THE SITUATION IN SOUTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00826A001500010002-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 15, 2016
• Document Release Date: July 15, 2004
• Sequence Number: 2
• Publication Date: December 5, 1966
• Content Type: IR

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No. 0402/66
Copy No. 148
INTELLIGENCE REPORT
THE SITUATION IN SOUTH VIETNAM
DIRECTORATE OF INTELLIGENCE
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This document contains information affecting 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.
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South Vietnam's Constituent Assembly,
having approved wording on rights and
duties of individual citizens for the
draft constitution, is now discussing
the form of the future government.
Leaders of the present government,
meanwhile, are considering proposals
by the assembly for changes in the
body's founding law, but are not ex-
pted to give up their quasi-veto
power over the final version of the con-
stitution.
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Con.stituen.t Assembly Developments
1. On. 26 November the Constituent Assembly
began a debate on the general principles its draft-
ing committee will follow in writing the constitu-
tion.. Thus far, the assembly has concluded its
debate on rights and duties of individual citizens
to be specified in the constitution., and has begun
to discuss the form of the future govern.men.t. The
constitution-drafting committee has proposed a
straightforward presidential form of executive, but
fears within the assembly of a possible return to a
Diem-type dictatorship could result in the adoption
of a modified system, with a prime minister responsible
to the legislature in addition to an elected presi-
dent.
2. In subsequent meetings, committee repre-
sentatives recommended a bicameral legislature, an
independent judiciary, and an inspectorate in addi-
tion to the executive branch of government. The
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upper house of the legislature would contain. 30 to
35 delegates, and members of the lower house would
be elected for every 25,000 to 30,000 registered
voters. The judiciary would be headed by a nine-
man supreme court. The fourth branch of govern-
ment, a nine-man. inspectorate equal in status to
the other branches, would be charged with investi-
gating and monitoring their activities.
3. Previously, the assembly approved 14 rights
and four duties of individuals. Duties consisted
of obligations to defend the n.ation..an.d the constitu-
tion., to pay taxes, and to fulfill military service.
Many of the rights were the usual individual safe-
guards, such as compulsory and free elementary edu-
cation; freedom of press, speech, and criticism of
the government; right of assembly; and protection
from unlawful arrest. Other rights, however, applied
more to the specific Vietnamese context. For example,
the issue of land reform was introduced as an, individ-
ual right and produced a heated and disorderly debate.
Dr. Phan Quan.g Dan, a well-known political independent,
led the fight for a specific land reform pledge, but
received little support; Hoa Hao delegates from the
delta were the most vociferous opponents of any land
reform provision. Finally, after prodding from
assembly chairman. Phan Khac Suu, the assembly adopted
a provision. declaring that the policy of the state
would be to make citizens property owners.
4. Another:. sensitive Vietnamese topic touched
upon during the debate on individual rights was
civilian.-military relations, which were considered
as an adjunct to the individual's right to partici-
pate in. the political process. After a reasonably
restrained debate on this subject, the assembly
approved the principle that "military personnel on
active duty cannot join political parties or partic-
ipate in the government." The final wording and
nuances of this principle, as well as all others,
will again. be considered by the assembly when the
draft constitution itself is presented by the draft-
ing committee; thus the precise application of this
principle is not yet clear. However, such a provi-
sion could seriously conflict with the governmen.t's
present administrative system which depends heavily
upon military officers all the way down to the
district level.
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Government Attitudes Toward the Assembly
5. This provision also could have some nega-
tive effect on the current thinking of the military
leadership regarding proposed modifications of the
assembly?s founding law, which inter alia would
eliminate the government?s authority To -make changes
in the draft constitution reversible only by a two-
thirds assembly vote. An assembly committee pre-
sented the government with this and other modifica-
tions of the founding law on 18 November, and a
onvernmcnt rPnly is exnected sometime this week.
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II. REVOLUTIONARY DEVELOPMENT
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1967 to provide a security screen for Revo-
lutionary Development activities may cause
some serious morale problems in the officer
corps. A total of 2,505 Viet Cong defectors
came under government control during Novem-
ber,lan all-time high for any month since
the inception of the Chieu Hoi program.
Meanwhile, the Viet Cong are reported to
have initiated a program in Bien Hoa Prov-
ince to sabotage the Chieu Hoi effort. In
Quang Nam Province, the National Police
are reported to be the target of a new and
intensified program of subversion by the
Viet Cong. Nearly 16,000 persons have be-
come refugees in Tay Ninh Province since
31 August, largely as a result of recent
allied operations..
Effect of ARVN's 1967 Mission on Morale
1. General Do Cao Tri, who is presently un-
assigned but maintains many good connections among
the military, believes there is apt to be bitterness
in the officer corps over the plan for the ARVN to
concentrate on providing the security screen for
Revolutionary Development (RD) in 1967. According
to Tri, morale is already very bad because of ex-
cessive favoritism in promotions, a situation which
often results in the exclusion of combat officers.
Tri also alleged that corruption and reluctance to
fight on the part of many general officers are other
factors eroding the spirit of the officer corps.
2. Leaving the primary task of combating the
Communist main forces to Americans and Koreans will,
Tri feels, give many ARVN officers the feeling that
they are being relegated to a role which is beneath
their dignity. Only proper preparation by the Joint
General Staff for the ARVN's new role may, in his
opinion, be able to avert further unrest among the
officer corps.
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3. Although Tri's observations may be colored
in part by his own anomalous status, there are some
indications that some high ranking members of the
government share his reservations about the present
and future state of ARVN and the morale of its of-
ficers. The feeling is that ARVN officers will. have
to be re-oriented to make them thank differently
about themselves, their jobs, and the importance of
the pacification mission.
Viet Cong Defectors (Chieu Hoi)
4. The total of returnees to government con-
trol in 1966 rose to 17,726 as of 30 November. Dur-
ing the week of 24-30 November, there were 772 re-
turnees according to GVN statistics. This is the
second highest weekly total for 1966. The previous
weekly high occurred in late February when 922 re-
turnees were tallied, The extremely high return in
February was attributed largely to an intensive pre-
Tet Chieu Hoi campaign mounted by the GVN. A break-
down of this week's returnees by Corps Tactical Zone
follows :
:i Corps
48
11 Corps
526
i i is Corps
62
i V Corps
1.36
772
(384 military)
5. During November, there were 2,505 returnees
(1,380 military)--an all-time high.
Viet Cong Counter-Chieu Hoi Program
6. According to information received from a
rallie:r, the Viet Cong have established a counter-
Chieu Hoi training center in Bien Hoa Province. Ac-
cording to this source, selected individuals are
trained at this school to rally to the GVN side and
then attempt to obtain Jobs at Chieu Hoi centers.
Once in place, these agents are supposed to attempt
to incite ralliers against the government and
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persuade them not to serve in the Vietnamese armed
forces. Furthermore they are to work to exploit
the complaints of the ralliers.
National Police Target of Subversion in Quang Nam
7. The 'Viet Cong Quang Da Provincial. Planning
Committee (responsible for what is approximately the
GVN province of Quang Nam and Da Nang City) report-
edly has directed its security sections to mount an
intensive subversion effort against the National
Police in their zones of responsibility. The plan
is to be carried out in three phases: (1) investi-
gation of individual members of the force, their
families, and ideological and political leanings;
(2) intensive subversion effort through every means
of contact; (3) discrediting, abduction, or assas-
sination of police who do not agree to cooperate.
8. This new Viet Cong effort, according to the
source, is not unusual for its target, but for the
fact that Viet Cong security sections have been
assigned the mission. This is a measure of the im-
portance which the leadership attaches to the effort.
.An intensive effort to undermine the police in Quang
Nam may be part of a countrywide effort of the Com-
munists to reduce the effectiveness of the National
Police force, which is an important asset to the
over-all Revolutionary Development program.
Refugee Situation in Tay Ninh
9. Preliminary reports from Tay Ninh Province
indicate that as of mid-November, there were 23,059
refugees living in temporary shelters. This repre-
sents an increase of nearly 16,000 in the number of
refugees in temporary shelter in this province since
31 August when only 7,085 refugees were listed as
being in temporary shelters. The increase appears
to result in large part from the disruption caused
by Operation ATTLEBORO--a massive allied sweep of
the province.
10. Tay Ninh Province has had the reputation
of being able to absorb most of the refugees which
have come from the province. Many refugees, for
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instance, re-establish themselves individually rather
than in government sponsored projects. This new in-
flax will probably prove more difficult to deal with.
11. Current plans for the resettlement of refu-
gees call for the construction of two model hamlets
to resettle 1,000 refugee families. These hamlets
were to be constructed during 1967. Considering the
magnitude of the current flood of refugees, present
plans for resettling refugees will have to undergo
serious revision.
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III. ECONOMIC SITUATION
Price movements were generally favor-
able during the week ending 28 November.
Retail prices of domestic and imported
commodities dropped slightly from levels
of the previous week. Free market gold
prices fell significantly and currency
prices declined also. The prices of pro-
tein food led the decline in food prices
and, significantly, the prices of pork and
rice were at or below the levels reached
last week.
The pork situation was discussed by
US and GVN officials with a tentative
agreement that official price ceilings
on pork should be removed. This would
depend, however, on establishing an ade-
quate reserve stock of about 2,000 tons
of frozen pork. Present facilities can
accommodate only about 500 tons. The em-
bassy favors construction of additional
cold storage facilities to permit the
holding of necessary reserve stocks of
pork.
Discussions by embassy officers with
GVN economic officials ranged over a num-
ber of topics. Although Secretary of
State for :Industry Ton did not attach much
urgency to formulating a new rice policy,
Secretary of State for Commerce Thien An
shared embassy feelings of the urgency
to do so. Thien An recognized, however,
that political considerations will exert
considerable influence on the rice policy
adopted by the GVN.
Although problems have continued since
the US took on an advisory and action role
at the Saigon port, the embassy: feels that
a continuation of current efforts in the
line of confiscating cargos left in :ware-
houses, improving cargo accountability, and
a correct credit policy will have some
salutary effects on port operations.
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1. Retail prices in Saigon during the week
ending 28 November declined slightly with the over-
all USAID retail price index down three percent from
the previous week. Food prices declined three per-
cent primarily because prices for protein :foods fell
or remained steady. The price of pork held steady a
second week at the relatively low level. of 85 piasters
per kilogram, while the prices of beefsteak and fish
declined. Rice prices held steady. Non-food items
were mixed,with prices for charcoal, and soap register-
ing increases and other items holding steady. The
USAID non-food index declined one percent below the
level of the previous week. (A table of selected
weekly retail prices in Saigon is included in the
.Annex).
2. Prices of imported commodities were gen-
erally unchanged: the USAID price index for selected
US-financed imports declined only slightly from the
level of the preceding week. Prices of condensed
milk and flour, were again a little lower than the
level of the previous week as stocks continued ample.
Chemicals remained relatively unchanged as fresh
supplies reached the Saigon market. Despite the
resumption of construction activity with the onset
of the dry season, prices of construction materials,
except cement, fell slightly with the arrival. of new
shipments.
Currency and Gold
3. The free money market remained relatively
strong. The price of US dollars and MPC (scrip)
was down slightly to 170 and 112 piasters per dollar
respectively. The price of gold fell significantly
during the week from 239 to 227 piasters per dollar
as the recent reduction in the official sale price
of gold continued to affect market psychology.
(Graphics on monthly and weekly free market gold
and currency prices are included in the Annex).
Pork Situation
4. US and GAIN officials met on 18 November to
discuss the over-all, pork situation, particularly
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:increasing or removing official, ceiling prices on
live hogs and constructing new storage facilities
for frozen pork. Although no substantive decisions
were made at this meeting, the discussion was un-
usually frank and gave a clear picture of GV'N
thinking on pork.
5. The issue of GVN price ceilings ;provoked
the most lively discussion. US officials contend
that these price ceilings, which were originally
:imposed last December, have served no useful pur-
pose and indeed, have suppressed production and
disrupted arrivals of live hogs in Saigon, More-
over, the US feels that current and planned USAID
programs, such as disease control, mixed feed plants
and importation of improved stock, will not lead to
increased production at current official prices.
GVN representatives conceded that about one third
of Sa.i.gon's pork supply currently comes through the
black market and that because the official price
applies only to live hogs at the slaughterhouse,
the market price usually is 'well. above the official
level. Nevertheless, GVN officials were reluctant
to reach the conclusion that official. prices should
be abandoned or at :Least greatly increased. Finally,
however, they appeared willing to remove price ceil-
ings provided an adequate reserve stock of about
2,000 tons of frozen pork could be established to
regulate the market,
6. The US urged importation of both live hogs,
at least 'through Tet, and frozen pork. In reply to
a GVN inquiry about US financing for pork imports,
it was pointed out that past pork :imports had been
financed by the GVN. The question of imports quickly
became a question of cold storage facilities since
present cold storage capacity is only 500 tons and
the continued availability of this capacity is ques-
tionable. It was agreed that a cold storage facility
of 2,000 ton capacity--roughly one month's consump-
tion in Saigon--would be sufficient 'to supplement
domestic supplies as required. US officials agreed
to ascertain the cost and time required for con-
struction of such a facility.
7. The embassy reports that the proper use of
frozen pork could stabilize the market without dis-
placing domestic production or lowering the return
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to the producer below a fair market level, Moreover,
in view of the importance of pork in the consumer
price index, a stable pork market would contribute
significantly to economic stabilization. For these
reasons and because the GVN appears willing to re-
move price ceilings upon the establishment of an
adequate reserve of pork, the embassy feels that
there is merit in erecting a large cold storage
warehouse,
Discussions with Ton
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dustry Ton said that Premier Ky had announce
the UVN cabinet a 1967 budget ceiling of 75 billion
piasters, which would be in line with US thinking
on. the budget. Ky did not, however, indicate the
size of the civilian and military portions. Ac-
cording to Ton, Ky also expressed an intention to
scrutinize the various ministerial budgets.
9. Ton again confirmed that the GVN was think-
ing of granting a ten percent wage increase for all
GVN employees in early January or just after Tet.
Because of concern about the impact of such a wage
increase on prices, however, the GVN is exploring
the possibility of disguising this proposed wage
:increase in the form of increased allowances or
across the board step increases.
10. With regard to the recent reorganization
of the Ministry of Economy, Ton said that Ky had
announced the appointment of Ton, as chairman of
the Economic and Finance Committee. This economic
policy committee had formerly been chaired by the
Minister of Economy. It is interesting that, while
Governor Hanh was away at the Asian Development Bank
meeting in Tokyo, Ky chose to reject Hanh's sug-
gestion that Ky chair the committee with Hanh as
vice--chairman.
1'.1, Ton's comments on rice policy indicated
that he does not attach much urgency to formulating
a new rice policy. He reported that the province
chiefs were reluctant to become responsible for
establishing rice buying stations because they did
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not have adequate warehouses and were afraid of
losses. Moreover, Ton felt that there were real
dangers in getting ARVN too involved in rice col-
Secretary of State for Commerce Thien An on Rice Policy
12, Secretary of State for Commerce Thien An in
discussing rice policy with embassy officers gave the
general impression that he would support an increase
,in the price for rice but that because of possible
political repercussions it might not be acceptable
to Premier Ky at this time. He confirmed the state-
men.t by Acting Secretary of State for Industry Ton
that the GVN would not be capable of mounting a buy-
ing operation in the provinces, He agreed with the
embassy, however, that the rice policy should be an-
nounced soon, by 15 December at the latest. This
would mean that it would be discussed in a fairly
final stage at the next cabinet meeting, This sense
of urgency contrasts with that expressed by Ton.
Situation at the Saigon Port
13. The US Embassy feels that in placing the US
military in an advisory and action role at the Sai-
gon. port last summer, the US adopted the best course
of action to increase cargo movements through the
port with the least disruption to Vietnamese adminis-
tration of the port. To date, the following measures
have been taken to rel.ieve port congestion: re-
organization of the port; approval of a new tariff
which sharply increases warehouse charges; estab-
lishment of a cargo accountability system; improve-
ment in warehouse management; completion of addi-
tional barge landing sites; and Ky's approval. for
enforcement of the 28 July confiscation decree,
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14. In spite of these measures, however, the
key port problem--the unwillingness of :importers to
remove their cargo from port warehouses--has not yet
been solved.
Hopefully, selective confiscation will. take place
in the near future. There remains, however, the
problem of making available to importers adequate
credit in order that they can pick up their goods
on arrival. Overdue cargo reports are now being
supplied weekly to commercial banks to allow them
to bring pressure on consignees to remove their
cargo, In addition, the GVN has recently proposed
that credit for customs charges be extended to im-
porters in an attempt to get them to move their
goods out of the port more rapidly.
15. The embassy feels that the only other
alternative--a complete US takeover of the port--
would not solve the problem of importers' re-
luctance to remove their goods. Moreover, the US
would be confronted with a host of difficult prob-
lems including liability for losses of goods, the
handling of certain GVN services such as customs,
assumption of title for all port equipment, and
maintenance of a complicated bookkeeping and fi-
nancial system for port operations. More important,
however, is the fact that it is unlikely that the
GVN would ever accept outright US operation of the
port. For these reasons, the embassy feels that
the best course of action is a continuation of all
current efforts--confiscation, cargo accountability
and a correct credit policy--to get importers to
remove their goods.
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WEEKLY RETAIL PRICES IN SAIGON a/
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3 Jan
7 Nov
14 Nov 21
N
ov
28 Nov
1966
1966
1966 1
96
6
1966
Index for All. Items b/
160
222
224 2
27
217
Index for Food Items b/
169
228
230 2
37
c/
226 c/
Of Which:
(In Piasters)
Rice-Soc Nau (100 Kg.)
800
1,600
1,C5J 1,6
00
1,600
Pork Bellies (1 kg.)
70
170
110
85
.85
Fish-Ca Tre (1 kg.)
110
130
150 1
80
140
Nuoc Mam (jar)
50
85
85
85
85
Index for Non-Food Items b/
124
202
202 1
91
c/
195 c/
Of Which:
(In Piasters)
Charcoal (60 kg.)
440
650
650 6
20
630
Cigarettes (pack)
10
14
14
14
14
White Calico (meter)
27
36
35
35
34
Laundry Soap (1 kg.)
30
45
45
32
40
a. Data are from USAID sources.
b. For all indexes, 1 January 1965 = 100.
C. Preliminary.
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500
GOLD Basis: gold leaf worth $35 per troy ounce
US $10 GREEN
""" US $10 MPC Military Payment Certificates (scrip)
Saigon Free Market Gold and Currency Prices
PIASTERS PER US DOLLAR
L.- -- .-L..1 1-L lam
1964 1965, 19.66
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