Foreign Relations of the United States, 1964–1968, Volume XXIX, Part 1, Korea

71. Telegram From the Embassy in Korea to the Department of State¹

Seoul, January 10, 1966, 1010Z.

713. Joint Embassy/USOM Message. Department pass DOD. Troops for Vietnam. Ref: Embtel 705, Deptel 703.²

1. ROKG list, entitled Economic and Financial Supports Suggested for Review by USG handed to us January 8. Foreign Office official advised Embassy officer that paper was an official communication which President Pak wanted handled through diplomatic channels. Some won budget support type requests also included in shorter note handed to us January 7.³

2. ROKG list includes:

(1) Additional budget costs from sending troops, including death and disability payments and provision new division to replace Tiger division already in SVN (estimated by ROKG at 3 billion won).

(2) U.S. budget support for three quarters of military budget until 1971 (end next 5 year development plan).

(3) Compensation for land and building requisitioned by UNC (estimated at 4.6 billion won through 1963).

(4) $10 million special assistance from “U.S. Presidential Contingency Fund” for cultural, educational, welfare projects.

(5) Variety of OSP proposals under MAP and AID. Also priority to Korea over Japan and other Asian countries. Expansion and full use Korean facilities for producing military supplies and repair services. Abolish application aid [garble] American policy to OSP for Vietnam (e.g., iron and steel). Process PL 480 wheat and cotton for Vietnam in Korea. Use Korean technicians in Vietnam and train Vietnamese technicians in Korea.

(6) Variety of development loan requests: Allocation $100 million DL year for six years 1966 through 1971; accelerate approval of projects under $150 million commitment; finance steel plant, machine shop; approve thermal power loans Ulsan and Yongdong areas before end 1966; support port expansion Inchon, Yosu, Phohang, Masan, Pusan to enable start of work before end 1966; finance before end of 1966 six dredges for development industrial areas Ulsan, Piin and Chinhae, and 200 bulldozers and 500 dump trucks for farm land expansion and national construction projects; 500 freight cars.

(7) To finance commodities for economic stabilization, export promotion, and domestic capital mobilization, $50 million program loan in 1966 and $20 million per year from 1967.

(8) 150,000 tons of cargo ships by grants-in-aid and loans in kind.

(9) Encouragement Korean exports to U.S. Lift U.S. quota on Korean textiles.

(10) January 7 paper on military requirements includes counter-infiltration assistance (affecting AID and MAP), item (2) above, suspension MAP transfer through 1971, and MAP for construction barracks and welfare facilities (could involve some additional won counterpart release).

3. This list discussed January 8 between DPM, USOM Director and Economic Counselor. DPM indicated that list was compiled by Foreign Ministry which assembled specific proposals suggested by Prime Minister, DPM, Minister Defense, Foreign Minister, Chief Secretary Blue House and President. Impression, confirmed by private remarks DPM’s program assistant, is that each Minister felt compelled support largest possible demands in competition with colleagues to appear to Korean people to be bringing greatest benefits to Korea. Resultant list extremely unreasonable.⁴

4. U.S. side indicated not in position give U.S. official reaction without full CT review and Washington instructions, or even to react informally on individual items until there had been time for review. However gave informal general reactions (1) list very unrealistic and unreasonable; (2) many items failed meet basic assistance criteria as to need, absorptive capacity, avoidance waste, statutory and policy limitations, etc.; (3) requests go beyond U.S. financial capabilities, in light global claims on limited MSA funds; (4) tended to run counter to fundamentals of development policies laid down officially and vigorously by President Pak, DPM and ROKG in legislative program, public declarations, and private statements, and followed with increasing success in recent period, i.e., policies involved in moving rapidly as feasible toward self-reliance and careful use investment funds.⁵

5. DPM defended list in general political terms without justification specific points or showing much fervor. Said he did not wish to push additional assistance to point at which produced effects contrary to established self-help policies, but that ROKG and Korean people wanted increase in aid that would permit acceleration of investment and growth rate. (DPM and President Pak appear to believe it is politically necessary and feasible for Korea to absorb effectively faster capital inflow than now in sight and thereby expand economy faster.

(Director emphasized that development programs and external resources in prospect for next several years are roughly at maximum that can be absorbed without negative effect.) DPM said there was much discontent over unemployment and poverty and people expected government to do more to reduce these problems faster. Said he considered assistance of two kinds desirable: (1) accelerating foreign exchange earnings, (2) accelerating capital goods inflow. At one point he also referred to need for more active U.S. role in meeting domestic capital requirements than was in prospect for next number of years, reiterating that he did not advocate more supporting assistance for this purpose, ROKG felt it needed to seize opportunity that Vietnam situation offered to increase these types of help for accelerated economic growth, having in mind stimulus Korean War provided to Japanese economy. DPM also argued U.S. should use this opportunity to give Korean economy last big push it needed to get over the hill. Then, he said, we can be stronger than North Korea. He cited Vice President Humphrey as saying Korea may get extra help if it sends troops to Vietnam. In responding to query re status of proposals in ROKG view,DPM said ROKG needed to consider the Korean realities and U.S. its own realities in reviewing proposals, leaving implication that list was a bargaining tactic.

6. DPM called Blue House during session to arrange meeting with President to report negative U.S. reaction. He called director afterwards to confirm that submission should be regarded as a list of suggestions for U.S. to consider. DPM suggested talks adjourn until January 17 (i.e., after his return from Saigon trip). We agreed.

7. Meanwhile, we are responding by paper stating that our concept is preservation integrity Korean security and avoidance new economic burden plus some modest “plus”, and setting forth initial offer included Deptel 703 just received plus “best efforts” promise on procurement for SVN and willingness explore any projects submitted by ROKG, including those specifically referred to in their paper, for DLF financing in context Johnson-Pak communique of May 20, 1965. We are including promise to replace brigade as well as division, as we consider this both necessary for security and omission this assurance would adversely color whole negotiations, this may perhaps get us down to serious bargaining. We are also pressing for early activation ROK/U.S. planning group on technical military problems involved promised by MND on January 5.

8. We will have comments on Deptel 703 later and would appreciate earliest comments on Embtel 705. Ambassador and Country Team repeat their personal conviction that we cannot and will not get these extra forces, except possibly with unacceptable arm twisting and bitterness, unless we can find some way to give Korea preference in a significant area of procurement for SVN, at least over Japan.

Brown

1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, POL 27–3 VIET S. Secret; Priority; Limdis. Repeated to CINCPAC for POLAD, Saigon, and Tokyo and passed to the Department of Defense.
2. See footnotes 4 and 2, Document 69.
3. The documents submitted by the ROKG to the Embassy along with the latter’s response are attached to airgram A–275 from Seoul, January 18. (National Archives and Records Administration, RG 59, Central Files 1964–66, POL 27–3 VIET S)
4. In a letter to Brown, January 18, Berger wrote that the list of Korean requirements had “caused some disappointment here. We have thought that the mendicant period of Korean history was drawing to a close and that we could expect the increasingly confident and sophisticated Park Government to present a stiff but essentially reasonable initial Korean negotiating position.” Berger concluded by expressing hope that “the Koreans will in the end accept a reasonable economic-military assistance package in return for the additional division and brigade.” (Ibid.)
5. In a telephone conversation with President Johnson on January 17, McNamara reported that the Koreans wanted “about $600–700 million worth of cumshaw” for the additional troops. Their proposal had been rejected by both the State and Defense Departments, but, McNamara noted, the United States was willing to provide “something on the order of $70 million worth of extra equipment and payments” to the Koreans. (Johnson Library, Recordings and Transcripts, Recording of Telephone Conversation between Johnson and McNamara, Tape F66.02, Side A, PNOs 1 and 2) For text of the conversation, see Foreign Relations, 1964–1968, vol. IV, Document 26.