Created: 9/30/1963

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SC No.

INTELLIGENCE AGENCY Office of Current Intelligence3


SUBJECT: Inplications of North Vietnam's Poor Agricultural Outlook

apparently ls headed for itsyear of severe agriculturalwillontinuation of the tightthe subsistencefor several years. Northdevelopment will also be Impeded. as yet no indications that this year'sdifficulties will forcein Hanoi's domestic policy, orampening effect on the regime'sforeign policy, particularly itsthe Viet Cong insurgents io South Vietnam.

The spring rice crop this year in North Vietnam was substantially damagedrought wblcb began late2 and continued into tbe spring The more important fall rice crop will apparently also be substandardesult both of tbe drought and flooding from summer rains. The impact of tbe adverse weather has doubtless been heightened by the chronic and widespreadmismanagement which has occurred under the Communists.

Agricultural problems in North Vietnamoundation in tbe country's geographic conditions. Because of rugged terrain, dense forests, and poor soils, onlyercent of the total land area ls under cultivation. In tho main, the regime has sought to increase food output by using tbe standard Communist collective farm, which facilitates strong state control. Overercent of the peasantry bas now been collectivized, but tbe collective programunpopular with the peasants, in partrice cultivation is an Intenselyoperation.

this year, in fact, one spokesman for the regime recently claimed tbat the percentage of tbe populace on substandard rations had been substantially reduced

The persistence of marginal agriculturalthis year will doubtless impede Hanoi's efforts to bolster tbe industrial sector of its economy, an objective it bas heavily underscored recently. Tbe regime had apparently hoped, for example, that gains in food production would soon permit modest foodwhose earnings could be used in industrial ignificant diversion of resources from tbe agricultural to tbe Industrial sector will almost certainly prove impossible this year.

The agricultural difficulties bave had, and probably will continue to bave, even less Impact on Hanoi's aggressive foreign policy than they have bad on domestic policies. Hanoi, in its growing criticism of Soviet foreign policy during tbe last few months, has la effect aligned itself with Communist China Id the Sino-Soviet dispute, and has demonstrated itstoutoff in Soviet aid. The Northattitude toward Moscow apparently stems mainly from the fear that Soviet cooperation with the US will undercut Communist militancy in South Vietnam and Laos, where Hanoi continues to give insurgent Communist forces vigorous support.

There are numerous indications that Hanoi is continuing to implement decisions apparently made early this year to step up materiel and manpower support for tbe Viet Cong in an attempt to counter the growingof tbe Republic of Vietnam's military forces. Pood and armaments are also continuing to flow from North Vietoan to tbe Communist forces ln Laos.

Hanoi's support of tbe war ln South Vietnam does not appear ln any case toarticularly heavy financial burden on the North Vietnamese econony. Hard facts on Hanoi's costs are difficult to determine, the best available estimate indicates, however, that the North Vietnamese probably did not spend more than the equivalent ofndillion US dollars

'On the war In this regard, moreover, tbe willingnessommunist government to commit large slices of its fundsrime political objective must be considered.



12. The continuation of Hanoi's hard-linepolicies, and its shift toward Peiping in the Sino-Soviet dispute, have apparently been accompaniedrowth in influence of the more extreme members of the North Vietnamese Communist Party. It isthat the regime's agricultural failures have played muchole in this development, since botband moderates bave been closely Identified with Hanoi's agricultural policies. Tbe continuingdifficulties this year, therefore, will probably have little impact on the stability of tbe Northparty leadership.



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