246. Telegram From the Department of State to the Embassy in Vietnam1

254. Joint State-AID message. At highest level meeting today,2 concern was expressed that despite many desirable AID contributions to economic and social progress in rural areas, the pacification effort is not offering the Vietnamese peasant a sharply contrasting alternative between life under the VC and a clearly better deal with the GVN. It [Page 572] was proposed that US undertake with GVN a dramatic and intensive social and economic effort on a single project or area which would highlight as quickly and effectively as possible the opportunity for progress after pacification. This objective also could be furthered through more discriminating provision of benefits of present nationwide AID programs, with denial of benefits to disloyal or VC-dominated villages.

Highest authority has asked for Country Team’s most imaginative thoughts on what might be done toward this objective. US would be prepared to make an all-out effort to produce rapid and visible impact on popular psychology.

Possibilities which initially occur to us for CT consideration include:

Area projects such as irrigation works and related agricultural production and processing development in the Phan Rang valley. Understand Japanese completing feasibility study of irrigation system using runoff from Da Nhim dam which might irrigate 20,000 hectares. This water presently going to waste, it would seem. Suggest consideration of creation of joint GVN-US body functioning somewhat like JCRR in Taiwan for overall accelerated development of area. Joint body would have assured commitment of US and GVN funds and special authorities to establish or improve cooperatives, assure equitable land distribution, draw on GVN and AID agricultural and industrial development assistance. Suggest this area may be small enough to serve as manageable model and large enough to have important demonstration effect. It is relatively pacified and defensible. Success there could lead to similar area projects elsewhere on chronically dry central coast.
Nationwide programs:
The intensive village water wells and cisterns program now being launched, might be announced with numerical targets and with emphasis on provision of potable water to cleared and loyal villages and hamlets. Plans for future CI fertilizer distributions restricted to a discriminatory award and punishment approach might be announced.
Full scale windmill irrigation program, based upon recent experiments, might be announced, as grant assistance to established or new cooperatives and confined to secured hamlets.
While recognizing complexities of the problem, we continue to believe a bolder GVN approach to land reform and rural debt-waiver would strike a telling blow at VC, particularly if restricted to cleared and cooperative villages. If payments to land owners and creditors could be made in form of equity shares in productive enterprise rather than cash, benefits would be multiplied. Imaginative CT action in this field welcome.

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Emphasize foregoing are informal ideas to add to CT’s consideration. Further suggestions may be offered later.

  1. Source: Department of State, Central Files, AID (US) VIET S. Secret; Priority; Limdis. Drafted by Forrestal, Poats, and Montgomery and cleared by William Bundy. Also published in Declassified Documents, 1978, 297A.
  2. The following persons met with the President at the White House from 11:34 a.m. to 12:29 p.m. on July 25: McGeorge Bundy, McNamara, William Bundy, Forrestal, Wheeler, McNaughton, Colby, and Harriman. The meeting was off the record. Johnson Library, President’s Daily Diary) At this meeting, Wheeler was asked to prepare a list of possible military courses of action designed to support the counterinsurgency program in South Vietnam and relieve the current frustration of South Vietnamese leaders.