751G. 5/3–1253: Telegram
The Ambassador at Saigon (Heath) to the Department of State1
1779. Repeated information Paris, Hanoi unnumbered.
- 1.
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Prior to Letourneau’s visit last June Embassy suggested for discussion with him fairly long list (Embassy’s 2218, May 10 and 2224, [Page 403] May 11 [12]) of political concessions which we thought French should make in order to permit creation of Vietnamese Government of national union willing and able to govern and successfully prosecute war. We also suggested a list of social and economic reforms which should be undertaken by Bao Dai and Vietnamese Government with joint French and American help, urging and guidance. Since then measure of progress has been made along lines suggested (Embassy’s 1469, January 25 and 1534, February 4) and recommendations still constitute desirable program of objectives.
In forthcoming Mayer–Bidault–Letourneau conversations, however, I believe there are no major political decisions or concessions which at this time we should press the French to make. I do not believe, for example, that it would be politically practical, in view of present disposition of French Parliament, for French to go further in way of “evolutionary statement” than that Letourneau made before the Overseas Writers Club last June, which unfortunately was never published locally. We are told that an informal agreement has at last been reached between Letourneau and Tam to turn over the Norodom Palace when Vietnamese have constructed a residence with office quarters for French High Commissariat to Vietnam (see eyes only telegram 1700, February 28).2 Letourneau’s plan for reorganizing French representation in direction of separate diplomatic missions to the Associated States plus group of attached economic and cultural missions has not yet been put into effect but is expected to be implemented shortly. French are expecting obtain small credit for direct economic aid to Indochina which we assume will eventually be increased and will tend to give French Union affiliation a more positive value in Vietnamese eyes than has its present somewhat tutelary character.
We had understood the French were about to abolish stipulation in March 8 accords whereby Vietnamese legislation would not be binding on French nationals unless also promulgated by the High Commissariat, but Letourneau now holds it would be presently unwise voluntarily to offer any single concession from the accords and would be preferable to await return of peace when inevitably whole structure of Franco-Vietnamese and Franco-Cambodian relationships and privileges will have to be renegotiated. I do not believe that at this precise time we can or should urge French to whittle away accords by unilateral piecemeal concessions, in view of French attitude that, since they are bearing lion’s share of fighting and expense of protecting Vietnamese independence, it is quite legitimate for them to enjoy privileged status. I believe that stipulation in the accords whereby French nationals can be judged only by mixed French-Vietnamese tribunals is not compatible with Vietnamese independence but for the moment, in view of civil war, terrorism and the newness of the Vietnamese [Page 404] judiciary, the Vietnamese courts are not yet competent to dispense sure justice. Surprisingly enough this has not been one of the main items in Vietnamese bill of complaints. While we believe that economic privileges accorded French interests in March 8 accords are excessive and in France’s own interest should be reduced, I think we can leave to Vietnamese Government responsibility for defending Vietnamese interests when time has come for renegotiation of these accords. As regards Vietnamese army, the French in the recent meeting of joint high military committee permitted and in fact encouraged an increase in numbers and autonomous responsibilities of national army. At the talks I think we should compliment Letourneau on this development.
While I believe that at this time there are no political concessions which we should urge the French to make to the Vietnamese, we should insist, if we are going to be asked to foot a deficit resulting from proposed expansion of Vietnamese national army, that French moderate their hitherto quite adamant stand against any Vietnamese tax increases which would bear heavily on French interests here. This is discussed in part 3 of this telegram.
- 2.
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As regards national reforms and improved performance on the part of Vietnamese Government, we should suggest in these talks that French join with us in urging on Bao Dai and Viet Government a more active program of agrarian reform. Because of French and Vietnamese vested interests, French have given no support to our urging of this reform on Bao Dai and Tam Government, We might well also discuss with French possibility of persuading Bao Dai to allow the formation of national assembly.
The French favor an indirectly elected national assembly, but it is questionable whether this will satisfy popular demand for direct participation in political life of nation whetted by January 25 village and municipal elections. Bao Dai not unnaturally opposes a national assembly since it would infringe on his present theoretically absolute power and it might press for a republic instead of a monarchy. We feel that out of a truly representative national forum some elements of political dynamism and popular appeal which this situation requires should surely emerge.
- 3.
- The important Indochina problem up for discussion in the forthcoming talks is the planned expansion of Vietnamese national army which we will undoubtedly be asked, in large part, both to equip and to finance. If it is true that France is already making her maximum financial and military contribution to Indochina and that Vietnamese Government revenues cannot be increased to cover calendar year 1954 deficit resulting from recruiting 40,000 troops this year and an additional 40,000 or more next year, the US, to preserve Southeast Asia [Page 405] from Communism, should come to the rescue financially. But we should insist that (as proposed in MacDiarmid report) the French withdraw their certain objection, one might almost say veto, to the imposition of an exchange tax on financial remittances abroad. This would allow Vietnamese Government to increase its financial contribution. Remittances of French soldiers and functionaries could be exempted from this tax. We should be prepared, if the French are too resolute in their objections, not to insist upon an absolute exchange tax but to demand that at least 20 per cent of financial remittances be invested in short or medium term Vietnamese war bonds the principal of which on their due date could be transferred abroad by the holders. If the French resist an exchange tax, they should be persuaded to accept some other form of taxation which will reduce war induced profits to the benefit of military budget.
We should also tell the French, when they remind us of the heavy financial burden they are bearing in Indochina and when they request us to increase our financial contribution to the Indochina war, that a quite substantial part of the cost is due to the unrealistic exchange rate of the piastre agreed to by the French some years ago. We realize, of course, that France cannot unilaterally alter the franc–piastre rate and that pressure to force the 3 Associated States to agree to devaluation would now meet with obstinate resistance from the latter (see my 1747, March 8).
We should, however, endeavor to persuade the French that in the interest of France and our own finances and, we believe, in the eventual interest of the Associated States themselves, they should join with us in “conditioning” the Associated States Governments—and the French business and official community here—to early devaluation of the piastre.
If we are called upon to increase our contribution to the French and Vietnamese effort here, we are entitled in these talks to receive a plan of offensive operations calculated to break the VM resistance in so many months or so many years. There is I feel sure no such plan at present. Furthermore, we need assurance that this offensive plan will in fact be aggressively carried out. Too many French minds are imbued with the idea that complete eradication of VM would be dangerous because Chinese Communists would then invade Indochina. I suggest that no war can be successfully prosecuted nor can any increase in our present contribution be justified if such a mental reservation is held. I think we might ask for and I believe French will be ready to give us assurance that they have no intention of negotiating a compromise with the VM—this to dispel recurring rumors.
We should have assurance that French will send their best commanders to this region. While we recognize Salan as a competent general, [Page 406] we believe that he has been over-prudent. His tour here will shortly end. From long observation we believe General De Linares, now commanding in the North, would be a successful Commander-in-Chief, and General Cogny, now under Linares, who is remarkably popular with both his French and Vietnamese troops and civilians, would be a fine commander in the North. Both were selected by the late Marshal de Lattre. There may be French generals equal or superior to them, but we do not know them. Obviously we cannot specifically request that certain French generals be assigned, but certainly we do not wish to see a commander such as General Carpentier,3 who was calamitously inadequate in 1950 to this peculiar military situation.
Finally, while the French military and High Commissariat have been cooperating in giving us quite full military and political information, we have been able only with difficulty to obtain general information about the amount passing through exchange control, which is still in French hands. If we are to expand our financial contribution in an area which is of primary interest to the French, without any direct benefits for ourselves, we should at least have a banker’s right to full access to detailed international financial transactions of the area.
I have not mentioned in this cable one question which French will most probably raise—namely, what is US prepared to do in case Chinese invade?
The foregoing has been shown to General Trapnell, MAAG Chief and has his concurrence. Bartlett also concurs but would like also to include in the agenda discussion of desirability formulating a medium term, overall economic plan.