217. Memorandum From the Secretary of the Treasury (Dillon) to the Secretary of State1

On Monday, June 15, French Finance Minister, Valery Giscard d’Estaing, gave a luncheon for the other Ministers and Central Bank Governors attending the financial meeting in Paris. I found myself seated on his right. Toward the end of the meal the French Finance Minister turned to me and asked how we viewed the current situation in Indochina.

I told him the situation was extremely serious, that we had reached a decision that we would not retreat any further, and, if necessary, would resist further military measures by force. I told him it would be perfectly possible for us to mount very substantial air attacks on North Vietnamese objectives from aircraft carriers. Should we be forced to any such action, I said we would make very clear that we had no idea of doing anything except persuading the North Vietnamese to [Page 521] stop their adventures in neighboring countries. We would make clear that we were not interested in upsetting the government of North Vietnam, or of taking any part of North Vietnam. I said I doubted if there would be any need for large scale ground action, in view of the weight of air power that could be brought to bear. I said the facts of this situation were the exact opposite of that in Korea when, in the face of Chinese warnings, we crossed the 38th parallel and moved up to the Chinese border. In this case we were taking the position that the Communist Chinese took during the Korean episode, namely, trying to make clear that we had reached the limit of our patience and that no further Communist advances would be permitted. Whether or not the situation escalated had now become a question for the Communists to decide.

Giscard d’Estaing then asked me if I had been at the Honolulu meeting. I told him I had not. He then inquired whether I was a member of, and present at National Security Council meetings. I told him I was a regular attendant at such meetings. The conversation ended on this note. I have no doubt that he will report our conversation promptly to De Gaulle. I would hope that this might result in an additional signal to the Communists to go easy.

Giscard d’Estaing also commented that the French felt the present military government in South Vietnam could not, on its own, handle the situation there over the long run. I told him we were very conscious of the need for better civil organization at the regional level. We planned to make a major effort to increase the effectiveness and efficiency of civilian provincial governments but this type of work naturally would take some time before results could be seen.

Douglas Dillon
  1. Source: Department of State, Central Files, POL FR–US. Top Secret; Exdis. Also sent to McNamara and McGeorge Bundy.