Created: 4/4/1955

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I froci tho Board of "Ihe Crioie in floiflon,'

ottofihod nomorrmdun Buperaedoa tba toxtpril transmitted to you oa that date under ooverenornndum fron Hr. Rent.

The present text is identical withprU text except at paragraphhlch vaa revised to take Into account Info-ration receivedpril.




the nighterch minor fightingin Saigon between armed members of the Binh Xuyengroup which was given control of theand tho Surete by Bao Dai) and elemente of thoNational Army, Tho French suocoeded in establishing

a truce which still exists, and have deployed0 troops in the Saigon area to soparato National arny and Binh Xuyen forces* Premier Diem remains determined, however, to take control of the national police, using force if necessary. The crisis in civil order has bean heightened by the recent resignations of several nowhere of Diem's

this situation General Collins hasUS policy in support of Diem be reviewed. He points

out that Diem has had ample opportunities toovern-raent ond has failed both to bring ir. strong cabinet leaders and to delegate authority. He fears that tha country willorate Diem'sgovernment and believes that the Diem government may shortly fall. He reconroends,that the following alternntives to Diem be considered:

new government with Tran Van Dosinister) as president;

nev government with Quat as president;

Dai to return in supportewto be formed ond led by Diem;

Dai to return ond assume presidencynew go varment

General Collins reoogniees that the problem of the Sects would remainuccessor, but he fears that If Diemin office and pressed for military action against the Scots, there will be insubordination in the Arny leading to

conditions more intolerable than those existing at the

of General Hinh 'a

_ ,iinn

3. Wen,'s Bain objectives since aa tuning office havo been to establish tbe independent eharaoter of bis government and thus to rally rwrtlonaliat support and to derolcp and extend the authority of the National government, Tho present orisia ia an outgrowth of hia efforts to break the power of the Soots. Slnco the first of the yoar, with firm US and Increased French support, Dlen has boon making sonc progress toward this and.esult of bribes, appeals to Vietnamese natlonallsw, ar4 the Prench stopping subsidy paynonts to the Sacte, certain Sect leaders rallied to Dlen or at least agreed not tenpposo him.

h. The Sects appeared to roeogr.lse the seriousness of Diss's threat to their special position and reacted in Karch bynited Rational Front. The Front presentedan ultimatum, demanding that he resign or "reform" his Diem, although agreeing to consider broadening hie government reacted to tho challenge of the Sects by removing the Sslgon-Cholon police from Binh Xuyon control and renewing his efforts to split tha Soots. Within the past few days ho has succeeded in rallying ths sooond of the two major military leaders of the Ceo Dal,otal ofCOO

Cao Dai troops now pledged to Diem, However, trie perrencnce of any single rallie ie dubious and probably depends on the amount of his subsidy and his estimaio of Diem's power position.

5. In tbe present crisis General Ely has beon unwilling to ooradt unreserved support to Diem. General Ely and the French have tended to consider the Sect's actionorttreetla for power between twoups rather thanhallengeegitimate government. In part, at least, thia is In keeping with tho general French dislike for Diem which they have evidenced from the beginning and their reluctance to turn Against the Sects, There isounting body of evidence that ths French in Indochina, and particularly the military, are maneuvering with the Sects to secure the downfall of Dlen. The French attitude ray also resultrench estimate that the Sects ore too strong for Dlen to cope with by force and French desire to avoid at alnost any costof French forces in civil war in South Vietnam or any shooting which would endanger Frenoh civilians in Saigon, To avoid conflict they have consistently urged Diem not to resort to force against the Sects and have recommended that Bao Dai's assistance be sought in bringing the two parties together.

6, The Sects are primarily the creation of the French who

developed and nurtured them ln tho course ofdlvldo and rule" policy In Indoohlna for many years, Host Victnantjeo understand the long history of Fronoh relations with tho Scots. If, therefore. Diem resigns or is removed during this crisis, many Vietnamese will almost cortainly conclude that the French ore still the arbiters of political action in South Vietnam. Many would conclude that efforts to build annational authority wore futile and Vietnamesewouldevere blow. Moreover, if the Rational government gives in, the Seote will havo conflmed theiras autonomous power centers and thus render even wore difficult tho formation of an effective central ^vernmont ln South Vietnam. In all probability the Soot lenders who have rallied to the central government would withdraw and seek: to reestablish their autonomous position.

?. In this situation, It would bo extremely difficultuccessor, who would almost Inevitably berench puppat, to rally genuine national support. uccessor attempted to follow Dlom's oxanple of building national authority, he would soon bo up against the same problem with

tho Soots and other groups who, having son the first round, would be Bven noro vigorous in their efforts to protect their position. South Vietnam divided between the Sects and

a weakened national governrtont vould have little chance ofipainst Ut llOMr.;:

Van Do, the presont foreign minister, is acf doubtful personal course, and has little <hiat,apable person,onklr.esesubstantial support In South Vietnam. The return ofunder any condition, would probably not lend to We believe his prestige is low and becauso ofwith the French he would not haveai himself has shown none of the attributesleader who vould be oapablo of dealing with theproblems in Saigon nor has he denenstratidendurance to provide sustained lendership for the future,

loyaltios and capabilities of the Vietnamesethis situation are not clear. The unita in the Saigoncommanded by officers eeleotod by Diem, and sone Frenoh and

ources believe that they would rswnin loyal to hiiTin the event of fighting with tho Binh luyen. However, these unite have no araunition reserves and are dependant on the French for resupply, tfe agree with General Collins that there is some danger, that, if Diem uses force against the Soots, thoro may bo some Insubordination in the Array. Howevor, wo also fool that both the Binh Xuyen and Hao Hoa troops are not highly motivated, and would not long resist determined force. On balance, wo believe Cien would have the capability, if given full OS and French backing, of dealing with the present crisis in Saigon,

10. Thoro is some danger that Dlen nay resign or that bis govcrn-iont will fall in the issodiate future. Suchwould be most likely If Diet should feel that he was being frustrnted in his efforts to reduce Binh luyon power by French intervention or lack of US support. If Diem should leave offloo during this crisis he would probablytrong statement denouncing the French for intervening in defense of tho Soots and the US for witJidrawing support of the National Oovommont, FOR THE BOAItD OF NATIONAL ESTIM/tTBSiI

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