THE SITUATION IN SOUTH VIETNAM (WEEKLY)

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41 40 Secret
Intelligence Report
DIRECTORATE OF
INTELLIGENCE
The Situation in South Vietnam
(Weekly
State Dept. review
completed
USAID review
Secret
148
completed
13 February 1967
No. 0337/67
ARMY review(s)
completed.
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WARNING
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.
GROUP 1
EXCLUDED FROM AUTOMATIC
DOWNGRADING AND
DECLASSIFICATION
Secret
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
THE SITUATION IN SOUTH VIETNAM
(6 - 12 February 1967)
POLITICAL SITUATION I
Tet cease-fire violations; Armed
Forces Council meets in Saigon;
Co's supporters re-
portedly released; Constituent As-
sembly activities; Directorate -
assembly discussions; Catholics and
the presidential elections; Release
of prisoners,
Revolutionary Development in Dinh
Tuong; Public health in Vietnam.
ECONOMIC SITUATION III
Reduction in military piaster spend-
ing; Labor situation; Industrial de-
velopment; Saigon port,
I\I?NEX: Saigon Free Market Gold and Currency Prices (graph)
Saigon Cost of Living Index (graph)
Scc! L'i Vietnam Money Supply (graph)
South Vietnam Foreign Exchange Reserves (graph)
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1. POLITICAL SITUATION
Official government business ground
to a halt for celebration of the Lunar
New Year (Tet) from 8 to 12 February.
There were nearly 150 Communist-initiated
major violations of the Tet cease-fire in
which casualties were inflicted, large
units were involved, or a large volume of
weapons fire was exchanged. None of the
incidents, however, was considered as
serious as those during the two 48-hour
military standdowns over Christmas and New
Year's.
The South Vietnamese military estab-
lishment upgraded some of its key officers
as part of a continuing drive to make it
function more efficiently, to rid itself
of corrupt officers, and to assign impor-
tant positions to officers responsive to
the northern-oriented leaders.
defense minister is General Cao Van Vien,
concurrently chairman of the Joint General
Staff.
The Constituent Assembly concluded
debate on the first 35 articles of the
draft constitution before recessing for
ten days to celebrate Tet. The assembly
will have slightly more than one month to
finish the document when it reconvenes on
14 February.
Tet Cease-Fire Violations
1. A total of 346 Communist-initiated incidents
were reported during the 96-hour Lunar New Year (Tet)
cease-fire from 8 to 12 February. Of these, 147 were
considered major violations of the cease-fire--that
is, involving casualties, large units, or a heavy
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volume of weapons fire. According to the preliminary
MACV assessment, 17 US and 10 South Vietnamese sol-
diers were killed, while the Communist losses were
placed at 116.
2. At least two thirds of the enemy-initiated
actions were directed against US forces; most were
triggered by friendly reconnaissance patrolling of
defense perimeters. Significantly, there were no
serious incidents such as the massing of nearly 1,000
Communist troops near US Marine positions in Hue dur-
ing the New Year truce. GVN and Viet Cong forces ap-
pear to have deliberately avoided each other during
the four-day standdown.
Armed Forces Council Meets in Saigon
3. The Armed Forces Council--which includes all
general officers and division commanders, and is the
theoretical seat of government power--met in Saigon on
4 February. Premier Ky told Ambassador Lodge that
both he and Chief of State Thieu talked to the council
about the importance of improving the quality of the
ARVN in relation to the "Revolutionary Development"
program, and that they also reported on progress in
drafting a constitution. Ky denied rumors that the
council had agreed upon a military candidate for pres-
ident, or that it discussed regulations for national
elections later this year.
4. During its afternoon meeting, the council de-
cided upon promotions for three generals. Cao Van.Vien,
concurrently minister of defense and chairman of the
Joint General Staff, was promoted to four-star general,
thus becoming the ARVN's highest ranking officer on
active duty, Nguyen Van Manh, who has been IV Corps
commander since November, was promoted to major gen-
eral, and a division commander in I Corps was named a
brigadier general. US Embassy officials are inclined
to view these promotions as a simple upgrading of rank
to fit the job being occupied, Both Premier Ky and
Chief of State Thieu have spurned promotions while they
have occupied their political positions, although
Thieu's position was automatically raised under a gen-
eral reclassification of rank in 1965 to correspond
with US designations.
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Co's Supporters Reportedly Released
6. The estimated 35-50 military personnel who
were taken into custody following the ouster of Gen-
eral Co have reportedly been released by the national
police, with the exception of one of his closest as-
sociates.
a ou al e e ainees have been
discharged from the military service and that some of
them will be prosecuted for corruption.
Constituent Assembly Activities
7. The Constituent Assembly continued its debate
of the legislative portion of the constitution through
its 3 February session, after which it adjourned until
14 February to celebrate the Lunar New Year. During
the meeting on the 3rd, the deputies inconclusively
discussed part of Article 36, having already approved
the draft constitution's first 35 articles, with some
changes in the final wording of several of them. De-
bate on the more controversial sections of the draft
dealing with the powers of the future legislature was
postponed until after Tet. When the assembly recon-
venes, it will have slightly over one month in which
to complete its final version of the constitution for
submission to the Chief of State,
8. On 2 February, the Constituent Assembly ap-
proved various constitutional provisions dealing with
requirements to be met by candidates for the upper
house of the legislature, the filling of vacancies in
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the upper and lower houses, and the immunity to
prosecution or arrest for members of both houses
during their terms. The only controversial issue
to arise was whether there should be a separate
electoral law for ethnic minority candidates for
the upper house, whose membership is elected at
large. The assembly resolved the issue by adopt-
ing an article stipulating that procedures and con-
ditions for the election of candidates, including
minority representatives, for both houses would be
prescribed by law.
Directorate - Assembly Discussions
9. There are indications that consultations
between the government and the assembly are moving
ahead under favorable circumstances. General Pham
Xuan Chieu, secretary general of the Directorate,
told US officials on 3 February that he was pleased
with the "reasonable" attitude now displayed by as-
sembly deputies in ironing out an acceptable draft.
Chieu asserted that the first draft was replete with
internal contradictions and "impracticalities" which
reflected the emotional state of the "immature" dep-
uties, He claimed that the military fully appreci-
ated that diplomatic skill and forbearance were at a
premium in working with the deputies so that they do
not feel that they are being pressured into accept-
ing changes in the draft against their will.
10. Tran Van An, a civilian member of the rul-
ing Directorate, told US officials on 2 February
that the Directorate and the Constituent Assembly
have agreed that the legislature will have the author-
ity to "recommend" to the president that the prime
minister or individual cabinet ministers be dismissed,
but will not have the power to adopt a binding vote
of no confidence against the government. Such a
"compromise" presumably will assuage the military's
worst fears concerning legislative control over the
executive branch of government. It is not entirely
clear, however, how this new "agreement" differs from
the wording in the first draft constitution, which--
if correctly translated--stipulates that the legisla-
ture only has the authority to "propose" the dismissal
of individual ministers or the entire cabinet.
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Catholics and the Presidential Elections
11. The Catholic community intends to play an
active role in the upcoming presidential elections
but, at this juncture, it is not united on a can-
didate, according to a recent assessment by the US
Embassy.
12. Southern Catholic spokesmen have told US
officials that they are currently backing former
premier Tran Van Huong for the presidency. Huong's
reputation for honesty and his strong stand against
the Buddhists during his short tenure as premier are
apparently the basis for his strength among southern
Catholics. Northern Catholic elements, however, are
divided between Huong and Premier Ky. One leading
northern Catholic politician, who heads the well-
organized Greater Solidarity Forces political group-
ing, has told US officials that he has had several
meetings, with Ky in recent weeks and has urged him
to organize a "political machine" for the elections.
13. Other potential candidates are not receiv-
ing much consideration from the Catholic leadership.
Phan Khac Suu has apparently been ruled out because
of his age and strong opposition to the former Diem
government, and Chief of State Thieu is receiving
little attention because of the uncertainty of his
candidacy and what is believed to be his lack of
interest in establishing close ties to the Catholic
hierarchy.
Release of Prisoners
14. South Vietnam on 3 February transported
28 North Vietnamese prisoners of war and two Viet
Cong prisoners to the Ben Hai River bridge between
North and South Vietnam for release to North Vietnam-
ese authorities. The two Viet Cong prisoners de-
clined at the last minute to depart, and were ac-
cepted by GVN officials as Chieu Hoi ralliers. The
28 North Vietnamese crossed the bridge, and were
met and taken off in trucks by local police. A
similar release of North Vietnamese prisoners by
the GVN in connection with the Tet holidays occurred
last year. Hanoi on 2 February had denounced the
"repatriation" as a "hoax" and said that the "com-
patriots" will be allowed to choose whether they will
stay in the North or return to the South.
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15. On 8 February, 19 South Vietnamese prisoners
were reportedly released by the Viet Cong in Kien
Giang Province, possibly as a local good-will gesture.
There was some indication that the prisoners were ex-
pected to return to their captors after celebrating
Tet.
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II. REVOLUTIONARY DEVELOPMENT
In Dinh Tuong Province the past year
has been a period of training, planning,
and consolidation in Revolutionary De-
velopment. Many problems are impeding
progress, and the 1967 plans do not offer
prospects for substantial success there
in the near future.
In all programs concerned with RD,
the US/Third Country presence is seen
and felt most in the field of public
health. Although there have been some
s. `c-c:' _cant achievements in this field,
progress is slow due to the lack of
trained Vietnamese and the burdens
placed on US resources.
Tae Ch_.,cu Hoi report for 29 Janu-
ary - 4 February will not be available
until 13 February, when the GVN ministry
resumes normal business after the Lunar
New Year (Tet) holidays.
Revolutionary Development in Dinh Tuong
1. The Revolutionary Development (RD) program
and the security situation in Dinh Tuong Province
has undergone little change in recent months. Given
the military situation, GVN forces--especially the
RF/PF--have done well in hod _.,g their own. For the
Revolutionary Development program, it has been a
period of training, planning, and consolidation.
2. The 1966 pacification plan called for no
major expansion of activities but for consolidation
of 40 existing hamlets and the construction of 25
new life hamlets. The latter were to be established
along fairly secure lines of communication or in
southwest Chau Thanh District near My Tho, the pro-
vincial capital.
3. In March 1966, there were six 59-man Revo-
lutionary Development (RD) teams in Dinh Tuong and
two additional teams slated for the area in training
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at Vung Tau. The six in-province t q had been
hurriedly formed by combining 40-man Armed Propa-
ganda/Political Action (APA/PAT) teams trained at
Vung Tau under an earlier program with untrained
19-man civic action cadre groups drawn from various
other GVN programs. The performance of these com-
bined teams was spotty. District officials c. red
that the teams were apathetic and unwilling to work
effectively; althol-?h they were able to recite what
their mission was, they seldom had any idea how to
carry it out. Friction frequently developed be-
tween these cadre teams and village or hamlet offi-
cials. By September 1966, however, the two 52 a,.
teams training in March were in place, and two other
combined teams plus the four remaining 19-man teams
had received training at Vung Tau and had been re-
turned to Ding Tuong. This gave the province eight
59-man trained teams.
4. ''.,ring the period October-December 1966,
in line wiiii a o f e program, the RD teams in.
Dinh Tuong were brought to the pro..ncial capital
for briefings on the 1967 RD program and for re-
organization of the 19-man specialist portions.
The specialist teams now consist of two squads
rather than three. Under the Group Leader, there
are two Assistant Group Leaders--one for Militia
(Seci.'.??ity) and one for Reconstruction. The latter
has under him a Civic Action Chief responsible for
Census Grievance and Administration, and a DD:~velop-
ment Chief in charge of other specialists in
farmers cooperatives, etc. This organization is
now found in all 59-man RD teams throughout the
Republic of Vietnam. As of late December 1966,
only two RD teams in Dinh Tuong were at work in the
field; the - ers were still in M...; T'-.o for training
and reorganization.
5. General Thanh, ex-chief of Go Cong Prov-
ince and present commander of the 7th Division in
My Tho, is generally assessed by US personnel as
one of the more apolitical ARVN generals in the
Delta. Although the 7th ARVN Division has tradi-
tionally been one of the GVN's most aggressive, its
offensive activities have been almost nil since Gen-
eral Thanh has taken command. In early 1966, Gen-
eral Thanh withdrew a battalion, supposedly engaged
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in pacification, from Ba Dua Village, Co Lay District,
Dinh Tuong. His reason, which appears valid, was
that the battalion was not accomplishing anything.
The negative attitude of the 7th Division is re-
flected in the fact that in the last eight months
only one ARVN battalion--the 32nd Ranger Bn--has re-
quested USAID to supply commodities for civic action
projects. Under the 1967 RD piais, five of the 14
maneuver battalions of the 7th Division will be de-
tached and placed under the operation control of the
chiefs of the four provinces within the Division
Tactical Area. Dinh Tuong Province will again re-
ceive a battalion.
6. The Dinh Tuong Province Chief, Lieutenant
Colonel Phuoc, remains skeptical that the ARVN `it-
talion assigned to the province will contribute much
to the RD program. He believes it will probably
have to be used on conventional "search and destroy"
operations against at least three Viet Cong main
force/provincial battalions and five VC district com-
panies operatinl-? in the province. Colonel Phuoc has
expressed the hope that he will have operational
control of one battalion for an extended period of
time rather than of different _"otating battalions.
If this could be the case, provincial officials
could take advantage of the opportunity to indoc-
trinate the troops on Civic Action and "getting
a1oog" with the people. Colonel Phuoc and his com-
petent Deputy for Administration, Mr. Hoi, have con-
tinuously supported the RD program. In spite of
the fact that Colonel Phuoc has been a close as-
sociate of General Thanh during their military
careers, General Thanh has reportedly asked for his
transfer and appears not to want Phuoc to remain in
his position longer than the normal 18 month tour
of duty.
7. The province chief, as of March 1966, had
15 RF companies and 5,000 PF soldiers who could be
used in the RD programs. The province has requested
an additional three RF companies and 432 PF soldiers
for the 1967 RD program, but because of the nation-
wide freeze on RF/PF expansion initiated for budge-
tary reasons, the province will not receive them.
It is widely believed in Dinh Tuong that this un-
welcome freeze was instituted at American insistance.
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8. The 1967 provincial plan for RD originally
proposed a relatively wide dispersion of the RD
cadre teams, which are to be increased to 10 this
year. However, General Thang, the Minister for
Revol` '_~:. ?y Development, opted for a concentration
of the teams in smaller areas. Seven of the 10
teams will be concentrated in an area adjacent to
the US 9th Division base site at Dong Tam near My
Tho in Chau Thanh District, one will go to Ben Tranh
District to the north, and one each to Cho Gao Dis-
trict to the east and to Cai Be District to the west.
The location of the majority of the RD teams in Chau
Thanh district places them too near the city of My
Tho and under a very weak District Chief, from whom
little can be expected in the way of leadership.
In sum, prospects do not appear entirely favorable
for RD progress in the near future.
9. Of all the developmental programs underway
in the Republic of Vietnam, the American/Third Coun-
try presence is most seen and felt in the public
health sphere. Foreign "omnipotence" in this field
is due to the almost complete absence of qualified
Vietnamese, the larger number of sick and injured
generated by wartime conditions, and the different
attitudes towards patient care in eastern and west-
ern cultures. The US Agency for International De-
velopment (USAID) is maintaining pressure upon the
GVN Ministry of Health to make its programs and sup-
ply system responsive to xa` :oi-wde demands.
10. The Republic of South Vietnam has only abo--
1,000 qualified medical doctors for an estimated
16.5 million people. Approximate170 percent of
medical doctors are in the GVN armed forces. Only
160 doctors are on the rolls of the Ministry of
Health (MOH) and available for public medical treat-
ment; the majority of t-1-_,6s are engaged in hospital
administration and not patient care. Country .
there are approximately 3,000 nurses and 12,000
civilian para-medical personnel---corpsmen, orderlies,
etc. Over the last 18 months, the number of em-
ployees of the Ministry of Health has dropped from
16,000 to 8,000. This decrease has been due to the
low salaries paid to employees and the availability
of employment in fields other than health.
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11. At present, 30 countries contribute some
form of medical aid to the GVN. Of these 30, nine
countries have supplied 15 medical teams to work
with the United States in the Provincial Health
Assistance Program. Three additional countries--
Germany, Canada, France--have medical teams oper-
ating independently of this program. Denmark may
contribute a medical team to replace the French
team in Da Lat when the latter's agreement with the
GVN expires in the summer of 1967.
12. The US has 21 Military Public Health As-
sistance Teams (MILPHAP) and four specialist teams
(2 civilian, 2 military) working in the provinces.
Under ideal conditions, if a specialist team
(surgical) is located at the main provincial hos-
pital, a MILPHAP team will operate out of district
clinic or as a mobile clinic in the countryside
treating patients on the scene or serving as a re-
ferral agency to the provincial hospital. The 16-
man MILPHAP team will often divide into smaller
teams for field clinic activity. However, less
than half of the MILPHAP teams are operating ac-
cording to concept, either because of the absence
of surgical teams or because of lack of initiative
by the team leadership. Younger medical officers,
oriented toward a hospital environment rather than
toward public health, preventive medicine or as-
sistance programs, have been unable to utilize the
MILPHAP unit effectively. Due to major shortages
of enlisted team members, activities in some prov-
inces such as Bac Lieu and Quang Ngai are almost at
a standstill.
13. Major hospitals in Saigon and the provinces
now operate on a 24-hour basis thanks to staffing by
US personnel including doctors and 62 civilian
nurses. No provincial team or hospital has ever
been reported attacked by the Viet Cong; the Viet
Cong know they will receive the same treatment as
other patients at the hospitals.
14. In the provinces, ten provincial hospitals
have been revnovated and approximately 80 percent
of the GVN secure areas are now free of serious
malaria problems. The eight hospitals and 24 health
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facilities in Saigon, although functioning, are al-
most all in need of improvement in their physical
plant to enable them to provide better patient care.
The best staffed, equipped, and most under-worked
hospitals are those belonging to the military. The
GVN hospitals, were they to provide care for soldiers'
cepe_naL-nts, could relieve some of the civilian hos-
pital workload and doubtlessly increase military
morale.
15. In an effort to offset the indigenous short-
age of medical personnel, several nations have of-
fered scholastic aid to enable Vietnamese to study
abroad. In many clinics and specialized treatment
centers in Vietnam, on-the-job-training for Viet-
namese is being attempted. In November 1966, a
new medical school with a capacity of 1,200 stu-
dents was opened in Saigon; enrollment at this
school now stands at 1,000, On 9 January the Di-
rector of Public Health approved the na tior.-,'ide
Public Health Service Program which will emphasize
the integration of Public Health nursing activities
with rural health activities and insure that public
health nurses receive field experience to better
acquaint them with techniques and practical appli-
cation.
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Price data for the week ending 6 Feb-
ruary have not yet been received. MACV re-
ports that its program to reduce military
piaster spending during the last half of
1966 was successful, Recently available
information indicates that wages continued
to be relatively stable during December.
Vietnamese workers and unions are be :oL_I ng
increasingly sensitive about the employment
of third-country na