Created: 10/11/1955

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ctober 5





To estimate the prospects for the developmentietnamese government with the capability to defend itself against internal subversion and uprisings and with sufficient authority and administrative ability to deal adequately with the manyfacing it, including those posed by the Geneva Agreements.


he became Premier ingo Dinh Diem has made considerable progress toward establishing the firstindependent Vietnamese government. Nevertheless, the capability of the South Vietnamese to develop an effectivewhich can survive during the next few years is still in doubt.

Assuming Diem survives and provided he continues to receive wholehearted US support, we believe he will probably be able to cope with non-Communistelements and to remain in officethe period of this estimate.providing the Communists do not exercise their capabilities to attack acrossh Parallel or to initiate large-scale guerrilla warfare in South Vietnam, Diem will probably make further progress inore effective government.

Diem will almost certainly not agree to hold national elections for theof Vietnam bylthough Diem, under pressure from the Western Powers, might reluctantly agree toconsultations with the DRVelections, he would insist onwhich he felt certain thewould be unable to accept. Aware thatosition will probably cause the Viet Minh to increase their efforts lo destroy his government, Diem willseek to bind the US more specifically to the defense of Vietnam.

he Viet Minh, despite their relative quiescence, present the greatest potential threat to Diem. Should the Viet Minh elect openly to invade the south with regular forces, they are capable ofthe VNA and any French forces (if committed) now present in South Vietnam. Moreover, with an0 military personnel in Souththe Viet Minh have the capability to undertake local sabotage and terrorist actions, and small-scale but widespread guerrilla warfare. The Vict Minh canthese forces by infiltrating into South Vietnam. The Viet Minhexerts political influence in many areas scattered throughout South )

We believe that the Viet Minh, at least untilill probably continue to concentrate primarilypolitical struggle" designed on the one hand to exert pressure for implementation of the Geneva Agreements and on the other to bring to power in the south politicalamenable to coalitionwith the Viet Minh. Their tactics will probably be to maintain andtheir influence in theamper government administration,Diem and the government, tothe command elements in the VNA, and to infiltrate and incite dissident groupsparticularly elements of the sectsto oppose the government.

However, the Ctommunists probably estimate that unless they effectivelythe position of the Diemthe latter will gradually strengthen and stabilize its position. They mightdespite the presence of theControl Commission, to initiate small-scale but widespread guerrillain the south, provided such action was consistent with over-all Bloc policies and provided they estimate that suchwould not provoke Manila Pact

Should the Viet Minh initiate large-scale guerrilla operations supported by substantial infiltration from the north, the South Vietnamese government would be hard pressed to do more than maintain control in the Saigon-Cholon area andew other major urban centers. If the operation were prolonged, theprobably could not survive without military assistance from outside.

While the French will continue to seek to salvage as much as possible of French commercial and cultural interests, weFrench interests and influence in South Vietnam will progressively decline during the period of this estimate.for training personnel, possible air and naval bases, and perhaps some token forces, the French will have withdrawn the bulk of the FEC byrench forces remaining in Southwill almost certainly not beagainst the Viet Minh, except in self-defense or possibly as part of aWestern action.



hen Ngo Dinh Diem was appointedby Chief of State Bao Dai ineasically unstable andsituation. In the area under theof the Vietnamese government, the population of someillion was war-weary,ense of identification with thegovernment, and was divided byloyalties and religious opinion Their principal concern was to better their economic position and preserve their newly-found peace.

The most significant articulate politicalof the bulk of the population was an antipathy for the French combinedersonal regard for Ho Chi Minh as theof Vietnamese Nationalism. The small educated minority who were concerned with national politics, were primarily poweropportunists. The existence of armed politico-religious sects contributed to theof establishing central government authority throughout South Vietnam. Many French were still trying to preserve their

vested interest in tho economic and political life of the country and the Frenchfeared that the establishment ot an effective antl-Communlst government in the south might Involve French forces in renewed fighting with the Viet Minh. The prospects were made even darker by the ease with which the Vict Minh appeared to be consolidating its control of the north.

In this situation Diem was forced to move slowly. Although possessing considerableprestigeatriot, he wasin administration and was confronted at the outset by the intrigues of Bao Dal and other self-interested Individuals and groups, who in many cases benefited from French support. Moreover, the loyalty of the army to the centra) government was in doubt and General Hinh, its Chief of Staff who alsoommission in the French Air Force, was openly maneuvering for political power. The national police and security services were commanded by Bay Vien. the leader of the Binh Xuyen gang who had bought them from Bao Dai in4 and who was hostile to Diem. Finally, Diem was handicappedack of trained administrators at the national and provincial levels.

In the difficult and conrused situation confronting the national government. Diem concentrated on eliminating or neutralizing the most important groups and individuals challenging the authority of his government. He successively excluded General Hinh and Bao Dai from the political scene, won theof the army, and established theof his government from FrenchBy bribery, persuasion, and finally force. Diem virtually eliminated the Binh Xuyen and the most Important elements of the Hoa Hao sects as threats to his authority. At the same time, he maneuvered the Cao Daithe strongest of the sectsInto an uneasy allianceesult of these successfulDiem gained prestige and increased popularityymbol of Vietnamese

Nevertheless, the success of Diem's efforts toiable anti-Communist govcrn-

SEX ment in South Vietnam is still in doubt.Diem has established control over the apparatus of government, he has dealt only in part with such fundamental problems as: (a) the development of an effectiveparticularly on provincial and local levels; (b> the institutionopularly-sanctioned constitutional basis for the(c) the elimination of armedand the extension of governmentthroughout all areas of South Vietnam; (d) the suppression of Viet Minh military andcapabilities remaining in Southand (e) the restoration of the economy.


The Diem Government

At present, Diem's greatest assets are his reputation for honesty and unsulliedhis control of the Vietnamese National Army, and the moral and financial support of the US. In addition. Diem has gainedpopular following, especially incenters and In recently pacified areas and has the loyalty of the refugees from North Vietnam. However, should he lose army or US support, his regime would probably

Diem also has the sympathy and In many instances the active support of theatholics in Southatholic refugees from theho represent an anti-Communist core with considerable political potential. However. In order to avoid aggravating the religious issue.atholic, has been careful not to appear to champion tliecause.

Diem is still in the early stages ofa political machine. His cabinet isprimarily of loyal technicians who lock political stature, Most well known political figures of the pre-Diem period have beenby Diem's unwillingness to trust them and by his Insistence that unquestionedof his leadership is the only basis for cooperation. Diem has depended heavily



his tmpopular brothers for advice andthem with positions of greatHis tendency toward "one manis dependence on his brothers for advice, and his rejection of Vietnamese leaders whom he does not trust, has denied his government many of the few trained administrators.

Although Diem has established firmover the army and security forces, he has not established internal security. This fact, coupled with his failure to organize hiseffectively, has been largelyfor the delay In the implementation of promised reforms in government procedure and agrarian policies. Projects fordevelopment and land reform, under tho guidance of US advisors, are still largely in the planning stage. Even with US assistance and Its own best efforts, the Diemhas completed onlynits accommodating approximatelyercent ofefugees from the north. Diem has made some progress inthe number of villages under the administrative guidance of the centralCivic action teams, composed of representatives of the various ministries, have been trained and sent out to villages in aboutrovinces.

Diem hasonsiderable effort to galvanize mass popular support behind his program. Initially, he concentrated onpopular antipathy for Bao Dai and the French; more recently he has sought to develop strong anti-Communist sentiment. Although there have been instances ofmanifestation of popular anger and xenophobia, Diem has on the wholein keeping popular passions within bounds.

Diem and his advisors are currentlya three-phase program to obtain amandate for his regime and eventually toepresentative assembly in South Vietnam: (a) an early referendumimple public choice between Diem and Bao Dai as Chief of State;eferendumew constitution coupled with elections at the communal and municipal levels; and (c) elections by the end5ationalwith limited powers. To what extent this process will be carried through willlargely on Diem's judgment as to his own appeal in the south and the extent of Communist influence. The formationepresentative body may be delayed

Non-Communist Opposition

The Cao Dai, the most powerful of the sects, aspires to political control of South Vietnam and is potentially Diem's mostnon-Communist opposition. Ita sizeable rural area andelatively cohesive religious following ofietnamese,rained army ofhile the Cao Dai spiritual leader. Pope Pham Cong Tac, has cooperated with other sect leaders opposing Diem, most Cao Dai military leaders have supported Diem. General Phuong, the Commander-in-Chief of Cao Dal forces and probably the sect's most influential political leader, has entered into an agreement with the government to integrate the bulk of his troops into the VNA and to disband the remainder. However, Phuong has continued to intrigue to obtain better terms and the agreement still has not been fully Implemented.

During the spring and summerhe Cao Dai sought to become the majorforce ln South Vietnam by attempting to capture control of thehis committee was formed during the spring5 at the time of the Binh Xuyen crisis. It resulted from aof followers of Dlcm's brother Nhu, Cao Dai generals The and Phuong, and Hoa Hao General Ngo, all of whom sought to use the force of nationalism to serve their ownends. It is likely that much of the extreme nationalist activity of theduring April and May5 reflected Cao Dai efforts to undercut Diem and to give the RC the political initiative. However, Diem's supporters have thwarted Cao Dai efforts.

During the period of this estimate,of Cao Dai forces into the VNA will

probably continue. ThLs process may be marked by considerable political Jockeying and some local armed flare-ups may occur. Because Phuong and other Cao Dai leaders lack popular support, we do not believe they will elect to resist Diem by force. Should they adoptourse, we believe they would notajor threat to theexistence of the government.the effort to suppress their forces would disrupt army training and divert attention from other critical tasks Including theof the Communists.

Although the Binh Xuyen and someof the Hoa Hao sect still retain the power to wage guerrilla warfare in limited areas, the government by force and bribery has drastically reduced the potential of these groups to challenge Its authority. Theis the disposition of the four principal forces of the Hoa Hao: Ba Cut's unit isto be reduced to, who are scattered and in hiding after evading VNASeal's group has beenesult of VNA operations and probably does not now total more; Nguyen's force of, thoughrallied to the government, is in fact neutral; and Ngo's unit ofswith the government. The Binh Xuyen have probably ceased to be anforce following the recent VNA operation against their swamp hideout However, the remaining forces of Bay Vien, Ba Cut. and perhaps Soai will probably continue to oppose the government during the period of thisand may be tempted to cooperate with the Viet Minh.

Most of tho other political groupings are opposed to Diem and arc composed primarily of intellectuals and political opportunists. They have little popular following. While these groups will continue to maneuver for position in an eflort to secure power, wethe majority will gradually come to terms with Diem as they become convinced that he cannot be removed by political

Communist Opposition

The Communists pose the ultimate threat' to the Independence of South Vietnam. The Communist regime In North Vietnama far strongerore experiencedgreater cohesion of leadership, and greater drive than the government of South Vietnam. However, we do not believe there willirect test of military and political strengths during the period of this estimate. Considerations of over-all bloc strategy and apprehension concerningUS intervention will almost certainlyan open Viet Minh attack. On tho other hand, Premier Diem will almost certainly not agreeest ot relative popular strengths in national elections.

The struggle, therefore, will be indirect On the Viet Minh side it will be carried out by their agents now in South Vietnam, by the combined resources of Bloc diplomatic and propaganda facilities, and possibly by troops Infiltrated acrossh Parallel.

ince the cease-fire and the subsequent evacuation of most Vict Minh military units to the north, the Communists in Southhave concentrated on methods ofstruggle" designed on the one hand to exert pressure for nationwide electionsto the Geneva Agreements, and on the other to Infiltrate and subvert the institutions of Free Vietnamiew to bringing to power in the south political personalities who would bo amenableoalition government with the north.

e have little intelligence on Vict Minh strength, activities, and Intentions in South Vietnam. We estimate, however, that in South Vietnam there are0 armed Vict Minh military personnel in addition to an unknown number of political cadres and several Communist front groups. Military personnel are probably organized as skeletal units. Unit locations are not fully known, nor is the identity of their leaders. However, the strongest groups and most extensiveappear to be centered in the coastalof Southern Annam, the interior

tains ot Central Annam, the Plalne des Jones area adjacent to Cambodia and the Laotian borders, and in the Ca Mau region of Cochin-China. These elements arc probably engaged in intelligence activity, organizational and training functions, and in protecting local headquarters and base areas. They are also probably encouraging ond perhaps assisting those Binh Xuyen and Hoa Hao forces inopposition to the governmentinformation Indicates that the Viet Minh in South Vietnamontinuedfor armed action andampaign of mass intimidation, assassination, sabotage, and terrorism.

The Vict Minh probably exercises effective political control only In areas which areand in which the government has made no attempt to establish its ownThese include pockets in the plateau and foothill areas of South-Central Vietnam, the Camau peninsula in the extreme southern part of Vietnam, and the Plaine des Jones in Cochin-China The Viet Minh also probably exerts Influence in rural areas where government administration is present but still meffective. In urban areas where national government control is greatest, the Viet Minh are working primarily through frontsuch as labor unions, social service, and "peace" groups.

There appears to be little Communistin the higher echelons of theNational government or tlie army, but there are indications of fairly extensiveof lower units of tho administration, possibly including regional and provincial governments, and almost certainly the village councils. With respect to the South Vietnam politico-religious seels, recent information from Vietnamese sources suggests growing and probably successful Communist efforts to penetrate the factions of these sects whichhostile and in armed opposition to the government.

The Communists arc confrontederious dilemma In their campaign toViet Minh control over South Vietnam. They probably estimate that unless theychallenge the position of the Diemthe latter will gradually strengthen and stabilize its position. Moreover, they have probably concluded tliat Diem will not agree to elections or unification schemes which would favor the Communists. Under these circumstances the chancesommunist take-over of the south by means short of open force might decline. On the other hand, tbe Communists also probably realize that the use of force against South Vietnameither through open invasion or by Infiltratingtroops acrossh Parallel touccessful "liberation"would jeopardize current Bloc peace jxilicies and risk provoking US intervention. In addition, themay not presently have sufficient strength In South Vietnam quickly tothe Diem government and mayestimate that to undertake widespread guerrilla warfare without substantialfrom the north might lead not only to the weakening of their exposed organiaation in the south but alsorastic loss of public support

e believe that until6 thewillourse of action which is primarily political. They did not seize upon the crisis of last spring to Initiate guerrilla warfare and their propagandafrom Hanoi appear to direct their followers in the south to continue theiractions. Their objective appears to be the preservation of their pose as the defenders of Vietnamese unity and Independence and as the supporters of the provisions of the Geneva Accords. In the south, they will probably work ln both the villages and urban centers to exploit local grievances, to hamper andgovernment administration and reform, to subvert the command elements in the VNA, lo discredit Diemationalist, todissident groups in armed opposition against the government, and to increasefor plausible Communist proposals for unification. By these measures, which may involve terrorism and violence short ofguerrilla action, the Viet Minh could seriously hamper government efforts tothe rural areas. They would prob-

e i"

ably hope by this tactic tohange in the government of South Vietnam or towidespread antipathy toward Diem.

the Communists might,presence of the ICC. decide tobut widespread guerrillathe south, provided such action waswith over-all Bloc policies andestimate that such action would notUS counteraction. Thewould be less fearful of USIf they believed that they couldsuccessful guerrilla operations withsupport from the south to makeobvious and extensive support from


The Vietnamese National Army (VNA) has an estimated strengthr0 sect forces in the process of Integration. The VNA is composedombat battalions,2 armored,esult of recent reorganization most of the battalions have been regrouped toield infantryight infantry divisions;erritorial regiments;ndependent infantry regiments. The remainder of the battalions arc independent. The larger elements generally are still In the formative stage, and arc not yet operational. The Vietnamese government hopes to increase the VNAtrength. whereas current US-approved force levels, including air and naval forces, callotal strength ofy

In recent operations against sect forces, the VNA displayed major weaknesses in staff work, particularly In logistics, and the tactical control of units was poor. Sinceeveral key VNA officers have been purged, and much of the present army leadership Is new. Time will be required for the new team to "grow" Into their positions, but withand tlie scheduled training of VNAin US service schools, the armyshould Improve gradually.

The morale of the VNA has risen sharplyesult of its operations against the Hoa Hao and Binh Xuyen dissidents. This factor, together with the halt in demobilization and the firm nationalist stand of the government against the French, has given theew sense of independence and confidence.

Despite the VNA's lack of experience and training. It probably has the capability of maintaining the government in power against potential armed opposition now located south ofh Parallel, and of maintainingof major urban centers and lines otShould the Viet Minhajor guerrilla operation supported byInfiltration from the north during the period of this estimate, the government would be hard pressed to do more than maintain control of Salgon-Cholonew other major urban centers. If the operation was prolonged, the South Vietnamese government probably could not survive without military assistance from outside. Provided US assist' ance is continued, and conditions permit the implementation of planned reorganization and training programs, the VNA in another two years should be able toarge measure of Internal security even In the event of considerable infiltration of guerrillas from the north. Moreover, against externalIt should be able at that time, withnaval and air support, to0 day delay in withdrawing to the general vicinity of Ban Me Thuot-Dalat-Nha Trang, and toefense for some months of the Saigon-Cap St. Jacques area.

Vietnammall air force with an over-all personnel strength ofrained officer and enlisted pilots,ilot trainees, andther skilled and semi-skillednd an aircraft strength ofand transport types. The Vietnam Air Force (VNAK) has minor capabilities forartillery observation, target spotting, batUe area liaison, and air evacuationNo significant increase in VNAFIs expected during the period of this estimatearger and more effective VNAF is planned for theears. Any


increase in air force capabilities will depend primarily upon the traming and re-equipment programs of the USTraming Relations Instruction Mission (TRIM) and MAAO.

The Vietnam Navy is under operational control of the Chief of Staff of the VNA and under the administrative command of anaval officer. Its navalen.oast Ouard ofenarine Corpsen Inietnamese serve with the French Naval Forces. Far East, on abasis. The naval component1 submarine chaseroastal minesweepersndmaller amphibious and patrol craft. The Vietnamese Navy has limited effectiveness, but is capable of undertaking river patrol, and minor coastal and amphibious operations. Both the navy and marines depend upon foreign logisticand will require considerable additional training before they can perform effectively.

The Vietnamese National Police, under new and apparently more effective leadership, consists ofen, al least half of whom are in the Saigon-Choi on area.improvement in the morale,and effectiveness of these forces is likely during the period of thisivil Guard is currently being organizederger of former provincial guards, local militia, and suppletlf elements under thedirection of the Minister of Interior. This organization with an0 men still lacks cohesion, skills, and necessary equipment. Of0 will be trainedS program now being instituted.

The French Expeditionary Corps (FEC) has been reducedtrength of, because of concern for the North Africaneneral loss of Interest in South Vietnam, and Vietnamese pressures.are now proceeding between South Vietnam and France concerning the future role and status of the French military in South Vietnam Unless the Vietnamesethe withdrawal of all French forces, the French may continue lo maintain some token forces in South Vietnam. Inthe French will probably seek to retain naval and air bases in South Vietnam. The principal missions of the FEC at the present time are to protect the ICC in Vietnam and French nationals and property. Only some token forces now remain In the vicinity ofh Parallel. The FEC will almostnot be committed against the Viet Minh, except to protect itself or as partultilateral Western action. The French will continue to provide training facilities for VNA personnel in France and will also probably continue to participate, although reluctanlly, with the US ln training the VNA in Vietnam. In addition, the French will probablythe turnover of depots and installations to the VNA.


Vietnam's economic position has notIn the past year. Formidable basic economic problems still confront theThe country Is dependent on foreign aid to finance Imports and the defense budget. Acreage under cultivation is still far below prewar levels and the position of the peasant needs to be improved. There are also serious immediate problems. Despite adequateof rice for domestic consumption, distribution and marketing difficulties haveramatic rise ln the price of this commodity in Ihc large urban risingesult of the closing of the French enterprises and militaryand Is aggravated by theof VNA and sect armed forces. These problems may come to have significant political effects and add to Instability in the months to come.

Rice output, Vietnam's principal resource, isetric Ions for thecrop year, representing virtually no gain over recent years and little more than half of pre-World War II production. This level shouldmall ex|>ort surplus

etric tons. The dislocations of war and the continued lack of security in many rural areas have left one-third of the prewar rice acreage uncultivated. Rice,and other exportsear, which pays roughly for only one-third of South Vietnam's Imports. US aid Is now the major source of foreign exchange for the area.

Local resources are expected to cover aboutercent of theudget ofUS military and economic assistance Is programmed at0 which will cover most of theThe French now provide onlyn foreign aid and this willdiminish as their military forces arc

France continues to be the chief source of imports and French capital still controls the bulk of manufacturing and plantationHowever, Franco-Vietnameseties are weakening because of mutual mistrust and suspicion and the shift to direct US dollar aid. Vietnam's Foreign Exchange Office has limited franc Imports and hasthe flow of remittances to France. The new Vietnamese tariff schedule continues the traditional preferential rates for France, but at sharply reduced levels. Under theseFrench enterprises will curtail the scale of their operations and general tradebetween France and South Vietnam will not improve.

Vietnam is also losing its traditional trade within Indochina. Cambodia, which formerly used the port of Saigon to channel its imports and exports, Is becoming Increasingly oriented toward Thailand as the result of new rail and ferry facilities. Moreover, trade withhas been curtailed since the dissolution of the Indochinese customs and monetary unions at the endelations between these countries have also been troubled by the failure of South Vietnam to turn overfull share of Die custom receiptsby the Indochinese wilh North Vietnam has also been disrupted primarily because of Vietnam's self-imposed restrictions.

Improvement In economic conditions in South Vietnam will depend largely on the success of government efforts to deal with such problems as unemployment, land tenure, rural credit, currency reform, foreignrelations, and the recreationice surplus for export. The Diem government has recentlyew central bank, initiated independent control over foreignresources, and undertakenplanning. The government probably will be successful in permanently settlingnumbers of refugees, In initiatingImport policies, and in regularizing Its trading relations with Cambodia and Laos. However, institutional reforms and otherdesigned to alleviate the economicwill not pass beyond preliminary stages during the period of this estlmale.

Despite economic stagnation in Vietnam, the situation is unlikely to become critical so long as US aid continues. On the other hand, there is little prospect of sufficientin economic conditions totrong stimulus to popular support for tlie government


Recognizing that his regime is dependent on US aid and support, Diem will probably continue tooreign policy marked by cooperation with the US. At the same time, Diem's foreign policies will bear the mark of strong independence of action, and maylead him to misunderstandings with his closest allies. Diem will continue to urge the development of effective defenseunder the Manila Pact, while seeking diplomatic support through wider recognition of his government, particularly in Asia.

In stubbornly refusing to recognize orto the terms of the Geneva Agreements, Diem has shown little sensitivity to world opinion. He Is probably concerned by Indian, British, and French pressures, with which the US has been to some degree associated, to hold election consultations and publicly declare his cooperation with the ICC. But he is fearful of the possible effect that consultations might have on public opinion and on his public sup-


He clearly believes that anyof the DRVgovernment" in the north would have adverse politicalConsequently, although Diem will attempt to moderate the disfavor of the ICC and the Geneva powers, he will probablylo resist external pressures to holdHowever, under pressure from the Western Powers and Asian neutralists. Diem might reluctantly agree to some form ofconsultations, but in such circumstances he would vigorously press for conditions wliich he felt certain the Communists would be unable to accept. Aware that his position will probably cause the Vict Minh to increase their efforts to destroy his government, Diem will probably seek to bind the US moreto the defense of Vietnam.

Because he recognizes that the continued presence of the International Controlin Vietnam exerts some deterrent force on possible Communist designs, Diem will probablyrudging andcooperation with that body.he will reject any efforts by the ICC to Inject Itself into the question of elections in Vietnam, even if his refusal should lead to the departure of the ICC from Vietnam.

The French have decided to withdraw the bulk of their forces from South Vietnam and to reduce their financial contributions to the Vietnamese government because ofin North Africa, popular sentiment in France, and Vietnamese pressures. While the French will continue to seek to salvage as much as possible of French commercial and cultural interests, we believe French Interests and influence in South Vietnam willdecline during the period of thisThe French will probably continue to give no more than lip service to theof the Geneva Agreements. In any case, they will attempt to avoidof French forces in renewed hostilities or internal disorders. While the Frenchwill give its verbal support to the Diem government, it will in fact cooperate with the latter and with the US in Vietnam only grudgingly.

India's principal objectives towardwill be dictated largely by its concern to prevent the outbreak of hostilities in the area. To effect this, India will attempt tothe terms of the Geneva Agreements. This policy may lead India into conflicts with the Diem government and may lead India to propose the dissolution of the ICC in Vietnam. However, India's policy toward South Vietnam is likely to be moderated to the extent that Diem succeeds introng and popular regime and replacing Ho Chi Minh as the symbol of nationalism in Vietnam.

Canada,ember of the ICC along with India and Poland, has consistently supported US efforts totrong anti-Communist government in the south and may be expected to continue toolicy generally parallel to that of the US in the area, even in the event of the break-up of the ICC. The UK, on the other hand, has hadmisgivings as to the strength of the Diem government and the wisdom of Diem's policies. Because of its position asof the Geneva conference on Indochina and because of its deep fearsenewal of hostilities in the Indochina area, the UK has consistently urged uponechnical compliance with the Geneva provisions. The UK will continue to press Diem to urgefree elections in an effort to take the initiative away from the DRV and force it to accept the onus of rejecting adequate election guarantees. Indications are that if Diem continues to refuse even indirectthe UK will probably not join inDiem with external protection should South Vietnam be attacked from the north.


Diem survives and providedto receive wholehearted USwe believe he will probably remainduring the period of thisprovided the Communists dotheir capabilities to attack acrossParallel or to initiate large-scalewarfare in South Vietnam, Diemmake further progress in developing

a more effective government. His position will probably be strengthenedesult of Increased popular support, the continued loyalty of the VNA,eterioration in the strength and cohesivcness of hisopposition. The national government will probably Increase the number of rural communities under Its control, particularly in areas now held by the sects. However, Diem will probably have advanced little beyond the preliminary stages in his social and economic reform programs. Moreover, should Diem for whatever reason be eliminated from theeriod of extreme political instability would almost certainly follow. Suchmightuccessor more amenableapprochement with the Vict Minh.

ict Minh elements In South Vietnam will continue to control or Influence remote areas and to hamper government action in theThe Viet Minh capability lopersonnel and arms into South Vietnam, and to reinforce Communist and potentialelements will remain the most serious threat to the establishmentiable and stable national government in the south.

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