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FOREIGN RELATIONS OF THE UNITED STATES 1961-1963, Volume II Vietnam, 1962
Department of State |
204. Telegram From the Embassy in Vietnam to the Department of State/1/ Saigon, May 23, 1962, 2 p.m. /1/Source: Department of State, Central Files, 751K.5/5-2362. Secret. Repeated to CINCPAC for Polad, London, Bangkok, Phnom Penh, Vientiane, Kuala Lumpur, Singapore, and Manila. 1504. Embassy officer saw Colonel Lac May 23 prior receipt Dept's 1367/2/ in order determine status his concept of organization for counterinsurgency operations in Delta. Lac said concept has been presented President Diem but has not yet been approved. He said he had been informed by Secretariat in Presidency that concept had been referred to "group" for study but Lac professed ignorance as to who this group is. /2/Document 200. At Embassy officer's request Lac provided copy organizational chart presented to Diem which will be pouched Department./3/ /3/Not found. Embassy officer asked Lac whether concept as presented to Diem included single commander at division tactical zone level for military and civilian operations. Lac said he had recommended to Diem that this authority be given division commander with proviso that central government (i.e. President) determine when military control in given area will shift to civilian control. Embassy officer asked Lac whether any operational plans for Delta area had been developed as yet. He replied that until organizational concept approved by Diem orders cannot be issued for formation committees at various lower levels including division tactical zone and plans cannot be requested from division tactical zone until committees formed. He added that once concept approved orders for formation committees can go out within two or three days and plans should come up rapidly for approval. Embassy officer made it clear that we need specific operational plans in order to determine where we can bring our assistance to bear in counterinsurgency operations. Lac said that meanwhile he has been made member of Inter-Ministerial Committee on Strategic Hamlets (headed by Nhu). Meeting is to be held at My Tho under Nhu's chairmanship May 24 to deal with Delta provinces. Lac said he plans recommend at this meeting that series of "defended hamlets" be constructed along edge Plaine des Joncs for resettlement inhabitants that area under VC pressures or control. If recommendation approved he said we would be requested to provide assistance. Embassy officer pointed out this would appear to be contrary to Delta Plan concept of restoring security gradually from more secure to less secure areas and asked particularly whether there would be adequate forces to defend series defended hamlets along edge Plaine des Joncs. Lac understood reasons for this question and indicated it would be raised at meeting in My Tho. Lac said he would also have to present to this meeting proposals which had been made by province chiefs of Long An, Dinh Tuong and Vinh Long for erection additional small defense posts. Lac indicated however he did not think very much of this idea himself as there are already too many small posts to defend. Embassy officer likewise said that he did not particularly like this idea which had been presented about week ago to Country Team Committee on Province Rehabilitation. Lac also said that he planned urge at My Tho meeting that province chiefs in area establish specific plan of area priorities for strategic hamlet construction. He said that Nhu supports concept of priorities based on Zones A, B and C--i.e. from more secure to less secure areas taking into consideration population and communications routes and centers--but province chiefs thus far building strategic hamlets helterskelter fashion. Embassy officer strongly supported idea of area priorities for strategic hamlets. Lac agreed that there is essential difference between Thompson Plan approach to pacification which would give priorities to Delta provinces because security forces not adequate to permit simultaneous pacification efforts all over country and GVN's current approach involving strategic hamlet construction in every province in country. Comment: Lack of approval thus far of Lac's organizational concept for counterinsurgency operations in Delta is discouraging but it did not appear from this conversation that Lac has given up hope of obtaining approval. We shall talk to Thuan to try determine just where Lac's concept stands. Shall reserve further comment on British information reported Dept's 1367 (which had come also to us directly from British here). Nolting
205. Memorandum of Conversation Between the Vietnamese Secretary of State at the Presidency (Thuan) and the Charge in Vietnam (Trueheart)/1/ Saigon, May 24, 1962. /1/Source: Department of State, Vietnam Working Group Files: Lot 66 D 193, 6.1-C GVN 1962, Agrovilles. Secret. Drafted by Trueheart. Attached as COPROR/DOC/25 to the minutes of a meeting of the Committee on Province Rehabilitation of May 25, COPROR/SR/10. The meeting was held at Gia Long Palace. SUBJECT I opened the conversation by asking Thuan whether he could bring me up to date on the status of the Delta Plan. We had heard, I said, that the Plan had been "shelved". Thuan said he would give me a "complete explanation". He began by recalling that the Delta Plan had been worked out by the British Advisory Mission in coordination with the U.S. Mission. President Diem had approved the Plan and issued a decree appointing Colonel Hoang Van Lac as Commissioner for the Plan./2/ At about the same time, the Interministerial Committee on Strategic Hamlets was formed./3/ It thus became necessary to ascertain the relationship between the two programs (Strategic Hamlets and Delta Plan) and those administering them. Therefore, Thuan said, after the appointment of Lac, he asked the President, at a meeting (of the NISC?) at which Nhu was present, (a) to define precisely Colonel Lac's authority and (b) to make clear whether the Delta Plan would have first priority (presumably within the Strategic Hamlets scheme). In the discussion of these points with the President, it developed that, on the military side, Lac would not be able to give orders to Division Commanders or to General officers. (The implication was that this was because of his rank.) Moreover, he would not be able to give orders to Province Chiefs. /2/March 16 and 23, respectively. /3/February 3. As to whether the Delta Plan would have first priority, Thuan said that the President's decision was in effect that it would not. The Strategic Hamlet Program would go forward throughout the country. Thuan remarked wryly that the Program was to be completed in six months. In this situation, Thuan said, it was decided that Lac should be made a member of the Strategic Hamlets Committee and given responsibility for the construction of strategic hamlets and defended hamlets in the Delta area. Thuan said that this was logical because the Delta Plan was a plan to establish such hamlets in the Delta area. In fact, he could see nothing inconsistent between the Delta Plan and the Strategic Hamlets Program. I remarked that strategic hamlets were a key feature of the Delta Plan but an equally or more important feature of the Plan was the closest coordination between civil and military authorities at every echelon. The latter did not appear to me to be spelled out in the Strategic Hamlets Program. Thuan did not dispute this. In this connection, I asked whether Lac was likely to get his organizational scheme (which provides for civil-military coordination) approved. Thuan was vague on this. He said that Lac had shown the President his chart but had not given him a "full briefing" on it. I asked whether the Strategic Hamlets Committee might be considering Lac's organizational plan. Thuan was vague on this also, but I gathered that this might be the case. Turning next to Lac's "plan" for constructing defended hamlets in Long An, Binh Duong, and Vinh Long Provinces, roughly along the edge of the Plaine des Joncs, Thuan said that Ambassador Hohler had complained that this was a Maginot Line concept tying down the regular forces. Thuan said he had put this to Colonel Lac, whose reply was that it was proposed to defend the defended hamlets with Civil Guard and Self Defense Corps, not regulars. Regular forces would operate into the Plaine des Joncs. I remarked that this scheme for a defense line along the Plaine des Joncs had been described to the U.S. Committee on Province Rehabilitation, but not as a plan of operation, rather as the views of individual Province Chiefs. I pressed Thuan as to whether the idea had been coordinated with the military authorities. Thuan said eventually that Lac had "discussed" it with the Commander of the 21st Division (who liked it) and the Commander of the 7th Division (who did not like it). In response to my question as to the views of III Corps, Thuan said that this was "just a headquarters." I thanked Thuan for the information he had given me, but said it disturbed me. In the first place, the absence of geographical priorities made it almost impossible for the U.S. to plan its support for counterinsurgency operations. Secondly, I was perhaps even more concerned at the apparent absence of close coordination between civil and military. To leave the military out of planning meant effectively to lose their support in execution. This, I said, was to fight with one hand tied behind your back. Thuan said that the military were represented on the Strategic Hamlets Committee, but made no attempt seriously to refute what I had said. (The Strategic Hamlets Committee, according to Minister Luong, does not review the plans of the Province Chief unless he makes a request for help from Saigon.) After some further discussion of Operation Sunrise and Hai Yen II, Thuan asked if I did not think "things were going well." I said I did, that there was real momentum behind the Strategic Hamlet Program which seemed to me a sound concept. I thought, however, that planning and coordination had to be imposed on the program for constructing strategic hamlets. Otherwise, I feared that many hamlets in exposed areas were going to be overrun. I was afraid that if this happened the Program might be discredited in Viet-Nam and in the U.S.A. Thuan did not comment. When I left, however, after discussing several other matters, Thuan reverted to the earlier discussion and said that he recognized the importance of priorities and coordination. He asked me not to despair. I said that I never despaired.
206. Memorandum From Michael V. Forrestal of the National Security Council Staff to the President's National Security Adviser (Bundy)/1/ Washington, May 29, 1962. /1/Source: Kennedy Library, National Security Files, Vietnam Country Series, Staff Memoranda, Michael Forrestal. SUBJECT /2/The article under reference, attached to the source text, was by Homer Bigart and was datelined Saigon, May 28. I have talked to Sterling Cottrell in the State Department about the Bigart article in this morning's Times. Essentially the article discloses nothing new other than the fact that Bigart has discovered the dimensions of American effort with President Diem which has been going on for some time. For several months now we have been trying to persuade Diem to permit Americans (MAAG and USOM) to dispense economic and military assistance directly in certain of the most pressed provinces on an emergency basis. Although Diem has refused to sanction this sort of operation generally because he feels it would undermine his political control, he has permitted some direct allocation of resources by Americans on a project-by-project basis in connection with Operation Sunrise and counter-insurgency activities in one of the provinces. This is, however, only one of a number of programs suggested by us with which Diem has been slow to cooperate. He has not dug in his heels but is putting on the brakes. He has, for example, reluctantly permitted the assignment of American advisers to the province chiefs but has not in every case allowed them to occupy the same buildings. Cottrell feels that, at this point, Diem's resistance to most of our proposals is not so great as to require more forceful pressures from us; but he, Ambassador Nolting and General Harkins are watching the situation closely. There is, however, one problem which may come up soon where we may have to take a tougher attitude toward Diem. This is the problem of generating sufficient local currency (piasters) to finance increased local cost of maintaining the para-military forces and other counter-insurgency operations. The GVN has argued that it needs more gold or hard currency to back up any increase in piaster circulation. We have taken the position that the GVN should borrow from the central bank and to the extent that inflation became a problem, we would undertake an increased commodity import program. Apparently last year we caved in on a similar request and provided the GVN with gold or dollar reserve. Both State and the Aid Agency do not favor a repetition of this approach. My own very strong feeling is that cash grants to support the international convertibility of local currency is idiotic and dangerous. This is precisely what we have been doing in Laos with the painful results we know so well. I see absolutely no justification for subsidizing the convertibility of piasters, since without strict and effective exchange control, all this does is to increase the importation of nonessentials and does nothing to help get on with the problem of defeating the Viet Cong. If the money supply in Vietnam exceeds the supply of essential commodities, then we should provide the commodities to match the money supply, not free dollars. I sense from a few conversations with the President that he is inclined to agree with this position. Mike
207. Memorandum From the Director of the Policy Planning Staff (Rostow) to the Secretary of State/1/ Washington, May 31, 1962. /1/Source: Department of State, S/P Files: Lot 69 D 121, Chron. Top Secret. SUBJECT The possibility of putting US combat forces into Laos raises this question: Is our objective (a) a split Laos; or (b) a unified Laos from which the North Vietnamese are made to withdraw and from which the Chinese Communists are barred? The issue has been obscured because (a) has been regarded as a "tough" policy; (b), as a "soft" policy. I believe the opposite is the case. If our objective is (a), it probably can be attained if we move sufficient US forces into the area and if we are prepared to have them stay there indefinitely. Our movement would face the Communists with a choice. They could either accept the split, de facto or de jure; consolidate on their side of the line, probably introducing Chinese Communists as well as North Vietnamese forces; and then look forward to a gradual extension of their power in Laos by indirect aggression which the long lines of demarcation and the nature of the terrain would make thoroughly possible. From their point of view the split would be a great advance over the situation in 1954 when the Communists were merely granted two Lao provinces in the north. Moreover, it would be very difficult for us under the new de facto situation to argue that it was inappropriate for the Vietminh and the Chinese Communists to come into the north if we remained in the south. On the whole I believe this is the outcome Ho, Mao, and Souphanouvong want. My hunch is that the Soviet Union has, on the whole, opposed a split because it raised the possibility of escalation in which their prestige would be involved and because it would push North Viet-Nam closer to Peiping. On the other hand, the attractive situation on the ground and the low costs we have imposed on the North Vietnamese for their aggression in northern Laos, have made it difficult for Moscow to persuade Ho and Souphanouvong honestly to back a neutral, independent Laos. On the other hand, if we set as our objective a Laos from which both North Vietnamese and Chinese Communist troops are excluded, I suspect we shall have to raise the costs to the Communists beyond the point of present defensive planning. We should have to take the view that our policy in Southeast Asia is to get the North Vietnamese forces back to North Viet-Nam; and to keep the Chinese Communists from using the road into Laos they are now building; and we would have to be prepared to impose on North Viet-Nam sufficient costs to make a neutral, independent Laos the most attractive realistic alternative open to the Communists. Specifically, therefore, if aggression is resumed in Laos by the Communists, I urge that we consider the following track: 1. We restate our objectives in both South Viet-Nam and Laos as, essentially, a return to the Geneva Accords of 1954 (including explicitly a neutral, independent Laos). 2. We surface the crucial role of the North Vietnamese forces in Laos, as well as in South Viet-Nam, stating publicly for the first time what is true; namely, that the aggression in Laos is essentially Ho's rather than Souphanouvong's. 3. We propose to inflict selective damage on North Viet-Nam for its aggression beyond its borders until that aggression ceases. I do not have in mind here massive bombing of Hanoi. I do have in mind highly selective attack on transport and power facilities, by precision methods, which are now within our capability, plus some mining of Haiphong harbor. 4. In this setting we would move vigorously into Laos and immediately take measures to close off the infiltration through Laos into South Viet-Nam. It is my assessment that, unless we are prepared to raise the ante in this way, the Communists will judge--and judge correctly--that their present salami tactics in Southeast Asia will succeed. If, however, we are prepared to take the risks of this wholly legitimate act against North Viet-Nam--which has no right to have its soldiers south of the 1 7th parallel or in Laos--we have a fair chance of giving Khrushchev a legitimate argument for going forward on the track which Mr. Harriman and Mr. Pushkin discussed in Geneva. There are, of course, risks in this as in any other action designed to stop aggression; and we should be prepared for any level of escalation that the Communists may choose in response. On the other hand, the internal situation in both North Viet-Nam and Communist China, plus the relatively favorable balance of nuclear strength between the US and the Soviet Union, and the Sino-Soviet split, make this as good a time to face this risk as any we are likely to confront in this decade. Finally, I believe our relatively passive policy in both Viet-Nam and Laos has weakened the hand of those in Moscow--including Mr. Pushkin--who wish to see the situation in Southeast Asia defused. In short, I believe a bolder policy than that now envisaged has a chance of fending off an outcome we have long sought to avoid; that is, an indefinitely prolonged US commitment to hold with US troops the Mekong Valley and southern Laos.
208. Editorial Note On June 2, 1962, the International Commission for Supervision and Control in Vietnam (ICC), comprised of the representatives of Canada, Poland, and India (chair), issued its Special Report to the Co-Chairmen of the Geneva Conference on Indo-China. The report was made public on June 25 and on July 2, the Bureau of Far Eastern Affairs, Department of State, released it as a special publication. This publication included the report itself, two letters to the ICC liaison offices in Saigon and Hanoi protesting lack of cooperation with the ICC in its attempts to inspect for war material in North and South Vietnam (April 5 and 6), a statement of dissent from the Report by the Polish Delegation (June 2), and an Indian refutation of the Polish dissent (June 2).
209. Telegram From the Embassy in Vietnam to the Department of State/1/ Saigon, June 4, 1962-4 P.m. /1/Source: Department of State, Central Files, 751K.5/6-462. Secret. Repeated to CINCPAC, Clark Air Force Base, Phnom Penh, Bangkok, Vientiane, Manila, Paris, Taipei, New Delhi, Singapore, Hong Kong, Hue, and Fuchu. 1550. Our 1503./2/ Second Weekly Status Report (delayed by Dept Cirtel 2032, 2040, 2045)./3/ /2/Document 203. /3/Dated May 31 and June 1 and 2, respectively, they imposed a restriction on the transmission of telegrams to the Department of State until 1 p.m. on June 4. The paper copies of the telegrams have been destroyed. (Department of State, Central Files, Microfilm Cassettes) Political 1. Delta Plan and Strategic Hamlets Program. Organization for counterinsurgency operations in Delta presented by Delta Plan Commissioner, Colonel Lac, has not yet received Presidential approval, and indications are that Delta Plan has been merged into Strategic Hamlets Program under Ngo Dinh Nhu. Lac has been made member of Strategic Hamlets Inter-Ministerial Committee and given responsibility for construction of strategic and defended hamlets in Delta area. Meeting held May 24 at My Tho (Headquarters 7th Division south of Saigon) under Nhu's chairmanship at which Lac presented plan for series defended hamlets along edge Plaine des Joncs./4/ Task Force Province Rehabilitation Committee subsequently met with Minister of Interior Bui Van Luong (representing GVN Strategic Hamlets Committee) on May 28 expected request for U.S. assistance to defended hamlets project was not presented./5/ /4/See Document 205. /5/According to the minutes of the June 1 meeting of the Committee on Province Rehabilitation (COPROR/SR/11), Luong requested, and the Committee approved, 100 tons of barbed wire for three provinces in the I Corps area. (Department of State, Vietnam Working Group Files: Lot 66 D 193, 6.1-c GVN, 1962, Agrovilles) Comments: Original Delta Plan included strategic hamlets as one of key elements but evident GVN primary emphasis on strategic hamlets as demonstrated by above developments risks loss of coordination of civilian and military action which Delta Plan and Lac's organizational concept had envisaged. Building of strategic hamlets all over country abandons priority envisaged for Delta Area and risks discrediting strategic hamlet principle because of inadequate number of security forces to defend strategic hamlets everywhere at once, as well as inadequate civilian personnel and resources to carry out civic action, economic and social phases of program simultaneously all over country. This also leaves us without priorities as to where to bring our assistance to bear except in two clear-and-hold operations in progress in Binh Duong and Phu Yen Provinces. We working to get priorities established and adhered to. 2. Operation Sunrise (Binh Duong Province). Regional delegate, General Cao, is initiating establishment two more resettlement villages in addition to three already established under this operation. Also plans two later stages involving three and four additional resettlement villages respectively. Rate development these villages determined primarily by availability of troops for defense. 3. Operation Hai Yen II (Phu Yen Province). Operation continuing with good civil-military coordination but nothing significantly new to report. 4. Montagnard Developments. Various sources continue report flow of Montagnards from mountain area seeking GVN protection. We now attempting assemble complete report as to number involved (apparently about 100,000), just where they are and what their needs are. GVN this week requested air assistance in transporting 400 tons rice from Saigon to meet emergency Montagnard needs. MACV helping on this. GVN also desires additional U.S. help with respect rice, cornmeal, tools, etc. for Montagnards. Shall determine what we can further do on basis report now in preparation. 5. Social Purification Law. President promulgated this law which has now gone into effect. Contains provisions about smoking and drinking of minors, bans on dancing, superstitious acts, prostitution, contraceptives, etc. Like most laws changing social customs it has given rise to much sniping and has caused decline in government's popularity at least in cities. Also likely increase unemployment among taxi-girls, orchestras, waiters, etc. 6. Australia. Australian Government has announced that it will send group of up to 30 military instructors to Vietnam to provide instruction in jungle warfare, village defense and related activities. Dispatching military officer to Saigon to discuss just how Australian personnel can be used. Foreign Minister Barwick in Saigon on two-day visit. Publicly indicated he wished get clearer picture of means by which Australia can aid Vietnam. Expressed strong support for Diem and GVN, and admiration of US efforts and stand here. 7. ICC. ICC expected meet June 1 to take majority decision (Indian and Canadian) on DRV subversion and GVN violations Articles 16, 17 and 19. Canadians have now decided not to file addendum making explicit cause-and-effect relationship, but are expected issue public statement in Ottawa along this line. Hanoi continuing pressure against ICC through mass meetings, petitions, veiled threats, etc. to prevent or delay decision. GVN opened to press May 29 exhibit at General Staff Headquarters on DRV support of guerrilla war in SVN. Released communiqués on recent letters to ICC including proposal of detailed system of ICC controls along Laos-South Vietnam frontier and in western part Demilitarized Zone. ARVN Chief Staff General Khanh who gave briefing to press at exhibit also told press large GVN air operation May 27 may have succeeded in destroying headquarters VC Regional Command for Central Vietnam. Comments: Attendance foreign press corps disappointingly meager, apparently because of repeated postponement of dates for press conference and lack proper coordination and cooperation among GVN officials. 8. DRV. According Liberation Radio, Central Committee of National Liberation Front has issued communiqué stating that U.S. has invaded South Vietnam and will be resisted. Warns Western nationals that since Americans cannot be distinguished physically from other Westerners latter should restrict movements and carry identity cards for their own protection. Implication is clear that Americans are to be considered targets. Hanoi propaganda media also attempting exploit GVN trial, conviction and death or hard labor sentences on May 23 of 11 students and 1 teacher including those accused participation in grenade attack on Ambassador in July 1961/6/ and attacks on MAAG personnel. Hanoi press lauds students' "struggle against American aggression." Hanoi Radio reported demonstrations by "tens of thousands," including one of 40,000, in Hanoi to protest sentences. /6/See the editorial note, Foreign Relations, 1961-1963, vol. I, Document 86. Economic 9. General. Failure SVN economy to absorb estimated level of US-financed revenue-producing imports, and estimated higher GVN expenditures, particularly military and para-military, have led GVN to revise budget estimates for CY 1962. Revised estimates show deficit of 4.8 billion piasters. GVN is of opinion that failure maintain import levels is mainly due to procurement restrictions imposed by U.S. aid policy. Consequently, GVN has requested cash grant of U.S. $25 million to enable "worldwide" procurement of variety of imports, including machinery and fertilizers and, thus, not only help economic development but result in sizeable increase revenues through import taxes. [Here follow sections on rural affairs, public works projects, and internal public affairs activities.] Summary Evaluation. In terms revival strength GVN versus Viet Cong during week since last report, I see no significant internal factors indicating any substantial change. International recognition of importance Vietnam's struggle against Communist subversion continues to increase (Australian ForMin's forthright support and upcoming ICC action), and has beneficial effect on morale here. GVN planning, organization and execution of plans continues to be spotty. Despite some delays and setbacks, I think improvement can be noted. It goes without saying that outcome in Laos will have very great effect on chances of ultimate success here. Nolting
210. Telegram From the Embassy in Vietnam to the Department of State/1/ Saigon, June 6, 1962, 10 a.m. /1/Source: Department of State, Central Files, 811.0051K/6-662. Secret. Repeated to CINCPAC for Polad. 1564. Task Force Viet Nam. Reference: Aidto 999, May 24./2/ /2/Aidto 999 reported that AID declined to deviate from the recommendations of the Staley-Thuc report of August 1961 on aid levels. (Ibid., 811.0051K/5-2462) This message represents Task Force's considered views on memorandum handed US reps by President Diem at Dalat (despatch 476)/3/ and a communication received May 28 from Secretary Thuan. The latter communication (pouched)/4/ provides additional data in support of GVN memorandum. In brief, it predicts a deficit in central government budget for CY 1962 of 4.8 billion piasters which attributed as follows: 1.7 billion to military budget; 3.17 billion to civil and paramilitary forces budget. Argument is made that deficit arises primarily because of failure to dispose of US economic aid and difficulties of importers to use such aid because of price factors resulting from limited world wide procurement requirements under USAID. Memorandum suggests a $25 million cash grant (presumption is that such a cash grant would have no limited procurement strings attached to it). Of this $25 million (to be disposed of within this calendar year) 5 million dollars would be spent for freight payments on foreign flag vessels, 12 million dollars for industrial machinery imports, and 8 million dollars for a variety of raw materials of which major item is fertilizer. /3/ See footnote 5, Document 203. /4/ Not found. Two GVN written communications, plus several informal discussions, point to another serious negotiation with GVN on financial matters. We have given much thought to position we should take. Before describing effect of present economic and financial situation SVN on counter insurgency effort and making recommendations thereon, several factual errors in GVN memorandum of May 9 need correction: 1.GVN's balance of gold and dollar reserves as of March 31, 1962 was 164,450,000 dollars (figures given in GVN's memorandum failed to include about 20 million dollars in gold). 2. Average yield on US-financed imports is approximately 74 piasters per dollar rather than 82. 3. The contention that GVN has carried out all financial measures recommended in Staley-Thuc Report/5/ is exaggerated. While the 5/7 tax on foreign exchange (25 piasters per dollar) and revised scale of customs duties have been beneficial steps, there still remains much that can and should be done by GVN to increase its revenues. Revenues from taxes on real estate and income, for example, are up 16 per cent over last year, but should be considerably higher. (While rate of 60 piasters per dollar, plus customs duties, is not as high as it should be: we do not think time is right to press for another increase in foreign exchange taxes. While this should be long range objective, present business, political, and psychological conditions here make it inadvisable to press for it now.) GVN has this year, for first time, been confronted with necessity of major deficit financing. GVN estimates a deficit of approximately 4.8 billion piasters (on a total budget of 23.7) for this year. (Only earlier estimate was in the order of 3.5 billion piasters.) /5/See the letter transmitting the report in Foreign Relations, 1961-1963, vol. I, Document 93. Two issues are presented: (1) concerning the level of GVN foreign exchange holdings, and (2) the necessity to finance the piaster budget to wage a successful campaign on all fronts. With regard to question of maintaining about $200 million level of foreign exchange reserves, GVN's position is that, in adopting Staley-Thuc Report, US and GVN both agreed that such level should be maintained by mutual measures. We have already explained to GVN that such factors as increase in list of US-financed imports (petroleum, sugar, cotton yarn--23 million dollars), dollar expenditures by US forces for military construction (15-20 million dollars), probable revival of GVN rice exports during second half of 1962 (5 million dollars) will reverse recent trend and probably restore GVN's reserves to region of 200 million dollars by mid-1963. This assumes that GVN will not repeat its unusually high drawings on foreign exchange reserves as during last half of 1961. GVN foreign exchange position is not, then, an acute economic or financial problem. It is, however, a real psychological and political factor on GVN side. With respect to piaster shortage, there will doubtless be a requirement for major deficit financing this year. Our original US-GVN calculations were that GVN budget of 23.4 billion piasters could be financed by: GVN's own revenues of 11 billion piasters; US imports amounting to 165 million dollars, including PL 480 (11 billion piasters); bank borrowing of 1.5 billion piasters. However, failure GVN economy to absorb more than approximately 135 million dollars US imports has resulted in shortfall govt income. Several factors are responsible for this situation, chief of which are sharp rise in prices resulting from monetary reform, on top of price increases resulting from limited world wide procurement policy, and insecurity in countryside. We are not certain whether GVN's conclusions that removal of limited world wide procurement restrictions on aid dollars would in fact result in sales of an additional 25 million dollars of foreign exchange. It would be helpful if Washington could give exemptions on certain selected commodities this year to test GVN assumption. This, we think, could be done without creating a precedent for other countries, in light of SVN's emergency situation. We recognize that in purely economic and financial terms, GVN can and probably should proceed to solve their piaster shortage through central bank financing of the budget deficit, which could probably be done without major price dislocations because of current slow-down in business activity and reduction in velocity of currency in circulation. We not unaware of GVN proclivity to pass the buck to Uncle Sam, but we do not believe that standing pat in present situation will be conducive to winning the struggle here, despite the lack of an airtight economic rationale on GVN side. The US has made a very large investment of resources, manpower and prestige in this struggle. We need now a negotiating position from which to gain the largest possible contribution by the GVN from its own resources which will be both sound and timely and will keep up the momentum. If we do not come up with such a proposal, believe result will be either a slowdown or an effort to "sweat it out of the peasants" (e.g., failure to pay for labor, supplies, care for Montagnard population, civic action, etc.). In addition to regularly budgeted items, there constantly arise in this fluid situation special requirements and special opportunities, requiring program changes or additional funds. For example, unforeseen requirements for strategic hamlets, "clear and hold" operations, relief and resettlement of many thousands of Montagnards who have flocked to government for protection, military civic action programs, etc., all present additional piaster requirements. They are tremendously important in counter-insurgency effort. US policy aims at speed-up in getting necessary supplies and incentives to Vietnamese peasants in order to enable them to defend themselves. We have sought a method to apply counterpart funds directly to rural rehabilitation projects. In the overall shortage of piasters for budgeted requirements, however, this has been difficult to achieve as it involves robbing Peter to pay Paul, although we have succeeded in getting one such agreement implemented. Our considered recommendations for meeting current problem are as follows: 1. A waiver of limited worldwide procurement for industrial machinery. This is a category in which GVN claims that imports have fallen because of price factors stemming from limited worldwide procurement, particularly for small orders which are typical here. It is a fact that licensing activity for industrial machinery has dropped from an average annual rate of about 20 million dollars a year to an annual rate of 6 million during 1962. GVN estimates that an additional 12 million dollars of industrial machinery would be imported this year under conditions of unlimited worldwide US-financed procurement. While we are not certain that this would in fact result, we believe it desirable to test the GVN's assumption, and we believe this could be done without setting a precedent in view of the situation of active insurgency prevailing here. 2. Purchase from Viet Nam's National Bank approximately 730 million piasters for US direct use (as agreed with GVN) for counterinsurgency operations where timely action is vital. This would produce a piaster fund enabling US to take direct action, where necessary, in order to apply prompt aid measures in US interests, and would, of course, additionally contribute 10 million dollars to GVN's foreign exchange reserves. These funds would be from allotments currently available to USOM in Saigon--i.e., this would not be additional aid to that already made availa61e by Washington. We consider this a justified extraordinary action for this year. En the first instance, when we formulated the current year's budget, the full measure of the cost of the counterinsurgency effort was not foreseen; thus adequate provision was not made for screening out other items of expense. Secondly, the fall-off in demand for imports has served to blunt the anticipated increase in revenues deriving from import duties. If this proposal is approved, we will make a strong point of the fact that the GVN cannot count on this kind of action being repeated in future years. 3. In return, we would require an understanding from the GVN to finance from their own resources the remainder of the central government budgetary funds. We would urge measures to increase internal taxes, both assessments and collections, particularly on real estate and income. (The GVN record in this respect is improving--by increase of 16 per cent during this year--and we have reason to believe that the GVN intends to press forward in this field.) Deficit financing would obviously be the way to make up the difference, and we would require a firm undertaking from GVN to do so. Request Washington reaction as soon as possible. Nolting
211. Telegram From the Embassy in Vietnam to the Department of State/1/ Saigon, June 6, 1962, 1 p.m. /1/Source: Department of State, Central Files, 811.0051K/6-662. Secret; Priority. Designated for AID Director Hamilton, Assistant Secretary Harriman, McNamara, and Taylor. 1568. Task Force Vietnam. Embtel 1564/2/ gives our considered recommendations for breaking local currency bottleneck which is beginning to impede total counter-insurgency effort in Viet-Nam. /2/Document 210. In summary, position is as follows: 1. Original GVN budget for CY 1962 has been increased and will probably go higher if GVN is to do the things "we and they" think necessary to win counter-insurgency. 2. A shortfall in estimated absorptive capacity of SVN economy has developed, to extent of approximately $30 from original estimate of $165 million of US-financed imports for CY 1962. 3. As result of these and other factors, GVN is faced with budget deficit substantially greater than that anticipated at time adoption Staley-Thuc report. There is developing a shortage of piasters despite available US commercial aid. 4. In this situation, GVN is reluctant and slow to finance special counter-insurgency measures, including targets of opportunity, which are tremendously important (e.g. care and feeding of Montagnards who are coming over in increasing numbers, adequate provision for resettled people, pay for work on strategic hamlets, pay for newly elected village officials). 5. While a good economic argument can, and has, been made that deficit financing by GVN (borrowing from National Bank) is way to meet problem, plain fact is that this will probably not be done in sufficient amount--or done soon enough--to keep momentum in civic-social-economic actions in "clear and hold" operations, rural rehabilitation, and Strategic Hamlet Programs. 6. We propose to meet the problem by a combination of orthodox and unorthodox means--as set forth in last paragraphs Embtel 1564. 7. Proposals do not require an increase in the total amount of US economic aid already approved for Viet-Nam for FY 1962. 8. Would greatly appreciate your personal consideration of our proposals. Nolting
212. Telegram From the Department of State to the Embassy in Vietnam/1/ Washington, June 8, 1962-7:22 p.m. /1/Source: Department of State, Central Files, 811.0051K/6-662. Secret; Niact. Drafted by Stoneman, Furst (AID), Wood, and Spurgin (State) and cleared in DOD, Treasury, and BOB. Forrestal's name had been typed in as clearing officer for the White House but was crossed out. Designated for the attention of James Fowler of AID, then in Vietnam. Repeated to CINCPAC for Polad. 1425. Task Force Viet-Nam. Ref: Embtels 1564 and 1568./2/ /2/Documents 210 and 211. 1. Department understands that this is a crucial time in Viet-Nam war, that it is of capital importance (a) to supply quickly the strategic hamlets being set up all over country and show villager GVN offers him more than VC, and (b) to show GVN can meet minimum needs approximately 100,000 Montagnards now seeking protect themselves from Viet Cong, that prompt action now will increase momentum these and other programs with good chance taking initiative from Viet Cong during next six months. Is this correct? 2. Commend reftel's basic approach of attempting convert GVN pressure for cash grants into a useful and constructive lever for more effective counter-insurgency support. Presume reftel proposals are part of integral package along with subject of counter-insurgency PA discussed Toaid 1077 and 1095./3/ Recognize need promptest possible response reftels for your current negotiations with GVN. Final interagency action requires following information: /3/Neither found. a. Results June 10-11 Saigon discussion with Fowler reftels and points raised in this message. b. Does urgency situation require FY 62 funds in June (which would require use MAP transfer funds) or could situation be met through AID FY 63 funds (which can be assured in July for approved requirements)? Also, as real extent of GVN CY 62 budget crisis probably not precisely known for several months, could final consideration of proposed piaster purchase be deferred on some basis of U.S. contingent assurances until September or October without serious effect? c. Could a reduction in rate of counterpart deposit on limited number key U.S. source commodities effectively substitute for waiver of limited worldwide procurement by putting cost of U.S. source items to VN consumer on parity with procurement from presently excluded sources such as Japan? Reduction counterpart deposit is corollary measure envisaged for certain cases in U.S. policy on limited worldwide procurement. Would not wish press this if it would psychologically unduly undercut GVN's exchange rate reforms. d. What is rationale for amount $10 million at this time to purchase piasters? e. What will be relationship of piasters purchased with $10 million to proposed counter-insurgency stockpile to be created with $10 million PA proposed Toaid 1077 and 1095? f. It would be helpful to know the composition, rate of return and location of Vietnamese reserves. 3. What would be best negotiable arrangement with GVN to give U.S. most desirable degree control over piaster counter-insurgency fund? How would release procedure differ from present counterpart procedure? How define "remainder" essential expenditures (last para your 1564) which GVN would finance from own resources? Would closer joint budgetary review on continuing basis be necessary to assure GVN not deferring expenditures which we regard as important? 4. While we sure you keenly aware factors in following paras, your comments would be helpful in meeting your requests. 5. We hopeful that reftel concessions, if made, would lead to increased GVN assumption its own financial responsibility. There is Washington concern lest extraordinary U.S. aid measures create substantial disincentives for GVN to pursue the social, economic and fiscal measures sought by the U.S. which also very much a part of counter-insurgency, the lack of which in longer run might create pressures or disorder counter to our counter-insurgency efforts. Illustrative concerns are: a. Understand war burden already falls most heavily on rural populace while richer urban groups contributing relatively little. Better tax administration could help shift burden. b. Understand current piaster shortage not only result of shortfall of AID-financed imports below $165 million (which U.S. expected when that figure set as target), but also results from shortfall tax collection which appears be actually declining despite GVN pronouncements increased tax rates. Request comment on measures GVN might be induced undertake. c. Feel budget gap probably even larger next year due limited absorptive capacity imports and counterpart generation which expanding domestic industry may reduce further. At same time, counterinsurgency budget costs likely increase sharply. What is outlook for more specific GVN action help fill gap? 6. As US making strong play get more aid to VN from other countries (see Circular Aidto X-552/4/), we concerned lest waiver of limited worldwide procurement undercut these efforts. Realistically, impact of any such other aid arrangements probably not realizable until next year. However, request refined estimate as to amount waiver actually usable during remainder CY 62. This estimate is not precondition to 730 million piaster purchase recommended para numbered 2 (Embtel 1564). For processing waiver request, need specific examples types machinery to be imported from now-excluded sources that not available from U.S. procurement, and rationale as to specific level of waivers requested. /4/Dated June 5, not printed. (Department of State, Central Files, 851K.0000/6-562) Rusk
213. Special National Intelligence Estimate/1/ SNIE 58-5/1-62 Washington, June 12, 1962. /1/Source: Department of State, INR-NIE Files. Top Secret. COMMUNIST REACTIONS TO ADDITIONAL US COURSES OF
/2/According to a note on the cover sheet, the Central Intelligence Agency and the intelligence organizations of the Departments of State, Defense, the Army, the Navy, and the Air Force and NSA participated in the preparation of this estimate. The Directors of the Bureau of Intelligence and Research, Department of State, of the Defense Intelligence Agency, of the National Security Agency, and of the Joint Staff (Intelligence), and the Assistant Chiefs of Staff for Intelligence of the Army, the Navy, and the Air Force, concurred in the estimate. The Atomic Energy Commission and FBI representatives to the USIB abstained on grounds that the subject was outside their areas of jurisdiction. The Problem To estimate the likely Communist responses to certain courses of action by US and allied forces with respect to Laos which are in addition to those considered in SNIE 58-5-62, "Probable Communist Reactions to Certain Possible US Actions with Respect to Laos," dated 31 May 1962./3/ These courses of action were provided by the Departments of State and Defense. /3/Not printed. (Department of State, INR-NIE Files) The Estimate A. US air attacks against Communist supply bases in Laos and against the Laotian parts of the main overland supply routes from North Vietnam. This course of action might be taken in connection with or subsequent to occupation of the major Mekong River areas of Laos by 8,000-10,000 US troops supported by Thai forces. 1. The Communists would almost certainly conclude that the US was preparing for extensive military operations in Laos, particularly if reinforcements and supplies were being built up in Thailand. They would attempt to cope with the US air attacks by both passive and active means and would maintain their forces in the areas of Laos they now control. Therefore, it seems likely that North Vietnamese antiaircraft units in Laos would be reinforced. In addition, small numbers of fighter aircraft, flown by Chinese Communist and possibly Soviet pilots, perhaps in the guise of North Vietnamese, probably would be introduced into North Vietnamese airfields. The Soviet airlift would almost certainly continue as feasible. To the extent of their limited capabilities, Communist aircraft would probably attempt some retaliatory action against US positions in Laos. However, as long as the US air attacks were confined to Laos, the Communists would almost certainly not extend their own air operations beyond the Laotian borders. 2. We believe that the Communist ground forces would probably intensify the actions we have already estimated they would take in response to the US occupation of the Mekong River valley areas: they would probably deploy to confine the areas under US control and harass US outposts, patrols, and lines of communications. North Vietnamese reinforcements would almost certainly be introduced. The Chinese Communists would reinforce their border garrisons and some forces might enter northern Laos. Moscow and Peiping would almost certainly increase their logistics support to North Vietnam. 3. At the same time the Communists would be concerned to keep the conflict from spreading beyond Laos, and would take vigorous political action, including intensified propaganda efforts, to obtain a cessation of hostilities and the resumption of negotiations. B. US air attacks against North Vietnam. The US air attacks would be extended to include the North Vietnamese ends of the main supply routes into Laos, but not the principal population centers such as Hanoi. This course of action might be taken as part of a US offensive involving 45,000 US troops to occupy the panhandle area of Laos or might be undertaken in connection with the lesser action involving the occupation of the Mekong River valley only. 4. Attacks on North Vietnam territory would, in the Communist view, mark a major turning point in the situation. The Soviets and Chinese would declare their full support for Hanoi. In an immediate effort to obtain a cessation of the US attacks, they would orchestrate their political, diplomatic, and propaganda moves in the UN and elsewhere against what they would proclaim was an act of outright aggression. 5. Peiping and Moscow would almost certainly introduce air support to protect North Vietnamese territory. The chances of the introduction of Chinese Communist troops into Laos would increase significantly, but we do not believe that they would consider it necessary to introduce them into North Vietnam at this stage. The Communists would be concerned to keep hostilities from spreading and, initially, they would confine their action to the defense of North Vietnam. However, if the US attacks were intense and sustained, and particularly if they were associated with a US investment of the Laotian panhandle, the Communists would be likely to regard them as a forerunner of a general military offensive against North Vietnam. Under these circumstances, they would almost certainly attempt to extend their air attacks to include bases in Thailand and possibly in South Vietnam and US carriers. We do not believe that there would be significant differences between Moscow and Peiping insofar as the question of coming to the aid of Hanoi is concerned. C. Amphibious Operations Against North Vietnam. This situation assumes a division-strength landing in the Vinh area followed by a drive west to the Laos border to link up with US forces in Laos. This course of action would be undertaken in connection with a US offensive involving 45,000 US troops to occupy the panhandle area of Laos. 6. Open invasion of North Vietnam would be considered by the Communist Bloc as a direct challenge to the integrity of the North Vietnamese regime and as a threat to the security of Communist China. Hanoi would take speedy and vigorous action to repel the invasion./4/ Communist China would almost certainly provide additional ground forces if they were needed. The Bloc would launch a violent propaganda campaign, warning of the danger of nuclear war, in an effort to obtain US withdrawal under international pressure and condemnation. If the US was undeterred and the invasion made headway, US ground and naval units in the immediate area would almost certainly be attacked by Communist air elements, perhaps under the guise of a North Vietnamese air force. In addition, it is possible that Communist submarines would be brought to bear. Supply and operational bases in Laos, South Vietnam, and Thailand would probably be attacked by Communist air forces. The Communists would be highly unlikely to take the initiative to resort to nuclear weapons at this level of US action. /4/The North Vietnamese Army consists of 280,000 regular troops supported by 100,000 militia. [Footnote in the source text.]
214. Memorandum From the Ambassador at Large (Bowles) to the President/1/ Washington, June 13, 1962. /1/Source: Kennedy Library, National Security Files, Meetings & Memos, Staff Memos, Chester Bowles. Secret. SUBJECT In my memorandum to you of April 4th, "U.S. Policies in the Far East,"/2/ I urged that we clearly define and publicly state "a coherent over-all political objective" for our involvement in Southeast Asia. Last Friday/3/ I again discussed this question with Mac Bundy. /2/Document 142. /3/June 8. Since then, two developments have given the matter new urgency. The first is Mike Mansfield's Michigan speech/4/ which has focused public and Congressional attention on our ultimate aims in Southeast Asia. The second is the apparent Laos settlement which now offers us an excellent opportunity for a positive clarification of our over-all political objectives. /4/Reference is to Senator Mansfield's commencement address at Michigan State University on June 10. (Yale University, Bowles Papers, Box 285, Folder 0282 Mansfield 6/10 at MSU Commencement) The military decisions we have made thus far in Vietnam and Thailand and our contingency planning for Laos have been forced on us by events. Although the necessity for these decisions is to be regretted, the arguments for them at each juncture have been compelling. However, our step-by-step military response has not been accompanied by a comparable effort to think through our ultimate political aims for Southeast Asia as a whole. As long as we lack a political "grand design" for Southeast Asia, the initiative will continue to rest with our adversaries and with our allies and camp followers, whose parochial views often ignore the global forces with which American policy must contend. As matters now stand, we may find ourselves forced to choose between an escalating war or a humiliating retreat in an area where the strategic conditions are disadvantageous to us and where direct U.S. military participation would be roundly denounced by domestic critics as "another Democratic war." If in the meantime we have failed to go beyond Mr. Eisenhower's famous "falling dominoes" analogy to explain our political objectives in Southeast Asia, we may find ourselves increasingly the captive of events with unpredictable results both at home and abroad. The historical parallels are impressive and disturbing. Leaders of great nations have often found themselves pressed by a succession of events, each non-decisive in itself, into a position which they would not conceivably have chosen and from which there was no honorable avenue of retreat. The Guns of August overflows with pertinent examples from World War I. In World War II, caught among the differing theories of Henry Morgenthau, Robert Taft, Henry Wallace, Stalin and Churchill, we found it impossible to agree on the kind of post-war Europe for which we were fighting. One by-product is the present ugly dilemma of Berlin. In his discussion of the Korean War, Dick Neustadt has analyzed the process of "non-decision" which resulted in our crossing of the 38th Parallel, our march to the Yalu, and our catastrophic rout by the Chinese. As Neustadt and others have pointed out, our inability to agree on our political objectives for Korea as a whole resulted in an unsatisfactory truce at the 38th Parallel two and one-half years--and many thousands of lives--after the Inchon landings when precisely the same settlement could have been achieved on our terms in an atmosphere of dignity and success. During this period the French in Southeast Asia were also in the midst of a war with no clear definition of the broad political and economic aims which the fighting was designed to achieve. For domestic political reasons, the French Government refused to spell out their willingness to grant freedom to the three nations of Indo-China once the struggle against the Communists had been won. As a result, with nearly the entire population against them, the French Army suffered casualties that totaled more than 90,000, with money costs that exceeded all the aid we gave France under the Marshall Plan, to which we added $3 billion in U.S. equipment. Ten years later we are still paying for this debacle. I believe that we may now stand at a comparable threshold of decision. In Southeast Asia U.S. forces are involved in operations of uncertain dimensions. This involvement is taking place in a political framework which is unclear to our allies, our adversaries, the people of Southeast Asia, the American public, and the Congress. The greatest danger may lie in the profound confusion that exists among the 200 million Southeast Asians who are most directly concerned. Most young anti-Communist Vietnamese, Cambodians, Laos [Laotians], Burmese, Malayans and Indonesians now tend to think of the U.S. in terms of the massive military supplies which we sent the French "colonialists" in the early 1950's, . . . and of our support for Sarit, Diem, Phoumi and Chiang Kai-shek, none of whom can be said to reflect the "New Frontier" in Asia. It is essential that we present ourselves in a fresh and affirmative role. This requires a governmental decision, followed by a public statement understandable both at home and abroad, in which we spell out our objectives for Southeast Asia as a whole. In June 1947 General Marshall dramatically outlined our economic and political aims for Europe. In 1961 you described through the Alliance for Progress what we are seeking to achieve in Latin America. In my opinion, the time is at hand for a similar statement in regard to Southeast Asia. Here, as elsewhere in the world, what we want for the people of the region is almost precisely what the people want for themselves: guaranteed national independence, more rapid economic development, and maximum freedom of choice within their own cultures and religions. These objectives not only coincide with our own interests; they are wholly compatible with our present undertakings. By spelling them out as American objectives in Southeast Asia, we can provide a compelling rationale for whatever future action--military, political or economic--we may be required to take in the region. Such a clarification by you would be immediately reassuring to the politically sophisticated people in both neutral and aligned states of the region. It would firmly identify the United States Government and people with peace, development, and the increasing regional unity which offers the most compelling alternative to Communist divisiveness and fragmentation. It would give American military, political and economic operations in Southeast Asia the affirmative, understandable, appealing purpose which has been largely lacking since the days of Roosevelt. It would also give us a clear initiative in dealing with our Communist adversaries, while encouraging whatever elements within the USSR may desire stabilization and neutralization of the region, and removing any valid excuse for Chinese Communist aggression based on a misunderstanding of our objectives. I have outlined the kind of proposal that I have in mind in a rough draft of a speech, to be made by you, which I am attaching to this memorandum./5/ /5/Not printed; 15 pages in length, it outlined a proposal for economic development of the Mekong River region. In it I have sought to identify the United States with the forces of peaceful, democratic change throughout Southeast Asia, to picture the kind of future that the people there may achieve once the fighting has been ended, and to offer our assistance and support in this great effort It is important, of course, that the language of such a statement be sufficiently balanced to allow us room for maneuver while providing a firm commitment of U.S. support for a new start in this war-torn region, if the Communists will permit the establishment of peace. As far as American public and Congressional opinion is concerned, I believe that such a declaration of American political objectives in Southeast Asia would be generally welcomed and applauded by members of both political parties. I also believe that at the very least such a statement will restore confidence in the United States throughout Southeast Asia.
215. Memorandum From the Naval Aide to the President's Military Representative (Bagley) to the President's Military Representative (Taylor)/1/ Washington, June 13, 1962. /1/Source: National Defense University, Taylor Papers, T-185-69. Confidential. SUBJECT 1. In talking with Mr. Cottrell yesterday afternoon, I gathered Alexis Johnson is moving ahead with plans to form a Southeast Asia Task Force. Cottrell indicated present thinking is to chair the Task Force with Mr. Koren, Director of Southeast Asian Affairs at State, maintaining the Viet-Nam Task Force as a separate entity. Cottrell and Koren will then effect necessary liaison and coordination between the two groups. I sense State may be running with this ball too quickly and that there is a need to stop and look at the concept of Task Forces. 2. Based on past discussions within this office, on task force organization, the important issues can be isolated as follows: a. The scope and definition of responsibilities of the task force director. b. The Department from which the director is selected. c. The character of the task force membership. And, as a separate issue, related to the regional approach, d. The organization in the field which can best respond to Washington task force direction. 3. The Task Force Director should be formally chartered and accorded specific responsibilities. He requires the tools to undertake an active role in implementing an agreed Program; if his authority is not spelled out, experience suggests the Task Force will become a passive forum. Since the Special Group (CI) has specific functions in Southeast Asia in accordance with NSAM 124,/2/ and is to rely on performing such functions upon country or regional interdepartmental task forces, the relationship of the Task Force to the Special Group (CI) should be dearly delineated. As an example, I have attached a rough list of task force director responsibilities which seem to me to meet the several needs without intruding radically on sensitive departmental prerogatives. /2/Document 26. 4. NSAM 124 indicates a task force is normally to be chaired by a State Department Assistant Secretary. That level of rank is desirable if any degree of authority is to be plausible. In addition, Task Force operation would be smoother if the Director came from the Department of dominant interest. In the situation at hand, we are discussing South Viet-Nam with an active insurgency; Laos with a dormant, but advanced state of insurgency; Cambodia, whose internal security must depend in the immediate future on the Army rather than on the police; and Thailand, which has US armed forces present but whose immediate need is a build-up of non-military counter-insurgency assets. A good argument can be made that Defense should chair this task force but, at a minimum, the problem should be examined. 5. The character of the task force membership should be defined in the formal charter referred to in paragraph 3 above. The membership subordinate to the Director preferably should be at the regional level within each department or agency. Membership would then be held down numerically and, if the desk-level Viet-Nam Task Force continues separately, many of the same individuals will not attend two meetings. At the regional rank level, it will be easier to effect the broad coordination implicit in the establishment of a SEA Task Force. 6. There has been previous discussion as to the desirability of some sort of regional US administrator on-the-ground in Southeast Asia. You will recall Mr. Godel's recommendations of last fall on this point. Since the military currently has this arrangement, it is perhaps more desirable now that non-military functions be so organized. If we are to effect coordination in Washington through a regional Task Force, a parallel organization in the field would help to gain compatible approaches to priorities of effort, allocation and interchangeability of resources, coordination across country boundaries, and centralized capability to respond. It is largely a political problem, however, and in the past State has objected on the grounds that it is not diplomatically realistic among the diverse and contentious states of SEA. 7. While the State desire to keep the Viet-Nam Task Force separate from a SEA Task Force is understandable, for many of the reasons listed above this proposition should be reviewed before a new Task Force is formed. If separated, it means individual attendance to some extent at two Task Force meetings, the possible generation of requirements in South Viet-Nam not coordinated with those of the rest of Southeast Asia, and a split responsibility in Washington administration of programs in the region. In addition, since Cottrell does not have specific responsibilities and his operation is more passive than active, the Viet-Nam Task Force would not properly complement a Southeast Asia Task Force clearly chartered for active operation. 8. These observations are not intended to provide answers. They do, however, point up some of the considerations which we have been unable to attack directly in the past. Current formulation of a Southeast Asia Task Force affords an excellent opportunity to look at these matters now. I suggest that this sort of an examination would be appropriate within the responsibilities of the Special Group (CI) and you may desire to consider an approach on that basis. WHB
[Attachment] List of Task Force Director's Responsibilities The Task Force Director should be accorded specific responsibilities: a. Supervise and coordinate all activities in Washington related to the implementation of the Program. b. Authorized to call for information and progress reports from all participating departments and agencies and to invite attention to any deficiencies or slippages in performance. c. Review adequacy of resources to deal with the situation at which the program is directed. d. Report to his Departmental Secretary and to the Special Group (CI) on any matter he is unable to resolve that detracts from the effectiveness of the Program. e. Make recommendations to the Special Group (CI) on changes in Program policy or detail which are considered necessary. f. Make recommendations to the Special Group (CI) on changes in US organization or relationships in the field required for proper implementation of the Program.
216. Telegram From the Embassy in Vietnam to the Department of State/1/ Saigon, June 14, 1962, 8 p.m. /1/Source: Department of State, Central Files, 811.0051K/6-1462. Secret, Priority. Repeated to CINCPAC for Polad. 1605. TF/VN. Deptel 1425./2/ Your statement of problem correct. Objective our proposals is to invigorate and accelerate counterinsurgency programs to maximum extent. Obstacles to this are varied. On one hand there is essentially psychological problem on Vietnamese side represented by prospective budget deficit and drop in foreign exchange holdings. On other hand there is practical problem of getting in hands US Mission sufficient dollar and piaster resources for application to counterinsurgency program in countryside. Our premise is that by bringing in "new money" and by making concessions on limited worldwide procurement to meet second problem we will obtain leverage to overcome psychological obstacles represented by former and, secondarily, to relieve to some degree the budgetary and foreign exchange problems themselves. It is important, however, to keep the two problems conceptually distinct, even though we must work on them together. /2/Document 212. GVN (and Diem especially) is overwhelmed by size projected budget deficit this CY. As a result, it has been focusing most of its fiscal attention on ways of trimming ministerial budgets; rather than finding excess funds in those budgets for application to counterinsurgency. Of course, neither we nor GVN knows exactly what budget deficit will be at end CY. They now claim 4.8 billion piasters--it will probably be materially smaller. In any event important point in our proposal to buy piasters is not related to budget deficit except to extent GVN unable or unwilling fund counterinsurgency in face of potential deficit. Whether deficit is entirely manageable in financial terms without extraordinary aid is thus beside point; point is GVN doesn't believe it manageable. PA procedure proposed in other telegrams should be viewed in similar light. We not addressing ourselves to balance of payments problem or GVN exchange reserve position. Rather, we are trying to develop system through which US can inject itself into counterinsurgency operations through procurement, stockpiling, distribution, etc. In the process, it is essential that we develop procedures which will sharply reduce GVN bureaucratic entanglements and procedural bottlenecks. We are not, however, going to bypass the Saigon Ministerial machine completely. This is simply not acceptable to GVN, and there should be no illusions that this is what we expect to obtain. We do believe that we can develop procedures for prompt and effective use of piaster and dollar resources made available to US. To summarize, our basic argument for extraordinary actions at this time is not need for dollars to correct fall in reserves nor need for piasters to correct deficit problem as such. Our objectives are (a) to cope with Counterinsurgency Program, (b) to provide psychological carrot which will relieve GVN preoccupation with deficit and exchange position, and (c) to avoid situation in which US-generated local currency is bound into existing counterpart system which is not satisfactory for needs war situation. US strategic interests in SEA demand, in my opinion, that we find a way to achieve these objectives on an urgent basis. As for amount needed initially to meet these objectives, our proposals call for $10 million on dollar side and $10 million for piaster generation. Basis for these figures is set out in next following telegram/3/ (together with answers other questions raised reftel). We would like authority to commit ourselves to expend full amount both categories in CY 1962. If fund availabilities do not permit these amounts in FY 62, it will be satisfactory to commit during this month whatever funds are available, if we can give firm assurances that balance can be committed July from FY 63 funds. /3/Not printed. (Department of State, Central Files, 811.005K/6-1462) Fowler has not seen this message, although he and we have discussed the problem thoroughly. He agrees that extraordinary approach is justified on political/psychological grounds as experimental measure to break present impasse counterinsurgency program. He also agrees that type of extraordinary approach we have proposed is sound one. Believe, however, that he would prefer see smaller amounts committed initially, with expectation they could be augmented if device proved successful. While this approach is certainly understandable, in my judgment to go below the figures proposed would jeopardize chances of achieving psychological breakthrough on GVN side and hence would risk our chances of success. Nolting [Continue with the next documents]
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