Foreign Relations of the United States, 1952–1954, Indochina, Volume XIII, Part 2

751G.00/8–1454: Telegram

The Ambassador at Saigon (Heath) to the Department of State

secret

Saigon, August 14, 1954—2 p.m.

580. Repeated information Paris 198, Hanoi unnumbered.

1. I saw Ngo Dinh Diem this morning and told him I was somewhat alarmed by Junta of the three southern sects and others which had as its obvious aim ouster of his government. Diem said it was one of his troubles and worries but expressed confidence he could handle this problem. Tran Van Do and other Ministers had been in negotiation with sects and today members of his Cabinet would meet with leaders of latter. Sects had wanted representation in his government but their idea of representation was to have key portfolios of Interior, Foreign Commerce, and Defense, and no government could function in this time of national peril with sects operating those vital posts. They were neither competent nor honest. Cao Daist Pope had asked for a license for export of rubber and permission to transfer large sum to France. He said he had granted certain favors of that type but one had to stop some time. Basic offer he would make sects would be to give them each, say, ten seats in a National Assembly, which would be given power over budget, enjoy free debate and right to “interpellate” government.

It would be an appointive assembly at outset but truly representative of country. Catholics would also be represented as sect in assembly and presumably receive ten seats same as Cao Daists, Hoa Haos, and Binh Xuyen. Remaining 20 or 30 members of Assembly would be taken from elected members of municipal councils of south and center Vietnam. Three non-Catholic sects would therefore have important bloc of seats but not a majority. He hoped form this assembly in next month or two.

2. I said I was somewhat preoccupied by Bao Dai’s announcement that he would return shortly to Vietnam.¹ Diem replied he was also preoccupied over this occurrence and had wired Bao Dai urging him not to come for several weeks yet. He could not, however, prevent Bao Dai returning if latter insisted on it. There were two reasons for Bao Dai’s proposed return. One was criticism in French, particularly Socialist, press over his remaining in France while his country was in difficulties. Other reason was that his advisers, such as Giao, who had enjoyed authority and financial profits from Bao Dai regime, were afraid they were going to lose their revenue and places and were accordingly urging him to return so that they could get on payroll again. He said it was useless to think of Bao Dai giving any real “performance” since he was a very sick man. He rejected idea that Bao Dai’s influence over sects might persuade latter to abandon their financial and power ambitions and get behind a true movement of national unity. Bao Dai had occasionally kept sects in line but almost always by passing out money or export licenses or monetary transfer permits. His return at this time would only complicate work of an overworked government. He would have to take time off to consult with Bao Dai, make reports, and send extra copies, et cetera of all decisions. Bao Dai, he said, had always operated on principle of “divide to rule”. He would not be a unifying influence.

3. Diem admitted his governmental team was far from perfect. There were some good men but some who were not up to job. Some men whom he would like to take into government had refused to enter and he was in no position forcibly to draft them. He was trying to get back certain men who were now abroad.

Nevertheless, in spite of his difficulties he was gratified with performance of his government to date. It had won first round in preventing Viet Minh from overrunning certain provinces and cities in center and south. (Comment: I find this a somewhat hopeful assessment of efficacy of his government against Viet Minh penetration.) He had prevented organization of Viet Minh manifestations, although his police and Vietnam armed forces were woefully inadequate in many centers. Their partial success against Viet Minh was due, he felt, in considerable measure to confidence of people and functionaries in him and in his administration. This confidence was more gratifying since Viet Minh were resorting to terrorism and threats against officials, even Ministers of his Cabinet. He was building up something of a team spirit. For example, one of his innovations was to keep “open table” for all members of Cabinet. Meeting at meals they worked out many a problem and kept up team spirit. However, his grocery bill for first month had risen to 80,000 piasters, which was practically his official income. I suggested that would be a legitimate budgetary expense.

He said that French press was criticizing his administration. French should be grateful because he had prevented anti-French demonstrations which would have dangerously increased anti-French feeling. Desire to manifest against French was nationwide after evacuation of loyal provinces in delta followed by Geneva accords which split country.

4. Returning to difficulty of getting competent men on government team, Diem said he knew a great many competent Vietnamese he could not use because of their incorrigible tendency to graft. I told him that while I thought Secretary for Economic Affairs Thoai² was doing a good job in organizing refugee evacuation, his team was not large enough for task. I inquired whether he had given thought to temporarily putting men like Nghiem Van Tri, former Defense Minister, and Le Quang Huy, former Public Works Minister, on team. He said Tri was much better talker than effective organizer. Furthermore, he always insisted on feathering his own financial nest. Huy was an amiable, nice person but too easy going. He had not enjoyed respect of Public Works Department and no one in that Department had ever really worked at his job. I inquired as to effect of arrival of Prince Buu Hoi in Vietnam. Diem said Prince was really anti-Viet Minh, although he had been accused of having soft spot for them because of previous connections. He was even more anti-Bao Dai although a member of Royal family. Prince had asked him for money to start up a leprosy research institute and he would try to find funds for him but he did not intend to add him to his governmental team. He said Prince’s private life cost great deal of money and he was not qualified to be a member of an austerity regime. He doubted that his visit would have much political effect.

5. I told Diem I had been somewhat shocked that two leading Vietnamese bankers, Le Van Vy and Le Quang Gong, had come out for fixed parity of exchange of Viet Minh and Vietnamese piasters. I remarked we would have to reconsider our whole aid program if that were done because it would mean that Vietnamese economy, our aid, and French aid would be subsidizing Viet Minh section of country. If there were to be an exchange it should be on free market basis. Diem said to have no worry that he would not consent to such an arrangement. Vy, although banker, he said, was Viet Minh sympathizer refusing to believe it was Communist movement.

Diem seemed full of determination and optimism.

Heath

1. In telegram 581 from Saigon, Aug. 14, Ambassador Heath reported that the prestige of Bao Dai in Vietnam was zero and that only trouble could arise from his return. Heath urged that the United States exert its influence to prevent the return of the Chief of State. (751G.00/8–1454) The Embassy in France expressed its concurrence with these views in telegram 684 from Paris of Aug. 18, and reported that efforts would continue to persuade French officials to keep Bao Dai in France. (751G.00/8–1854) In telegram 603 to Paris, Aug. 18 (repeated to Saigon as 626), the Department agreed that the return of Bao Dai would worsen the situation there. (751G.00/8–1454)
2. Nguyen Van Thoai.