INDOCHINESE MILITARY DEVELOPMENTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A002400090001-5
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: December 23, 2016
• Document Release Date: April 11, 2013
• Sequence Number: 1
• Publication Date: September 29, 1950
• Content Type: REPORT

Declassified in Part - Sanitized Copy Approved for Release 2013/04/11:
2 9 SEP 1950
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[l DECLASSIFIED TS S c
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INDOCHINESE MILITARY DEVELOPMENTS
French Vulnerability . .. .............
2
Vietnamese Army. ;
.
:........... .
2
French Obstructionism ................
.
.
3
Major Problems ....... ..........
3
WESTERN ECONOMIC PROBLEMS
Export Controls......... .........
5
Schuman Plan ......................
6
European Inflation .....................
6
Aid to Asia .. ...... ............ .
7
Air Transportation ....:..............
7
Italian Cabinet Changes.... ............
9
Philippine Cabinet Shuffle ...............
9
Burmese Moderates ....................
10
Korean Military Tactics .................
11
Brazilian Election Prospects .......
...
11
'AI CHIVAL
/PLEASE RETURN O
A GENCY AR
Declassified in Part - Sanitized Copy Approved for Release 2013/04/11 : CIA-RDP78-01617AO02400090001-5
 As the timerwhen UN forces in Korea would reach
the 38th Parallel grew appreciably nearer and North Korean
forces were being withdrawn to defensive positions on the
border, the world still waited anxiously for a UN decision
on the future disposition-of Korea as well as for some firm
indication of the steps the USSR would take to keep control. of
North Korea.
Meanwhile, the Communist threat in. Indochina was
increasing. Rebel attacks on French border posts were con-
tinuing ,and served to point up the vulnerability of the French
military position (see page 2). If these attacks develop into
a coordinated, large-scale Viet Minh offensive, an action
which may soon be within Viet Minh capabilities, Frehch
maintenance of control over Indochina--by means of their
own forces alone-will be seriously threatened. Despite
this growing threat to their military control, the French
have been slow to implement their announced program of
expanding the Vietnamese Army, apparently fearing that
such a step would weaken their ability to contain Vietnamese
nationalism.
As the Western Powers, continued to discuss the
vital question of European rearbiament, they were beset
by a number of economic problems, including the prospect
of further delays in a strengthened export control program
(see page 5), a stiffened German attitude in negotiations on
the Schuman Plan (see page 6), and the specter of inflation
in Western Europe (see page 6).
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French Vulnerability The fall of the isolated French border
post at Dongkhe, coupled with a series
of attacks on other posts in Tonkin, points up the vulnerability
of the French military position. Although these attacks do not
necessarily herald the start of the long-awaited rebel offensive,
the French are already being pinned down at widely separated
points and must rely on air transport to reinforce the points
under attack. The Viet Minh action at Dongkhe was undertaken
by an estimated six battalions and was preceded by artillery
preparation on a. much larger scale than that used in similar
strikes last spring. If these attacks develop into a coordinated,
large-scale Viet Minh offensive, an action now well within Viet
Minh capabilities, it is doubtful whether the French (even .if
supplied with US military aid) would be capable of maintaining
control over Indochina with their own forces.
Vietnamese Army Despite the growing threat to their mili-
tary control, the French have been slow
to implement their avowed program of expanding the Vietnamese
Army,,apparently still confident that acquisition of US arms
will enable them to achieve military victory. An expanded
Vietnamese Army with greater responsibilities not only would
strengthen Indochina's defenses, particularly with regard to
maintaining law and order in rear areas but, by demonstrating
French willingness to grant greater independence to the Indo-
chinese, would be a substantial step toward gaining the broad
popular support essential to suppressing the increasingly power-
ful Viet. Minh insurgent movement.
 Declassified in Part - Sanitized Copy Approved for Release 2013/04/11 : CIA-RDP78-01617A002400090001-5
French Obstructionism Current French actions regarding
plans for an expanded Vietnamese
Army apparently stem from the fear that creation of such a
force would threaten French ability to contain Vietnamese
nationalism within the bounds so far imposed. In addition, the
French actions demonstrate the deep-seated distrust felt by
most French officials toward the Vietnamese. Most of the
"practical" objections being raised by the French to expanding
the Vietnamese Army would not be insurmountable if the French
were not so anxious to preserve their present position and so
fearful of granting the Vietnamese more power. (Even full.
cooperation by the French in Increasing the Vietnam Army would
not jeopardize French control, which would be assured by the
8 March Agreements which guarantee to France the final de-
cision on military,. diplomatic, and financial matters affecting
Vietnam.)
Major Problems Thus far the French have adopted a cautious
policy toward the arming of Vietnamese
troops. Since 1946, only four all-Vietnamese battalions have
been activated; the regular Vietnam Army theoretically com-
prises nine battalions, which cannot be used as independent units
because the Vietnam Army has no communications, quartermaster,
.medical, or ordnance services. Only five of these battalions are
operational with French Union forces. French reluctance to ex-
pand or strengthen the Vietnam Army is indicated by insistence on
allocation and distribution of US military aid under French con-
trol, failure to make plans for necessary financing, inability
of French officials to agree on a' course of action or policy, and
refusal to expand local militia. Although the French are them-
selves probably unable either to finance an expanded Vietnamese
Army or provide the necessary military training, they have
formally opposed the attachment of US military instructors and
technical experts to the Vietnam Government. Meanwhile, high
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 French officials disagree among themselves regarding
the, Vietnamese Army, not only as to the need for such an
army but as to the measures necessary for its formation.
In addition to lacking faith in the ability and integrity of
Bao Dal 'to direct a Vietnam Army, French officials have
until recently consistently opposed. expanding local militia,
despite the notable successes achieved by the North Viet-
nam militia organized by Governor Tri. Since the increase
in Viet Minh pressure on northern border posts, however,
High Commissiondr Pignon has. pr.omised_Governor:.Tra. that
militia strength would be increased if a means to finance.
it can be arranged. Unless US aid is made available for
this purpose, there will be little practical effect. from this
ostensible change in French policy.
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 TOP SECRET
WESTERN ECONOMIC PROBLEMS
Export Controls Early agreement by the ERP countries .
on an expanded program .of ekport con-
tr;ols on strategic items is not likely to result from the
recent decisions of the Big Three Foreign Ministers meeb-
ing in New York. The remanding of the whole question to
"the technical level" has once again. set. the stage for a long
grind of negotiations. Agreement on an ERP wide export con-
trol list or any substantial additions to the present inter-
national control list will tend to be obstructed by three of
the decisions reached at New York. The agreement to have
British, French, and US representatives draw up the initial
list will create difficulties because the other ERP countries
may feel slighted at having been excluded from the discussions
and, when requested to approve, may raise charges of pressure.
tactics. Acceptance by the Foreign. Ministers of the British
concept that quantitative controls should be restricted to "selected
items ' required 66111 key industrial sectors" will seriously limit
the number of..additi.onal items subjected to export control. Finally,
the negotiators have been provided with a convenient excuse for
excluding strategic items-, the Foreign Ministers have agreed that
in considering which items to place on. the control list, account
should be taken of what effect the proposed controls would have
on the economy of Western. Europe. Despite these obstacles to
early agreement on a more stringent export control program, the
flow of war-potential goods to the Soviet orbit may slacken as a
result of increased requirements for expanding Western defense
programs and a stricter British enforcement of. export controls
following the recent parliamentary debate of the government's
policy on the matter.
 Schuman Plan As negotiations continue on the Schuman
Plan, the Korean war and the recent For-
eign.Ministers Conference have produced a marked stiffening
in the attitude of the German delegates which, if persisted in,
may seriously threaten the original concept of a supra-national
authority. The Germans feel. that their international position
has been improved by the Korean war. The Germans not only
expect a greater German rearmament effort but are already
tending to regard the Korean war as sufficient reason for re-
moving restrictions on German steel production; in fact, steel
plants are already accepting orders at a rate far beyond present
limitations on production. The Germans are therefore trying
to use their stronger bargaining position to retain a national
competitive advantage within the proposed single market, ap-.
parently believing that they n6 longer need to make concessions
in the Schuman Plan negotiations. They are insisting that their
own high tariff be adopted against outside countries and oppose
an increase in German wages, especially in the coal mines, as
well as an increase in German coal prices that might benefit
the coal industries of other countries. Although the stiffened
German attitude may be a tactical device to gain advantage in
the forthcoming negotiations for revision of the Occupation
Statute, the danger is increasing that the Germans may effec-
tively sabotage. certain important aspects of the Schuman Plan.
European Inflation One of the most serious potential re-
percussions of increased world tension
and consequent NAT rearmament is a renewed specter of
inflation in Western Europe. Early indications of inflation
are already apparent in some Western European countries,
land there has been. a marked rise in key raw materials prices
following the Korean war. The European governments, including
the UK, as yet show little disposition either to retrench financially
Declassified in Part - Sanitized Copy Approved for Release 2013/04/11 : CIA-RDP78-01617A002400090001-5
 by cutting non-essential expenses or to redirect their
economic recovery programs in order to minimize the in-
flationary impact of rearmament. Although the rearmament
program can probably be achieved without significantly lower-
ing living standards, largely through increased productivity
in the NAT countries; these countries must take more active
measures to maintain financial stability and must modify
their recovery programs if they -are to prevent renewed in-
flation that could threaten the Western rearmament effort.
Aid to Asia The Commonwealth, consultative conference on
economic aid to Southeast Asia which convened
in London on 25 September faces the central problem of financ-
ing a comprehensive plan for capital development in Southeast
Asia at a time of increased defense expenditures in. the UK and
Australia. As planned last May at the Sydney Commonwealth.
meeting, the conference's discussion of Australia's proposal
to foster capital development will follow lines suggested by
detailed questionnaires returned by the intended aid recipients.
The general report based on these questionnaires places
primary emphasis on increasing food and agricultural pro-
duction and on the necessity for internal financing. Although
it is generally anticipated that the cost of an effective program
to stabilize the economic and political situation in Southeast
Asia will be in excess'of present Commonwealth capabilities,
assistance by international agencies and more advanced countries
will be viewed as but one element in the total picture and efforts
to enlist US aid may be deferred pending exhaustive screening
of individual programs.
Air Transportation The recent reallocation of European routes
for. PAA and TWA has caused considerable
alarm in France, and in the forthcoming discussions between the
US and France of US air traffic rights the French may insist on
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 limiting US commercial traffic. Failure of the US to agree
to a satisfactory compromise might even result in the abroga-
tion of the US-French bilateral agreement. If the US is forced
to accept traffic limitations for PAA and TWA, not only will
these airlines require increased government subsidies but a
precedent will have been established for the restriction by
other countries of US air, operations on international trunk
routes. European airlines, operating in a crowded and highly
competitive field, have been searching for means to reduce
financial deficits; the US reallocation of routes will intensify
US competition with European carriers, and in the case of
France, will increase US flights between Paris and Rome.
France, however, may be willing to postpone the issue by
agreeing to a compromise similar to that recently accepted
by Brazil whereby US airlines will "voluntarily" reduce
frequencies while statistics are compiled to permit re-ex-
amining at a later date the capacity offered by carriers of
both countries over the routes concerned.
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TOP SECRET
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Cabinet Changes Prospects for broadening the base of
the Italian Cabinet have increased as
a result of the recent shift of the Unitary Socialist Party
(PSU) from a policy of neutrality to one of active opposition
to the USSR. Since the outbreak of the Korean war, Premier
De Gasperi has sought the widest possible approval for Italy' s
clear-cut association with the West, and the PSU's recent
decision would'permit him not only to include that party in
his Cabinet but, as a counterweight, to offer a seat to the con-
servative Liberal Party, which has consistently supported
.Italy's pro-Western policy. Such a broadened Cabinet, united
in realization of the danger of Soviet aggression, could act
with greater decisiveness in support of the Western defensive
effort, but would probably cause further delays in much-needed
socio-economic legislation.. The dominant conservative group
of the Christian Democratic Party could use the broadened
Cabinet as an excuse for such delays. Moreover, thediversity
of views represented in the Cabinet could widen the area of
disagreement over such controversial measures as land and
tax reforms, and make it more difficult for the government to
propose a common, agreed-upon legislative program to
Parliament.
THE PHILIPPINES
Cabinet Shuffle Several new appointments and further
shuffling of the Philippine Cabinet may
temporarily strengthen its prestige but the prevailing inex-
perience and corruption in the government will seriously
limit efforts of the new appointees to improve governmental
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efficiency. The appointments actually reflect President
Quirino s continued- preoccupation with strengthening
,his personal political position rather than a genuine
attempt-to enhance the-quality of the government. Quirino
apparently feels that appointing Vice President Lopez as.
Secretary of Agriculture and Natural Resources and Lopez'
relative, ;Salvador Araneta, to a newly-created portfolio as
Secretary of Economic Coordination will tend to make them
less inclined to criticize his administration. The only ap-
pointment apparently based purely on merit is that of the
new Secretary of Health, Salcedo, whom US officials in the
Philippines regard as excellently qualified.
Moderates Win The.recent expulsion. of pro-Communist
leaders of the Burmese Trade Union
Congress (-TUCB) from the Anti-Fascist People's Freedom
League, the principal political organization supporting the
Burmese Government, indicates that the moderate leadership
of the League is determined to eliminate all disruptive influences.
Moreover, since the TUCB is affiliated with the Burma Socialist
Party, the dominant component; of the League, a further showdown
between moderates and extremists in the Party seems inevitable.
Although the influence of the extremists extends to all levels of
the government, their sympathizers constitute a minority, and
lack of widespread political and military support precludes the
usual reversion to underground operations. A new party formed
by the pro-Communists, however, would in all likelihood have the
support and encouragement of the Chinese Communist Embassy in
Rangoon and could gain, strength rapidly if widespread disillusion-
ment with the existing regime should develop.
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 TOP S E C R E T
Military Tactics As enemy resistance lessened all along
the old Pusan perimeter, it is becoming
increasingly clear that the North Korean high command in
tends to make 'its final defensive effort north of the'38th
Parallel. The rapid UN advances in the south cannot be
attributed solely to the disintegration of North' Korean forces
following the Inchon landing and have been made.possible
largely, because as many seasoned combat troops as possible
have been withdrawn, leaving only sufficient' troops to engage
in delaying tactics in key communications centers.' Present
estimates indicate that the enemy will succeed in withdrawing
as many as 30,000 well trained troops in organized units.
These troops will probably man. the extensive defensive positions
along the 38th Parallel and will be used as cadres for new divi-
sions formed from training centers in the north for a final defense
effort.
Election Prospects The race for the presidency in the 3 Octo-
ber elections in Brazil appears to have
narrowed down to ex-dictator Getulto Vargas and the government-
sponsored candidate, Cristiano Machado. Although the political
situation remains in complete turmoil, with the major factor
of confusion being the multiplicity of local, state, and national
."deals" among the political parties, Vargas seems to have
gained considerable' support throughout Brazil. Barring extra-
ordinary last moment, maneuvers by President Dutra's followers
or Gomes, the third major candidate, throwing his support to
Machado, Vargas appears. to be the candidate most likely to win
the elections. At this time the extent 'or direction of Vargas'
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possible opposition to US interests cannot be determined.
The ex-dictator's campaign equivocations have made it
clear that he is- still essentially a demagogue and an oppor
tunist. Thus far, he has committed himself only to promote
the social welfare and economic development,-of each locality
in which he has spoken. In international matters he has
adopted a "center position" apparently similar to Peron's
third position. Vargas is thus free to consider, in the light
of future developments, suck important matters as coopera-
tion with the UN in regard to Korea, the development of
Brazil's natural resources, and his stand on. the entrance of
foreign capital into Brazil's industries and mining and petro-
leum fields. It is almost certain that Vargas would not take
a position openly hostile to the US, but he could and might
reverse Brazil's past inclination to be cooperative with the
US, particularly in. economic matters.
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B64=W4 Drm. U
?i?A CHAACE in Class.
s. CHANGED TOt . T$
1S......... Secretary of the Air Force
12.......... Special Assistant to the President, W. A. Harriman
13,14,15..... Chairman, National Security Resources Board
16,17....... Executive Secretary to the National Security Council.
18......... Assistant Secretary of the Navy for Air
19......... Chairman, Joint Chiefs of Staff
20......... Secretary,. Joint Chiefs of Staff
21,22....... Chief of Staff, US Army
23,24,25..... Chief of Naval Operations
26,27,28...... Chief of Staff, US Air Force ?
29......... Assistant Chief of Staff, G-3, Operations, US Army
30:.......... Deputy Chief of Staff (Operations), US Air Force
31.......... Deputy Chief of Naval Operations (Operations)
32.......... Director of Plans and Operations, US Air Force
33,34,35..... Special Assistant, Intelligence, Department of State
36,37,38,39,40,41,
42,43,44,45. Assistant Chief of Staff, G-2, Intelligence, US Army
46,47,48,49,50,51,
52,53,54,55,56,
.57,53,99,60. Director of Naval Intelligence
61,62,63,64,65,66,
67,68,69... Director of Intelligence, Headquarters, US Air Force
70....... Director of Intelligence, Atomic Energy Commission
71.....? .... Executive Secretary, Military Liaison Committee,
Atomic Energy,Commission
72,73,74,75,76,77,
78,79,80,81,82,
83,84,85... Chief, Acquisition and Distribution Div., OCD, State
86......... Chief, Policy Planning Staff, Department of State
87......... US Air Force Representative on joint Strategic Survey
Committee
88....... Director;:Federal Bureau PfInvestigation .
69......... Administrator; Econbmic Cooperation Administration
90.'.......... Deputy Director for Intelligence, The Joint Staff
9t,92...... '.. Secretary, Joint Intelligence Group, joint Staff
93,94,95..... Director, Armed Forces Security Agency
9.. ..... Secretary of the Army
10......... Secretary of the Navy
6,7,8...... Secretary of DefenseDatet ~~ By,
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