NIE 63.2-57/THE PROSPECTS FOR NORTH VIETNAM

Created: 5/14/1957

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intelligence estimate

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(Supersedes relevant portions of NIE

the prospects for north vietnam

Submitted by the

DIRECTOR OF CENTRAL INTELLIGENCE

The foUoiotng intelligence organizations participated in the preparation of this estimate; The Central Intelligence Agency and the intelligence organizations ot the Departments of State, the Army, the Navy, the Air force, and The Joint Staff.

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ononcurring were the Special Assistant,Department of State; the Assistant Chief of Staff, IntelUgence. Department of the Army; the Director of Naval Intelligence; the Director of Intelligence. USAF; and theDirector for IntelUgence. The Joint Staff. The Atomic Energy Commission Representative to the IAC, and theDirector, Federal Bureau of Investigation, abstained, the subject being outside of their jurisdiction.

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the prospects for north vietnam

THE PROBLEM

To analyze the current political, economic, and military situations and tothe prospects for North Vietnam over the next year or so.

conclusions

the Communist regimeVietnam (DRV) has probablyconsiderable measure of ilssupport and has been facedoutbursts of violence, itfirm control largely because of theand effectiveness of the array.with substantial help from thehas apparently made significanttoward economic restoration,in agriculture. (Paras.

DRV has undertaken toits mistakes" which it admitsresentment, and it willable to regain some of the popularwhich it lost. If the partyis sufficiently strengthenedcrop prospects are good, stepssocialization of agricultureas soon as the fall or winter ofdisturbances may recur but forfuture the DRV will beof maintaining)

DRV is generally isolated fromworld except for close tiesBloc, on which it depends for aidHowever, the DRV has probably been disappointed by the lack of effective Bloc support for its objective of unifying all Vietnam under DRV rule. The DRV, with Bloc logistical support, could easily overrun South Vietnam, Cambodia, and Laos if opposed only by indigenous forces. However, the Bloc would support such an attack only if Moscow and Peiping were to estimate that such action carried little risk of US military intervention.)

he DRV will probably continue its tactics of "peaceful competition" with South Vietnam for the support of thealthough it will continue itsto infiltrate and to subvert official and nonofficial organizations and todissident and dissatisfied groups in South Vietnam. In Laos, we believe that the DRV will continue to support Pathet Lao efforts tooliticalwith the Royal Lao Government, with the ultimate objective of Communist control, and may encourage local Pathet Lao military action in order to bringto this end. The DRV will probably not, in the immediate future, play arole in Cambodia. )

DISCUSSION

the Geneva Agreementshe fao Dong (Workers) Partythe Communist Party oi Vietnamsought to lay the foundations for the transformation of North Vietnamommunist society. Its most important immediate tasks have been toan cflective system of administration and control over the population and tothe economy which had suffereddamage during the long years of war.

The Lu Dong waselatively favorable situation at the time it assumed control in North Vietnam. Its victory over the French had engendered considerable popular support, and itt leader. Ho Chi Minh. was considered even by many non-Communist nationalists as the only person who could drive the French from the rest of Vietnam. It controlled and had the loyaltyarge, battle tested, and effective army. Nevertheless, from thepoint of view the party Itself had two major weaknesses. Therehortage of well-trained cadres, and many members of the party were motivated more by antl-Frcnch and nationalist sentiments than by Communist dogma

During the past year these fundamental weaknesses were exposed as Uie regimeto Impose its control on the peasantry too rapidly and too crudely. Much of the popular support which the regimeationalist force appears to have been dissipated. The regime now confronts the task of rebuilding sufficient popularof its programs to permit theof further steps towardand Increased production without the direct and ronstant application of force and coercion.

While supremacy over all Vietnamaste Communist objective, Uie success of President Ngo Dinh Diem in South Vietnam and the apiwreiit unwillingness of Uie Bloc U)ilitary invasion havereduced the likelihoodakeover of 3outh Vietnam in the near future. The Lao

Dong has accordingly given Increasingto the less direct tactics of peaceful competition and subversion.

INTERNALStatus

The Lao Dong has organized theRepublic of Vietnam" (DRV) along the lines of other "peoples democracies" and it controls directly the government apparatus and the Vietnam Peoples Armyower and leadership are exerclswl byof the Politburo who hold positionsin the party and government. We believe that Ho Chi Minh is the ultimate authority In the regime. He Is Chairman of the party. President of the DRV. and. sincehe Secretary Ocneral of the Central Committee of the Lao Dong. Other important leaders who hold both parly and government positions are Vo Nguyen Giap, member of the Politburo and Minister ofand Commander of the Army, and Phnm Van Dong,ember of the Politburo and Prime Minister and Foreign MlnLstcr. Ttuong Chlnh, although recently removed from Uie office of party Secretary General,ember of the Politburo and still holds the post of Vice Chairman of the Central Agrarian Reform Committee.

Below the top level, the party still sutlerserious shortage of experiencedadministrators, and managers. The government's administrative apparatus and the party's lines of control have provedto carry out some major aspects of the regime's program. On at least oneUie party has had to use Uie army to restore order.

armytrength of aboutremains the main source ofelatively well paid elite enjoyingprivileges, and most of its officersof the Lao Dong party. Theand less reliable members are being

weeded out, various categories of militia and regional troops are being integrated into the VPA, and the regime has been seeking tothe relations between the army and the peasants.1

As the economy of North Vietnam isagricultural, the principal problems facing the regime involved organizing and controlling the peasantry and increasing agricultural production. Land reform cadres, drawn from politically reliable but otherwise poorly trained personnel, have been theprincipal instrument both forthe peasants and for purging andthe party in the rural areas. These cadres have been largely successful inthe landlordslass and Inthe land among middle and lower class peasants. As the land wasthe cadres began to introducesocialist forms by organizing the peasants into mutual aid teams in which the peasants cooperate to plant and to harvest each other's land. The regime claimed that byutual aid teams, whichalmostercent of the peasant households, had been established.with the land reform, these cadres purged from theubstantial number of members believed to be politicallyand recruited replacements primarily from the poorer peasants.

The DRV has conceded that the operations of Uie land reform cadres were so crude and arbitrary lhat widespread disaffectionwhich In some cases broke into openThe regime has admitted that the cadres classified as landlords many peasants who were merely slightly better off than the average peasant. They also victimizedwho had supported the regime during the war, had sons in the army, or had relatives among the poor peasants. Estimates of the number of landlords put to death by decisions of land reform "people's courts" range0. Others were imprisoned, suffered expropriation, or were cast out of the community.

'See Appendix A: Tbe Military.

The cadres further disturbed the normal life of the communities by forcing localorganizations to disband. Even some of the peasants who ostensibly profited from the redistribution of land were dissatisfied because the land reform cadres made excessiveof Uie crop yield and, consequently, of Uie taxes to be paid. Catholic peasants were further alienated when the land reform cadres rcqulsiUoned their churches for use asdistributed church land to individuals, and intimidated worshippers. The concurrent purge of party members involved abuses, guilt by association controversies, and arbitraryso that byhe morale of the party was shaken and the official line changedriticism of lhe manner In which the purge had been administered.

The application of controls has probably also caused some loss of popular support in urban areas. Many factory workers,and small businessmen have reacted adversely to the Communist system ofand to the shortages of food and other consumer goods. Tlie non-Communistwho initially supported the DRV. also became dissatisfied and when Uie regime gave Ihem some freedom In the fallhey severely criticized DRV policies in nonparty publications.

The DRV has also had the problem ofcontrol over the minority groups who inhabit the mountainous regions of North Vietnam and who provided soma of the best native troops In tho French Union forces during the war. To this end the regime has established some autonomous zones.thereraditional hostility between the mountain tribes and the Vietnamese, and dissidencc will almost certainlyroblem for Uie regime.

Communist China's experience in com-munizalion undoubtedly prepared Uie DRV for the development of opposition lo lheprogram, bul Uie vehemence of Uie op-posiUon apparenUy exceeded its expectations. During the fallhe regime's concern over unrest led It to take measures to remove the causes of discontent. In announcing the over-all policy of "correction of our mistakes"

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the DRV acknowledged the profound Influence ofh Congress of the CPSU and the Eighth Congress of the CCP, and some aspects of the regime's program paralleled those in other Communist states. The regime was probably also influenced by awareness that Informed Vietnamese on both sides ofh parallel were comparing developments in the North unfavorably with those In the South.

he nmst significant corrections havethe land reform program. The party accepted thr resignation of Truong Chlnh as Its Secretary General, and demoted several other party leaders responsible for agrarian reform and party reorganization programsthe Vice Ministers of Agriculture and Interior. In addition, the central and local agrarian reform committees were shorn of tholr executive power and reduced to advisory organs, and the regime announced theof land reform "people'she DRV also undertook to indemnify relatives of those wrongly condemned to death, release prisoners, restore some property mistakenly expropriated, reinstate expelled partyand cadres, return churches and church property to the parishes, and reduce crop estimates and tax levies. The DRV promised corrections In other fields including Increased "democracy" and improved living conditions.

he admission of errors at the top level of the party and government and the promise of reforms and greater "democracy"the expression of antlrcglme sentiment. DRV leaders reacted quickly and made it clear that there were narrow limits within which the liberalIzation program would function, and lhat the regime would not relinquish any important controls. In earlyhe ormy was placed on alert status throughout North Vietnam. Furthermore, troops were more conspicious In some cities, probablyhow of force lo discourage any possible outbreaks of violence.

n mid-November the army suppressed an uprising in Nghe An province. This Is the only known major incident In which regular army units were committed. Even in this in-sUmci len'.iku tiv-.p;l.nibly ivq'.lirrd

more because of the ineffectiveness of the local militia than because of the extent and organisation of the uprising. The likelihood of further violent outbreaks declined, largelyesult of the strength exhibited by the army in its oftcialions to restore order. The army alert appears to have been terminated in

Our knowledge of economic conditions in the DRV is largely derived front Communist statements. However, It has been possibleumber of instancest theseagainst other evidence. Based on such analysis, we believe that the regime has achieved significant progress toward theof thehis has been made possible by the availability of grant aid and technical assistance from the Bloc. The regime appears to have raised rice output substantially, largely by expanding acreage and rehabilitating Irrigation and flood con-trolsystems.45 were bad rice crop years,6 the cumulative effects of DRV efforts combined with good weather resulted in production of rice nearly sufficient to meet minimum food requirements. Thisubstantial reduction in riceand some rice was exported. We believe that the regime has been less successful in expanding the production of subsidiary food crops, and rather unsuccessful fn its efforts toajor expansion of cotton. The regime has probably completed the restoration of most of the prewar highway and railexcept for the line south from Ninh Binh toh parallel. Many mining and industrial Installations arc bock inCoal exports8 were more than double thoseowever, output of coal, cotton textiles, and other majoris still substantially below peakunder the French.

There is little likelihood that the North Vietnamese economy will becomein the foreseeable future. Itood deficit area, presentlevels arc austere, and reserves for poor crop years arc probably nonexistent.

'See Appendix B: The Economy.

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foreign trade has increased, thewill not be able to cover its chronic trade deficit from its own resources unless thereubstantia] Increase in domestic production of consumer goods and in tbeand export of coal, minerals, and cement. Meanwhile, it will continue tolarge scale economic support from the Bloc.

Probable Developments

Although local disturbances may recur, the DRV will continue for the foreseeable future to have the capability to maintain effective control in North Vietnam. The army, tlie principal source of DRV power, willcertainly remain loyal and retain its offensive capabilities. (Seets coastal andtrol forces and Its air arm are not likely, during the next year, to increase significantly in size and effectiveness,

During the next few months the regime will probably continue Its efforts to regain popular support, particularly among theand at the samu time to strengthen the party organization. It will probablyits "correction of errors" in the land reform program by such measures as read-Justing the distribution of land, revising crop collection quotas and tax levies,those wrongly accused or convicted,party members and cadres mistakenly expelled, and restoring some property toorganizations. II may also seek toisplay of "democracy" in order to improve Uie popular attitude, particularly that of the intellectuals. Further effort will probably be made to give the National Assembly theof an instrument of popular will. But despite these steps, the regime will not relinquish Its essential controls over the pop-ulation.

The DRV will probably be able to regain some of the popular support which it lostits "correction" campaign Is as badly managed as the agrarian reform. In any event, the period of consolidation and concern for jiopular opinion is not likely to continue indefinitely. The regime will probably become impatient to get forward wlUi the socialization of agriculture In Uie Chinese Communistsince the leaders as Marxists believe that collectivization leads to both better control and increased output. Moreover, they may-have completed many of ihr more obvious "correcUons" by the fall or winterf so, they arc likely to push forward with the socialization of agriculture, handicraftand small commercial firms. They will probably move slowly at first and attempt to obtain compliance by "persuasion."

The regime's Internal actions during the next year or so will be conditionederies of factors outside its control. Its decisions regarding the pace of agriculturalwill depend not only on the eflecUveness of its party apparatus in rural ureas but also on the weather, since Uie regime Is less likely to push rapid socializauon, at least in the early stages,eriod of bad crops. The regime will also probably seek to avoid courses of action, such as Uie blatant use of force, which would put the DRVad light In South Vietnam, and will probablyto emphasize in its propaganda theof the National Assembly and oUicr "democratic" procedures. Finally, Uiewith which internal economiccan be pushed will be determined in part by Uie willingness of Bloc countries to extend additional credits.

Though the death or disability of Ho Chi Minh would weaken the governmentit probably would notignificant effect on DRV policies or governmentalA collective leadership appears aThe regime's success in demoting Truong Chlnh while retaining him inparty and governmental officesconsiderable basic harmony andin top leadership. Factionalism might develop, possibly ranging General Glop against Truong Chinh, but it probably would not reach the point of endangering theof the regime. In any event.China and the Soviet Union would use their influence lo prevent an overt struggle for power.

In the next year or so, the restoration of the economy to the) level prob-

ably will be complclcd and preparations madeodest start on new development.progress will dependarge extent on foreign aid. favorable weather, and the ability of the regime to contain peasant discontent. Expansion of foreign trade Isecessity.7 State Plan calls for the restoration of the economy lo9 level, withon production of consumers goods, plus minerals and other products for export. Ifaid is continued at current levels and agricultural production is not adverselyby climatic conditions, the DRV should be able toodest improvement in the over-all standard of living wilhin the next year orRELATIONS WITH THE BLOC

Not only are the DRV leaders bound to the Bloc by strong Ideological ties, but the very existence of the Communist regime in North Vietnam is dependent on continued Blocmililary. and economic support. The Chinese Communists seem to exercisegreater influence than the USSR and have given the DRV greater economic andsupport. In large measure this is probably the logical result of geographicand the type of Initial assistance the DRV hasn the military,and transportation fields. Family, the Chinese Communist experience in theof Communist doctrines appears to be more appropriate then that of the USSR to the situation in North Vietnam. However, there is no evidence that Soviet and Chineseare at odds over North Vietnam.

In its public statements concerning intra-Bloc politics, the DRV has tended to follow the line set by the Chinese Communists. Itthe Soviet action In Hungary andthe reforms In Poland. Despite the coldness of current Soviet-Yugoslav relations, the DRV has moved toward establishing more cordial ties with Yugoslavia, and in7 it was announced that ambassadors will be exchanged.

The Bloc has recently given less than full support to Vietnmncso reunification, to the perceptible discomfort of Uie DRV. At the

B

0 meeting of the Geneva co-chairmen, the Soviet Union tacitly accepted the status quo in Vietnam for an indefinite period. In7 the USSR further recognized the long term nature of the division of Vietnam when it proposed,ountermove toproposals for Uie admission of Southand South Korea. Uiat both North and South Vietnam and North and South Korea should be admitted to the United Nations. Nevertheless, the DRV will almost certainly continue to be guided In its external course of action by Uie general policy set down byand Peiping, although It will continue totronger policy on reunification.

iii. drv activities in south vietnam, laos. and cambodia

The DRV continues to maintain itsfor subversion within South Vietnam and has the caj>ablllty to infiltrate fairly large numbers of military and politicalinto South Vietnam. Although the Communists In the South have been largely quiescent, some trained military personnel remain, loosely organized in small units that presumably could be reactivated for missions of assassination, sabotage, or limitedactivity. South Vietnamese security forces intermittently discover cachedarms.

Because the country-wide electionsby the Geneva Agreements have not been held and because mililary action has been prevented, the DRV has been frustrated In its hopes of gaining control of SouthThis has caused some discontent among cadres evacuated from the South in thethat they would soon return.of the countryrincipal objective of the DRV regime, and it continues to seek support for its pretentions to emerge as the government of the whole of Vietnam. Its "liberalizaUon" measures are designed to appeal to the population of the South as well as the North. The DRV has maintained its pose of adherence to Uie terms of Uieagreement concluded at Geneva while accusing the Republic of Vietnam and the US of violations, It Is seeking to enhance its

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prestige anci position, and to secure the broadest possible support for the political settlement envisaged at the Geneva conference which it still insists mustbe implemented

The DRV will probably continue for the next year or two to restrict its campaign for reunification to "peaceful" means. However, the DRV will continue its efforts to infiltrate and to subvert official and nonofficialand to exploit dissident andgroups in South Vietnam. It wouldnot use its paramilitary forces in South Vietnam to initiate widespread guerrillaunless it estimated that the situation in South Vietnam had so deteriorated that such action could overthrow the government. The DRV will continue to have the capability to overrun South Vietnamelatively short time if opposed only by Southforces, but it would only launch such an attack if the DRV together with Moscow and Peiping were to estimate that such action carried little risk of military intervention by the US.

Tlie Communist movement in Laos, the Pathet Lao, continues to be dependent on DRV support and assistance to maintain itsin the northern provinces. However, the Communist Bloc apparently believes that its objective of gaining controlos can best be served by political rather than military courses of action. Because of US support to the Royal Lao Government (RLG) andof the existence of the SEATO protocol, the Communists probably estimate that an attack against Laos would Involve risk ofof US forces. On the other hand, the Lao government is weak and potentially vulnerableolitical assaultell-organized, legal Communist party.for the past year the Pathet Lao has been seeking to obtain participation in the RIC and recognitionegal political party. Simultaneously, the USSR,China, and the DRV have sought to establish diplomatic, economic, and cultural relations with the RLG. Although thesehave failed to date, we do not believe that the Communist Bloc will throw over the political approach completely and launch an attack on the RLG, However, during the next few months the DRV may support local Pathet Lao military action In order to bring pressure on the RLG toolitical agreement.

the past year the DRV hasCambixiians for their policy ofInvolved closer relations withgovernments while accusing the Westpressure to induce Cambodia tomore pro-Western line. The DRV hasin cautious attempts todiplomatic relationsambodia entered intoaid agreement withand permitted the USSR to openin Phnom Penh. For thefuture we believe that Communistin Cambodia will be pursuedPeiping and Moscow.

IV. RELATIONS WITH OTHER COUNTRIES

for conclusionewwith Indonesia in January,has made no substantial recentits continuing drive to develop closerwith the countries of South andAsia. The DRV continues tosemiofficial mission in Rangoonbranch of the Vietnam News Agency).represented by Consuls General inNew Delhi. Although there Is aestablishment in Hanoi. DRVwith the UK are slight. Tho DRVwith French refusal to acceptmission in Paris. The drying uprelations is reflected inImplementation of French-DRVthe progressive withdrawal ofInstitutions from theand the failure of the SainU-nywas established in Hanoi at thetlie French withdrawal to developties.

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he military

Sincelie DRV hasajor emphasis on reorganizing andIts army (thoubstantialol arms and equipment have probably been received from the Chinese Communists and these have made possible theof unit firepower, the development of new specialized and technical components, and the improvement of tactical organizations. We believe that the VPA. givenl, has the capability oflhe total military forces of South Vietnam, Cambodia, and Laos simultaneously.

he VPA is estimated lo total0 troops, orgunlzed Intonfantryone artillery division, oneeparate Infantryorder and coastal security rcgimenls,eparate battalions. In addition, there arc Regional Troops and Armed Popular Troops with strengths estimated00 men respectively; these are assigned ansecurity mission under the over-allof the VPA. VPA units conUnue to be deployedenerally defensive posture. The largest concentraUon almost certainly is in the Red River Delta region. We also believe that major unlls are located In Thanh Hoa and Vinh and that smaller forces are deployed nearh parallel. In the west, and in the northeast.

he DRV nuval force is not anorganizationaritime adjunct of the VPA. Currently theomall, lightly armed, motor-launch-type patrol craft andootor Junks which comprise this force are based principally in Uie Haiphong area. The patrol craft, mostly of Chinese origin, are employed In coastal and inland waterway patrol while the junks are used exclusively for training. The DRV naval force could not cope with the South Vietnam navy if the (alter sought to deny Ihem the use of Uie Gulf nf Tonkin in the event of hostilities. DRV naval forces will probably not expand beyond their present strength orole of broader scope as long as the International Control Commission (ICC)in Vietnam.

p to the present Uie DRV hasno combat air capabilities, and Uie DRV Is not expected lo present any serious air threat for Uie next several years. Presently the DRV has an estimatediaison-type aircraft usedemlmlUlary role. The personnel of this quasi-air force number. Operational training direction and maintenance probably are provided by Communist China, and It is possibleeal air force is being created covertly inChina. There areormer French airfields in North Vietnam, one of which could probably support sustained jet light bomber operations. Four olher airfields arc suitable for limited Jet fighter operations and could support sustained Jet fighter operations if developed. (Sec Map.)

n an important and lengthy speech to the National Assembly inrmy Commander-in-Chief General Giap outlined plans for continuing lhe transformation of Uie VPAalanced, modern force, and also emphasized the political aspects of its mission. In addition lo lis "defensive"General Giap said that the VPA asarm of the Iao Dong party has the duty of maintaining internal security, and ofthe "peaceful struggle Tor theofeneral Giap called for an intensified training in "pollUcal-mind-edness" in Uie VPA, and for Uie adoptionompulsory military service system fora "reserve force which includes all the people."

eneral Giap Implied lhat the strength of Uie VPA might be reduced, and cited Uie following as factors which have placedon the buildup of the VPA's effective strength: the DRV's "peacehe VPA's

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"defensivehe manpower shortage, and budget possibilities. In6 the DRV announced with great fanfare, intended to prove the peaceful policy of the regime,0 troops were being demobilized. (Probably with some Justification, localCommunist leaders have regarded these ex-soldiers as having been discharged because they were politically unreliable, and apparently treated them accordingly.esult many of these veterans have become associated with the disaffectede believe that to the extent these discharges actually took place, they have been offset by new recruitment and by integration of other elements Into the VPA.

hinese Communist military advisors and technicians have been assisting in theof the VPAut we have little information on either the number of advisors or the current extent of Chinese (or Soviet) military assistance to the DRV. It Is reported that inoint SI no DRV military headquarters was established In the Kunming area of Yunnan Province in Communist China. This could be used both forlogistic and training activities and for developing Joint operational plans to meet future military contingencies In thearea. It might permit the Chinese Communists to exercise considerable influence in the VPA and thus in the DRV Itself.

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HE ECONOMY

North Vietnam traditionally hasood deficit area and prior to the division of Vietnam waa drpcndent on imports largely from Soir.li Vietnam.ajor problem of the regime Is to raise the production of foodstuffs to meet the minimum needs of the population whileelf-supporting economy. Despite progress in restoring the economy North Vietnam continues toow standard of living and to be dependent on foreign aid to cover the trade deficit in its balance of payments. The DRV5 has received credits and grants, to be usederiod of years, in the amount0 million from tho0 million from Communist China, and small amounts from European Satellites (all conversions at official rates).

he DRV had5 to be the first of two years of planned economicafterarger scale plan of longer duration would be launched. But theof unfavorable weather, thelack of experience in economicand planning, and the delay inBloc technical aid and equipment resultedear of trial and error, andof acute distress in large parts of the country. Up to tlie end5 very little progress had been achieved in developingin the established Industries of coal, cement, electric power, ferrous and nonferrous metals, and textiles. Only In the fields of transportation and telecommunications, where Chinese Communist aid was mostailable. and in irrigation and flood control, was there significant progress.

he formationational Planning Board inhe creation of aservice innd the arrival of Bloc advisors enabled the regime by6 to inaugurate planned economic development and to utilise effectively the Sino-Soviet Bloc aid which began to arrive in the second quarter of the year. The DRV6 operatedne-year plan aimed generally at rehabilitating the economy and laying the foundations for the transition to socialism. The plan was formulated along the lines of the Chinese Communistof the period9o absolute figures were announced for6 budget, but the regime indicated the amounts to be spent for economic and social projects would be allocated as follows.

griculture and irrigationercent-Industrial constructionransport and communicationsercent- culture, health, education, and miscellaneous.

The regime has claimed fulfillment of most of the specific goals of6 economic plan.

gricultural rehabilitation isto the recovery and development of allof the North Vietnamese economy and it has been the most Important program of the regime. Emphasis has been given toof rice acreage, and there have beenachievements in irrigation and floodThese coupled with favorable weather conditions have resulted8 ricesignificantlymports of rice, which had been sizable5 andere negligible during the latter half6 when the regime was able to export small quantities of rice. In order to Increase the availability of rice the government has maintained strict rationing of rice and isrogram for raising of secondary agricultural crops. The regime is alsothe development of cottonwith the aim of insuring self-sufficiency in raw cotton. Although this program is promising for the long6 production was disappointing and even7 plans are fulfilled, only one-third of North Vietnam's raw cotton requirements will be furnished by domestic production.

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ehabilitation of modern Industries has proceeded rapidly with the extensive aid from the Soviet Bloc, and must major mining and industrial installations are now back inalthough output is generally well below prewar levels. Emphasis is being given to development of exportable minerals and industrial products and to production ofgoods. Tho DRV claims6ercent of the peak in the period of French control. Althoughis scanty, we believe that these claims in most cases are high ond that6 coal output reachedillionillionnd cotton yarnons compared0ement production was0 tonshe Tinh Tuc tin mine,in-processing plant has been installed, is being exploitedunder the direction of SovietThe DRV has claimed that the tin resources are far larger than previouslyand that gold, tungsten, chrome,and iron ores are also present. Mineral surveys throughout North Vietnam areby the DRV to have revealed more thanxploitable mineral deposits previously

otton textile plants and phosphate crushing plants, as well as other factories serving the domestic economy, have returned to production, and production from smalland handicrafts has increasedIn spite of this progress in industrial reconstruction, the regime Is still far from being able to provideatisfactoryof goods for home consumption, orexports to balance the large quantities of imported material and equipment necessary for further economic development.

6 North Vietnam's foreign trade was more than double thathe regime continues to be primarily dependent on trade with the Bloc, but trade with non-Bloc areas has also increased, principally with Jajmn. Exports of coal, the principal export Item, increased fromons5 toonsons to Japanons io Western

Europe. It is estimated that0 coal exports will have doubled, and Lhat moderate increases will be made In the export of cement and other basic commodities.

orth Vietnam's seuborne trade hasmainly the export of coal to Japan, Western Europe, and China, the importation of limited quantities of material andfrom the European Satellites and the Soviet Union, and the importation from Burma of Soviet-purchused rice. The only discernible trends arc the rapid increase in coal exports since the third quarter5 and the reduction of rice imports

oclolization is In Its early stages. Major industrial plants and construction projects are operated by the slate, but most small scale industry and handicraft production is still in private hands. In the interest of efficient operation, the regime has announced that state factories will be given autonomous status with the management assuming responsibility for the capital and property and operatingrofit and loss basis. The regimeintends, at least for the time being, to control small industry indirectly through taxation and marketing and supplywhile attempting to organize artisan craftsmen gradually for cooperativeState control of domestic and foreign trade was expanded greatlyn agriculture, the regime is proceeding along the Chinese Communist road loByhe regime claimed there weremutual aid teams" in North Vietnam involving almostercent of the peasant households. Most of these were seasonal arrangements for sharing labor and equipment, but they almost certainly will become more permanent as pressure from the party cadrestepped upfor agricultural producers cooperatives as well as marketing and credit cooperatives will probably follow as soon as the regime considers this move feasible.

ith Chinese Communist technical and manpower assistance, rapid progress has been made In restoring transportation andfacilities. Rail lines have largely been reconstructed (sec map) with the ex-

of the line south from Ninh Binh toh parallel. North Vietnam's highway system has been restored generally to itsstatus and in some areas improved.emphasis is being directed towardnumerous streams in order to eliminate ferries on the primary roads. The Hanoi-Lai Chan mute and roads south fromh parallel have been significantly improved, thereby facilitating the movement of troops and supplies to many points along the Lao and South Vietnamese borders.Bloc assistance is facilitating theof port facilities which will further expedite the increase of trade.

Bll. Planning goals7 have beenin general terms. These goals carry on the same line as thoseproduction will continue to be basic. Priority will be given to light Industry for the manufacture of consumer goods and to those industries which process goods forThe state-owned sector is to beexpanded, although for the present the regime is apparently counting on private enterprise U> supply an important portion of locally-produced consumer goods and various tax and price adjustments have beento encourage such private production.

here have been no announcements of long range economic plans. The regime has presumably looked on theeriod in which it would reconstruct the economy and gain planning experience beforeong range plan. We believe that the DRV Is likely to formulatelanul the plan almost certainly will require revisions in later years.

n trying toosition of relative economic independence, North Vietnam will continue lo face difficult problems.of food must be greatly Increased, exports must be raised substantially,ody of skilled technical and administrativemust be built up. Even if Sino-Soviet Bloc aid is continued at its present high level, achievementelf-supporting economy will take some lime, and willeavy burden on tho mass of the population.

e believe that during the next year or so the DRV will continue to concentrate onto Increase agricultural, mineral, and light industrial production. The unusualplaced by the DRV on light industry may be due In partesire to attainstandards comparable to those in South Vietnam. The DRVe-source base capable of supporting increased exports and modest Industrial development and it will probably have moderate success In Itsefforts. If external aid is continued at current levels and agricultural production is not adversely affected by weather, the DRV should be able toodestin the over-all standard of living within the next year or so.

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Original document.

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