THE SITUATION IN SOUTH VIETNAM (WEEKLY)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00826A002400390001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 19
• Document Creation Date: December 16, 2016
• Document Release Date: July 28, 2005
• Sequence Number: 1
• Publication Date: July 31, 1967
• Content Type: IR

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Secret
No Foreign Dissem
Intelligence Report
DIRECTORATE OF
INTELLIGENCE
The Situation in South Vietnam
(Weekly)
-- Secret
143
31 July 1967
No. 0361/67
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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 re-
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1. The newly formed Central Election Campaign
Committee, which consists of two representatives
from each of the 11 presidential tickets, has out-
lined the major aspects of the campaign that starts
next week. In accordance with the electoral regu-
lations, the candidates are scheduled to make 24
joint appearances, mostly in the provinces, in the
month before the election. They will appear on
television three times, speak on the radio once,
and hold two joint press conferences. Candidates
are not allowed to use public buildings or govern-
ment offices for additional speeches, but they may
speak in their own homes or in restaurants. Accord-
ing to the US Embassy, the campaign committee's
schedule is not mandatory; there has been no elabora-
tion thus far on what the candidates will be allowed
to do on their own.
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II. REVOLUTIONARY DEVELOPMENT
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Corruption Among Vietnamese Officials
1. US officials believe that IV Corps com-
mander General Nguyen Van Manh has so far succeeded
in gradually replacing some of the worst IV Corps
.province chiefs appointed by his predecessor,
General Quang?. The newly appointed province chiefs
of Phong Dinh, Chuong Thien, Vinh Binh, and to a
slightly lesser extent Kien Giang have shown un-
usual enthusiasm about reducing the degree of
corruption and appear to be relatively effective
administrators.
2. In a conversation with a US official,
General Manh claimed that thus far this year about
30 military personnel had been removed for cor-
ruption in IV Corps. Manh apparently prefers to
punish military officials by removing them from
office rather than by prosecuting them. He said
that trials are too lengthy and present "other
problems"--presumably a reference to the political
problems and disclosures such trials could bring.
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3. Manh does not appear personally to be
overly concerned with corruption and seems to ac-
cept it as a part of normal administrative affairs.
He has, nevertheless, appointed a number of of-
ficials who appear to be striving to reduce cor-
ruption, and has not yet interferred with the
anticorruption policies of his new appointees.
4. Lieutenant Colonel Pham Ba Hoa, the new
chief of Phong Dinh Province, has removed or
suspended several technical: service chiefs and
district chiefs.
IIn Vinh Binh, the new
cnie Lieutenant o on ran Binh Qui, has re-
moved the provincial RD warehouses from the con-
trol of the reportedly corrupt RD chief, and is
checking into alleged payroll padding by the long-
entrenched provincial police chief. The new
province chief of Kien Giang, Major Le Truong Dam,
who is a brother-in-law of General Manh, is consid-
ered by US advisers to be much less corrupt than his
predecessor, but some Vietnamese officials in the
province have criticized Dam's administrative
effectiveness. Since such criticism is something
rarely heard in the delta, this could reflect
either a lack of respect for the new Kien Giang
Province chief or a new feeling of independence
on the part of some local Vietnamese officials.
5. Although some headway is being made both
by senior government officials and by the RD
teams in implementing the anticorruption campaign,
any significant elimination of corruption will be
slow in coming. As elsewhere in the Orient, use
of public office for private gain is an accepted
practice in Vietnam and, in some cases, an
economic necessity for government officials.
Often, Vietnamese officials can only remain in
office by acquiescing in malfeasance by their
superiors or subordinates, and the expense of
office often obliges them to engage in illicit
activities themselves. Inflationary pressures and
other dislocations of the war have further multi-
plied both the temptations and opportunities of
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officials to misuse their office for personal gain.
There have been reports over the past several
months of some degree of corruption among pro-
vincial and district officials in Quang Nam, Quang
Ngai, Binh Thuan, Pleiku, Long Khanh, Phuoc Tuy,
Long An, and Bac Lieu provinces. This list is by
no means believed to be all-inclusive.
Further Changes in the National Police
6. The regional director of the National
Police in II Corps, Nguyen Binh, was relived of
his duties on 3 June by Major Cao Van Khanh of the
Military Security Service (MSS). The dismissal
of Binh, a career police official, appears to have
been part of the continuing effort by the director
general of the National Police, General Nguyen
Ngoc Loan, to.fill high-level police positions
with MSS personnel who have some loyalty to himself.
Since Binh was purported to be a member of the
Revolutionary Dai Viet Party which is running its
own candidates for the presidency and for the
senate, his removal. by Genera]. Loan may also have
more immediate political motivation.
7. Even before the change of command at
II Corps, there were other indications that General
Loan was moving to install MSS leadership among
the police at the regional and provincial levels.
On 16 May the Dalat city and Tuyen Duc provincial
police organizations were merged and placed under
the command of MSS Captain Nguyen Nhu Vy. Other
contributing factors in the Tuyen Duc reorganiza-
tion, however, may have been the reported corrup-
tion of the Dalat city police chief and the
frequent jurisdictional disputes between province-
district police officials and those of the city,
25X1C which is autonomous.
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8. By the end of June the takeover by MSS
personnel of the National Police organization in
III Corps was virtually completed. Only two of
the 12 III Corps provincial police chiefs are
now civilian police officials. Although the
regional director, Major Bui Hop, apparently is
not from the MSS, he is nevertheless a Loan
Since General Loan became director of
the National Police, there have also been indica-
tions of improved over-all police effectiveness.
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Youth Affairs
10. In the youth program established by the
US Mission in Saigon, the mission has taken the
initiative in identifying, influencing, and
training Vietnamese youths it anticipates will
in five to 15 years hold positions of influence
and authority in the country. The mission has
also assisted the government in developing
programs designed to broaden.the leadership base
of the country and prepare young Vietnamese for
future responsibilities. Mission activities
among Vietnamese youth were greatly increased in
mid-1964 as a result of concern over mounting
student political demonstrations and disruptions.
11. The first major youth civic action
program was initiated in November 1964 when severe
flooding occurred in central Vietnam. As a
result of participation in the flood relief
effort, a group of student and youth leaders re-
presenting a variety of religious and political
forces requested US assistance in the development
and implementation of nation-wide youth civic
action programs. One of the programs which re-
sulted was the Summer Youth Program (SYP). In
1965 the SYP sent approximately 7,000 youths from
26 provinces and Saigon into the rural areas to
assist in small-scale socio-economic development
projects. In 1966, an improved program sent more
than 12,000 young people from 31 provinces and
Saigon into the rural areas and urban slums under
the direction of some 300 youth leaders.
12. One of the most significant programs to
evolve out of the 1965 SYP was the "Eight District
Development Program" in Saigon. In August 1965,
Premier Ky granted control of the city's poorest
district to a group of young professionals, military
officers, and youth leaders. Their work was so
successful in promoting self-help projects and self-
government that the program was expanded to include
Districts Six and Seven, with a combined population
of over 350,000 people.
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13. In order to ensure better coordination
and more emphasis on youth affairs, a two-level
mission committee on youth affairs has been
organized. The deputy ambassador will be the
chairman of the policy committee, and the present
interagency youth committee is being reorganized
into the working group of the policy committee.
In addition, a full-time youth affairs officer
will be assigned to the political section of the
US Embassy, and a youth officer position has been
authorized for each regional staff. This will
integrate youth affairs and the Vietnamese
equivalent of the 4-H projects--now to be ad-
ministered jointly by the Agriculture Division
and the Youth Affairs section--into the CORDS
structure.
14. According to US advisers, the Vietnamese
Ministry of Health (MOH) has neither the resources--
nor, perhaps, the desire--totally to mobilize the
health manpower and material assets of the country
and to develop a national health plan. Because of
the demands placed upon USAID's Public Health
Division (PHD) to supply personnel resources in
support of a multitude of crash programs, and be-
cause of the lack of USAID-MOH counterpart inter-
play, the PHD has,. likewise, been unable to
develop or assist in the development of a national
health plan for South Vietnam. Furthermore, the
expertise to develop such a plan in depth has, up
to this time, not been available to USAID or to the
MOH. One of the problems US.advisers are confronted
with is that the personnel in the upper echelons
of the MOH are not secure in their positions and
therefore the whole administrative structure of the
ministry is too unstable. Officials in the MOH are
reluctant to identify even current resources on
which to base future programs and requirements.
Crash medical programs--short range and high
impact--have been politically expedient.
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15. Based upon the differing cultural ap-
proaches to medicine, there has been a tendency by
some advisers to underrate the Vietnamese re-
sources. There does exist a large number of
trained Vietnamese, but they are not being equit-
ably utilized--especially those medical personnel
and facilities belonging to the military. Many
of the problems in the underutilization of manpower
can be attributed to the Vietnamese budget and pay
scale, but as the US fills the gaps, the Vietnamese
apparently feel less of a compulsion to expend
their full capabilities and meet their responsi-
bilities.
16. Some advisers feel that in a number of
cases the MOH may be more realistic about Viet-
namese conditions than its US counterparts. One
often mentioned example of this has been the
hospital rehabilitation and renovation program.
In this program US officials produced a plan to
give the Vietnamese what they should have to
practice medicine by Western standards, whereas
minimal renovations might have established some-
thing the Vietnamese could staff, finance, and
maintain themselves.
17. The PHD advisory effort has become aware
of these problems and is now working to consolidate
its efforts, as well as to program current re-
sources for the long term and to reduce the turn-
over of PHD personnel. USAID officials in Saigon
also believe the provision of qualified US super-
visory personnel to direct regional and national
level health affairs and to channel the enthusiasm
and aggressiveness of the US and free world medical
effort along policy lines agreed to by the GVN and
US has been marginal.
Electric Power in Saigon
18. The Vietnamese Government has decided to
establish an independent public power company to
operate the plants and facilities now run by the
Compagnie d'Eau et Electricite (CEE) when the CEE
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franchise expires on 31 December 1967. It is now
planned that the new company will be self-support-
ing and will absorb all the public electric
facilities connected with the Saigon generating
plant. In addition, plans are being made to double
electric power generation and distribution facili-
ties in the Saigon area.
19. USAID and the GVN secretary of state for
Public Works have concluded an agreement whereby
AID will lend $32 million and the GVN will allocate
one billion piasters over a four-year period for
the expansion of the electric power facilities in,
the Saigon area. The $32 million US grant will be
in the form of a 20-year loan which will be repaid
into the piaster counterpart fund under joint
US-GVN supervision. This agreement covers the in-
stallation of new equipment at Thu Duc designed to
add 132,000 kilowatts to the present generating
capacity of only 116,000 kilowatts. In addition,
18 miles of primary and 45 miles of secondary power
lines will be rebuilt and 60 miles of new overhead
and underground cables will be installed. To ensure
adequate supervision, the GVN has contracted for
a team of American utility management experts to
assist in establishing the new facilities and to
train Vietnamese personnel in the operation and
management of the new company.
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Retail prices in Saigon rose two
percent during the week ending 17 July
and reportedly were up another three
percent by 21 July. Free market cur-
rency and gold prices also rose. The
effectiveness of the joint US-GVN eco-
nomic committee has diminished as a
result of recent inactivity. Some ma-
jor changes were made in the Commercial
Import Program in order to increase
control over AID-financed imports.
Prices
1. Retail prices in Saigon rose two percent
during the week ending 17 July and reportedly were
up another three percent by 21 July. The USAID
index for the week of 17 July was only slightly be-
low the all-time high reached in mid-March during
the rice crisis and apparently reached a new high
on 21 July. The increase for the week of 17 July
was caused entirely by higher food prices, espe-
cially for fish, shrimp, and chicken. These prices
reportedly rose because of a slowdown in deliveries.
The further rise in the index for 21 July was led
by increases of seven to 11 percent in pork prices
caused by low deliveries of hogs because of Viet
Cong mining of Route 4 connecting Saigon with the
provinces to the southwest.
2. On 17 July rice prices were mixed com-
pared with the previous week as the price of high-
quality rice went up, the price of low- quality rice
declined, and the price of the medium-quality rice
used in the USAID index was unchanged. The embassy
attributed the decline for low-quality rice to the
marketing of US medium grain remilled rice in large
quantities at a slightly lower price. Nonfood
prices declined slightly as prices of charcoal and
firewood went down while all others were unchanged.
(A table of weekly retail prices in Saigon is in-
cluded in the Annex.)
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3. The index for US-financed imports rose
about four percent during the week ending 18 July
as prices of almost all items increased. Import
licensing was low during the first half of this
year, and businessmen reportedly have begun to in-
crease stocks in order to hedge against future
price increases. They apparently anticipate de-
clining arrivals of imports through early 1968.
Businessmen may also have been influenced by ru-
mors of new USAID importing procedures. (See
paragraphs 6-8.)
Currency and Gold
4. .Free market currency and gold prices rose
during the week ending 17 July. The price of dol-
lars rose one piaster to 155 piasters per dollar.
The rate for MPC (scrip) increased three piasters
to 113 piasters per dollar, still five piasters
below the official rate. The price of gold rose
for the second consecutive week, reaching 199 piasters
per dollar, or five piasters above the price on
10 July. (A graph on monthly and weekly currency
and gold prices is included in the Annex.)
Joint Economic Committee
5. Earlier hopes for significant achievements
by the joint US-GVN economic committee have dimmed
as a result of recent inactivity. The committee
held its fourth meeting on 21 July, and only one
topic, rice, stirred up discussion. According to
US officials, the working subcommittees have become
inactive and there is lack of direction and prepara-
tion at the joint committee level. No agenda was
circulated before the 21 July meeting, and there
has been little or no follow-up of previous dis-
cussions. US participants had approached Governor
Hanh of the Bank of Vietnam, who chairs the com-
mittee, before the meeting to express their dis-
satisfaction and make some suggestions for improve-
ment. They were thus encouraged at the meeting
when Hanh proposed the establishment of a full-time
joint secretariat to replace the present arrangement
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whereby each side has a few persons working on com-
mittee matters part-time. He also proposed that
experts be appointed to make studies for the sub-
committees rather than have all members of the sub-
committees study the same problem at the same time.
US officials feel that the joint committee is an
invaluable institution and intend to recommend ad-
ditional ways to improve its work.
Changes in Commercial Import Program
6. During the week ending 22 July some major
changes were made in the Commercial Import Program
(CIP) in order to increase control over AID-fin-
anced imports. Almost all import licenses eligible
for US financing that amount to $5,000 or more are
now subject to office of Small Business (OSB) pro-
cedures requiring competitive bidding. Formerly,
only licenses for more than $10,000 were subjected
to this procedure. All import licenses under
$5,000 will now be financed by the GVN with its
own foreign exchange reserves.
7. The expanded use of competitive bidding
from suppliers is designed to help prevent collu-
sion between suppliers and importers. Exceptions
to this requirement will be made in cases of emer-
gency procurement or goods available only from one
source. The elimination of US financing for trans-
actions under $5,000 will reduce the number of
licenses which must be reviewed by the CIP division
of USAID and thereby enable commodity analysts in
the division to concentrate on a more manageable
number of licenses. In FY 1967 USAID approved the
issuance of almost 10,000 import licenses, of which
more than 80 percent were for amounts $10,000 and
under and a sizable portion of these under $5,000.
8. In another major policy change, AID ter-
minated its financing of pharmaceuticals as of 15
July. In the future the GVN will assume the entire
burden of this financing, to which the US contri-
buted $9,750,000 in FY 1967.
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9. Although changes in methodology preclude
comparison of the latest provincial prices with
those reported earlier, as of 31 May prices in I
and II Corps were 24 percent above those in Saigon,
while prices in III and IV Corps were one and
seven percent, respectively, below those in Saigon.
In almost all provinces, as in Saigon, food prices
have risen much faster than nonfood prices.
10. The embassy has considerably broadened
the coverage of its reporting on price levels in
the provinces and adopted a uniform methodology
for all corps areas. The data for 31 May include
reports from all but four of Vietnam's 44 prov-
inces, whereas prior to this date they included
reports from only a selected sample of provinces.
The indexes for the four corps areas are now given
as unweighted averages of the indexes of the re-
porting provinces within each Corps.
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Weekly Retail Prices in Saigon a
13 June
3 Jan.
26 June
3 July
10 July
17 July
1966 /
1967
1967
1967
1967
1967
Index for All Items
173
225
267
280
278
282
Index for Food Items
190
242
293
314
312
318
c/
Of Which:
(In Piasters)
Rice-Soc Nau (100 kg.)
1,250
1,700
2,400
2,500
2,500
2,500
c/
Pork Bellies (1 kg.)
90
130
150
180
180
180
Fish-Ca Tre (1 kg.)
130
150
180
200
190
210
Nuoc Mam (jar)
70
90
150
150
150
150
Index for Nonfood Items
140
195
217
218
215
213
Cl
Of Which:
(In Piasters)
?
Firewood (cu. meter)
360
560
540
520
500
1+80
Cigarettes (pack)
10
14
14+
14
14
14
White Calico (meter)
27
33
33
33
32
32
Kerosene (liter)
7.8
10.5
10
10
10
10
a. Data are from USAID sources. For all indexes 1 January 1965 = 100-
b. Price level just prior to the 18 June devaluation,
co Preliminary.
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Saigon Free Market Gold and Currency Prices
500
400
PIASTERS PER
US DOLLAR
7 JULY
31 MAY
198
199
158
155
113
1966
1967
MAY JUN JUL
1967
GOLD: Basis gold leaf worth $35 per troy ounce
US $10 GREEN
US $10 MPC Military Payment Certificates (scrip).
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