Foreign Relations of the United States, 1961–1963, Volume III, Vietnam, January–August 1963

125. Memorandum from the Deputy Director of the Vietnam Working Group (Heavner) to the Assistant Secretary of State for Far Eastern Affairs (Hilsman)¹

Washington, May 15, 1963.

SUBJECT

• Possible Responses to Nhu Call for Cut in U.S. Forces

You requested a list of actions we might take which would hurt Diem but not the war effort. The list, plus estimates of likely results, follows:

A. Possible Actions

1. Aid Cuts. This could take a variety of forms on both the civilian and military side. I would suggest—and this is subject to further study—the following possibilities:

(a) POL. Petroleum products for civilian use are financed by our commercial import program; they run around $17 million per year. To cut this flow, we could inform the GVN that licensing under existing purchase authorizations is suspended and no further authorizations will be issued. This would force the GVN to use its own foreign exchange reserves to buy POL-and Diem is very sensitive about keeping up the level of GVN foreign exchange reserves. He probably sees his rather large foreign exchange reserves as a hedge against American withdrawal, aid cuts, or pressures like this.

(b) Sugar and Wheat Flour. We finance, under our CIP and PL-480, about $25 million per year of these commodities. Cutting them would have the same effect on GVN foreign exchange reserves as cutting

(c) [less than 1 1ine not declassified] Support for National Youth Center. This is quite a small item [1-1/2 lines not declassified]. But as a gesture, it might prick Nhu directly because he is the Grand Mogul of r the Republican Youth.

(d) Military Construction. We are planning to fund under MAP a number of construction projects. The problem, of course, is that cutting them will interfere with the war effort rather directly. In this category are items such as rehabilitation of the air field at Danang ($3.5 million) and construction of a quad wall at Saigon ($1.6 million).

2. Stopping Herbicide Operations. This has been a pet project for Diem. We have had our doubts and misgivings about it, but dropping crop destruction would, in my opinion, also hurt the war effort to some degree.

3. Cutting Farmgate. The military view would be, I am sure, that any cut in Farmgate would be very bad for the war effort. Perhaps they could eliminate interdiction type missions, however, and carry out all their other missions in spite of a healthy cut. There is a lot to be said for this idea, in terms of U.S. and world opinion, because Farmgate is our only real combat involvement. On the other hand, Diem would be nettled, but not deeply hurt. Nhu could present it as a personal triumph, i.e. we were forced out.

4. Public Statements. It might help domestically to respond directly to Nhu, and it would certainly strike a sensitive Diem nerve if we were to rebuke Nhu, however mildly, in a public statement. It would also play directly into the Communist propaganda line, give aid and comfort to all our critics, possibly force us to go much further in facing down Diem than we may wish to go, and even conceivably spark a coup attempt.

B. Results and Objectives

1. Strictly speaking, none of the above actions would be completely without negative effect on the war effort. Even in the case of POL or sugar and wheat cuts, for example, counterpart plaster re sources would be directly reduced by the proposed cuts; as you know, we are chronically short of plaster resources and are even now engaged in delicate negotiations aimed at getting the GVN to deficit finance CI projects formerly paid for by our $10 million plaster purchase. The GVN response to POL or sugar and wheat cuts would likely be to reduce their plaster support for CI projects which we, but not they, deem essential to a successful war effort. (There could also be a troublesome Vietnamese public reaction to cuts in POL or wheat and sugar. Shortages could be used to direct public anger against the U.S.)

2. There is also the broader question of what we mean to accomplish. I doubt that any of the above actions would result in chastening or disciplining Nhu and Diem. We would have to tell them pretty directly that we were undertaking the action as a punitive response to Nhu’s outrageous remarks or risk the interpretation that the action was a prelude to an American pull-out. Given Ngo psychology, most likely the result would be not more but less GVN cooperation, less trust certainly, and quite possibly, more outrageous public statements.

If pressure is brought on Diem and Nhu, it should serve our major objective—defending Viet-Nam. Thus, if we cut or threaten to cut aid, it should be in support of an objective such as full plaster support of CI projects and a continuing American voice in administering them.

In the immediate instance, we could use such actions or threats to back up a demand for a public GVN statement to the effect that American assistance and personnel were requested by the GVN and are needed, at the present level, until the VC threat is further reduced. If such a statement is judged essential to maintaining domestic support for our Viet-Nam program, the actions would be justified. But we should recognize that Diem might well refuse to yield and could even use our demand against us publicly. We should also recognize that such a statement, coming on the heels of the Nhu remarks, would lend support to the main Communist propaganda line, i.e. Diem is an American puppet.

Most important, if we use punitive actions or the threat of such actions, we have to recognize that the mutual confidence on which the joint war effort must rest will be further eroded. This means the likelihood of an all-out confrontation, now or later, is increased measurably. And of course, there is a very real chance that Diem will not bend, and that once started down the road we will be unable to stop short of anything except a change in government. We don’t want to blunder into that.

All of the foregoing is subject to reconsideration after we get the results of Ambassador Nolting’s demarche plus the benefit of his suggestions.

1. Source: Department of State, Vietnam Working Group Files: Lot 67 D 54, POL-1 (Gen. Pol. Secret; Limit Distribution.