96. Memorandum of a Conversation, Saigon, November 21, 1959, 9–11 a-m.1
1. Present:
- President Diem
- Mr. Tuan, Secretary of State for Presidency
- Mr. Valeo2
President Diem began the conversation after the usual exchange of amenities by saying that he had just returned from a short inspection trip of the Delta Area where he had gone to visit some of the Farmers’ Centers which he was encouraging. They constituted part of his urbanization program which already was beginning to yield results. For example, as a result of the grouping together of scattered villages, their inhabitants now had the possibility of sending their [Page 251] children to school, for one thing, and for another, of devoting some of the land to the cultivation of vegetable gardens and fruit trees. The Farmers’ Centers were sort of miniature chambers of commerce.
2. Mr. Valeo expressed his interest in the President’s program and added that he himself had visited several key cities throughout Vietnam including Hue and that he had returned to Saigon from Qui Nhon by rail. He had been very favorably impressed by the railroad and the efficient way in which it had been constructed. As he understood it, it had been built on the initiative of the Vietnamese Government and with Vietnamese funds. Only the bridges had been built with direct U.S. aid. If all this was true, he wondered if it was not possible the same modus operandi be followed in other major projects, such as the road building program, for example.
3. President Diem replied that Mr. Valeo understood correctly and that the railroad had been financed and built as he had just said. There was a great deal to say about this way of implementing construction programs because it was inexpensive and at the same time it satisfied the most urgent needs of the population.
On the other hand, those projects which were entirely under the control of American civilian authorities often cost an excessive amount and did not always meet the most urgent requirements. They cost an excessive amount of money because the Embassy and USOM officials were very much afraid of having to make any decisions; they would like to leave this responsibility to the “experts”. Finding experts and getting their opinions is a long process. In the mean time not only is the project in question paralyzed, but so are numerous other activities which depend on it. In addition, the same fear of making decisions on the part of the civilian advisors creates long delays in finding contractors. Often rigid specifications written up without reference to Vietnam or any other under-developed country have to be met because the USOM authorities are afraid of using their initiative.
Again, the most urgent needs of the country are not always satisfied. This comes about as a result of priorities set up by people who are not in touch with developments in Vietnam. A rather striking example of this sort of thing occurs in Cambodia where a 143-mile highway has just been opened from Sihanoukville to Phnom Penh. This highway cost the U.S. some $30,000,000.00—enough to build 100 airstrips. Yet, the tolls on this highway are so high, that it is hardly used and goods continue to be transported up the Mekong River.
All this is in sharp contrast to the effectiveness of the military aid program. General Williams is extremely sensitive to the local situation and to the requirements and capabilities of the Vietnamese Army. He sets up very well defined and carefully studied goals but [Page 252] gives the Vietnamese military authorities every chance to exercise their initiative in attaining these goals. The result is that the Vietnamese Army feels that they are putting out the effort under the direction of their own officers. In this way there is first, a minimum of waste, and secondly, the most pressing requirements are satisfied first. In less than four years General Williams has thus been able to guide the Vietnamese military authorities in satisfying some of their requirements in signals equipment, ordnance and motor transportation, not to mention the tremendous strides taken in training and in attaining a high degree of combat effectiveness.
The whole secret to the efficient administering of aid, President Diem continued, was the exercise of initiative on the part of the US officials on the ground, their willingness to take responsibility, and an exercise of that “sensitivity” mentioned in connection with General Williams and the administration of the military program.
Finally, President Diem asked whether it would not be possible for the civilian authorities to study and imitate the methods used by the military?
4. Mr. Valeo indicated that he followed the President’s reasoning and asked permission to come back to his previous remarks on the new Vietnamese railroad. He wanted to emphasize the efficient use that had been made of US aid in this project and the rapidity with which the work had been done and also to point out the advantages of using the same methods in other construction, as of highways, as he had previously mentioned.
4. [sic] President Diem agreed thoroughly with Mr. Valeo but insisted that his government should be given the choice as to the priorities to be assigned different projects. Only that way could first things be made to come first. Economy was another advantage to be gained by giving the Vietnamese government some initiative and control. When a particular project was not only being paid by the U.S. but was entirely under the supervision and control of Americans, the Vietnamese sub-contractors took the attitude that this was a purely American job for Americans. The result of such an attitude was not only a drop in efficiency, but even the indulgence in questionable practices.
6. Mr. Valeo now asked the President if he would say something on the Pakse–Kontum Highway.
7. President Diem replied that this was a highway for which General Williams had been fighting since he had arrived in Vietnam. From a military point of view it was essential because Highway No. 9, the main link between South Vietnam and Laos, was too close to the 17th parallel and consequently, very vulnerable. In addition, the Pakse–Kontum Highway would give Laos a much needed exist to the sea through South Vietnam. At the present time the only work being [Page 253] done on this road was by the Vietnamese Army with the advice of General Williams’ Army Engineers.
Here was another case in point. The construction of this highway was of great importance to Vietnam, yet the Embassy and USOM authorities could not seem to get contractors to do the job. This was true due to the reasons mentioned previously, namely, endless red-tape due to a fear of taking decisions by the civilian officials. (Yet the US had put $30,000,000.00 in the Sihanoukville–Phnom Penh highway, which, as he had indicated before, was not serving its purpose.)
Mr. Durbrow, the American Ambassador to Vietnam had asked President Diem whether the Vietnamese could complete the Pakse–Kontum Highway themselves and President Diem had replied that they could provided that the necessary heavy equipment were [was] forthcoming. This equipment was essential and in fact, the great superiority that American aid enjoyed over that from any other country, lay in the ability of the U.S. to supply heavy machinery in large numbers.
As far as maintaining this equipment was concerned, the Vietnamese had demonstrated their ability to do so. South Vietnam was the most motorized country in Southeast Asia, and in the Delta Region alone there were over 600 privately owned farm tractors in operation.
To get back to the Pakse–Kontum Highway, President Diem felt that the U.S. Department of Defense was aware of its importance, but the State Department had unfortunately as yet failed to grasp this fact. Of course, USOM’s procedures were notoriously slow. Then, there were other obstacles that had to be overcome. For example, Mr. Durbrow was opposed to the construction of a jet strip at the Tan Son Nhut Airport for fear that this might be interpreted as a violation of the Geneva Accords.
8. Mr. Valeo now spoke of the effect that the existence of multiple exchange rates had among certain Congressmen in the U.S. Some felt that is the American dollar, which was really worth 72 piastres brought only 35 piastres to the Vietnamese Government, something over 50% of the American dollar was being lost.
9. President Diem replied that in the first place, once the taxes and duties were added to an item bought with US dollars, the Vietnamese Government did receive the equivalence of the dollar, that is, some 70 piastres. On the other hand, a devaluation of the Vietnamese piastre would be disastrous for the average Vietnamese while it would be of great benefit to the Chinese and other speculators.
Among the Vietnamese, President Diem continued, there were no marked differences among the different economic classes. There were no great concentrations of wealth, no financial superstructure, [Page 254] and consequently, the Vietnamese Government could not, as in industrially developed countries, borrow from private citizens. Instead, it had to lend to the private individual.
It was this lack of an economic superstructure (industrial complex) and infrastructure (roads, ports, cities, etc., etc.) in addition to the slow procedures followed by the Embassy and USOM that made implementation of the Loan Fund unsatisfactory.
It had been suggested that Vietnamese put a greater percent of its funds into the military budget so that the US could then put more dollars into the civilian budget. This would be a very unhappy procedure, for there was no problem connected with the administration and utilization of the military funds and if the Vietnamese Government were to give it greater emphasis nothing would be gained. On the other hand, the administration and utilization of US civilian aid was so slow and inflexible, that if the Vietnamese Government did not favor its civilian budget many projects of primary importance to Vietnam would not even get started.
10. Mr. Valeo asked whether North Vietnam was making much progress.
11. President Diem answered that it was. From a military point of view, it had a much larger army than South Vietnam and very well equipped. It was strong in armor and artillery. South Vietnam’s mission was to hold its frontier against this threat. Its success was a matter of importance to the free world as a whole because South Vietnam was the key country in Southeast Asia. If it were to go, all Southeast Asia would go with it. Thanks to General Williams the combat effectiveness of the South Vietnamese Army was high, but its ceiling should be at least 170,000 rather than the present 150,000 men.
12. Mr. Valeo now asked whether the granting of US Military Aid did not encourage the setting up of military dictatorships in the countries receiving such aid.
13. President Diem replied that the contrary was true, for a coup d’état was most likely to occur in a country when the Army was weak and internal security was feeble.
14. It was now 1100 hours. Mr. Valeo thanked President Diem for the interview and took his leave.
- Source: Center of Military History, Williams Papers, 119. Drafted November 23. The source text bears no indication of authorship, but the format indicates preparation by a member of the MAAG, who may also have served as interpreter.↩
- Frank Valeo was Assistant to the Majority Whip of the Senate, Mike Mansfield of Montana. Senator Mansfield was also a member of the Committee on Foreign Relations.↩