Foreign Relations of the United States, 1961–1963, Volume II, Vietnam, 1962

63. Memorandum From Robert H. Johnson of the Policy Planning Council to the Director of the Council (Rostow)¹

Washington, February 15, 1962.

SUBJECT

• Economic Program for Vietnam

Attached is a paper prepared by Warren Silver of the Vietnam Task Force staff on the FY 1962 and FY 1963 Project AID Programs for Vietnam. This paper illustrates in a very graphic way the fact—known to many of us for some time—that our economic AID program is not in very good shape in Vietnam and has not been well related to our other efforts. Even where new programs are being added that appear to be more closely related to the counter insurgency effort, as in the case of the “rural development” program on the 4th page of the tabular material, we know so little about the intended content of the program in Washington that approval is being given more or less on the basis of “blind faith.”

The paper was discussed at a Task Force meeting which I attended today.² As a result of that meeting, the following seemed to be tentatively agreed:

a. That it would be desirable if at all possible, to send a team, including military as well as AID members to Vietnam within the next two weeks to review both the FY 1962 and FY 1963 programs in order to bring them into closer alignment with our counter insurgency effort. These programs contain a large element of conventional AID activities. Ideally, this team should have the power to make decisions in the field.

b. There seemed to be general agreement that it would not be desirable to adopt the proposal put forth by Silver that the new USOM Director be a military officer who would be a Deputy to General Harkins. It seemed agreed the problem was one primarily of communication between the military and the USOM in Saigon and between the USOM and Washington. It was agreed that this problem could be better attacked in other ways including possibly meetings between Mr. Hamilton and the USOM Director in Honolulu on the order of the regular military meetings there.

In the course of the discussion, I suggested that one approach to the problem of the FY 1962 program would be to provide funds for civic action in support of the sort of program that had been recommended by the U.S. military civic action team that went to Vietnam. It was pointed out that that teamʼs proposals still awaited approval by the GVN. It was also indicated that once a program was established there would be no problem of getting AID funds to support it. A message to Saigon on civic action is presently being cleared.³ It would propose that any civic action undertaken be in the form of “packages” involving little or no local effort.

It was pointed out that our more conventional view of civic action assumed a degree of community spirit and recognition of the social values of community effort which simply did not exist in a country like Vietnam. Vietnamese farmers, when pushed, can be forced to admit that an irrigation project to which they have been required to contribute labor provided them with identifiable benefits. However, their principal reaction to such projects will be to complain bitterly about the personal effort involved. They would like the work done by “American machines”.

The proposed telegram on civic action would, inter alia, propose the creation of travelling medical teams. Vietnamese doctors might be induced to undertake such duties through promising them scholarships for study abroad after completion of a two or three year tour of duty.⁴

[Attachment]

Paper Prepared by Warren A. Silver of the Vietnam Task Force⁵

Washington, February 12, 1962.

SUBJECT

• Viet-Nam Economic Program FY 1962 and FY 1963

Recommendations:

1. The Taylor Mission priorities should be adopted for the projects in the FY 1963 economic program;

2. All FY 1962 projects in the CEP (Country Economic Program),⁶ both continuing and new, should be approved;

3. The CEP should be reviewed at once in Saigon by Task Force Saigon (including the MAAG) with the collaboration of an officer from AID and from DOD, and in consultation with the GVN, to bring the FY 1963 program into line with the Taylor Mission priorities;

4. Consideration should be given to whether or not, in FY 1963, the economic program in Viet-Nam thus revised and co-ordinated with the military effort, should be directed by a military officer who will be a deputy to the Chief, USMAC Viet-Nam.

Discussion:

1. The Taylor report says that the economic program for Viet-Nam should:

a. Expedite projects that are particularly useful in the short run;

b. Continue successful long-range projects but defer new starts for the time being; and

c. Review long-range projects for possible modification or termination.

The Vietnamese Special Financial Group in July, 1961, said that Viet-Nam then had eighteen months to win its survival and in that period should concentrate on those activities designed to achieve it. This view is consonant with the recommendations of the Taylor report, and a similar view was expressed by President Diem to President Kennedy.

The Country Economic Program (CEP) for FY 1963, which includes the program for FY 1962, states valid objectives (page 2): (1) successful counter-insurgency, (2) engage the loyalty of the people, (3) increase economic growth, (4) reach the less privileged groups.

To achieve these objectives, however, the CEP proposes a program that does not use the Taylor priorities (page 37). The CEP says (page 29) that long-range (development) activities and short-range (impact) activities are usually inseparable because no really significant or complete benefits can be conferred in a short time. This point of view rejects the significance of results obtained say, during the period between now and the end of FY 1963 (e.g. mobile medical and evacuation teams, population regroupments) and those results obtained later. The CEP says, indeed, that long-range projects with no immediate benefits demonstrate to the people the value of their country and their government for the future. This approach offers a future promise to people in present need; it overlooks, as they do not, that they may not be here to enjoy the fruits of the promise.

The CEP says, further, that insecurity does not make long-range activities more difficult than short-range activities; but this overlooks the main point that insecurity makes long-range activity less important than short-range activity.

Perhaps if there were no lack of skilled people, technicians and administrators, both the long and short-range activities could be carried out; and the CEP says the existence of this lack is not critical. But the existence of this lack dictates a choice of projects to which to apply the human resources there are in Viet-Nam, and the Taylor priorities give a sound basis for choice.

In this context of prompt effectiveness, the measure of “usefulness” under the first Taylor priority would be support of the war directly (e.g. medical, communications, transportation) or by speedy realization of economic and social benefits.

2. The FY 1962 program:

It is too late to apply these priorities to the FY 1962 project program. (Note that the commodity portion of the aid program, which is the major part, is proceeding independently of the problems discussed in this paper.) The CEP indicates (page 39) that the program has not been worked over with the MAAG, nor (page 40) with the GVN. Washington does not have the information, the documents, or access to the people in Task Force Saigon and the GVN, that would permit review of the FY 1962 projects in time to bring them into line with the Taylor priorities, and there is not enough information presently in the CEP to support such a review. Nor should Saigon alone be asked to do the job in expectation of early results unaided. For FY 1962 it would be more productive to rely on the field and approve the continuing projects and new projects recommended by the field. This keeps the program going and starts new projects that, on their face, seem acceptable.

3. The FY 1963 program:

Approval of the FY 1962 program then leaves the remaining few months of FY 1962 to work out the FY 1963 program on the basis of the Taylor priorities, and in full consultation with the American military and the GVN. When FY 1963 begins, continuing projects can proceed under the usual continuing authority, and any further new projects can be readied for the FY 1963 laws. This process should be started now. An AID officer and a DOD officer should go from Washington to take part in the process. They should go through the CEP FY 1963 projects with Task Force Saigon on the basis of the Taylor priorities, securing additional explanations where not now in the CEP, and taking part in the addition of projects, building up of existing projects or parts of projects, abatement or discontinuance of other projects, and the consultations with the GVN. They should bring back the FY 1963 program for approval, ready to start with FY 1963 itself.

4. Since the FY 1963 program would best be geared to a military operation, whereas the normal AID program is now geared, in substance and in administering, to long-range economic development, it would be inefficient to ask for a special administrative arrangement in AID for the war in Viet Nam. Present operating personnel in USAID would be continued in their work, but the program as a whole would be run by a military officer answering directly to the military commander who, in turn, answers for all operations in Viet Nam to the Ambassador. Additional personnel as required would come from civilian or military sources. The source of financing of the economic program would depend on the decision of the Administrator. Such treatment of the program would distinguish it before the Congress from those programs more capable of treatment under the prevailing legislation.

1. Source: Department of State, S/P Files: Lot 69 D 121, Vietnam, 1962. Confidential.
2. A record of the meeting is in Johnson Library, Vice Presidential Security Files, State Dept. 1961-63.
3. See Document 66.
4. At the end of this memorandum was written by hand the following: “Walt—I donʼt know whether you find this kind of informational report useful in your new role—I have tried to limit them to more important items.”
5. Covering this report was a transmittal memorandum by Cottrell indicating that it would be discussed by the Vietnam Task Force on February 15. Attached were a list of projects then under way in Vietnam, a summary of the projects recommended by the Staley-Thuc Report (see Foreign Relations, 1961–1963, vol. I, Document 93), and a list of the economic priorities contained in the Taylor report (ibid., Document 210).
6. Not printed.