Foreign Relations of the United States, 1964–1968, Volume IV, Vietnam, 1966

74. Telegram From the Embassy in Vietnam to the Department of State¹

Saigon, February 16, 1966.

2985. For the President from Lodge. Herewith my weekly telegram:

1. Honolulu aftermath.

We think that a large number of Vietnamese throughout the country knew of the Honolulu Conference and the events associated with it, including the final Vietnamese-American joint statement and the subsequent visit to Viet-Nam by Vice President Humphrey.

Among less sophisticated Vietnamese—the farmer and the cyclo driver for example—the focus was almost entirely on Prime Minister Ky and the Vietnamese delegation. The dominant attitude appeared to be one of national pride, because the Vietnamese sat as equals with the leader of the worldʼs most powerful nation. The more knowledgeable were conscious that conference took place at a halfway point between Saigon and Washington rather than in the American capital.

Among the sophisticated but generally non-political Vietnamese—merchants and provincial capital businessmen—there was a feeling that the Honolulu Conference, by the mere fact that it was held, somehow meant that the war in Viet-Nam was destined for an early end. Some members of this group even said that the war would end by mid-year as the result of decisions, unspecified, taken at the meeting. Exactly what particular event or statement from the conference should have left this feeling is not clear. Undoubtedly, the attitude represents wishful thinking rather than a sober, thought-out judgement.

Among the better-informed Vietnamese—civil servants, middle class and newspaper editorial writers, for example—the Honolulu Conference had a favorable impact. There was a strong reaction that the non-military aspect of the war—the “other war,” as Vice President Humphrey expressed it—had at last gotten the attention it deserved and that as a result of the meeting, new social welfare and economic development programs could be expected.

The Vice Presidentʼs visit contributed heavily to this feeling. It favorably influenced Vietnamese attitudes toward Americans in general and by all measurements can be considered a singular success. The Vice President made a particular impression on the average Vietnamese whom he contacted personally, and struck the rank and file as a man seriously interested in the problems and sympathetically understanding of their aspirations.

Herewith local press summary for February 6–12:

Tia Sang and Tieng Viet wrote about the “spirit of Honolulu” and urged the government to implement as soon as possible the programs adopted there. Dan Chu, Tieng Viet, and Ghanh Do applauded the Honolulu declarationʼs call for social justice and the building of democracy as priorities in the Viet-Nam conflict.

Tieng Viet and Xay Dung wrote that the conference was a major step in closer cooperation between Washington and Saigon. Tieng Vang saw it as reassurance by the United States that she respects South Viet-Namʼs sovereignty.

The papers viewed Vice President Humphreyʼs visit as an indication of the importance President Johnson places on the three pledges—building democracy, creating social justice and continuing to seek peace.

2. Basic political.

Chieu Hoi program figures are almost complete through February 10 (one province not yet recorded for both February 9 and 10). As of that date, a total of 789 returnees have been reported for February. If this rate continues, the record high of 1,672 achieved last month will be exceeded on February 22. In the 18 days since the end of the official Tet period (midnight January 23), 1,455 returnees have been recorded for an average of 81 per day. This compares with 41 per day as the average for September through December 1965.

3. Current political.

During Thieu and Kyʼs absence in Honolulu, General Chieu, the Secretary-General of the Directorate, and number 3 man in the government, started contacting the nominees for the “Democracy Building Council”, which will draft the new Constitution. The Directorate approved part of a list of about 80 nominees at its February 2 meeting, but the names have not been announced.

Low level rumors continued to circulate that certain groups were interested in organizing demonstrations against the government to take place near the end of the month. These people would key their demonstrations to protests against the high cost of living. It would be hard to get such demonstrations going on a significant scale because those who are usually potential demonstrators are doing too well. The cyclo drivers, taxi drivers and day laborers who usually could be easily persuaded to take to the streets in the past are all beneficiaries of the full employment resulting from the American build-up. In a sense they “never had it so good.” Junior civil servants and others on fixed incomes, unfortunately, are another story.

The government apparently has not yet made up its mind regarding the Montagnard problem, which is still tense and potentially dangerous. But Prime Minister Ky made a speech at Kontum on February 12 in which he restated the governmentʼs determination to extend equal treatment to all Vietnamese citizens regardless of religion, region or ethnic origin and promised to give greater consideration to the Montagnards in 1966.

4. Economic.

Secretary of Agriculture Freeman met the Vietnamese Agriculture Minister, received extensive briefings on agricultural programs and visited a variety of agricultural projects. His trip was a real plus.

Saigon retail prices dropped substantially from the post-Tet high level. Rice deliveries from the Delta increased slightly but imported stocks continued to make up the bulk of the stocks on hand in Saigon. Wholesale and retail rice prices were rising slowly. Both Viet Cong interference and slackened activity by merchants hoping for higher prices seemed to be contributing to this situation.

5. Inflation.

Our recent talks with Vietnamese officials convinced me that your message in Honolulu on the importance of measures to stem inflation was understood by Prime Minister Ky and General Thieu. They have told top Vietnamese officials, including Ambassador Vu Van Thai, that the economic problem is now top priority. The next step is that the other Vietnamese Generals understand the necessity of bold action. We are working closely with the Vietnamese to assure effective action. The Honolulu meeting has given us a good push forward and we intend to make the most of it.

The economic situation overall has become critical during the last two months. The greatest danger is that a series of wage increases would be granted which would lead to further price increases and move into a second and even more dangerous phase of the inflation. This can be prevented if our economic program can be launched quickly, including appointment of capable personnel by the GVN, increased imports, increased port capacity, larger tax collections, and a lowering of the black market rate.

The latter step is rather unorthodox but the Economic Counselor feels the rate of 170 piasters to the dollar must be brought down in order to give hope to the Vietnamese that prices can go down as well as up. If this price is brought down by U.S. Government purchases of piasters in Hong Kong, he believes this will have a salutary effect on overall prices in Viet-Nam and, most important, it will give a real psychological boost to the Vietnamese. In fact, it will be interpreted (somewhat erroneously) as being evidence of increased Vietnamese confidence in a successful outcome of the war, partly stemming from the historic meeting in Honolulu. These measures to bring the black market rate down will require concurrence from Washington and a separate message is on the way requesting specific approval.

6. Pacification.

The first class of rural construction cadre graduated from the National Training Center at Vung Tau after ten weeks of paramilitary and political training. The 3,095 graduates included 119 women, and represented 15 southern and 9 central provinces. This class had started training in November 1965.

MACV reports that the greatest single request from the Vietnamese provinces, of all the requests for U.S. personnel, is for public safety advisers. This would appear to me to indicate the pressing nature of the criminal (as distinguished from the military) side of Viet Cong violence, requiring police type measures to cope with it.

7. Military.

Allied forces continued on the offensive with a high rate of activity but major Viet Cong and North Vietnamese units evaded significant sustained contact in these operations.

Zorthian reports that most Vietnamese were unaware that there had been a 37-day cessation of the air strikes in North Viet-Nam. Those who were aware of the halt generally did not approve and welcomed the resumption.

Latest reports on RVNAF desertion rate continue to be unsatisfactory.

Lodge

1. Source: Department of State, Central Files, POL 27 VIET S. Secret; Priority; Nodis. The source text does not indicate time of transmission; the telegram was received at 7:25 a.m. and passed to the White House at 10:30 a.m.