PROBABLE DEVELOPMENTS IN NORTH AND SOUTH VIETNAM THROUGH MID-1957

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A008000040001-0
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 19
• Document Creation Date: December 23, 2016
• Document Release Date: June 3, 2013
• Sequence Number: 1
• Publication Date: July 17, 1956
• Content Type: NIE

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WM NIE 63-56
7~lR
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~~lni.V
17 July 1956
NATIONAL INTELLIGENCE ESTIMATE
NUMBER 63-56
(Supersedes NIE 63.1-3-55 and NIE 63.1-55)
PROBABLE DEVELOPMENTS IN NORTH AND
SOUTH VIETNAM THROUGH MID-1957
Submitted by the .
DIRECTOR OF CENTRAL INTELLIGENCE
The' following intelligence organizations participated in the
preparation of this estimate: The Central Intelligence Agency
and the intelligence organizations of the Departments of
State, the Army, the Navy, the Air Force, and The Joint Staff.
Concurred in by the
INTELLIGENCE ADVISORY COMMITTEE
on 17 July 1956. Concurring were the Special Assistant, Intel-
ligence, Department of State; the Assistant Chief of Staff,
Intelligence, Department of the Army; the Director of Naval
Intelligence; the Director of Intelligence, USAF; and the
Deputy Director for Intelligence, The Joint Staff. The Atomic
Energy Commission Representative to the IAC and the Assist-
ant Director, Federal Bureau of Investigation, abstained, the
subject being outside of their jurisdiction.
DOCL;"?;E 1T NO. -
N O C;iAN2E IN CLASS. L
IVDFCLASS,r1ED
I.
CLASS. CHPi\JG'r:D TO: TS S
I EXT RE`JtEV'.' DATE:
70-2
ALETH? 1-1R
~
DATE~AJ+I -I REVIEWER:
01. 4
251
COPY NO.
ASSISTANT DIRECTOR,0NNE
~S6
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1. This estimate was disseminated by the Central Intelligence Agency. This copy
is for the information and use of the recipient indicated on the front cover and of per-
sons under his jurisdiction on a need to know basis. Additional essential dissemination
may be authorized by the following officials within their respective departments:
a. Special Assistant to the Secretary for Intelligence, for the Department of
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b. Assistant Chief of Staff, Intelligence, for the Department of the Army
c. Director of Naval Intelligence, for the Department of the Navy
d. Director of Intelligence, USAF, for the Department of the Air Force
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f. Director of Intelligence, AEC, for the Atomic Energy Commission
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2. This copy may be retained, or destroyed by burning in accordance with appli-
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3. When an estimate is disseminated overseas, the overseas recipients may retain
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June 1953.
The title of this estimate, when used separately from the text, should be classified:
FOR OFFICIAL USE ONLY
WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
DISTRIBUTION:
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TABLE OF CONTENTS
Paragraphs
CONCLUSIONS . . . . . . . . . . . . . . . . . 1-4
DISCUSSION
I. INTRODUCTION . . . . . . . . . . . . . . 5-6
II. NORTH VIETNAM - CURRENT SITUATION AND
TRENDS . . . . . . . . . . . . . . . . ... 7-34
Internal Political Situation . . . . . . . . . . 7-11
Economic Policies and Courses of Action . . . . . . 12-19
DRV Military Strength . . . . . . . . . . . . 20-23
DRV External Relations and Policies . . . . . . . 24-34
Relations with the Bloc . . . . . . . . . . 24-28
Policies Toward South Vietnam . . . . . . . 29-30
Policies Toward Laos and Cambodia . . . . 31-32
Policies Toward Other Countries . . . . . . 33-34
TRENDS . . . . . . . . . . . . . . . . . . 35-63
Political . . . . . . . . . . . . . . . . . 35-39
Economic . . . . . . . . . . . . . . . . . 40-46
Military . . . . . . . . . . . . . . . . . 47-51
Internal Security . . . . . . . . . . . . . . 52-56
Foreign Relations . . . . . . . . . . . . . . 57-63
IV. THE OUTLOOK IN VIETNAM . . . . . . . . . . . 64-72
Probable Communist Courses of Action Toward
South Vietnam . . . . . . . . . . . . . . 64-68
Trends in South Vietnam . . . . . . . . . . . 69-72
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PROBABLE DEVELOPMENTS IN NORTH AND SOUTH
VIETNAM THROUGH MID-1957
THE PROBLEM
To analyze the current political, economic, and military situation in North and
South Vietnam and to estimate probable developments through mid-1957.
CONCLUSIONS
1. We believe that the Communist "Dem-
ocratic Republic of Vietnam" (DRV) will
not attempt an open invasion of South
Vietnam or a large scale guerrilla war-
fare effort during the period of this esti-
mate because of the danger of US or pos-
sibly SEATO counteraction and because
such action would prejudice Bloc empha-
sis on peaceful coexistence elsewhere.
The Communist regime will almost cer-
tainly remain in firm political control
throughout the period of this estimate,
despite some passive resistance and seri-
ous economic difficulties. It will require
continued large scale Bloc aid to make
even limited progress toward developing
a self-supporting economy. The DRV
army will retain the capability of defeat-
ing the total forces of South Vietnam,
Laos, and Cambodia. (Paras. 7-11, 13-
16, 18-21, 64-68)
2. In South Vietnam, the trend toward
political stability and popular confidence
in the government will probably continue,
barring a DRV invasion, large scale guer-
rilla action, or the death of Diem. Never-
theless, such contingent developments as
intensified Bloc support for DRV objec-
tives or reduction in Diem's international
support could stimulate greater Commu-
nist subversive pressure, weaken the
South Vietnam government's confidence,
cause some loss of its public support, and
revive opposition efforts for reconcilia-
tion with the north. (Paras. 35-39, 69-72)
3. Progress toward resolving basic eco-
nomic problems will probably continue
slow, but economic conditions in South
Vietnam are not likely to have serious
adverse political effects during the next
year, as rice production, rubber exports,
and large scale US aid provide reasonable
living standards. (Paras. 40-46)
4. All significant sect resistance in South
Vietnam has been eliminated, but some
8,000-10,000 armed Communists and a
Communist political network scattered
through the villages continue to pose a
serious internal security problem. The
effectiveness of the South Vietnam army
will probably improve gradually as more
units are released from security missions
for training, but by mid-1957 it will still
be unable to contain a DRV attack for a
prolonged period. (Paras. 47-56)
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2
DISCUSSION
1. INTRODUCTION
5. Under the terms of the 1954 Geneva Ac-
cords on Indochina, the area of Vietnam north
of the 17th parallel was placed under the ad-
ministration of the Vietnamese Communists.
The French assumed responsibility for imple-
mentation of the Armistice provisions in the
area south of the 17th parallel, but neither
the French nor the Diem government has
acknowledged responsibility for implementing
the political settlement envisaged in the Final
Declaration of the conference.
6. The UK and the USSR, as co-chairmen of
the Geneva conference, met in London in
April and May 1956 and reaffirmed support
for the political settlement foreseen at Ge-
neva but implicitly approved postponement of
its implementation, including the nationwide
elections. The co-chairman called upon all
parties to preserve the status quo and re-
quested the International Supervisory and
Control Commission (ICC) to continue super-
vising the Armistice. Thus no steps have been
taken to bring about unification or a political
settlement in Vietnam, and the partitioning
of Vietnam has been tacitly accepted by the
Geneva conference powers for an indefinite
period of time. In the meantime, the Commu-
nist regime in the north and the Diem govern-
ment in the south have been developing their
own institutions, and preparing for an extend-
ed period of struggle for control of Vietnam.
II. NORTH VIETNAM - CURRENT SITUATION
AND TRENDS
7. The Communist Party of Vietnam (com-
monly called the Viet Minh) and its govern-
mental apparatus, the "Democratic Republic
of Vietnam" (DRV) continue to exercise firm
and effective control over the estimated 13
million inhabitants of North Vietnam. Al-
though critically lacking in technically
trained personnel, the Communist regime
possesses a large number of experienced po-
litical workers and has made considerable
progress in developing an, effective adminis-
trative machine. It has strengthened its con-
trol despite severe food shortages, continued
passive resistance to its internal policies, and
the gradual reduction of its prospects for early
domination of all Vietnam.
-8. Ho Chi Minh continues to occupy a pre-
eminent position among Vietnamese Commu-
nist leaders, despite some de-emphasis of his
public role. His prestige as a nationalist lead-
er is still a significant factor in the attitude
of many people in South Vietnam and South-
east Asia toward the Vietnamese Communist
regime. Power relationships at the level be-
low Ho are not clear, but party Secretary
Truong Chinh, Premier and Foreign Minister
Pham Van Dong, and army commander Vo
Nguyen Giap appear to share top level re-
sponsibilities. We have no evidence of policy
or personal differences among these three men
or of the existence of "pro-Chinese" and "pro-
Soviet" factions in the party.
9. The regime's primary concern in the past
year has been to develop more effective con-
trols over the people and the economy and to
deal with such immediate problems as reha-
bilitation, malnutrition, widespread disease,
famine, tightening of the party apparatus,
and the development of the armed forces.
Although violence and intimidation have been
employed selectively, the Communists have
so far refrained from the publicized, wide-
spread terror employed in Communist China
during the consolidation period in 1951-1952.
Strenuous efforts are still being made to rally
popular support behind front groups on the
basis of nationalist and unification slogans.
The most important of these is The Father-
land Front which is designed not only to
mobilize support in the north for immediate
reconstruction tasks but also to attract sup-
port in South Vietnam for Communist efforts
to unify the country.
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10. The Catholic population of approximately
750,000 appears to be the main center of
passive resistance to Communist indoctrina-
tion and DRV control. The Communists ap-
pear to have recognized the special nature of
the Catholic problem and, probably with an
eye both to reducing opposition and impress-
ing the evacuees in the south, have moved
slowly to restrict church activities. At the
same time, they are attempting to weaken
the hold of the clergy over the communicants
by various means including visits of "puppet"
priests from Eastern Europe. To date the
Vietnamese Catholic hierarchy appears to
have been fairly successful in maintaining its
position among the Catholic population.
11. The substantial ethnic minorities, who live
outside the river deltas, have an ingrained
dislike for all Vietnamese and there have been
some instances of armed opposition by the
tribal groups of north and northwest Tonkin.
To integrate these minorities politically and
to lessen their opposition to Communist lead-
ership, the DRV has established "autonomous
administrative areas" nominally controlled by
tribal dignitaries loyal to the Communists.-
In any event, Communist military and secu-
rity forces are capable of eliminating any
active resistance in the north.
Economic Policies and Courses of Action
12. The regime is moving gradually to extend
its control over all aspects of the economy,
but it has not yet attempted detailed over-all
planning, the nationalization of small pro-
ductive units and domestic trade, or the col-
lectivization of agriculture. At present, the
regime is attempting to deal with immediate
problems on the following priority: (a) in-
creasing agricultural production; (b) restor-
ing the transportation network; and (c) re-
habilitating export industries, e. g., coal, ce-
ment, phosphates, and textile and other light
industries. Thus far the regime has not be-
gun to stress heavy industrial development
and is concentrating a major portion of its
industrial production on consumer goods.
13. The regime's major economic problem is
to meet the minimum consumption needs of
the population while developing a self-sup-
porting economy. Prior to 1954 the annual
rice deficit of North Vietnam averaged about
200,000 metric tons. As a result of wartime
damage to irrigation facilities and an un-
precedented series of floods, droughts, and
insect scourges, the rice deficit in each of the
past two years has amounted to at least
500,000 metric tons. With shipments from
South Vietnam cut to a trickle since 1954,
the DRV appealed to the Bloc for relief.
However, imports through April 1956, consist-
ing of token shipments from Communist
China and some 200,000 tons of Burmese rice
purchased by the USSR, have fallen far short
of minimum requirements. In December 1955
the DRV announced that the per capita food
consumption in that year had dropped at
times to as low as 500 calories per day.
14. There will probably be some improvement
in the food situation in 1956-1957. The USSR
has agreed to accept up to 400,000 tons of Bur-
mese rice each year through 1959. It is likely
that the Burmese will actually ship a high
percentage of this figure and that the DRV
will receive a major share of this rice. Al-
though the spring crop in 1956 will probably
again fall below normal because of continued
adverse weather, the extensive efforts of the
regime to mobilize all segments of the popu-
lation for irrigation repair, reclamation of
abandoned land, cultivation of new land, and
planting of subsidiary crops should lead to
a gradual increase in domestic output.
15. However, North Vietnam will not achieve
self-sufficiency in rice in the next few years
even with optimum weather conditions.
Planned investment to increase the supply
of fertilizers, pumps, improved seeds, and ag-
ricultural implements appears insufficient to
achieve a substantial increase in output in
the near future. Moreover, the current pro-
gram for redistribution of land will probably
depress production.
16. Rehabilitation of modern industries has
gone slowly due to a lack of raw materials,
technicians, and equipment. Coal production
in 1955 is estimated to have been about 700,-
000 tons compared to 900,000 tons under the
French in 1953 and the pre-World War II
peak of 2,600,000 tons. The rate may reach
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800,000 to 1,000,000 tons in 1956, permitting
an export of 300,000-500,000 tons. By the
end of 1956 cement production may reach its
former annual rate of 300,000 tons. The large
textile plant at Nam Dinh returned to limited
production in December 1955 but even when
operating at full capacity it will provide only
about half of North Vietnam's requirements
and it is dependent on imported cotton.
17. With Chinese Communist technical and
manpower assistance, rapid progress has been
made in restoring transportation and com-
munication facilities. The rail link from
Hanoi to the Chinese border at Nam Quan
has been restored and the Haiphong-Kunming
line will probably be fully restored this year.
This construction will link southwest China
with sea transport at Haiphong and the main
Chinese rail system .at Nam Quan. The line
from Hanoi to the 17th parallel is also being
rehabilitated and it is possible that service
south to Vinh will be established by the end
of the year. With Chinese assistance, the
DRV has also made rapid progress in rehabili-
tating North Vietnam's highway system. A
bridge building program for 1956 is aimed at
eliminating most of the ferries on primary
roads. Rehabilitation of the Hanoi-Lai Chau
route and of roads south from Hanoi toward
the 17th parallel will facilitate the movement,
of troops and supplies to any point along the
borders of Laos and South Vietnam. Soviet
assistance is making possible the improvement
of port facilities at Haiphong which will fur-
ther expedite the distribution of Bloc mili-
tary and economic supplies.
18. The chronic deficit in the balance of pay-
ments position of the North Vietnam area has
been deepened by the failure to restore agri-
cultural and industrial production and by the
abnormal requirements for foreign goods and
technical aid. The foreign exchange position
has also been worsened by the break in com-
plementary trade relations with the south.
A measure of the deficit and of the critical
economic situation is suggested by the magni-
tude of Bloc grants to the DRV. In July 1955,
Communist China granted the sum of 800,-
000,000 yuan (about $330,000,000 at official
rates) and the USSR promised 400,000,000
rubles ($100,000,000 at official rates). Smaller
grants have been extended by several of the
European Satellites. A substantial portion of
the aid received has been in the form of con-
sumer goods.
19. We believe that during the period of this
estimate the DRV will continue to concen-
trate, with moderate success, on efforts to
increase agricultural, mineral, and light in-
dustry production. The DRV has the re-
sources to increase exports and to support
a modest industrial development. However,
at least for several years, it will require sub-
stantial Bloc assistance to support even a
minimum standard of living and there ap-
pears little prospect for substantial forced
saving to support rapid industrialization in
the near future.
DRV Military Strength
20. The "Vietnam People's Army" (VPA)
now has a total strength of about 266,000 men
organized in 16 infantry divisions, 2 artil-
lery divisions, 1 AAA groupment, 10 separate
infantry regiments, and 5 border and coast-
al security regiments. As the VPA continues
its evolution toward a modern force, several
more divisions may be organized using exist-
ing separate regiments. -Although further
substantial increases in the numerical
strength of the army appear unlikely, a ready
pool of semitrained manpower exists among
the 117,000 men now in regional and popular
troop units. The recent announcement by
the DRV of a troop reduction probably re-
flects the release of unfit personnel since the
Armistice.
21. More extensive training was 'probably
made possible by reduced commitments to
internal security missions and reconstruction
projects, and multidivisional maneuvers were
reported in late 1955. We believe that about
half of the major combat units are combat-
ready and the remainder probably will reach
that status during 1956. Even at its present
level of training, the VPA is capable of de-
feating the total military forces of South Viet-
nam, Cambodia, and Laos.
22. There were no significant changes in the
dispositions of VPA units during the past
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year and the largest concentration remains
in the Delta region, approximately 300 miles
from the 17th parallel. However, clandestine
guerrilla operations, including infiltration of
small units, could be conducted against South
Vietnam and Laos without major troop move-
ments.
23. The Vietnamese Communists have no
combat air capabilities at the present time,
but some air training probably is underway
in Communist China. It is possible that the
DRV will have one or two regiments of piston
fighters operational in 1957. There are 26
former French air fields in North Vietnam,
five of which could be used with little or no
development to support sustained operations
by Communist jet fighters, and one of which
could probably support sustained jet light
bomber operations. The DRV has no sepa-
rate naval organization and coastal defense
depends on small armed craft and ground
patrols.
DRV External Relations and Policies
24. Relations with the Bloc. We believe that
the DRV is firmly committed to the policies of
the Sino-Soviet Bloc, even to the extent of
subordinating or postponing the pursuit of
its local or regional objectives in the interest
of over-all Bloc tactics and strategy. The
attitude of DRV leadership follows from its
Communist world outlook and from the fact
that DRV objectives can only be realized with
Sino-Soviet Bloc support.
25. Despite its close ties with and dependence
on Peiping and Moscow, the DRV on occasion
acts in less conformity with the Bloc than
the European Satellites. A number of consid-
erations account for this special status. The
Vietnamese Communists fought their own
fight against French colonialism. The DRV
possesses an army and security organization
which was developed prior to 1950 independ-
ently of Sino-Soviet material assistance. The
appearance of relative independence created
by some DRV actions may, nevertheless, serve
to further Bloc interests elsewhere in South-
east Asia.
26. Over the past year, Bloc economic and
diplomatic support may not have met DRV
expectations. Bloc deliveries of rice have
been far below levels necessary to prevent
widespread debility. in North Vietnam. Mi-
koyan's visit to Hanoi in April 1956, the first
by a major Soviet official, was made a great
public occasion and DRV propaganda sug-
gested some expectation that new aid or
economic agreements might result. No new
Soviet-DRV arrangements were announced,
however, and in fact Mikoyan departed with-
out issuance of the usual joint communique.
The USSR also failed to press DRV demands
either for the "strict implementation" of the
Geneva Agreements with respect to north--
south consultations and elections, or for re-
convening the Geneva conference. The So-
viet position, as it developed at the April-May
Geneva co-chairmen talks, accepts mainte-
nance of the status quo for the time, being.
Although the Chinese Communists have been
more forthright in supporting the stated DRV
position, the Soviet Union has shown no dis-
position to support the DRV's basic objective
of securing control of all Vietnam at the risk
of jeopardizing Soviet policy objectives in
other areas or the Bloc's campaign of em-
phasizing "friendship" and reducing tensions.
27. The rather aloof position of the USSR,
which increases the dependence of the Viet-
namese Communists on Communist China,
may be disappointing to the DRV. Some ele-
ment of the traditional Vietnamese distrust of
the Chinese probably survives among Viet-
namese Communist leaders, despite the bond
of Marxism, and the DRV may well wish that
it could counter Chinese influence with closer
Soviet ties.
28. Substantial differences over policy toward
South Vietnam, and possibly Laos, may de-
velop between the DRV and the USSR and
Communist China if prospects for an early
extension of Communist control to South Viet-
nam continue to decline. Even in this event,
however, and despite the DRV's potential
capacity for independent action, we believe
that other considerations would prevail to
cause the DRV to continue its loyal adherence
to the Bloc.
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SECRET 6
29. Policies Toward South Vietnam. Lack-
ing full Bloc support for its reunification
demands and recognizing that the July 1956
deadline for elections would not be met,
the DRV is now adjusting its policies for the
longer pull. The regime's public position that
the Geneva provisions must be fulfilled and
that nationwide elections must be held re-
mains unchanged. However, the DRV is now
playing down the demand for early reconven-
ing of the Geneva conference and increasing
its demands for direct north-south consulta-
tions. The DRV has accepted the position
taken by the Soviet Union at the London talks
that the ICC and Joint Armistice Commission
should continue their functions despite the
dissolution of the French High Command.
The DRV has also enlarged the scope of its
diplomatic activity to enhance its interna-
tional prestige and position and to secure the
broadest possible foreign support for eventual
implementation of the Geneva Agreements.
30. At the same time, the DRV has main-
tained its network of political and paramili-
tary cadres in the south. It has continued
its efforts to penetrate the government of
South Vietnam and probably is maintaining
contact with non-Communist but anti-Diem
Vietnamese, chiefly those now in exile, who
favor conciliation with the north. Through
use of nationalist themes and front organiza-
tions, it is attempting to retain popular fol-
lowing in the south. Ninety-five thousand
men were evacuated from the south in the
first few months following the Armistice. The
DRV probably views this group as a possible
instrument for subversive activity in South
Vietnam and some may have been retrained,
reindoctrinated, and perhaps even reinfil-
trated.
31. Policies Toward Laos and Cambodia. The
Communist rebel movement in Laos, the
Pathet Lao, is completely dependent on DRV
support and assistance to maintain its posi-
tion in the northern provinces. Although
the DRV continues to support the Pathet Lao,
it has begun to soften its line toward the
Royal Lao government. In place of its earlier
criticism of the Lao government, the DRV
now praises the Lao government's professed
adherence to the "five principles of coexist-
ence," encourages Laos to adopt a neutral
foreign policy and to enter into direct consul-
tations with the Pathet Lao to resolve their
differences.
32. DRV policy toward Cambodia encourages
neutralism and the establishment of wider
contacts between the Cambodian government
and the Communist world. The Hanoi radio
has virtually eliminated its previously bitter
condemnation of the Cambodian government
and is now extravagant in its praise of Cam-
bodian foreign policy and its "resistance" to
alleged US "plots" to undermine Cambodian
independence. Future DRV policies with re-
spect to Laos and Cambodia will probably
reflect the guidance of Moscow and Peiping.
33. Policies Toward Other Countries. In its
relations with other states in Asia, the DRV
has attempted to increase support for its
position on unification, to further the gen-
eral Bloc peace campaign, and to obtain dip-
lomatic contacts and recognition. At pres-
ent, North Vietnam is recognized by all Bloc
countries, but no non-Bloc country has ex-
tended full diplomatic recognition. India and
Indonesia have exchanged consular represent-
atives with both North and South Vietnam
and Burma has permitted the DRV to main-
tain an Information Office in Rangoon. The
DRV has taken special pains to woo the In-
dian delegates to the ICC.
34. The DRV has severely curtailed remain-
ing French cultural activities in North Viet-
nam and the much publicized commercial
arrangements have been too restrictive to
hold or attract any significant economic ac-
tivity by the French. However, the DRV has
won French agreement to the establishment
of a commercial and cultural mission in Paris.
Its presence will complicate French relations
with Diem and facilitate the maintenance of
DRV influence among Vietnamese resident in
France.
III. SOUTH VIETNAM - CURRENT SITUATION
AND TRENDS
Political
35. During the past year President Ngo Dinh
Diem's government has greatly strengthened
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SECRET
its internal political position in South Viet-
nam, a country with an estimated population
of 12 million. The national referendum in
October 1955 established the legitimacy of the
Government of Vietnam (GVN), and com-
pleted the elimination of Bao Dai as Chief
of State and as a major political factor in
South Vietnam. By the end of March 1956,
Diem reduced the Cao Dai and Hoa Hao
groups to political impotence by a series of
moves which culminated in the elimination
of the Cao Dai army as an independent mili-
tary force and the capture, trial, and execu-
tion of Ba Cut, the last important active Hoa
Hao resistance leader.
36. On 4 March 1956, in South Vietnam's first
national elections, 80 percent of the eligible
voters participated in electing 123 deputies
from 405 candidates for the Constituent As-
sembly. The returns gave pro-Diem forces a
substantial majority. Although nearly one-
third of the government-favored candidates
were defeated, no openly anti-Diem deputy
was elected. This was due in part to govern-
ment manipulation of the election campaign
and in part to a boycott of the elections by
most of the opposition parties. Despite efforts
by the Vietnamese Communists and other
resistance groups to disrupt and sabotage the
voting, the elections generally were calm and
orderly. The Constituent Assembly will sit
for a four-year term as the first National
Assembly.
37. The deputies in the Constituent Assembly,
which convened 15 March, are divided among
political parties as follows: National Revolu-
tionary Movement (NRM), 61; Revolutionary
Workers Party (RWP), 15; Citizens Rally
(CR), 26; Movement of Struggle for Freedom
(MSF), 6; and Independents .(including one
Dai Viet), 15. The NRM is the Diem govern-
ment's primary source of organized political
power. Although Information Minister Tran
Chanh Thanh is its titular head, a large part
of the party is controlled by Diem's brother,
Ngo Dinh Can, who controls Central Viet-
nam. The RWP, also a government party, is
led by Diem's brother, Ngo Dinh Nhu. While
the CR, MSF, and most Independents now
support Diem, they contain some members
who have reservations about some of Diem's
methods and are potential centers of parlia-
mentary opposition.
38. Diem will probably maintain his domi-
nant political position in South Vietnam dur-
ing the period of this estimate. The consti-
tution, which has been drafted under Diem's
supervision, gives the President wide powers
including the right to appoint the first Vice
President and to suspend civil rights during
the life of the first Assembly. Diem's personal
prestige will probably be enhanced by im-
provement in internal security and by con-
tinued frustration of Vietnamese Communist
objectives. However, he will continue to face
serious problems in attracting additional ac-
tive support for his government, in part be-
cause of his reliance on a small circle of rela-
tives and trusted friends. While Diem's con-
trol of the Assembly during the period of this
estimate will probably be adequate to insure
adoption of any important measure he wishes
enacted, his inclination to hold a tight rein
on the legislature may accelerate the develop-
ment of an active opposition.
39. The appointment of a Vice President by
Diem, now 55, will remove much uncertainty
over presidential successorship. Neverthe-
less, Diem's death, whether by natural causes
or assassination, could result in serious fac-
tional disputes in the government and among
the major political parties which could strain
the new governmental institutions. Ngo Dinh
Nhu and Tran Chanh Thanh, key figures in
the RWP and NRM, have a great deal of
political power and would play important
roles in any redistribution of power, but nei-
ther of these men has a wide popular follow-
ing. To some government critics and govern-
ment supporters Thanh symbolizes the more
regressive features of the Diem regime. At
the moment, Secretary to the President and
Acting Minister of the Interior Nguyen Huu
Chau appears to enjoy Diem's favor and has
grown rapidly in stature and power, but he
has no organized political backing apart from
his support by Diem and Nhu. Ngo Dinh Can
would probably play an important behind-
the-scenes role in any redistribution of power,
but his lack of national stature and poor
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SECRET 8
health would almost certainly rule him out
as a leading contender for leadership. Tran
Van Lam, leader of the CR, is ambitious and
enjoys considerable popularity in the south-
ern provinces, but his political position is
-weak. Although the army high command
has been trying to keep the army out of poli-
tics, the prestige and strength of the army
would almost certainly play a major and possi-
bly decisive role in the redistribution of politi-
cal power. The numerous anti-Diem national-
ists in South Vietnam and France would prob-
ably attempt to re-enter the picture and their
maneuvers would add to the confusion. How-
ever, many of these men are discredited be-
cause of their past relations with Bao Dai,
the French, or the Communists, and it is
doubtful that any of them could muster suf-
ficient backing to gain control.
Economic
40. South Vietnam is normally an agricul-
tural surplus area, exporting rice and rubber.
During World War II and the civil war
periods large portions of cultivated land were
abandoned and the transportation and irri-
gation systems deteriorated. Current rice
production is less than two-thirds the pre-
World War II levels, and exports in 1955 were
only about 100,000 tons as compared with the
prewar annual total of more than one million
tons. Current rubber output of 54,000 tons
exceeds the prewar level by about 10,000 tons
and rubber has replaced rice as South Viet-
nam's leading foreign exchange earner. In
1955, high market prices raised the value of
South Vietnam's rubber exports almost 80 per-
cent above 1954 and to more than half the
value of all exports.
41. Because of the decline in rice exports and
the large imports of consumer goods and, to a
lesser extent, capital goods for rehabilitation,
South Vietnam is running a large deficit in
its balance of payments. In 1954 exports
covered 17 percent of imports while in 1955,
even with unusually high rubber prices, ex-
ports covered only 25 percent of imports. At
present, US aid is filling the gap and is an
important factor in the relatively high stand-
ards of living prevalent in much of South
Vietnam. For the fiscal years 1955 and 1956
the planned level of US economic and military
aid for South Vietnam totaled approximately
$520 million (not including the value of US
equipment already in Vietnam and trans-
ferred to the GVN). At present the US is
financing about 90 percent of the GVN mili-
tary budget, 65 percent of the combined mili-
tary-civilian budget, and 75 percent of all
South Vietnam's imports.
42. The withdrawal of French military forces,
the termination of France's preferential trade
status, and the loosening of French-Vietna-
mese political ties have combined to curtail
the scale of French industrial and commercial
activity in South Vietnam. French business
interests are withdrawing about as rapidly
as Vietnamese restrictions on currency trans-
fers permit. South Vietnam's import trade is
moving away from France toward Japan and
the US. In 1953 and 1954, France supplied
about 80 percent of South Vietnam's imports.
In 1955 the figure dropped to 50 percent and
the downward trend is continuing. In the
same two-year period, Japan's share of South
Vietnam's imports has increased from three
to 12 percent.
43. The GVN has not yet effectively come to
grips with its economic problems. President
Diem has stated that 1956 will be a year of
economic consolidation, but through the first
six months of the year, GVN attention con-
tinued to be focused on security and political
issues. Only the most pressing economic
problems have received serious government at-
tention and those have generally been dealt
with by ad hoc methods or authoritarian de-
crees. For example the government has at-
tempted to cope with a serious threat of infla-
tion by a series of decrees controlling prices
and inventories for many items and establish-
ing high fines and even the death penalty for
attempts to corner the market. These meas-
ures have contributed little to preventing in-
flation and have aroused the resentment of
the important Chinese community. Inflation-
ary pressures have been held in check pri-
marily because the government has been able,
with US aid, to maintain a fairly high level
of imports of consumer goods. ,
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SECRET
44. Progress has been slow in the resettlement
of refugees and in the implementation of other
measures to increase agricultural production.
The limited land reform program inaugurated
in 1953 is unattractive to the peasant in com-
parison with extravagant Communist prom-
ises. Landlords are objecting to the low rents
provided for in the program and their opposi-
tion plus the general lack of official determi-
nation and administrative competence has led
to the stagnation of land reform.
45. Nevertheless, the GVN has made some
progress in building the organizational struc-
ture necessary to replace institutions of the
French colonial period. The GVN has created
an independent national bank, a foreign ex-
change office, an investment fund, a govern-
ment-owned commercial bank, and an inde-
pendent currency. President Diem has pro-
posed establishment of a High Economic Coun-
cil to guide the country's economic develop-
ment and he has made informal reference to
the possibility of a four or five year plan for
economic rehabilitation and development. In
addition, government officials now administer
a substantial import program and the appli-
cation of a substantial US foreign aid pro-
gram. Although these new institutions and
economic activities provide an essential be-
ginning for further economic progress, they
are not yet fully operative or effective.
46. Though South Vietnam cannot become
economically self-supporting so long as it
must maintain armed forces of the present
size, its economic position could be substan-
tially improved by economic and fiscal re-
forms. However, during the period of this
estimate there is little prospect for marked
development of South Vietnam's economy or
for a significant reduction in its balance of
trade and budget deficits. Inflationary pres-
sures are almost certain to continue. How-
ever, the food supply, a critical political fac-
tor, is likely to be more than adequate for
domestic needs. Provided security conditions
continue to improve, the GVN will probably
give economic problems increased attention
during the coming year and will probably be
able to make some progress toward solution
of several specific economic problems. A pro-
gram to resettle 100,000 refugees on aban-
doned land has been developed and some
40,000 of these have already been relocated.
This project will probably be followed by fur-
ther resettlement projects which are likely to
reduce substantially the refugee problem dur-
ing the estimate period. Additional land will
probably be brought under cultivation. Some
improvement is likely in tax collection and
in handling the problem of French disinvest-
ment. By mid-1957, economic development
planning will probably be well advanced, but
concrete results are unlikely within the period.
Military
47. Current strength of the Vietnamese Na-
tional Army (VNA) is approximately 145,000
troops. The VNA is organized into 4 field
infantry divisions (8,500), 6 light infantry
divisions (5,225), 1 airborne groupment
(4,000), 13 territorial regiments, 5 sepa-
rate sect regiments, and 15 assorted combat
battalions. Although some progress has been
made during the past year, the extensive
plans for training and reorganizing the VNA
have fallen behind schedule because most ma-
jor units have been dispersed with many of
them engaged in security operations. Prin-
cipal VNA weaknesses are an inadequate logis-
tical and technical support system, an ineffec-
tive chain of command, and inexperience at
the command and staff levels. At least six
months of uninterrupted training will be nec-
essary to bring the VNA to minimum opera-
tional effectiveness at division level. VNA
loyalty to President Diem and his policies
seems assured. The army's self-confidence
and morale are generally good.
48. When the French High Command was
inactivated on 23 April 1956, all previous
French-Vietnamese military agreements were
terminated. All French combat units have
been withdrawn from Vietnam. After 1 July,
only a few French army personnel remained
in South Vietnam, in addition to a 1,000-man
French military support group for the ICC.
The Vietnamese and the French are now ne-
gotiating concerning French support for the
ICC and the French role in training the Viet-
namese forces, particularly air and naval
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forces. The primary US-directed effort has
been the training of a Vietnamese instructor
corps and the development of training pro-
grams throughout the Vietnamese army. US
personnel are detailed to VNA training cen-
ters, to units at division level, and to major
territorial commands to supervise progress
and implementation of the training program.
The US military group in South Vietnam has
been held to its pre-Geneva size despite the
near complete withdrawal of the French mis-
sion, which totaled about 2,500 personnel
prior to the Armistice. However, a 350-man
US Temporary Equipment Recovery Mission
(TERM) is being established in South Viet-
nam.
49. South Vietnam's embryonic air force
(VNAF) has grown only slightly during the
past year. Its current strength of 3,336 in-
cludes 103 trained officer and enlisted pilots
and 100 pilot trainees. VNAF aircraft inven-
tory is 143 planes, mostly trainer/liaison and
transport types. Although the air force is
receiving F8F piston fighter-type planes, it
is unable to maintain even limited flight oper-
ations because of a lack of qualified mainte-
nance personnel. The VNAF has a limited
capability to provide air support to ground
troops, artillery observation, air evacuation,
liaison, and air lift for paratroop operations.
No significant increase in VNAF capabilities
appears likely during the next two to three
years.
50. South Vietnam's navy is under operational
control of the Chief of Staff of the VNA and
under the administrative command of a senior
naval officer. Personnel strength is 142 offi-
cers and 1,755 men, with a Marine Corps of
44 officers and 1,775 men. The forces afloat,
which have been augmented over the past year
by additions from the withdrawing French
forces, include 3 submarine chasers (PC),
3 coastal minesweepers (MSC (0)), 14 am-
phibious vessels (2 LSM, 2 LSSL, 5 LSIL,
5 LCU), and 170 smaller amphibious and
patrol craft. The Vietnamese navy has lim-
ited effectiveness, but it is capable of under-
taking river patrol and minor coastal and
amphibious operations. Capabilities should
improve substantially in the near, future be-
cause of continued US aid and intensive train-
ing programs which include technical train-
ing in the US and France.
51. We believe South Vietnam's military and
security forces are capable of maintaining
the government in power against any poten-
tial armed opposition now located south of
the 17th parallel. In the event of large scale,
concerted guerrilla warfare supported by in-
filtration of men and supplies from the north,
relatively large areas of rural Vietnam prob-
ably would be lost to government control. In
the event of full scale invasion, the Vietna-
mese forces at present probably could not de-
lay for more than 60 days a Vietnamese Com-
munist advance to the Ban Me Thout-Nha
Trang line. If the trend toward improved
internal security and increased effectiveness
of the Civil Guard continues, it will be possi-
ble to step up training and reorganization of
the VNA, thereby improving its capabilities
during the period of this estimate. However,
by mid-1957 Vietnamese forces will still be
incapable of delaying for more than 90 days
an advance by DRV forces beyond the Ban Me
Thout-Nha Trang line.
Internal Security
52. The internal security situation in South
Vietnam has improved substantially during
the past year. The sects are no longer a ma-
jor security problem for the GVN. Most of
the important non-Communist sect leaders of
a year ago have either fled the country, been
killed or captured, lost control of their forces,
or rallied to the government. Remaining sect
armed bands are scattered and disorganized
and probably total no more than 2,000. Al-
though various bandit groups will probably
continue to cause local disturbances, it is like-
ly that organized non-Communist resistance
will virtually disappear during the period of
this estimate.
53. With the sect problem basically under con-
trol, the Communist underground represents
the only serious threat to internal security
in South Vietnam. Reports on Communist
armed strength in the south over the past
year have ranged from 5,000 to 10,000. Our
best estimate of current strength is 8,000 to
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10,000 with approximately 5,000 organized in
skeletal company and battalion sized units
which could be expanded through recruit-
ment. These armed forces are generally scat-
tered through the mountains paralleling the
Annam coast and the remote swampy regions
of Cochin-China. They are capable of harass-
ing actions against VNA outposts and of wide-
spread intimidation, assassination, sabotage,
and terrorism, especially in rural areas. They
could disrupt north-south traffic throughout
Central Vietnam and interfere seriously with
provincial and local administration. How-
ever, any sustained guerrilla operations would
require a flow of reinforcements and supply
from the north.
54. The Communists have an unknown num-
ber of political cadres in the south engaged in
subversive and propaganda activities. Al-
though Communist cadres probably exercise
effective control over some remote communi-
ties where the GVN has not yet attempted to
establish its authority, and have some influ-
ence in villages through much of South Viet-
nam, over-all Vietnamese Communist political
influence in the south appears to have dimin-
ished during the past year. However, if the
Communists decide to exercise their capability
for armed intimidation and terror they could
quickly reassert political control or influence,
at least in some rural areas where GVN
authority is tenuous.
55. During the past year the Communists in
South Vietnam have remained generally qui-
escent. They have passed by a number of
opportunities to embarrass the Diem regime.
Although some cadres and supplies are being
infiltrated across the 17th parallel, the DRV
probably has not sent any large scale rein-
forcement or supply to the south. Commu-
nist activity in the south appears to concen-
trate on protecting vital bases and supply
caches, developing clandestine paramilitary
organizations, and implementing a broad pro-
gram of infiltration and subversion. While
seeking to maintain intact as much of their
armed strength as possible, their main activity
seems to be an effort to weaken the Diem gov-
ernment by subversive and political tactics.
Communist directives indicate that penetra-
tion and subversion of the GVN military and
security forces is a major objective. Although
there is little specific evidence, they probably
have penetrated lower echelons of the VNA,
especially the integrated sect forces, and prob-
ably hold positions of influence in some pro-
vincial governments and village councils.
Local Communist groups probably gave some
assistance to the Cao Dai and Hoa Hao forces
opposing the government. Since the collapse
of sect armed resistance it is possible that
the Communists are seeking to take over the
remnants of the sect forces.
56. The GVN has organized a Civil Guard to
relieve the VNA of many static internal secu-
rity duties. Current strength of the Civil
Guard is approximately 48,000 men organized
in lightly-armed mobile companies. Its mis-
sion is to maintain law and order, collect in-
telligence, and conduct countersubversion
operations at the provincial level in areas
pacified by the army. Although considerable
progress and refinement in its training and
organization will be necessary before the Civil
Guard can fully discharge its responsibilities,
it has shown considerable potential as an in-
strument for maintaining internal security.
A 60,000-man village Self-Defense Corps (Dan
Ve Doan) is being organized to provide secu-
rity at the local level.
Foreign Relations
57. GVN foreign policy objectives are to win
recognition as the legitimate government of
all Vietnam, to obtain maximum foreign mili-
tary and economic aid and guarantees of for-
eign assistance in the event of Communist
aggression, and to develop foreign support for
its position with respect to the Geneva Agree-
ments. Forty-one nations have recognized
the GVN. In addition, India and Indonesia
maintain consular relations with the GVN.
58. President Diem consistently has main-
tained that South Vietnam is not bound by
the 1954 Geneva Accords and has no legal
responsibility for their implementation. He
has refused to deal directly with the DRV
on any issue and has been steadfast in his
rejection of all-Vietnam elections until "demo-
cratic processes can be assured in North Viet-
nam." He believes that any consultations
or implied recognition of the DRV would have
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adverse political effects in the south and
could lead" to increased internal and inter-
national pressure for reunification of Viet-
nam under a coalition government with the
Communists.
59. His refusal to permit nationwide elections
and to assume responsibilities under the Ge-
neva Accords raised the possibility of a with-
drawal of the ICC following the deactivation
of the French High Command in April. To
deal with this situation, representatives of
the Geneva co-chairmen (the UK and the
USSR) met in London during April and May
1956. The USSR failed to press DRV de-
mands that the co-chairmen reopen the Ge-
neva conference. Instead, the co-chairmen
finally agreed upon identical letters to the
DRV and GVN requesting them to prevent
any violation of military clauses of the Ge-
neva Accords, to insure implementation of the
political terms, to submit at the earliest pos-
sible time a convenient deadline for direct
consultations and for holding all-Vietnam
elections, and to give every assistance to the
ICC. The co-chairmen requested the ICC to
continue supervising the Armistice. They re-
quested the French government to continue
its good offices in support of the ICC, to reach
agreement with the GVN to facilitate the task
of the ICC and the Joint Armistice Commis-
sion (French-DRV), and to preserve the status
quo until such new arrangements could be put
into effect.
60. Despite his past refusals.to assume respon-
sibilities under the Geneva Accords, in his
response to the co-chairmen's message Diem
agreed to respect the Armistice and to pro-
vide security for ICC members. He recognizes
the deterrent value inherent in the presence
of the ICC, and appears willing to take action
necessary to continue its function but con-
tinues to avoid the acceptance of any legal
obligation under the Geneva Accords.
61. Franco-Vietnamese relations continue to
reflect considerable ill-will and distrust on
both sides. Recent causes of friction include
disagreements concerning the future status
and role of French military training missions,
residual military base rights in South Viet-
nam, and the equivocal French attitude to-
12
ward the Communist regime in the north.
The French now exercise little influence in
Vietnamese affairs and there is little prospect
for any improvement in relations in the near
future.
62. South Vietnam-US relations have re-
mained close and friendly during the past
year. There have been few evidences of Viet-
namese resentment of increasing US influence
and . activity in South Vietnam despite con-
tinual efforts by the Communists and some
local French to stir up dissatisfaction on that
score. The GVN would like the US to raise
the mutually agreed ceiling on VNA force
levels and desires greater autonomy in ad-
ministering the foreign aid program. Diem
would also like the US to exercise maximum
political pressure, especially on the UK, India,
and France, to enable the GVN to avoid any
responsibility for the Geneva Accords.
63. Relations between South Vietnam and
Cambodia have been strained by activities of
resistance groups in border areas, by treat-
ment of minority groups, by boundary dis-
putes, and most seriously by disagreements
relating to trade arrangements. A trade stop-
page early in 1956 was removed through in-
formal mediation by the US, and by the terms
of settlement official representatives have
been exchanged for the first time. The basic
causes of friction remain, however. Vietnam
does not desire full diplomatic relations with
Cambodia because it fears such action would
lead to Cambodian recognition of the DRV as
well. There are no pressing problems in Lao-
Vietnamese relations and South Vietnam's re-
lations with the Philippines and .Thailand are
generally good.
IV. THE OUTLOOK IN VIETNAM
Probable Communist Courses of Action
Toward South Vietnam
64. The DRV probably estimates that its
chances for securing control of South Viet-
nam by means short of open attack or large
scale guerrilla action supported from the
north will gradually diminish with the pas-
sage of time. As indicated by Soviet and
Chinese Communist performance in the past
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13
several months, the DRV probably cannot
expect strong support from the Bloc for the
"strict implementation" of the Geneva Agree-
ments. The lack of strong Bloc pressure
strengthens international acceptance of the
status quo in Vietnam and increases confi-
dence in the future in South Vietnam. Al-
though the DRV may still believe that it
could obtain control of all Vietnam through
ICC supervised nationwide elections, Viet-
namese Communist leaders are probably in-
creasingly doubtful on this point because of
their own internal difficulties and the grow-
ing nationalist stature of Diem. The DRV
probably also believes that its covert assets
in South Vietnam will gradually decline if
the Diem government is permitted to concen-
trate on internal security and economic prob-
lems free of external harassment.
65. Despite the declining prospects for the
"peaceful" take-over of South Vietnam, we
believe that the USSR and Communist China
will almost certainly continue unwilling to
support open DRV military action against
South Vietnam during the period of this esti-
mate. They are probably unwilling to risk
the chance of US or SEATO intervention
which would make it difficult to limit the con-
flict to Vietnam, and probably believe that
overt DRV military action would seriously un-
dercut the worldwide effort of the Bloc to win
friends and supporters. Although the DRV
retains the capability to launch an independ-
ent military action against South Vietnam,
the chances of such action in the absence of
assured Bloc support appear to be extremely
small.
66. The only remaining course of action hold-
ing out some promise for the early achieve-
ment of Communist control in South Vietnam
appears to be the development of large scale
guerrilla warfare in the south. In recent
weeks a number of reports from sources of
untested reliability have indicated that the
Communists may have started preparations
in both South Vietnam and in the north to
begin guerrilla action. DRV allegations of
Vietnamese violations of the demilitarized
zone along the 17th parallel and Communist
claims of US-Diem plans to violate the Armis-
tice could be propaganda cover for the initia-
tion of guerrilla action against the south.
67. However, the possible indications of armed
action appear inconsistent with the DRV's in-
sistence on the continued functioning of the
ICC - which is in a position to make at least
limited observations of DRV activities. More-
over, guerrilla action in South Vietnam, if it
were to be sustained and not to result simply
in the identification and gradual elimination
of Communist cadres, would require large
scale support from the north. This would in-
volve some risk of detection by the ICC and
of intervention by the US and possibly SEATO.
It would also tend to prejudice current Com-
munist maneuvers elsewhere in Asia. For
these reasons, we believe that the DRV will
refrain from instituting large scale guerrilla
action within South Vietnam during the
period of this estimate. Communist capabili-
ties for guerrilla warfare in South Vietnam
will exist for some time, however, and the
chances of their being employed would prob-
ably increase in the event of any substantial
deterioration in the domestic situation in
South Vietnam - such as might conceivably
occur on the death of Diem. The chances of
Communist guerrilla warfare would also be
increased by deterioration of the international
aspects of the situation, such as a withdrawal
of the ICC under circumstances which would
permit the Communists to place the blame for
this event on the GVN.
68. The DRV will continue to seek maximum
Bloc support for its objectives and will seek,
within the limits of Bloc strategy, to harass
and undermine the government in South Viet-
nam. It will continue to seek direct contacts
with South Vietnam, offering economic and
cultural exchanges while castigating Diem for
"blocking" unification. It will continue ef-
forts to penetrate the government of South
Vietnam and to improve its covert organiza-
tion throughout the area. It may attempt to
increase pressures for a reconvening of the
Geneva conference and to unsettle the Diem
government by fabricating or provoking inci-
dents along the demarcation line and by dem-
onstrations of armed strength within South
Vietnam.
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Trends in South Vietnam
69. Barring a major Communist effort to dis-
rupt the Diem regime by renewal of large
scale guerrilla operations, the over-all pros-
pects for improved security of South Vietnam
are good. The VNA, as its training progresses
and as more units are released from static
security duties, probably will be able to pacify
and extend government authority into many
areas of present Communist influence. Diem's
success in by-passing the July 1956 election
date without evoking large scale Communist
military reaction will reassure many Vietna-
mese and encourage them to cooperate with
GVN programs to expose and root out Com-
munists. Continued improvement in internal
security will depend in some measure on the
government's ability to. deal with economic
and social problems and on the effectiveness
of the administrative apparatus.
70. If the Communists were to undertake
large scale guerrilla action in South Vietnam,
they probably would not be able to develop
widespread popular support, especially if the
VNA were to register some early military suc-
cess. The GVN is being increasingly accepted
as a nationalist alternative to Communist
leadership. Public confidence in the GVN,
combined with general war-weariness, may
have already reached, the point where any
effort to upset the government by force would
lead to a strong popular reaction against the
guerrillas.
71. The trend toward increased political sta-
bility in South Vietnam will probably continue
during the period of this estimate and Presi-
dent Diem will probably continue to exercise
effective political control. The trend toward
authoritarian rule through the political par-
ties led by Diem's relatives and small circle of
trusted associates will probably continue. Iso-
lation and neutralization of government crit-
ics- and men disliked or distrusted by Diem
will also continue. Diem and his associates
are likely to exert strong pressures against
any opposition in the Assembly. Thus it is
not likely that Diem or his government will
meet any serious opposition in the National
Assembly during the period of this estimate;
however, over a longer period the accumula-
tion of grievances among various groups and
individuals may lead to development of a
national opposition movement. The major
economic problems will undoubtedly continue
and over the longer run may handicap South
Vietnam in competition with the Communist
north, but economic conditions are unlikely to
affect political stability during the period of
this estimate.
72. Despite the moderately favorable outlook
projected for South Vietnam, the situation
contains many elements of instability, and
progress will continue to depend on firm US
support. A number of contingent develop-
ments could create new tensions among the
foreign powers concerned as well as between
the GVN and the DRV. For example, the
steps which Diem is willing to take toward
facilitating the operations of the ICC may not
be adequate to satisfy India whose representa-
tive serves as chairman of the Commission.
Should the Commission withdraw, DRV agi-
tation might well be intensified and interna-
tional Communist pressures on the diplomatic
level would probably increase. The UK might
become less firm in its support of Diem's posi-
tion. Weakening of international support for
Diem, a marked increase in Bloc support for
the DRV, or a substantial increase in Commu-
nist activity within South Vietnam would
probably weaken the government's confidence
in its position, cause some loss of public sup-
port, and lead to renewed efforts by opponents
of the regime in the direction of reconciliation
with the north.
Declassified and Approved For Release 2013/06/04: CIA-RDP79RO1012AO08000040001-0
 Declassified and Approved For Release 2013/06/04: CIA-RDP79RO1012AO08000040001-0
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