THE SITUATION IN SOUTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00826A001400010001-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 16
• Document Creation Date: December 12, 2016
• Document Release Date: January 14, 2002
• Sequence Number: 1
• Publication Date: October 24, 1966
• Content Type: IR

~ry~,
Approved For-Release 2002/01/30 :CIA-RD 01400010001-9
No. 0396/66
Copy No , 14 8
INTELLIGENCE REPORT
Till 'SITUATION IN SOU'TIl VIETNAM
DIRECTORATE OF INTI I.LIGENCE
BACKGROUND USF ON1 1'
NO FOREIGN DISSFA9
Approved For Release 2002/01/30 : T T T R ET
c;ROUP I
9 dom nyrodf and
de~i~ss~rl c.,Non
 Approved For F 4ease 2002/01/30 : CIA-RDP79T00826AW1400010001-9
This document contains information affect,-n-1 the
national defense of the United States, within the
meaning of Title 18, sections 793 and 794, of the US
Code, as amended. Its transmission or revelation
of its contents to or receipt by an unauthorized
person is prohibited by law.
Approved For Release 2002/01/30 : CIA-RDP79T00826AO01400010001-9
 Approved FocRelease 9 q.14: IlDP79T0082CA001400010001-9
.rXV
NO FOREIGN DISSSEM(/,BACKKGROUND USE ONLY
CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
THE SITUATION IN SOUTH VIETNAM
(17 October - 23 October 1966)
Cabinet crisis; Constituent assembly
develo:)ments; Special Buddhist national
congress; Dissident montagnards pledge
loyalty to GVN.
REVOLUTIONARY DEVELOPMENT II
General Than.g's views on Revolutionary
Development; National Police manpower
status; Viet Cong defectors (Chieu Hoi);
Additional third country Chieu Hoi
advisers.
US/GVN economic discussions; Situation.
at two major rubber plantations;
Regional economic situation. in August.
AppMe#(5R IF@IWa ?Q j0/'AlOCkE 7 88 V1400010001-9
SECRET
 Approved For Releaso'2002/01/30 : CIA-RDP79T00826A00,.41~,0010001-9
t s'J DEMARCATION LINE
?Qua gTri
Sbpon0,'. Q U A kI
l:ft.. I Hue
Cheo
TUYEN
Da Lai*
DUG
KHANH
HOA
H N41
co ~:'a
in ong
?^~ NH
v L rte''
j f1>C !_IEI)
toJ '/ \`\VtNH
*Da Nana
aravane . QUANG NAtn' .I 'CORPS
C)UANG TIN Chu La
DARLAC
*Ban Me
Thuot
SOUTH VIETNAM
4 e 25 50 75 IOU Miles
0 25 50 75 l 0 Kilometers
SECRET
Approved For Release 2002/01/30 CIA=RDP79T00826A001400010001-9
 Approved For Re se 2002/01Lh * 'I{ ?P0826A9U400010001-9
NO FOREIGN DISSEM/BACKGROUND USE ONLY
Premier Ky left for the Manila sum-
mit conference with his smoldering cabinet
crisis temporarily resolved. However,
when he returns in. the middle of the week,
he will be forced to decide whether or n.ot
to accept the resignations of the four of
the seven. dissident southern.-oriented min-
isters who chose not to withdraw their re-
quests. Moreover, the cause of the crisis
has not been alleviated and, if some con-
cessions are not made to the growing number
of disaffected southerners, Ky might be
faced with resignations from the constituent
assembly.
The constituent assembly deputies com-
pleted the drafting of the rules of proce-
dure and should elect their permanent offi-
cers this week. As a result of an apparently
deliberate effort by the moderate leader of
the Buddhist In.stitute, the special congress
of the Unified Buddhist Association was dis-
solved after three stormy sessions without
accomplishing anything. In the central high-
lands, 250 dissident mon.tagnard tribesmen
pledged their allegiance to the GVN in the
first phase of a return. of the FULRO forces.
1. Premier Ky has temporarily patched up the
rift in. his cabinet on the eve of the seven.-nation.
Manila summit conference. On the morning of 20 Octo-
ber, Ky held a meeting with six of the seven dis-
affected cabinet ministers and, in a last ditch appeal,
persuaded them not to leave their jobs until after
the conference. He followed up the meeting with a
press conference, announcing to the public that his
civilian deputy premier, on.e of the most influential
of the dissident ministers, would act as the head of
government in his absence.
Approved FOr-RlIffieIM2flnR211960Yf0001-9
 Approved For Release 2002108E M 00826A 400010001-9
NO FOREIGN DISSEM/BACKGROUND USE ONLY
2. However, the seventh dissident, Minister
of Economy Than.h, who was originally scheduled to
accompany Ky to Manila, appears definitely to be
out of the government with his resignation. report-
edly accepted by Ky. Two of the dissidents,
Transportation Secretary Thuan and Labor Secretary
Hung, the only nonsoutherner in the group, have
reportedly agreed to withdraw their resignations.
3. Vo Long Trieu, the youth secretary and
the firebrand among the resignation group, report-
edly also considers himself out of the government
line-up, even though he has agreed to support Ky
for the sake of appearances until the conference
is over. Although the catalyst that triggered the
dissension was police director Loan's arbitrary
detention of a southern subcabinet official, it
was Trieu who took up the challenge and inspired
the other southerners to support him. Shortly after
the original resignations were submitted on 2 October,
Trieu was personally threatened by Loan. The re-
sultant sharp personality conflict between. the two
has substantially hindered any resolution of the
crisis. The status of the remaining three ministers
will probably not be finally settled until after
the Manila conference.
Ky and most e otner military
members of the ruling Directorate favor replacing
the ministers, possibly with other southerners.
4. The squabble is by no means solved, how-
ever, Ky has not fully assuaged southern resent-
ment by acceding to their original demands for an
end to the alleged "police state" methods employed
by Loan. Unless Ky proves willing to permanently
temper Loan's aggressiveness, southern and civilian
pressures against Ky, Loan., and the rest of the
northern-oriented inner circle of the ruling oli-
garchy will probably build up again.
Constituent Assembly Developments
5. The constituent assembly delegates finally
approved the rules of procedure that will govern the
remainder of their meetings. It now appears that
Approved For I e 0~l(1 ~e
b0(? &10001-9
25X1X
 Approved For Ref se 2002/0)E (1 00826AOQ&400010001-9
NO FOREIGN DISSEM/BACKGROUND USE ONLY
the election. of permanent assembly officers will take
placethis week. One of the more controversial rules
that had been approved earlier in. regard to the pur-
pose of the assembly was reconsidered on 21 October.
The final version of that rule, as approved again
after a lengthy debate, readsthat the "chief respon-
sibility of the constituent assembly is to draft and
approve a connstitution.." This version is consider-
ably milder than had been hoped for by some of the
delegates, who envisioned broader powers for the
assembly.
6. During the past few days, the delegates
have approved, in principle, the formation. of formal
blocs in the assembly. Each bloc must have at least
12 deputies, and no deputy may be a member of more
than one bloc. The assembly has also approved the
establishment of four permanent committees: constitu-
tion drafting, information and press, budget and
finance, and "people's aspirations." The latter com-
mittee is to survey popular opinion regarding the
form the constitution should take. The press and
information committee will apparently attempt to
improve the assembly's image, which has been somewhat.
poor to date, in the Vietnamese press. The assembly
has also officially certified the credentials of 111
of the 117 deputies, with the remainder apparently
still awaiting court rulings on charges of election
irregularities.
Special. Buddhist National Congress
7. After a series of disorderly sessions held
on 21 and 22 October, the extraordinary congress of
the Unified Buddhist Association was dissolved before
the representatives could even agree on an agenda.
It is not known. whether subsequent meetings will be
held this week, but it appears doubtful. The sessions
were marked by lively arguments and disruptive political
tactics; at one point, shots were fired into the air
by plainclothes security police in an attempt to quell
the disturbance.
8. The disruptive tactics, which included dem-
onstrators with placards denouncing the congress,
Approved For ReSeasle 0~~(l l~/A4 R8b b09 10001-9
 Approved For Rise 2002/053E6? TjT00826AW400010001-9
NO FOREIGN DISSEM/BACKGROUND USE ONLY
appear to have been part of a deliberate plan. by
moderate Institute chairman. Thich Tam Chau and his
followers to keep the militants from choosing
another chairman and packing a new Institute council
with their own monks. The former council, of which
Tam Chau was chairman, resigned on. 13 October, leaving
the Buddhist hierarchy theoretically leaderless.
The militant leader, Thich Tri Quan.g, reportedly did
not attend an.y of the sessions. The militant-moderate
schism has apparently been. further widened and, ac-
cording to the embassy, it is likely that Tam Chau%
will leave the Unified Buddhist Association, taking
the northern. Buddhists, the Cambodian. Theravada
Buddhists, and the remaining moderates with him.
Dissident Mon.tagnards Pledge Loyalty to GVN
9. The first phase of the return to government
control of the FULRO forces, the dissident tribal
autonomy movement, was completed on. 17 October at
Pleiku city in. Pleiku Province. However, only 250
of the estimated 7,000 tribesmen..return.ed from their
base in Cambodia to attend the ceremony. The rest,
including their leader, Y B'Ham En.oul, are reportedly
waiting word of how the first delegation. was received
before committing themselves further to the GVN.
10. According to US Embassy observers who at-
tended the ceremony, the Vietnamese Government
speakers missed the opportunity to improve the
tenuous GVN-FULRO relationship, which had been. out-
lined in a previous agreement. The speakers failed
to mention the "four points" or the "special" demands
on which the rapprochement had originally hinged.
According to on.e US official, FULRO's attitude toward
the GVN has softened somewhat because of increased
pressures from Viet Cong and North Vietnamese mili-
tary forces operating in. their base area.
Approved I F e9 L 09/bq/M~/GRi- #6&2ihM04M10001-9
SECRET
 Approved For Reuse 2002/01/aVEIGW0826A0U400010001-9
NO FOREIGN DISSEM/BACKGROUND USE ONLY
II, REVOLUTIONARY DEVELOPMENT
Minister of Revolutionary Develop-
ment, Major General Nguyen Duc Thang,
while admitting to deficiencies in the
program, claims that the Revolutionary
Development Cadres have started to take
hold in the provinces and that progress
has been recorded. General Nguyen Loan,
director general of the National Police,
is confident of attaining the 1966 goal
of a police force totalling 72,000 men,
but US officials do not believe the goal
is within reach. Cuieu Hoi returnees
total 477 for the week 13-19 October; this
is the third consecutive week in which the
defector count has registered a gain.
General Thang's Views on Revolutionary Development
1. The Minister of Revolutionary Development,
(RD), Major General Nguyen Duc Thang, has made a
personal plea to the Peoples-Army Council for a 40-
percent increase in the RD budget. RD aid would
total $33.9 million in 1967 including Thang's re-
quest. Thang acknowledged that there has been a
shortfall in the program, although progress has
been recorded, and he has proposed reforms which
are intended to correct deficiencies which have
been uncovered.
2. He was particularly critical of the "new
life hamlet program" which was designed to provide
security from Viet Cong incursions and to create a
"new life" for the peasant. Thang maintains that
the latter goal of the program has not been suc-
cessfully achieved and in his words, "has not pro-
vided a new life for the peoples in the hamlets."
There has been no true social revolution, he as-
serted and "the Communists... have not been wiped out."
Thang implied that government interference in the
life of the peasants must be minimal and that ham-
let residents should control their own programs.
The Revolutionary Development Cadres, which he
claims have started to take hold in the provinces,
Approved For Release 2002/01/xjE J
,96a 40U0'1 001-9
 Approved For Rise 2002/01/,VA-ItT0826AM9l1400010001-9
NO FOREIGN DISSEM/BACKGROUND USE ONLY
should act mainly as an "emotional bridge" between
the peasant and the government, according to Thang.
National Police Manpower Status
3. It is probable that the government will
fail in its efforts to bring the strength of the
National Police to 72,000 by the end of this year.
General Loan, director general of the National Po-
lice is, however, still optimistic about meeting
the goal, which would require the recruitment of
nearly 20,000 men. If it appears that the goal can-
not be met, Loan will give priority to bringing the
Police Field Force (PFF) segment of the National Po-
lice to its agreed-on strength of 8,500 (current
strength about 5,000), and secondly bringing the
resources control element to 11,000 men (current
assigned strength 6,834). No priorities or goals
were indicated by Loan for the Police Special Branch
or other components of the National Police.
4. The National Police are conducting an in-
tensive recruiting campaign throughout the country.
Recruitment for the National Police has dropped off,
however, partly because of the inability of the
police to compete with the higher wages currently
being paid in the civilian sector. The police have
only recently been given authorization to dip into
the pool of men in the draft age brackets (21-29
years). This may attract a number of men who will
wish to avoid serving in the armed forces.
Viet Cong Defectors (Chieu Hoi)
5. For the week of 13-19 October, the number
of returnees in the Chieu Hoi program totaled 477
(303 military), according to reports from 34 of the
44 provinces. This is an increase of 100 over the
previous week, and marks the third consecutive week
in which gains have been registered in the number of
.returnees. A breakdown by Corps of the returnee
flow follows:
Approved FoKReiF~ 202/d31IM Br6A14 1O001-9
SECRET
 Approved For Ri ase 2002/0 ECJ 00826 1400010001-9
NO FOREIGN DISSEM/BACKGROUND USE ONLY
I Corps
23
II Corps
210
III Corps
81
IV Corps
163
477
(303 military)
6. The number of returnees for 1966 now totals
14,306, an average of 50 each day. Assuming con-
tinuation of the daily returnee rate at its present
level, only about 75 percent of the 1966 goal of
22,500 returnees will be achieved. It should be
noted, however, that the daily average rate of re-
turnees has fluctuated considerably.
Additional Third Country Chieu Hoi Advisers
7. The final increment of 19 third country na-
tionals, of a total of 45 hired as Chieu Hoi ad-
visers, were scheduled to arrive in Saigon this week.
The group will be given a five-day orientation period
in Saigon, and then moved to the four. USAID regional
offices for further orientation and assignment. Pres-
ent plans call for two of the 45 to be assigned at
the national level, four at the regional level, with
the balance being given provincial assignments.
Approved ForleH6'O11Y9~ E MAU04096~bY001-9
 Approved For ReIaa'se 2002/01/2' .E1C ETf826AO&[phone]
NO FOREIGN DISSEM/BACKGROUND USE ONLY
III. ECONOMIC SITUATION
The fourth US-GVN economic meeting,
which was held on 5 October, focused on
Mekong flood relief programs and con-
gestion at the Saigon port. At the be-
ginning of October, the Viet Cong were
reported to be in control of most of the
villages at Michelin's Dau Tieng Planta-
tion in Binh Duong Province and of the re-
maining workers at Ben Cui Plantation in
Tay Ninh Province.
Economic reporting from the prov-
inces indicates that, in contrast to
June and July when prices rose sharply
throughout South Vietnam, prices in most
provinces during August were either
steady or slightly lower. Data on price
movements for commodities, gold and cur-
rency during the week ending 17 October
have not been received from the US Mis-
sion. Between 10 and 14 October retail
prices in Saigon remained unchanged.
US/GVN Economic Discussions
1. On 5 October US and GVN officials held
their fourth joint economic meeting. The major
item of new business was Mekong flood relief'pro-
grams. Water levels are receding rapidly in the
five hardest hit provinces--An Giang, Chau Doc,
Kien Tuong, Kien Phong and Dinh Tuong. Secretary
of State for Social Welfare Lieng reviewed the ac-
tivities of his department in providing disaster re-
lief to victims of the current floods and expressed
appreciation for US assistance. He requested US aid
for building 100,000 wood floor houses on cement
columns in order to avoid future destruction. Al-
though US and other GVN officials displayed little
enthusiasm for this scheme, primarily because of
the costs involved, the US agreed to provide per-
sonnel for consultation on the plan and to continue
US support for other flood relief programs. Lieng's
proposal to buy rice in Saigon and transport it to
Approved FoNQeMUY /@1W ElZ QR i$tT 6 4?Q%1y0001-9
SE CARET T
 Approved For ReI tse 2002/01 /ig.E I ' O826A6400010001-9
NO FOREIGN DISSEM/BACKGROUND USE ONLY
flooded areas also was viewed negatively because of
the inflationary impact such a measure would have
on the cost of living in Saigon. The group dis-
cussed a program of reconstruction and development
of flooded areas, including the immediate supply of
seeds, water pumps, insecticides and fertilizer, and
long-range plans for the planting season that begins
next April.
2. As was the case at the first three joint
economic meetings, the Saigon port problem was con-
sidered. GVN officials reported that the GVN Na-
tional Police would take over responsibility for
port security and that the Secretary of State for
Finance had begun to sign "arretes" confiscating
goods left in warehouses more than 30 days. Acting
Minister of Economy Ton, however, continued to hold
to resigned Minister of Economy Thanh's line that
the major problem at the port is the inability of
importers to find their goods. The US questioned
GVN officials about the importers' complaint that
they could not get sufficient credit to finance the
removal of their goods from the port. GVN officials
agreed to make a report at the next joint meeting on
whether this is a real problem or merely an excuse
used by importers to delay removal of their goods
from the warehouses.
3. Meanwhile, USAID reports that importers,
most of whom made large profits during the last year
and a half, are becoming increasingly restive. Ac-
customed to an inflationary psychology, they are
finding it difficult to readjust to the concept of
normal mark-ups or even losses. As a result, the
importers reportedly are placing pressure on the
GVN to give them assistance, although it is not
clear just what form this would take. There are
rumors that the importers may go on strike and re-
fuse to accept any more import licenses.
Situation at Two Major Rubber Plantations
4. At the beginning of October, the Viet Cong
were reported in control of most of the 18 villages
at Michelin's Dau Tieng Plantation in Binh Duong
Province. Some local officials of the Federation
of Plantation Workers (FPW)--an affiliate of the
Approved FohTOeXQ4E-I@1/ SE CRE T~6Jr14?b001-9
 Approved For Re1e 2002/01/;$,826A04;-400010001-9
NO FOREIGN DISSEM/BACKGROUND USE ONLY
National Confederation of Vietnamese Workers--were
still residing in villages controlled by the Viet
Cong. These officials, however, were not in touch
with GVN authorities because they feared GVN ac-
cusations of having been sent by the Viet Cong.
5. Michelin
no longer maintains a French director at Dau Tieng.
The plantation is supervised by a Michelin repre-
sentative who flies to Dau Tieng three days a week.
As a result, the quality of the latex is not con-
trolled, effective tapping of the trees is not en-
sured, and new trees have not been planted for more
than a year. Nevertheless, the plantation reportedly
is producing about 60 percent of its normal latex
output.
6. Only about 350 workers--all closely con-
trolled by the Viet Cong--reportedly remain at the
Ben Cui Plantation of the Societe Indochinoise de
Plantations d'Heveas in Tay Ninh Province. At the
beginning of 1964 there were about 800 permanent
employees at this plantation.
Regional Economic Situation in August
7. In contrast to June and July, when prices
rose sharply throughout South Vietnam, prices in
most provinces during August were either steady or
slightly lower. Based on the appraisals of USAID
provincial representatives, the embassy reports
that economic conditions improved in 21 provinces,
remained unchanged in 14 provinces, and deteriorated
in 8 provinces. The level of Viet Cong economic ac-
tivities was generally unchanged.
8. In Region I both prices and wages appeared
to be levelling off largely because of the full
restoration of the movement of goods which had been
disrupted by the "struggle" movement in April and
May. The supply of most basic consumer goods was
adequate, and prices of these items were lower in
several provinces. Construction materials, on the
other hand, remained generally scarce. There were
some indications that Viet Cong economic activity
in Region I had tapered off. Although the Viet Cong
remained active on transportation routes from Danang
Approved For Release ZQDZ/Iffle-.
26A d i 496'16001-9
25X1X
 Approved 'For Re1sdse 2002/01/,,S ]R0826AOG.1r400010001-9
NO FOREIGN DISSEM/BACKGROUND USE ONLY
to Hue, movement of commodities by road was not
seriously hampered. Similarly, the highway con-
necting Danang, Tam Ky, and Quang Ngai remained
open to commercial traffic during most of the month,
and the Viet Cong reportedly were unable to levy
taxes on traffic moving on this road.
9. Prices were generally steady or slightly
lower in most provinces of Region II. The major
exceptions were Phu Bon and Lam Dong provinces
where prices continued to rise as a result of Viet
Cong interdiction of land routes. In addition,
prices of imported commodities continued to rise
in Ninh Thuan and Tuyen Duc provinces.
10. Although the cost of living remained high
in most areas of Region III, the general pattern
was one of stabilization of the prices of most com-
modities, especially foodstuffs. Exceptions to
this pattern were noted in Binh Long and Phuoc Long
provinces, where prices continued to rise as trans-
portation routes remained blocked. Prices also con--
tinued to rise in Binh Tuy Province as a result of
a significant increase in Viet Cong taxation and
interference with transportation.
11. In Region IV the prices of most staples
held steady or declined slightly. A few provinces
reported that retail trade had slowed down, which
may indicate a general expectation of a further
settling of prices. As in Region I, construction
materials remained generally scarce and expensive.
Viet Cong interference with transportation and
other economic activities continued, but no sig-
nificant developments were reported.
Approved FoNi~2AO 21~{ 'C1
~
VJ
16kb?1 Y0001-9
 Approved For Rele 2002/01l?E E l 00826A00 0010001-9
Approved For Release 2002/01/30 : CIA-RDP79T00826AO01400010001-9
SECRET