391. Telegram From the Embassy in Vietnam to the Department of State1

10641. For the President from Bunker. Herewith my twenty-eighth weekly telegram:

A. General

In the aftermath of the elections, the inauguration, and national day, a rather general feeling prevails that hopefully a new era is beginning in South Viet-Nam. This has been reflected in comments in the press that a new historic period is opening and in urging all the people “from the battlefield to the rear” to join together in renewed effort. Pride has been expressed that a popularly elected government with a constitution guaranteeing democratic freedoms for the entire people has come into being; and confidence has been expressed that the second [Page 1003] republic would be able to instill enthusiasm in the whole people for their nation building work and for the struggle against Communist aggression.
Among the voters there was a feeling of pride tinged with some skepticism; they had turned out in large numbers and had done their job, now it was time to see whether the newly elected candidates could do theirs.
The intense activity that preceded the inauguration of the President and Vice President and the installation of the lower house of the Assembly last week has been followed by a noticeable slowing of the pace of political activity this week. This has been chiefly concentrated in the efforts of the new Prime Minister to form his government and in the organization of the Senate, and in efforts by Thieu and Ky to marshal support for the government among members of both houses of the Assembly. Loc told me yesterday that he had completed his Cabinet list and that announcement would be made November 9, which apparently is an auspicious day. I hope to be informed of the identities of the new Cabinet members when I see President Thieu later today.2
The Assembly is continuing its work on organization and has completed Part I governing the organization of the upper house and is continuing its work on regulations and procedures. It is hoped that the entire rules which may include as many as 200 articles can be completed in another two weeks.
In the meantime there are a number of forward steps that have been taken by the government, some of which I have previously reported:
The decree covering partial mobilization;
The decree transferring collection of land taxes to the local governments;
Stepping up of the moves against corruption;
The process of selection and screening of new personnel for the positions of province and deputy province chiefs who would be responsible [Page 1004] to the central government instead of to the corps commanders. Ky informed me yesterday that great care has been taken in the process of selection and screening, that he expected to have this completed by the end of this month and that he hoped to have the new personnel trained and installed by 1 February.
The transfer of power to collect land taxes to the local communities is a long step forward toward the revitalization of local government. I have urged on both Thieu and Ky that having done this, the next logical step would be to transfer the control of land reform to the village councils, and believe that this could be done through the issuance of an ordinance and I have given them a draft of an ordinance which we had prepared. Both expressed interest in the proposal and I shall be following up with them.
Another matter which I have discussed with them and shall be continuing to talk with them about with considerable urgency is the question of the forthcoming budget and economic stabilization. I have reported that Ky had informed me that a ceiling of 95 billion piasters had been established for next year’s budget. Since then however an increase in military and police pay to take effect January 1, 1968 has been announced and yesterday Nguyen Huu Hanh, Governor of the National Bank, expressed to me doubt that the budget could be held below 100 billion piasters. In this connection I have expressed to both Thieu and Ky our view that it is absolutely essential that taxes be increased. I have left with them a memorandum proposing an increase in poll taxes which in our view would be the easiest and quickest way to raise additional revenue. Yesterday, however, Hanh expressed to me the view that other taxes especially import tariffs should be increased, and the tax collection system must be further improved. If these things were done he felt that the gap between revenue and expenditures could be held to 15 billion piasters.
In a talk with Ky yesterday3 I found him in a good mood and was encouraged to see that he has now focussed on moving ahead with vital government programs which hopefully will bring early and constructive results. I also have the impression both from his comments and from sources near Thieu that they are both keeping more closely in touch on development of political support for the government.
Ky commented at some length on what his major concerns will be in the new government. The anti-corruption program would be one. He noted that in III Corps alone some 75 officials have been removed for corruption this year. Ky also plans to devote a good deal of his time to pacification and coordination in this field among Generals Thang, [Page 1005] Vien, and Tri, and he will personally spend a good deal of his time in the provinces, examining the situation. Ky said he was worried about the generally poor conditions under which the RVNAF operate, citing problems of inadequate pay, difficulties in getting food, etc., observing that something needed to be done for them but the GVN simply didn’t have the money.
I told Ky I had no official instructions yet regarding a possible stand down over the forthcoming holiday periods but would like to know his personal views, since he had been so intimately involved in the matter last year. Ky said he thought we should agree to have a stand down, preferably 24 hours for Christmas, 24 hours for New Year’s, and 48 hours for Tet, since these are traditional holidays. He though it important that we take the initiative rather than let Hanoi or the VC get the benefit of it.

[Here follows discussion of military, political, and economic matters.]

  1. Source: National Archives and Records Administration, RG 59, Central Files 1967–69, POL 27 VIET S. Secret; Immediate; Nodis. Received at 9:48 a.m. and passed to the White House. A notation on Rostow’s note transmitting the telegram to the President, November 8, reads: “7:05 p, ps 11/18/67,” indicating that the President saw it at that time. (Johnson Library, National Security File, Country File, Vietnam, 8B(1)[B]) This telegram is printed in full in Pike, The Bunker Papers, pp. 234–241.
  2. On November 9 the 27-member Cabinet of the new Government of South Vietnam was sworn in. Retained from the previous Cabinet under former Prime Minister Nguyen Cao Ky were the Ministers of Foreign Affairs, Interior, Revolutionary Development, Chieu Hoi, Economy, Health, and Veterans Affairs. In Intelligence Note No. 907 from Hughes to Rusk, November 13, INR noted that most of the Ministries transferred from military to civilian directors were minor ones. In addition, Northern-born individuals held the most senior positions. (National Archives and Records Administration, RG 59, Central Files 1967–69, POL 15–1 VIET S) According to telegram 11004 from Saigon, November 13, in accordance with the provisions of the new Constitution, at the time of its promulgation Thieu and Ky took a leave of absence without pay from the military. (Ibid.)
  3. Also reported in telegram 10563 from Saigon, November 7. (Ibid.)