THE ECONOMIC IMPACT OF POSSIBLE INTERDICTION MEASURES AGAINST NORTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78S02149R000200180006-4
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 28
• Document Creation Date: December 9, 2016
• Document Release Date: October 18, 2000
• Sequence Number: 6
• Publication Date: June 29, 1965
• Content Type: SUMMARY

Sl-,
Approved For Release 2001/03/03 : CIA-RDP78SO2149R000200180006-4
S-E-C-R-E-T
NO FOREIGN DISSZ4
The Economic .Imp of Pos ;ible Interdiction Measures
Against North Vietnam
S - 1555
29 June 1965
CIA/ORR/EM
S-E-C?R-E-T
NO Foam MISS111
Approved For Release 2001/03/03 : CIA-RDP78SO2149R000200180006-4
 41 Approved For Release 2001/03/03 : CIA-RDP78SO2149R000200180006-4
S-E-C-R-E-T
NO FOREIGN DISSEM
CONTENTS
Page
Sw-mary and Conclusions
I. Nature of the Economy
11. Impact of a Naval Quarantine
III. Impact of a Blochade of Sea Ports
IV. Impact of Interdiction of Fail lines
V. Impact of a Danial of Rail and Sea access to North
Vietnam
S-E-C-R-E-T
NO FOREIGN DISSM
Approved For Release 2001/03/03 : CIA-RDP78SO2149R000200180006-4
 Approved For Release 2001/03/03 : CIA-RDP78SO2149R000200180006-4
S-E-C-R-E-T
NO FORGN IISSII4
Summary and Conclusions
This paper considers a range of economic interdiction measures which
might be undertaken by the US against Worth Vietnam. The alternatives are
(1) a quarantine; (2) a blockade; (3) a deneta.1 of rail transportation; and
(4) a complete denial of rail and sea access to North Vietnam.
A quarantine directed strictly against the supply of arms and military
equipment would have no direct economic impact upon North Vietnam. Even if
the quarantine should induce Free World shipowners to withdraw from the
trade there would be little difficulty in obtaining alternative shipping
from Communist sources. Import cargoes and general cargo moving in North
Vietnam's export trade could be handled by Communist ships already assigned
to trading with North Vietnam. The transport of North Vietnam's export
the
trade in bulk commodities--principally coal and apatite--would require/full
time assignment of 21 ships from the fleets of other Communist countries,
principally the USSR and Poland.
An offshore blockade of the sea ports of North Vietnam would cut off
imports that normally arrive in foreign ships. However, most of this tonnage
could be moved through the ports of Communist China and then carried by
railroad and road into North Vietnam without disrupting-the traffic presently
being moved by these modes of transport. Neither the transloading facilities
at P'ing-hsiang nor the narrow-gauge rolling stock inventory (with the
S-E-C-R-E-T
NO FOREIGN tISS.Ei
Approved For Release 2001/03/03 : CIA-RDP78SO2149R000200180006-4
 Approved For Release 2001/03/03 : CIA-RDP78SO2149R000200180006-4
S-E-C-R-E-T
NO FOREIGN L :SS M
possible exception of tank cars) would be a limiting factor in attaining
the estimated capacity of the P'ing'hsiang= Yanoi rail line. The increased
costs and other essential uses for truck transport would probably limit the
extent to which motor transport would be used to supplement shipment by
rail. The use of motor transport would depend on the priority that North
Vietnam and China attach to the maintenance of imports that currently arrive
by sea.
If the N rth Vietnamese were denied the use of rail service, highway
transport, ocean shipping, and inland water transport would be available as
alternatives. If the Hanoi-Don Dang line were interdicted there would
theoretically be sufficient highway capacity at least during the dry season
to move the estimated traffic normally carried on this line. Limitations
such as truck inventory, fuel, and service facilities make it unlikely,
however, that this traffic could be absorbed by the highway system. If use
of the Hanoi-Lao Cai line were denied to the North Vietnamese some freight
could be shifted to road and inland water transportation., although it would
be almost impossible for bulk shipments of apatite to be made. Most of the
Chinese transit traffic through North Vietnam would also be halted. If the
Hanoi-Haiphong line were interdicted alternative means of transportation
could.carry almost all of the additional traffic necessitated by the loss
of the line.
S-E-G-R-E-T
NO FOREIGN DISSEK
Approved For Release 2001/03/03 : CIA-RDP78SO2149R0002001.80006-4
 Approved For Release 2001/03/03 : CIA-RDP78SO2149R000200180006-4
S-E-C--R-E-T
NO FOREIGN DISSIM
If the three major rail lines were interdicted simultaneously the
economic impact in North Vietnam would be severe. The disruption created
in the internal transport system by the loss of the lines moving 90 percent
of all railroad traffic would necessitate strict rationing of transport
resources and a rigid system of priorities for the movement of goods. It
would be quite impossible for the remaining transport systems to satisfy
the requirements of both domestic and foreign trade.
Since North Vietnam is dependent on foreign trade for its industrial
development,, a complete denial of most imports for 2 months or longer by a
combination of sea blockade and interdiction of rail lines would cause
industrial output to fall drastically and bring to a halt the construction
of industrial projects. The most serious effect on industry and transpor-
tation would result from the denial of import of petroleum products. The
denial of food imports would have little effect on the food supply of the
population since the economy is basically self-sufficient in food.
Interdiction of ports and rail lines would also slow down the importation
of military supplies but it probably would not immediately hamper the war
effort against South Vietnam. The greatest impact on military operations
would result from the denial of petroleum products which would reduce the
mobility of some of the military forces.
The econonic disruption inflicted by these measures either singly or
in concert will be felt particularly in the small industrialized sector of the
economy of North Vietnam. Since the economy is basically an agrarian one,
S-E-C-R-E-T
Mn 'FY' MTM T1TR.5
Approved For Release 2001/03/03 : CIA-RDP78SO2149R0002001-80006-4
 Approved For Release 2001/03/03 : CIA-RDP78SO2149R000200180006-4
S-E-C-R-E-T
NO FOREIGN DISS M
however, it will continue to function at a subsistence level without
destroying the determination of North Vietnam to continue its military activ-
ities in South Vietnam.
S-E-C-R-E-T
NO FOREIGN DISSEH
Approved For Release 2001/03/03 : CIA-RDP78SO2149R000200180006-4
 ` Approved For Release 2001/03/03 : CIA-RDP78SO2149R000200180006-4
NO O C, DISSEM S-1555
Nature of the Econcrny
The North Vietnamese economy., Lich is basically one of subsistence icu].ture,
has only a small modern industrial sector concentrated is a few urban centers.
This . industrial sector is heavily decedent on s orts of machinery
and raw materials principally from Communist, CMna and the USSR. The country
imports little food even in poor a ricultu. 1 years and depends largely on domestic
production to feed its population of about 10 mll2lon persons.* North Vietnam
produces only minor items of military equipment -- grenades, mines, mortars,
and ammmitlon for s ma11 arms - and must ixnnort all of its heavy military eqi p-
meat and most of its sm%2 3 am s, enmunition., and medical supplies from Communist
countries.
The industrialization program of North Vietnam is relatively ambitious in
comparison to pre-Comanmiat efforts and in prison to the industrial programs
of most other underdeveloped countries of Asia. The machine-building industry,
the chemical 3 c1a luctry, the food processing industry, and severs.], other light
industries constitute the core of the new modern industrial structure of the
country. 3ustries in existence before the Communist takeover, such as cent
and textiles have been expanded. The country also is building with Chinese aid
a 100,000-ton steel mill at Miai Nguye vhich is already producing pig iron
anal is expected to be producing crude steel some rolled products by the
"--out 0 percen of the labor force is engaged in a iculture and in 196$
the value of agricultural production probably accounted for almost half of the
bso national product (ESOP) .
Approved For Release 2001/03/03 : CIA-RDP78SO2149R000200180006-4
S-E-C-a-EuT
." t.a.Rt DS
 Approved For Release 2001/03/03 : CIA-RDP78SO2149R000200180006-4
rO FOx~ GN DISK
end of 1965. Zia plant is the trot r ive forreega aid project to be built
1Vim td rw eats the "?ic elewont in the realmo's plans for
an iron s steel Industry.
le SI Afic? nce of `orv?i, t?radc
.o ford trade of North Vie, hich has been such an irtxwteat fact-or
in the concic deve nt of the country, r:~ equal to about 15 percent of
GP in 19641. The vctue of foroigx trade b =we thaA tripled since 1955,
inwBas1ng from US $80 minim in 195,5 to Us 4267 million in 1964.* About 83
percent of North Victn=ts foreiz trudo in 1963 was Frith Coatst countries.
The USSR and moist MIna h be its In?i ztci; . try partners, acco nti.
tosether for about to-thirds of Its total trade is 1963. Soviet-North Vietn=ew
trade in 1963 vas valued at US $92 Win, an 8 percent =ease above the
level of 1952. . toxth Viotna'ts try rata Caunist Mim in 1963 is estimated
to hove bean bet i US v7O million s US V+75 million. 'we vith terse tv o
omnitriess :L=cased s ,t in 1964 end Is scheduled to incr as even der
in 1965 aoording to reecntl,y en vacod trade s ee t>s. The won in
trade which is Pl=ied fear the P=t sev=1 ye bas not t&srtm pro as
rc)idly as ers ctad, bowwor, berme of a lack of products for for:..
About half of the value of total imports of North Vietn ra waisted of machinery
e ---d ejui ut durira 1961-63. Soviet dciivories of eguipr t for co xleto plants
.t orit' or LE X158 million and sorts oft $109 million. C ulmtively, Crom
1955 throu 1 the iurt su p1uss meted to over US 500 million, Qr n l y+
ham' of all lots.
Approved For Release 2001/03 "'CeT
NO FOREIGN
bP
8S02149 R000200180006-4
 Approved For Release 2001/03/03 : CIA-RDP78SO2149R000200180006-4
NO YOM-111(21 Diz MM
grew particularly xa idly during this pw1od. Imports from, monist China
consia t I8 'C Cly of industrial raw matcria an s nu 'actured. products with,
machinery being ]etas iuVortant than it is in imports from the USSR. Imports
fran countries of the rye World, aich made up 14 percent by value of total
i its in 1963, consist pr ari y of m=j *actured goods and chemicals.
The most critical industrial item imported by North Vietnam is petrol .
Until 1963 thO UM suvplied e3>ciost all the petrolem imported but in that year
Uwnauia became an important ssamplier, providin, about 20 percent of the total.
lust industrial chemicals > also i rtec , although the small indi ous chemical
industry has recently been eKDanded
acme extent particularly to produce chemical
fertilizer. The country also imports all of its steel products, pwtctical y a13.
of its rai.Ir rolling, stack and vehicles, and most of its emplex machinery and
metal manurfactures, sparse parts) chemical fertilizers, and rats' cotton. North
Vietnam has little in the vay of a &x ea tic armaments industry, relying, a a.3most
cc lctely on the USSR and Co nu nist China for military equipment. Unfortunately
the vol. of military Imports, vUch proba b3.y have a rather considerable value,
cannot be estimated with any duce of precision,l it is believed, however, that the
north Vietnamese data on total imports exclude all such items.
Forth Vietnam a .ports handicraft products raac1o from a,ricultural raw materials,
limit industrial products, and same unprocessed as icultural products, although
exhorts of the latter have declined since 1959? Products cC the extractive
indutries, porticularly anthracite coal as a atite,, make up about one-third of
the value of total Wis.
Approved For Release 2001/03/08-AIf78S02149R000200180006-4
NO FPM 1 DIGS 1
 Approved For Release 2001/03/03 : CIA-RDP78S02149R000200180006-4
M PO=GN DI Z
1~r ct of a Naval ',ua rantine
AnSuLntion
A quarantine on seaborne trade is a co cctive restriction that can be
applied t o i cific careoes or to trade between specific areas. For the purposes
of this x_ apor,, the Quarantine is usau oa to mem a prohibition of the transport
by sea of any ax'us or military cquipment to North Vietnam.
The Etc Tact of a 1' ' .t itime Q =rant i ne
Me institution of a quarantine applied strictly to the shipment of
military supplies to North Vietnam would not restrict the flaw of goods for purely
econoic use and, therefore, vould have no direct effect upon the economy of
North Vietnam. Fore a quarantine can Nava e any ecox is in pact the list of
proscribed goods would have to include a broad ranee of strategic items, that
try have a joint military economic use.
The imposition by the of a naval quarantine, ho o er, could cruse
Free tTorl d ships to withdraw frees the trade. Their withdrawal would probably be
accelerated if the US wore to warn of its inability to arautee the safety of
ships call , at North Vietnamese posts, and particularly if port facilities were
to be subjected to occasional air attack.
Althoui it in Impossible to predict the uumbe of Pree World ships
that would withdraw from the trade, the m3zit um impact can be uged by as auminS
that all Free World dhippin could leave the trade and that Communist Bloc shipping
.%)Ud ri ..n.
Approved For Release 200GT78502149R000200180006-4
 Approved For Release 2001/03/03 : CIA-RDP78SO2149R000200180006-4
NO I I MS-M24
Free Vor34 chipping in 1964 ezxried c:3out 45 percent of identified
North Victz azz se seaborne imports and 85 percent identified exports.* It is
estimated that Free World shipping to North Vietnam in the first quarter of
1965 .ate ec identified izoport car a ewmtina to only 11 perc nt of the cargo
oar yinS capacity of Free World ships calling at North Vietnam in the period.
is low level of utilization of caruo carryin cajox ity reflects the large
number of chips kuovn to have arrived in ballast. The tree World ships depa iU
North Vietnam dz ri n j the period were utilized to 90 percent or more of their
car c vyin city.
Mound cargoes in F World ships consist mainly of foodstuffs,
fertilizers and gQnoral cargo. Cc2' waist shipping currently cloyed In the
North Vietr. aese trada., especi&.1j o Polish ships in liner derv i ce could take
over the vol=e carried in Free World chips by adjusting schedules and probably
with little or no increase in the nmZere of ships a loyed.
Ace-ming that the pattern and volume of North Vietnam's seaborne export
trade in 1965 will be substantially the sortie as in 1%4, the Free World ships
in the trade mould cosily be ro laced by Cc cant st ships a np oyed: full time in
the service of North Viet n=. The anticipated volum of outbound gp~aeral car oea
could be handled by the Couminict shipping currently involved in trading with
North Vietr. . Me major problt vould be to substitute Cunist-: chips
=Tlete data ou the 19664 seaborne forei_ep trade of North Vietnam, if avail-
able, ~scauld shoo Pree World, ships c crying somewhat mmmll+or shares because obscrvod
.rgoc:o cc -ri.ed in Corn mist Chinese sups are knovn to c titutc only a sue.
Portion of the total.
Approved For Release 2001 /O?tW.- 4f =PDP78S02149R000200180006-4
170 FQ]?IGt D r,=
 Approved For Release 2001/03/03 : CIA-RDP78S02149R000200180006-4
140 FC1T: :(21 DI 11114
for the Free World chips ctarra:rat].y aL:; 1oyed in the export of bulk ca .ties .
An est1i ted this 9:7OO ton and si t 5,100 ton bulk carrie -z utilized full
time c o u l d c a r r y North Vietnam's exports of apatite a n d coal.* C h i p s of this type
anal giber could easily be Xirovic d from C =unist mariti fleets, partic i triy
fit the Soviet end Pblish fleets. Mae un st countries could then substitute
other 'bcs'cc1 Free World ships to operate in areas ot`2or the North Vietnam.
An a unt .t of this mature could probably be zaatlc affective within 2-3 t nthe of
the time of iz o itioa of the quarantine. To a limited extent CCommmist shipping
is as ready : a1aciuu the JeDvne o ships thcb stopped calliaS at North Vietnam in
late Vtax?Ch. : + r Covet ships were en . ed in c= ?/ing North Vietncmeso coal to
JaDM
It is possible that the Ctrx iuaist countries assist: North Vietnam could
absorb at least past of emy it3crowed costs resulting 91ro i the substituttiozt of
ships no==y to counter the offsets of a US nwral quarantine. It is also
possible that as an er)ression of solidarity Cc =rrunist maritime countries %ou1d
fora a ncva aad hi. y publicized shipping line to sustain North Vietnam's seebor
try. Precisely such a temp was tc%ke n zit the time of the US quarantine of Cuba.
ton carriers would be uvecl in the long. 1mU gal trades to Cuba,
' eato . n mope 2~n4NIox t12 Gina ors . The asz .I.1.or carriers would be used in the
coal trade with Jtrp m.
S-E-C-R-E-T
NO b'O1 EI Dom, t=i
Approved For Release 2001/03/03 : CIA-RDP78SO2149R000200180006-4
 Approved For Release 2001/03/03 : CIA-RDP78SO2149R000200180006-4
110 s 4 -LICII D S~ Y
T. L r t Of a IOCI:A04 or S P01-LE
'ice aasamVtton of blockade is into: pretcd to r^. c x the interdiction of sew,
ports to o =- oin whips c ed. in inter a1ion 1 try. As on offsbore
bloc" do it A uld, therefore , not deny to forth Vicar for C at China
t a use of aaa3l ships en in coastal trade. Those c ,ute3 ships 1d
probably be able to ply f rely been port in North Viet and tea`: mmist
Cam, and rc . asst a possible c-ns of c3:rcu r: ntir some of the ii a of a
blockade. Ard=,rA this ; c r does, not atta t to quantify the vol=e of tracaa
stieh mloit be c writ L in coastal opcr Lions, it is ccrtat z ly adeQuate top a t
the i t of soma hi eh priority bet a m -firth Vietnem. and Ca=mist
is the ev