199. Notes on the Meeting of the Operations Coordinating Board, Washington, October 8, 19581

[Here follow agenda items 1–6.]

7. Laos—Oral Briefing by Mr. J. Graham Parsons

The Board requested this briefing since the rapidly changing developments in the key monetary reform negotiations had made a written report impractical. Mr. Parsons gave a thorough review of the present status of the current situation in Laos which, while “precarious”, reflects “substantial achievement” by the U.S. He adverted to the strategic importance of Laos and highlighted the advances made since Geneva. He noted that we have a friendly government although there are Communists in the Assembly, that the French have been cooperating with us since the May 1958 elections and that most of the educated class now believes the Pathet Lao to be a Communist. He also noted that the government is in danger of being overthrown by a [Page 485] conjunction of the Communists and corrupt politicians.2 The government should seek more support from the rural areas, which voter segment is of great importance.

The significance of the September 30, 1958 agreement on monetary reform was explained and ways toward greater effectiveness of future U.S. aid shown. He suggested that, if the U.S. evidences its support of Laos in a subtle and organized way, our objectives can be more nearly assured. He urged that some gesture, probably by way of a direct dollar grant, be made now by the U.S. so that Prime Minister Phoui can point to it as evidence of continued U.S. support. As to the new monetary reform agreement, Mr. Parsons said that the Prime Minister had presented it to the cabinet but did not plan to send it to the assembly which is due to adjourn shortly. In commenting on the agreement, he said the old rate of 35 to 1 had been replaced by one of 80 to 1 and that the terms of the agreement were more favorable than those to which the U.S. would have been willing to accede.

Mr. Smith (ICA) said that Mr. Allen (USIA) at an NSC meeting had recommended against direct grants of this nature since they often have an effect of increasing apprehension and unhealthy conjecture in the recipient nation. Mr. Smith asked if the U.S. is at such a state in Laos that we can show our moral support only by use of a check. Mr. Parsons replied that all who have worked closely with the problem in the Embassy and in Washington, including ICA, have urged the grant be made as a reflection of U.S. approbation of recent Lao efforts.

Mr. Irwin (Defense) suggested that an inter-agency team from Washington should go to Laos and assist the Embassy in planning for the next national elections (December 1959 or later) by identifying objectives, organizing the U.S. effort and laying logistics plans. He said he had the impression that this would help the understaffed Embassy. Mr. Parsons said that the opinion of the Ambassador on this CINCPAC suggestion had been asked but no reply yet received. He emphasized the desirability of Embassy guidance should it be determined that such a team could help.

[Here follow the remaining agenda items.]

  1. Source: Department of State, OCB Files: Lot 62 D 430, Preliminary Luncheon Notes III. Secret. Drafted by Jeremiah J. O’Connor, Operations Coordinator in the Office of the Under Secretary. Kocher sent Parsons a briefing paper, dated October 8, for use at this meeting. (ibid., FE Files: Lot 60 D 90, OCB and NSC 1958; included in the microfiche supplement)
  2. Memorandum of conversation between Corcoran and Phoui Sananikone, October 7. (Department of State, Central Files, 851J.13/10–758; included in the microfiche supplement)