in this strategic corner mainland Asia. Continuing instability, even deterioration in various neighboring countries plus stepped-up tempo Sovbloc offensive underline growing importance Viet-Nam to US interests Asia. We dare not risk detrimental consequences to our strategic position which would result from short-sighted denial essential moral and material resources this friendly government needs to protect and strengthen its position. This is particularly true since RKG recognition Chicoms.

Though GVN requests greater military and economic aid than we have asked in format E or MSP presentation, I believe they feel that if aid levels requested MSP presentation is forthcoming (185 million dollars defense support, 5.150 million dollars TC) their essential interests (except Civil Guard) will be protected (see Embtel 264³). Pleased to note MSP program reflects results searching program review with GVN. Confident that major issues still outstanding can be resolved more easily if aid levels hold firm as requested. For reasons given Embtel 264, I believe political objectives can be attained by holding to total figure 190.15 million dollars, plus possible Civil Guard increment.

In formulating USIS and Mutual Security Programs, we have fully considered all activities supported by other friendly countries and have carefully avoided duplicating their efforts.

Aid provided by Colombo Powers, France, UN agencies, though quite useful, relatively small compared VN needs. Prospective Japanese reparations have been fully accounted for by USOM in calculating VN requirements. French cultural mission continues operate program which remains backbone VN secondary and university education and helps mitigate severity cultural nationalism and intellectual isolation. Though French acutely sensitive alleged US cultural offensive, I believe French cultural effort an important free world asset which GVN should be encouraged to retain. USIS cultural program and USOM educational activities will avoid duplication or competition French. We shall however take advantage GVN preference shift overseas training US and emphasize American techniques in many specialized fields, but without attempting displace French cultural influence.

My comments specific subjects follow:

1. Rice. Economic viability for VN many years away. Significant growth toward economic independence and reduced reliance US aid virtually impossible without massive increase rice production feed growing population and provide greater margin for export. Present US rice policy precludes MSP help this vital objective. I earnestly request full waiver this policy for VN. Unless we permitted through US aid programs help GVN begin immediately far reaching campaign to restore rice production and export, VN likely remain our ward at approximately present level for indefinite future. US Government must squarely face this choice. Aside from burden US taxpayer, perpetuation present situation extreme dependence implies continued US involvement many sensitive areas Viet-Nam’s Government and economy. This inevitably generates frictions detrimental to good relationships and basic US interests. Therefore in our interest help GVN as rapidly as possible toward economic self-support.

2. DLF. GVN counting heavily DLF loans for important self-liquidating projects of type financed prior FY 58 by DS grant aid. Several sound proposals fully supported US engineering will be ready this FY. [Garble] sympathetic consideration of DLF authorities, since these projects essential national rehabilitation and development and equally important to our foreign policy objectives as grant assistance.

3. Industry. All elements country team continuously exert every influence to GVN leadership value industrial development through private enterprise. GVN officials still sceptical for reasons deeply embedded their culture and recent colonial experience. In order not retard necessary industrial growth, believe US must be prepared in some cases permit access commercial import program and DLF for selected industries built and controlled initially by state but subject promise later offer sale private investors. This will help neutralize persistent VN complaint US aid procedures too rigid and cumbersome and not responsive to needs underdeveloped countries. Furthermore while GVN is not too enthusiastic about free enterprise for reasons given, it does not think in socialistic or nationalization terms as do many countries we are aiding, which is all the more reason we must show flexibility in this field.

4. GVN budget. GVN will face serious budget problem beginning FY 60 when insufficient counterpart available finance local costs economic projects. Virtually all counterpart 59 and 60 programs will be attributed military budget deficit since this President Diem’s “absolute priority” and deteriorating security situation Cambodia and Laos affords US no basis challenge this judgment. GVN must increase revenue by raising taxes and devaluing currency to finance local costs economic projects and avoid inflationary deficit financing. Believe logic events will compel these beneficial actions and we should be prepared help plan these measures and make various concessions during difficult transitional period, in order devaluation not result US control excessive percentage VN budget resources, US must be prepared release portion of counterpart automatically enable GVN meet recurrent budget costs, and may even find it in US interest to increase aid to accomplish this end.

5. Civil Guard. I am continuing negotiations with President Diem to secure agreement CG remain civilian police agency. Whether final decision CG military or civilian, will require substantial additional US financing which cannot be accommodated within aid levels requested either MAP or USOM presentations.

6. Governmental stability. If requested aid levels hold firm and our programs in VN continue to be as efficiently administered as they have been, we shall continue to build increasing strength and stability into this government and economy. Will enable GVN make creditable showing in competition DRV for loyalty masses VN people and eventual campaign for national reunification. President Diem today, although he has certain drawbacks, is solidly on our side and is sort of leader we can work with. If some tragedy should remove him from the scene it is my hope that our programs would have had time to build political and economic structures so secure that VN would be able to adjust to new leadership without undue internal strain or any loss to U.S. position and influence.

Durbrow

1. Source: Department of State, Central Files, 751G.5–MSP/8–1358. Secret.
2. Paragraph 5 of this telegram reads:

   “Would appreciate your succinct, over-all analysis of U.S. objectives and role various U.S. (both MSP and non-MSP) and non-U.S. programs in FY 1960 in achieving U.S. objectives. Such report from you as responsible supervisor all U.S. activities in country to which you accredited, considered essential to give proper perspective to separate agency programs. Form and organization of report left your discretion, but it is hoped that it will touch on points listed paragraph 2 above and will also include an evaluation of how well various elements MSP programs are coordinated with each other and with other U.S. and non-U.S. programs outside Mutual Security Program. Report should reach Department by August 1 for use in Washington review field proposals.” (Ibid., 120.171/5–558)

3. In telegram 264, August 13, Durbrow reported separate conversations with Diem on August 7 and Ladejinsky on August 8, in which the President and his adviser asked for a slight increase in aid to Vietnam for FY 1959 notwithstanding the projected global cuts in U.S. foreign aid. (Ibid., 751J.5–MSP/8–1358)