Created: 5/2/1955

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The following organizations participated in the preparetion of this estiimte: The Central Agency end the intelligence orscnizctions of the Departaents of Stcte, tbe Amy, the Navy, the Air Force, and The Joint Staff.


Concurring vera the Spocicl Assistcnt, Intelligence, Departr^nt of Stcte; the Assistant Chief of, Depcrtnent of the Amy; the Director of Novel Intelligence; the Director of Intelligence, USAF; end tbe Deputy Director for The Joint Staff. The Atonic Energy Counission Repro-sar-tctlve to the IAC, ond the Assistcnt to the Director, Federal Bureau of Investigation, abstained, the subject being outside of their jurisdiction.





SUBJECT: : The Current Saigon Crisis THE PROBLEM

To assess the implications of recent developments In Saigon and to estimate the probable actions of interested parties In the current crisis.


A. Implications of Current Developments in Saigon

1. The success of Premier Diem in operations arainst the Binh Xuyen, and in his stand against Bao Dai, the French, and General Vy, hasew and potentially revolutionary situation in Vietnam. While the situation In Vietnam isfluid. Diem appears to hold the initiative in the phase that is about to begin. In this phase, the interested partiesparticularly the French and Bao Daiwill have to adapt themselvesadically new political situation dominated by Diem or by

more extreme nationalist elements. If they do not adapt and if there are say substantial efforts by Bao Dai or the French to frustrate Diem's government, the chances of anti-French violence and the dissolution of the imperial institution would be greatly increased.

2, Diem'a relations with the Revolutionary Council which has been actively injecting itself in this situation have not yet been clarified. This council, designatedelf-appointed assembly,ore extreme position than Diem, particularly in regard to the withdrawal of French forces and the immediate deposal of Bao Dai. It is dominated by Cao Dai generals Trinh Hinh The and Hgycn Thanh Phuong and by Hoa hao General Ngo andumber of extreme nationalist General Ely sow charges that the Council is Coraiunist Infiltrated but so far has not produced evidence to substantiate this charge. We have no significant evidence to Indicate that any of the members of the Council are Communist. In athe Councilroad program couched in social revolutionary terns butenuncirtion of "red colonialism" ix North Vietnam. Its activities have beenby the Communist radio in Hanoi along with those of Premier Diem.


B. Probable Couraos of Aetlor. Interested Parties

3- Prenler Plea. Tha Tirtual expulsion of the Binh Xuyen froa Saigon-Cholon haa Increased Diea's prestigeVietnaa, Tbc oonfidsnce of Dir. and his supporters In their own strength, Judgment, and popular appeal has been considerably enhanced. In this situation, Diem will almost certainlyto resist any efforts to remove him froa office.

h. His actions and those of his followers have taken on an increasingly nationalistic, anti-French tone over the past few days and Diem may now be convincedontinuation of this anti-French policy is essential to the rallying of popular support. Nevertheless, he hasoderating influence on the anti-French and anti-Bao Dal position of theCouncil, However, if he believed the French weretheir efforts to depose him, he would almost certainly permit intensified anti-French manifestations.ourse would carry grave dangers of anti-French violence, particularly in Saigon,


5*. So far, Diem and his principal TOA leaders have appeared desirous of maintaining pood relations with the French, Diem's attitude toward Bao Dai has been less clear and there have bean indications that he has been considering the suggestions of the Revolutionary Council that Bao Dai be deposed. Ke nay be using ultranationalism to bring pressure against Bao Dai and the French. If he is thwarted In hisby the French or by Bao Dai, he will become moreto pressures toward extreme action.

Diem has rallied additional support during the current military phase, and from this position of strength, Diem will 'sljiiost certainly continue to gain adherents, including defections from among the Binh Xuyen and the sects.

The Vietnamese National Array. Aside from the French Army, only the VNA presently has the capability to enforce Bao Dai's authority in Saigon or to back Diem in defiance of Bao Dai. There are soma VNA officers who dislike Diem and who are concerned by the developing rift between Diem and Bao Dai. On the other hand, there is considerable pro-Diem, nationalist sentiment in the Army; Diem has gained additional support as a


result of clearing the Binh Xuyen from Saigon; and mostthe VKA units in the Saigon area appear to bo loyal to Diem,

0* If Biem should acre precipitously to depose Bao Dai, or if Bao Dai attempted to oust Diem, some elements of the Army might remain loyal to Bao Dai and atteapt to overthrow Dica. We believe such efforts would be unsuccessful, however, even if General Hinh had entered the country to rally support for Bao Dai,

J, Ban Dal. esult of Diera's stand against Bao Dai and bo causa of tho letter's involvement in what many Vietnamese nationalists consider torench inspired political maneuver, Bao Dai's prHStice has bean greatly redueed, whatever the out-coma of the presont crisis, Bao Dai's authority can only be enforced at this Juncture by the force of French arms and any such action would almost completely discredit him in Vietnam.

10. There appears to be considerable sentiment for the depoaal of Bao Dal, and if Diem gives his consent such action may be taken at any time. For tha presont, Bao Dai apparently


fecls that the tide la running with Diem, and is attesting to preserve the institution of the oonarchy by accepting the continuation of the Diem government.

U, The French Government. The French will find it difficult to accept Dlem's success which came despite their strong and well-publicized opposition. We believe that fear of large-scale violence and adverse domaatic and world reaotions will cause the French to refrain from overt action in Saigon to restrain the toa or to remove Diem unless the situation should threaten serious loss of French lives. However, the extent to which the French pemit the VKA freedom of action ard the nature of their dealings with the Binh Xuyen and Bao Dai can still have an influence on the outcome of the immediate situation. Furthermore, we believe that the French will continue pressures for Diem's removal; sens French elements in Vletcas axe likely to continue their covert assistance to Diem's energies. If the French believe that Diem will succeed in consolidating his position they may decide that they have no choice except to repair their position with Dies as best they can while making


plans for accelerated withdrawal of their forces.

Binh Xuyen. The military potential ofXuyen will depend on the extent of support theyor indirectly, from the French, and the Boa Hao.

It appears that the norale of the Binh Xuyen troops isirror have already defected, and that many of the troops may be susceptible to peace offers from the government. onsiderable number of the Binh Xuyen may attempt to resume their Ufa of piracy and extortion. The VNA should be able to reduce the Binh Xuyen to the levelocal nuisance.

Sects. We believe that for the immediateCao Dai military forces under Generals The and Fhuongactively to support Diem against tho Binh XuyenDai. The Boa Hao are unlikely to play an importantthe immediate situation, although the Ba Cut forcestheir terrorist operations.

The Special Assistant, Intelligence, Department of State, believes that the last sentence of this paragraph understates the difficulty the French would have in accommodatingtrong anti-French covornment In South Vietnam, and therefore believes the sentence should raadi "If thase efforts are unsuccessful and Diem appeared to be consolidating his position, the French in the and nay decide that they have no choice except to step up the withdrawal of their forces frost Vietnam."

lil. rne Viet Hlnh. The Viet Kinh probably fear that Dlen'b continuation in office would limit the prospectseaceful unificr.tion of Vietnam under terms favorable to the Communists, They will probably continue covert efforts in South Vietnam to keep the situation agitated. The Communists almost certainly will not invade South Vietnam in the near future.

C. General Outlook

In present circumstances, we do not believe that Diem could be persuaded voluntarily to resign. If he wore forced from office, many of Dlera's followers would probably undertake revolutionary opposition, including maquis resistance, to the successor regime, Somo VNA elements in Saigon and in central Vietnam would probably Join theae elements in resisting the new government,

Assuming that the US continues to support Dica, and that the French aoquiasee, we believe the situation will stabilize in Saigon under Diem'a control, Diem'a talents as

an administrator are unlikely to improve. His success achieved


largely on his own initiative and with his own resources is likely to make himindependent and less amenable to policyiem's government will still be confronted with manifold internalntegration of the sects, resettlement of refugees, land refnrm, extension of government authority in the provinces, training of tho Array. Although Diem has Improved his position, we believe that it will still be extremely difficult, at best, for Diem or any Vietnamese government to build sufficient strength to meet the long-range challenge of the Communists.

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