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FOREIGN RELATIONS OF THE UNITED STATES 1961-1963, Volume I Vietnam, 1961 Department of State Washington, DC

119. Telegram From the Embassy in Vietnam to the Department of State/1/

Saigon, August 14, 1961, 11 a.m.

/1/Source: Department of State, Central Files, 751K.00/8-1461. Secret; Priority. Repeated to Vientiane, Bangkok, and CINCPAC for PolAd.

226. Task Force VN. This replies pares 1, 2 and 4 Department's 160./2/ Reply other paras cabled separately./3/

/2/Document 117.

/3/See Document 120.

1. VC most likely continue concentrate efforts coming months on increased number small-scale military attacks and political activities in all parts South Viet-Nam, with purpose hamper communications, extend control rural areas, isolate cities, disrupt economy, and discourage and frustrate GVN forces by steady infliction casualties in ambushes and attacks on small posts and units without exposing themselves effective counter attacks. Higher incidence all GQ [?] activity expected central Viet-Nam, particularly in areas adjacent to Laos, but also including other areas which have been relatively quiet. Increase also likely in area surrounding Saigon, while Mekong Delta region probably will continue show high number incidents most sectors with possible increase end of rainy season November.

Larger-scale VC military attacks in force of 100 or more unlikely to occur very often in Mekong Delta area or in area around Saigon given improved RVNAF countermeasures these areas. Larger attacks in central VN highlands however a distinct possibility as DRV infiltrates more personnel and supplies from and through Laos. Possible that DRV might aim for establishment "liberated area" in central highlands for purpose setting up "revolutionary government," but we do not believe this could be achieved without infiltration men and arms on greatly increased and much more obvious scale. Available signs indicate, however, that DRV not at this time prepared incur consequences of overt aggression: i.e., A likely condemnation by ICC (and therefore by neutrals) and risk of provoking direct US or SEATO intervention.

Indiscriminate terror campaign or one directed against Americans in Saigon a continuing grim prospect. If latter occurs, might well be directed toward American dependents as part of DRV tactics of gradually confining Americans to Saigon and eventually driving them out of Viet-Nam. Thus far, however, GVN security measures in Saigon have proved reasonably effective.

VC political activities likely center on use "National Liberation Front" and related organizations to give semblance if not substance widespread support their cause and to cloak activities in guise popular revolutionary movement. Also will continue effort subvert tribal minorities in central VN highlands, with importance this area mounting if free world position Laos deteriorates.

Important note that while VC guerrilla capabilities increased recent months (such as estimated strength 14,000 as compared 7,000 Sept. 1960) and range their future activities likely to increase as result, they are not in position to sustain large-scale military operations against RVNAF or to secure "liberated area" in SVN in which establish solid political and military base for conduct their operations. They might however by indirect means achieve their intermediate objective of overthrowing Diem if continued or stepped up guerrilla activities were to engender frustration in GVN armed forces to point of bringing about coup.

2. We cannot predict with assurance when GVN will produce geographically phased national plan for systematic elimination of Viet Cong. We have been pressing for this ever since presentation of CIP in February. However, President Kennedy's recent letter to President Diem/4/ suggesting development of such plan plus very strong local American representation at all appropriate GVN levels should move GVN to accord high priority to development of desired plan. CHMAAG in separate letters to Diem and Thuan as recently as 7 August/5/ again strongly urged development of national phased strategic operation plan for progressively clearing SVN of Viet Cong presence and influence.

/4/Document 114.

/5/Not found.

Counter-insurgency planning as far as military is concerned stands as follows: area responsibilities of major commands and workable command structure have been established for planning and conduct of military operations against Viet Cong in consonance with CIP.

Concept for preparation of detailed ARVN counter-insurgency operations has now been reduced to writing and has been published in field command directive "Concepts of Pacification Operations" dated July 21, 1961./6/ This RVNAF concept takes into account psywar, winning the people, civic action and necessary coordination of civil-military effort as well as strictly military considerations. Corps commanders have been directed to submit soonest their corps area plans based on this concept paper. These corps plans will then be combined into overall military operations plan. This 20 page concepts document is sound guide for conduct of military operations under conditions of tactics, terrain and politics existing here in Viet-Nam and stems almost entirely from the MAAG "Tactics and Techniques" study.

/6/Not found.

We visualize a national CIP to be composed somewhat as follows

A. Statement of objectives of national plan.

B. Statement of responsibilities of governmental agencies and their plans as they affect overall national plan.

C. Establishment of machinery and responsibilities for coordination and execution.

D. Annexes covering in detail concept of carrying out counterinsurgency campaign in all its military, political, economic, psychological and social ramifications. This would include treatment of various phases required within each operation in each specific geographical area.

E. Annexes showing priority by geographic areas for carrying out offensive operations and setting forth in general terms goals for phasing of pacification process. Priority on clearing various areas of Viet Cong will probably depend on number of factors, among them strength of Viet Cong in area, threat they pose to important localities, their proximity to DRV and Laotian border, psychological factors and like.

National CIP must provide for flexibility sufficient to allow all agencies to react to changes in character and location of Viet Cong threat. Basic military concept of bringing entire country under governmental control is based on locating VC and eliminating them in successive areas. Larger groups would be located through use of net forces such as Rangers and eliminated with spear type forces such as regular ARVN battalions. Small VC groups or individuals more or less indigenous to their hamlet or village would be located and dealt with by civil guard and self-defense corps. This concept requires that civil and military leaders down to hamlet level, as part of "preparation phase", know of planned operations long enough in advance to coordinate and cooperate in preparing target area, intelligence wise and psychologically, prior to actual attack-as well as during and after military phase. Concept also requires upgrading of civil guard and self-defense corps through provision of equipment and adequate training program now in progress. To assure peasants and villagers in given area that they will have continuing protection, and thus inducing them to furnish intelligence on indigenous VC individuals or small groups as well as any information which may reach them on larger groups.

Because of advanced development of VC control, they are so strongly entrenched in certain areas that successful military operations against them are necessary prerequisite to effective political, economic or psychological action in area. However, political, psychological and economic elements must also be employed as integral part of this military phase whenever applicable and to full degree possible. For these reasons in Viet-Nam it is necessary to give priority to military phase of counter-insurgent operations, in order that other and equally important elements of final victory can be fully exploited in phases which must immediately follow or whenever possible accompany actual military operations.

Phasing of plan should extend, not only to geographical areas to be cleared by military operations, but should also include progressively phased actions whereby cleared area would be returned to normal peace time conditions. These actions can be designated as "preparation phase" which precedes military operations end [and?] establishes proper element of acceptance for "military phase" during which area would be cleared of VC. This is then followed by "security phase" which is final phase permanently installing civil government in cleared area under governmental control as well as insuring its continued security. This requires pre-planned occupation by paramilitary, provincial security forces as other civil agencies under province chiefs. If this is impractical initially, then RVNAF forces involved in attack must remain to prevent VC organization from again taking over until province chief's security forces can maintain order and control and rehabilitate area. Preplanning and implementation of this security phase at civil-military level requires close coordination and is most important.

Plan such as this should not of course be an inflexible one which does not permit for unforeseeable changes requiring adjustments in situation, but rather should provide well defined pre-planned series of intermediate goals based on progressive, geographically phased final objective-victory over VC. Such plan must be comprehensive in nature and take into full account political, psychological and civic action aspects of not only military defeat of VC but all important problem of preventing guerrilla re-entry into cleared areas.

4. RVNAF forces have dual mission of defending country against overt aggression and destruction of insurgent forces within country. Training now being conducted is directed towards preparing these forces for accomplishment these missions. Until one year ago, training emphasis was being placed primarily on preparing for defense against overt aggression rather than counter-insurgency operations. At that time only small percentage of training was devoted counter-guerrilla type training. In view of insurgency situation this was considered inadequate. As result MAAG recommendations JGS reoriented training program to insure all training was heavily weighted in counter-guerrilla subjects such as Ranger oriented training and psychological conditioning of individual. ARVN training progressing but slower than MAAG feels required by situation. This because bulk ARVN troops are committed against VC. At time their transfer from department interior to department defense, apparent that civil guard required military training before they could adequately perform fighting mission. At MAAG insistence JGS initiated program to train civil guard along counter-guerrilla lines. This program consists of individual, leadership and unit training. First group civil guard personnel began training January 1961. Civil guard force now being trained Quang Trung and Song Mai training centers with training completely oriented on counter-insurgency effort.

Mobile, lightly armed Ranger units specifically designed for combat against insurgents and their training continues receive heavy emphasis. Ranger cadre training initiated June 1960, and in April 1961, joint U.S.-ARVN Ranger training team began unit training program for Ranger companies. Intensive unit training now being conducted at two sites in or near actual operational areas assigned to companies. Plans have been made in past six months to expand overall RVNAF school system to meet increased need for trained leaders and specialists.

Due urgent necessity train forces more rapidly to meet current and developing situation, MAAG has developed a master training program to retrain on rotational basis, all present VN ground forces and train newly activated units. U.S. advisors will instruct ARVN and civil guard instructors and cadre, assist in selection training area and preparation training schedules and lesson plans, plus actively supervise actual training. This system has proved highly successful at Quang Trung and Song Mai training centers and with U.S. mobile training teams assigned to Ranger training sites. Training programs have been pared of all "nice to know" subjects and concentration has been placed on "must know" and training times have been cut to absolute minimum.

Sufficient Special Forces personnel now on hand to train Vietnamese Special Forces (1st Observation Group). In addition, 21 Ranger qualified personnel permanently assigned MAAG plus others experienced counter-guerrilla tactics and techniques. Also during FY 61, five Special Forces mobile training teams, totaling 53 personnel, have been brought South Vietnam and have been utilized for training regular ARVN forces. At present Special Forces mobile training team conduction gaining for Ranger units at three different training sites. Training of additional forces recently authorized will require additional MAAG advisors trained and qualified in Special Forces, Ranger and counter-guerrilla operations. No particular problem anticipated this regard in numbers or quality.

In summary, consider present quality counter-guerrilla training excellent. Problem lies ARVN ability to make available for training sufficient forces from operational areas. Success of MAAG plan mentioned above is largely dependent on output of trained units from 20,000 force increase which will serve as rotational base for old units now on operations. RVNAF has not yet felt results this form JCE [?] increase due to lead time required for activation, organization, equipping and training new units.

Nolting

 

120. Telegram From the Embassy in Vietnam to the Department of State/1/

Saigon, August 14, 1961, 7 p.m.

/1/ Source: Department of State, Central Files, 751K.00/8-1461. Top Secret; Priority. Repeated to Vientiane, Bangkok, and CINCPAC for PolAd.

229. Task Force VN. This replies to pares 3 and 5 Department's 160./2/ Since replies to other pares need not be classified above Secret, they are being forwarded by separate cable/3/ to facilitate handling and use.

/2/Document 117.

/3/Document 119.

3. Re action against North Vietnam, Diem is not impetuous man. Actions he has approved to date are limited in scope and intention: to build intelligence base and provide foundation for restricted harassment and sabotage. This is designed to maintain hope of liberation in north and inspire passive resistance to slow NVN's development arid absorb its energies to divert them from attacks on SVN. It seeks to avoid encouraging any premature violent uprising which would be repressed for lack of sufficient support from free world. Diem also sees that larger scale attacks upon NVN would extend DRV's liberty of action against SVN when he has enough problems from DRV's covert attacks. In specific terms:

(A) Air Drops: Diem has accepted this tactic, and risk of losses among participants, but is deeply concerned over possible losses among limited number of pilots in VNAF. Within limits outlined above he would probably accept an enlarged program, especially one providing more modern aircraft and additional aircrews.

(B) Coastal raids: Diem accepts coastal infiltration of agents. Any program of coastal raids would be evaluated against considerations outlined above, as well as practical problems of providing necessary sea lift capable of penetrating DRV's naval defenses (including some 25 modern Swatow class patrol gunboats).

5. Diem gravely concerned over deterioration situation southern Laos in recent months and would of course like to see action taken to clean up that area. Any decision on part of GVN to throw sizable force into this effort would be grave one not only because it would represent broadening of war in which GVN now engaged but because of limited available GVN forces to meet current military needs. Believe however that GVN would seriously consider as part cooperative effort commitment some additional forces beyond small number of Vietnamese Special Forces and regulars now engaged in Laos and along Lao border. GVN officials continue to talk in admiring and favorable terms about use of Pakistani troops in Laos, but we are not in position judge practicality of this idea. Diem might not insist upon actual involvement of US combat forces at outset of cooperative action in Laos but would certainly seek to obtain clear commitment by US to send in combat forces if need developed.

GVN operations Laos tactically and strategically sound and desirable. Due guerrilla war now going on in Viet Nam GVN military forces immediately available for cooperative action in Laos could probably consist only additional small units somewhat similar those now in Laos (principally along route 9) but with perhaps broader role, possibly to include limited combat support of Lao units. GVN might as calculated risk commit larger forces to Laos with view toward preventing intensified future VC infiltration through Laos, but sizable GVN operation in Laos could probably be considered only within time frame required to mobilize, train and equip additional forces now planned but not yet available. Forces being added under 30,000 increase will provide additional capability but these not available in significant numbers before late 1962. Should be recognized that, if the above occurs, there is possibility that increased enemy action will force GVN to escalate its forces committed across Lao border beyond whatever level it originally decides-e.g., small to sizable. In latter case it important it be kept in mind that additional 30,000 increment is required for GVN primary task of defeating insurgency within Viet Nam at approximately its present intensity.

Bangkok and Vientiane much better qualified than me to comment on likelihood Sarit and Phoumi cooperation in cleanup southern Laos. From Saigon it would appear that Phoumi could be persuaded without much trouble as we believe there is inclination on his part at times to throw in towel re northern Laos, withdraw his forces to south and attempt set up separate government there. Phoumi would probably regard cooperative effort in southern Laos as at least giving him greater assurance of being able hold out there if he is obliged give up north.

Would appear to US Sarit might be harder to convince that southern Laos should have priority as against occupying all parts of Laos adjacent to Mekong and thus bordering Thailand. We would assume if enough outside support thrown in (e.g., Pakistani troops) to conduct both operations, Sarit would willingly cooperate on southern Laos operation as well.

Above is based on my understanding first question under five refers to cooperative action just as remaining two questions do. If, however, first question stands alone and refers to unilateral GVN troop employment in eastern Laos for primary purpose defense South Viet Nam, then our response is:

With respect infiltration individuals or small groups VC, GVN troops not now capable with or without pushing out into Laos controlling very numerous rugged and forested infiltration points which occur entire length all borders here. Military forces required for high degree control infiltration type described above would be prohibitive regardless location of troops. On other hand for control any sizable communist troop units or supply routes GVN forces located Laos on major avenues of approach and commanding terrain worthy consideration. This for purposes early warning and desirability meeting enemy ahead of own borders plus additional indication determination stop aggression. Extent GVN troop commitment for this purpose would be governed by essentially same factors as those outlined above with respect to cooperative action in Laos. Presently RVNAF are studying MAAG recommended techniques to reduce infiltration such as defoliant, change from present static guard posts to mobile concept involving additional patrols including dogs, establishment of buffer population, additional roads and air fields and like, which are long range in nature and cannot be expected to stop but only progressively reduce infiltration.

Nolting

 

121. Editorial Note

The Conclusions of National Intelligence Estimate 14.3/53-61, August 15, 1961, entitled "Prospects for North and South Vietnam", are printed in United States-Vietnam Relations, 1945-1967, Book 11, pages 245-246.

 

122. Editorial Note

On August 17, 1961, William J. Jorden, a former New York Times correspondent who became a member of the Department of State's Policy Planning Council earlier in the month, left the United States for a fact-finding mission to South Vietnam. His task was to gather documentation on infiltration by North Vietnamese forces into the South. In a letter of August 17 to Ambassador Nolting, Vietnam Task Force Director Sterling J. Cottrell wrote that Jorden had only learned of his assignment the previous week and the suggestion that he be sent had been approved by the President within 24 hours. Cottrell described Jorden as "soft-spoken and willing to listen" and added:

"He is extremely serious about this undertaking and realizes that the material which he is able to assemble with your help and write up is likely to have a considerable influence on U.S. policy decisions. He is also prepared for the fact that he may not be able to obtain enough evidence to make a fully impressive case." (Department of State, Vietnam Working Group Files: Lot 66 D 193, VN 1961 Presidential Program Psychological TF 26 thru 31)

 

123. Memorandum From the Joint Chiefs of Staff to the Secretary of Defense (McNamara)/1/

JCSM-583-61

Washington, August 24, 1961.

/1/Source: Department of State, S/P Files: Lot 67 D 548, Vietnam. Top Secret. Stamped on the source text are the words: "SecDef has seen."

SUBJECT
North Vietnam

1. Reference is made to memorandum by the Acting Assistant Secretary of Defense (ISA), dated 19 July 1961,/2/ subject as above, which requests the views of the Joint Chiefs of Staff on the consequences and effectiveness of certain United States courses of action against North Vietnam.

/2/Document 99.

2. The Viet Cong receives its support by way of North Vietnam, about half of the total being brought in over inland trails and the other half being landed along the coast from junks. A large proportion of the support for communist aggression in all of Southeast Asia passes through North Vietnam.

3. It is estimated that successful interdiction of the communist logistic support passing through North Vietnam would facilitate military control of the Viet Cong and the maintenance of a favorable logistic balance over communist-supported forces in Southeast Asia.

4. The United States has the capability to substantially cut the flow of communist military support passing through North Vietnam, if and when it is decided to commit United States forces openly to this operation. Formal commitment of United States forces in this manner would probably generate Communist Chinese overt countermeasures, the magnitude of which would be determined by the degree to which Communist China desired to become openly committed to aggression in Southeast Asia and subject herself to further countermeasures.

5. In event the United States does not desire to commit its own forces openly to interdiction, there are covert, unconventional and guerrilla-type operations, as well as other measures, which can be made more effective.

6. The Joint Chiefs of Staff, with the assistance of CINCPAC, are investigating as a matter of priority the entire problem of interdicting support for the communist effort in Southeast Asia, together with the various means available and in sight for accomplishing this interdiction. Examples of specific lines of endeavor being pursued or investigated are:

a. Obtaining better intelligence on the nature and scope of the interdiction problem.

b. Training and equipping of the South Vietnam junk fleet has been accelerated. Development of an increased capability for the interdiction of North Vietnam imports and exports by all of South Vietnam's armed forces is being investigated. Unconventional operations are being studied as well as conventional operations to accomplish this interdiction.

c. Examining such nonmilitary measures as offering rewards to communist ship masters and fishing boat captains to destroy their cargoes or divert them to Free World ports.

d. Accelerating United States research and development of more effective weapons, techniques and tactics, unconventional as well as conventional, for interdiction of communist support to aggression world-wide; exploiting modern technologies and, where appropriate, precedents already set by the enemy in unconventional aggression. In this regard, a development and research group has recently been established in South Vietnam to perform this mission with regard to the problems in that area.

e. Examining all possibilities for new legal interpretations within the framework of modern circumstances, which would facilitate the problem of conventional interdiction. The present general interpretations of maritime law give legalistic protection to communist support of insurgency movements by sea. Legally, such activity on the high seas can be performed with relative impunity.

f. Increasing the unconventional and covert capabilities of United States forces in the area to interdict support for the communist effort in Southeast Asia.

g. Preventing the employment of Free World shipping in support of such distribution points of communist aggression as North Vietnam and Cuba.

For the Joint Chiefs of Staff:

L.L. Lemnitzer
Chairman
Joint Chiefs of Staff

 

124. Telegram From the Embassy in Vietnam to the Department of State/1/

Saigon, August 25, 1961, 7 p.m.

/1/Source: Department of State, Central Files, 751K.5-MSP/~2561. Secret; Priority. Repeated to CINCPAC for PolAd, Bangkok, Phnom Penh, London, Vientiane, and Paris.

277. Task Force VN. Gardiner, Mendenhall and I had almost 3 hour session with SecState Presidency Thuan and SecState National Economy Thanh Aug 24 with following results:

1. Thuan made clear GVN had taken decision to raise piaster yield to average of 74 piasters per dollar and said this decision could be cabled to Washington. At same time under questioning, he disengaged GVN decision on piaster yield from level US aid. Piaster yield will consist of 35 as counter-value at official exchange rate, 25 representing new "economic development and defense tax", and average 14 from other taxes. We believe this represents real progress as this is decision which has been sought by US for several years.

Thuan frankly stated this is devaluation in everything but name, but stressed importance of avoiding labeling it as devaluation publicly and officially. When I asked why GVN adopting complex system of taxes and subsidies rather than direct simple approach Thuan replied with smile that it was because of complexity. He explained that psychologically masses will not understand that rate has been changed, and political and social results will therefore be limited. On other hand if GVN were to announce change in official rate everyone would know what is taking place and results would be much more severe.

Two GVN subcommittees have been appointed to work out the necessary and indispensable measures to accompany piaster yield change: First to review and make adjustments in customs tariff and second to recommend further fiscal reform measures. These committees directed to report within 45 days and therefore new rate cannot be placed in effect before that time. Net reduction will result in "other taxes" on imports to achieve new average yield of 14 piasters per dollar (in contrast present yield these taxes of 17 or 18 piasters per dollar on sliding scale from low tax on essentials to higher tax on less essential goods). Subcommittees also working on problem of recapturing windfall profits resulting from new piaster yield approach and measures to increase yield from other than import taxes.

All addressees will recognize indispensability of maintaining secrecy about new piaster yield approach until officially announced by GVN.

2. Thuan presented piaster yield decision in context projected budget for calendar year 1962 showing expenditures 23.4 billion piasters and receipts 20.5 billion piasters. Budgetary breakdown as follows (in billions piasters): Expenditures consist of regular civil budget 8.6, security (including civil guard and self defense corps and gradual increase in armed forces during 1962 from 170,000 to 200,000) 10.6, continuation USOM economic projects 0.8, extra budgetary accounts (export subsidies and compensation account expenditures) 2.0, one-half of 18-month emergency economic and social program proposed in Staley Report 0.9, and one-half of 18-month long range economic development program proposed in Staley Report 0.5. Receipts consist of counterpart of US-financed commercial aid at official 35 rate 5.9, internal fiscal receipts 4.5, and import taxes (new economic development and defense taxes of 25 piasters per dollar and other taxes of 14 piasters per dollar) 10.1.

In calculating above receipts GVN projects import program of 259 million dollars consisting of commercial aid 169, PL 480 12.7, and GVN's own foreign exchange 73.8. Under questioning, however, Thuan stated clearly that GVN decision to go to 74-1 yield was not conditional upon US aid figure used in projected budget. He said aid figure used is simply one chosen by GVN because it has to use some basis for calculating US aid in making its budgetary projections. Thuan also stressed that average piaster yield is maximum GVN can do, thus indicating that if actual US aid is less than amount projected in budget GVN will have to cut back on program.

Thuan said that internal receipts item in budget represents increase of 1 billion piasters over 1961, thus showing GVN's intention to implement SFG report recommendation on tax reform as well as exchange reform recommendation. When questioned re gap of 2.9 billion piasters in budget he said GVN would try meet as much as it could by other two SFG report recommendations: Victory bonds (perhaps up to one billion) and National Bank advances, which has lowest priority of any of methods to be used for financing budget.

Budget being analyzed and our detailed comments will follow./2/

/2/Apparently a reference to Document 126.

3. I congratulated Thuan on adoption joint report/3/ breakthrough concept, as reflected in 1962 budget. I explained we could make no decision at this time re US aid level because Congress has not yet completed action on aid legislation. I also said that my approach toward aid level problem was to let joint experts report criteria be sole guide, since I saw no possible way of choosing realistic import figure at this time. I indicated I was not sure whether Washington would agree with this approach, and in any case we would shortly have to come up with a temporary figure which, as I envisaged, would be subject to revision after several months in light of experience. I also pointed out that in addition to commercial aid DLF offered possibilities for financing import of capital goods, and could under certain circumstances be used to generate piasters for current government use. Got no reaction to this.

/3/See Document 93.

Thanh was reluctant agree to my proposed approach of fixing only temporary aid level figure because he foresaw various practical difficulties such as delays in goods arrivals pending agreement on final figure, speculation and price increases. I believe however he eventually acceded to approach we proposed, particularly because of emphasis we place on flexibility given to field in President Kennedy's letter to President Diem./4/ Thanh stated however that for practical purposes review of temporary aid level would have to come well prior to expiration of 6-month period.

/4/Document 114.

Thanh told us that GVN calculates new piaster yield approach will cause only 4 percent increase in cost of living of lower classes. He underlined however importance prompt arrival of adequate quantity of imports to avoid greater effect on cost of living and adverse political repercussions.

Thanh asked specifically about addition petroleum products to list eligible commodities for US financing. Gardiner replied he saw no problem in this.

4. Thuan raised problem of extent to which piaster proceeds of aid should go into counterpart account under new piaster yield approach. He expressed awareness of congressional problems on this score, but asked that we also take a sympathetic look at GVN's public relations problems and vulnerability to Communist attack if apparent US hold on Vietnamese economy becomes too evident from budget. He proposed that out of new piaster yield of 74 per dollar 60 go into counterpart fund (which would be real improvement over present deposit rate of 43), but that 25 be released automatically for military budget and emergency development expenditures just as 7 out of current 43 is released automatically for military budget. We replied that we understood GVN concern; that this is primarily congressional and legal problem and we would see what we could do to accommodate GVN as much as possible. Shall submit recommendations on this point.

5. Thuan requested that 30 percent of total US commercial aid be exempted from buy American provisions. We also promised we would see what could be done on this score. I said that perhaps we could ask Washington to delegate authority to US in Saigon to go up to 30 percent but on basis case by case decision.

6. Will submit shortly our further ideas on how best to move in light this major step on part GVN. I took occasion to reiterate US assurance that "increased piaster realization per dollar's worth of imports will not be used as reason for reducing the American share of our joint efforts." (Deptel 140)/5/

/5/Document 113.

Nolting

 

125. Letter From the Secretary of State to the Deputy Secretary of Defense (Gilpatric)/1/

Washington, August 30, 1961.

/1/Source: Department of State, S/S-NSC Files: Lot 72 D 316, NSAM's. Secret. Drafted by Wood.

DEAR ROS: I would like to acknowledge your letters of July 3/2/ and August 17/3/ dealing with the level of Vietnamese Armed Forces.

/2/Document 52.

/3/In this letter Gilpatric wrote that the Department of Defense considered a force of 200,000 adequate for the foreseeable future. (Department of State, Central Files, 751K.5-MSP/8-1761)

I am pleased that the increase from a 150,000 to a 170,000 man force level appears to be moving ahead of schedule and may be completed in November. Concerning the subsequent increase from 170,000 to 200,000, I have noted the President's suggestion in his letter of August 4 [5] to President Diem/4/ that before increasing the level from 170,000 to 200,000 the two governments should be satisfied that there exists an agreed geographically phased strategic plan for bringing the Viet Cong under control, that the training and use of these 30,000 additional men will be based on such a plan, and that the rate of increase will be phased to Vietnamese absorptive capacities.

/4/Document 114.

Your letter of August 17 states that a force level of 200,000 men appears adequate to the Defense Department for the foreseeable future. In the best of circumstances, the 200,000 man level will probably not be reached until May or June 1962. Since this is so far in the future and due to the main threats faced by Viet-Nam, I propose that the question of a further increase above 200,000 men be carefully reviewed by the Viet-Nam Task Force during January 1962. Their recommendations should be based on the situation then existing in Viet-Nam and in Southeast Asia. A recommendation made then would still allow time for preparation, if it should be decided to support a further increase above 200,000.

It is most satisfying to read of the recent victories of the Vietnamese Armed Forces. I hope they will be able to maintain their initiative and that their victories will be followed by increasingly effective civic action.

Sincerely yours,

Dean

 

126. Telegram From the Embassy in Vietnam to the Department of State/1/

Saigon, August 31, 1961.

/1/Source: Department of State, Central Files, 751K.5-MSP/8-3161. Secret; Priority. Repeated to CINCPAC for PolAd.

304. Task Force VN. Re Embtel 277./2/ On question of level of supporting assistance (commercial aid) to GVN in light of GVN's decision on piaster yield, I would like to submit following analysis of situation and general recommendation.

/2/Document 124.

It seems to me we are in a fair way now to mount a "breakthrough" program, to finance it, to accelerate momentum and to carry it forward. There are many clouds on the horizon, not the least of which is Laos, but locally the skies are clearing somewhat and both governmental and public morale have been improved by recent military successes and hopes for the future. We will lose a great opportunity if we do not follow this up rapidly. As Task Force Washington knows, GVN is capable of adopting paper plans and then failing to follow through unless and until the money is in hand (CF agreement last spring to augment military forces by 20,000, which was slowed in implementation pending agreement on 1961 budget and means of financing).

It thus seems to me essential to follow through as promptly as possible on tentative aid level for FY 1962, in order to give the assurance to GVN necessary to start carrying out emergency economic and social programs recommended in CIP, presidential program, joint experts report, draft joint communiqué, etc., as well as carry on with build-up of armed forces. I continue to think that we should set relatively high targets for commercial imports under the agreed criteria, leaving it up to the GVN to justify their estimates re absorptive capacity, etc., and on clear understanding that estimates are subject to revision in light of experience. If we do it the other way, and set conservative estimates which can be revised upwards in light of experience, I am of the opinion that some, perhaps many, of the essential breakthrough programs will be delayed by GVN foot-dragging, perhaps beyond the critical period. What is really involved here is a question of earmarking as possible additional aid for Viet Nam approximately $50 million of supporting assistance funds (based on figures cited Deptel 184)./3/ This relates to a total aid program to Viet Nam of roughly a quarter of a billion dollars. Whether this 50 million can actually be used or not remains to be seen. I am strongly of the opinion that, when this matter comes to decision, presumably following passage of aid legislation, it would be in our national interest to earmark these additional funds and to tell GVN that they are available if they can be used under the agreed criteria. In this way, and I believe only in this way, can we keep up momentum which has been generated.

/3/Telegram 184, August 12, furnished the Embassy certain suggestions and instructions regarding financial assistance to Vietnam. (Department of State, Central Files, 751K.5-MSP/8-1261)

Foregoing discussed in Task Force Saigon. Task Force agrees with message, subject to following comments from Gardiner, which I am happy to attach for Washington's consideration:

1. Fully agree that further funding for capital goods meeting criteria should be provided within any reasonable limit, and have always counted on DLF to provide needed reserve.

2. Am skeptical about any substantial increase in commercial market demand for consumables and intermediate type goods such as tractors and trucks, in view very cautious attitude most firms handling such items and 2 years of overstocking already. This could change quickly if GVN continues present progress against VC.

3. Am convinced that govt planning for present conduct commercial aid program calls for forecast now of $140,000,000 new funds for FY 1962, including supporting assistance and PL 480.

4. Am always alert for any further demand for commercial aid funds required under present circumstances.

5. Am dubious about advantages of allotting funds that will accumulate in PA's unlicensed or in licenses unutilized./4/

/4/In telegram 321 from Saigon, September 5, the Embassy reported that Ambassador Nolting left for a visit to Bangkok and was embarrassed because he lacked any indication of the U.S. Government's reaction to the Government of Vietnam's decision to raise the total piaster yield to 74 per dollar and was therefore unable to transmit a response to Thuan. In telegram 275 to Saigon, September 6, the Department replied that it was "highly impressed and pleased" with the Government of Vietnam's decision but had delayed comment while it was seeking reaction from other U.S. Government agencies on the questions of counterpart, restrictive procurement policy, and commodity level. (Both telegrams are ibid., 751K.5-MSP/9-561)

Nolting

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