ECONOMIC AND MILITARY RECONSTRUCTION IN NORTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82S00205R000100040005-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 13
• Document Creation Date: December 15, 2016
• Document Release Date: March 25, 2004
• Sequence Number: 5
• Publication Date: April 28, 1972
• Content Type: STUDY

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28 April 1972
Economic and Military Reconstruction
j: North Vietnam
This periodic report reviews economic developments
within North Vietnam, including the receipt of economic and
military aid and the construction of military facilities.
Developments are selected on the basis of their relevance
to North Vietnam's ability to continue supporting the war in
Indochina and to restore the economy, and thus to their
possible effect on the country's desire or need to negotiate
a settlement of the current conflict.
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The 1972 State Plan
1. Reports by Premier Pham Van Dong and Deputy Premier
Nguyen Con to the National Assembly in late March set forth
1972 goals for all main sectors of the economy, the first such
detail in plan announcements since 1965. The report's compre-
hensiveness may be a reflection of the regime's confidence
that the plan can be achieved.
2. Total industrial output is slated to increase by 17%,
or almost 15% above the 1965 peak. The target most likely
includes some carry-over from 1971 when industrial growth,
which was claimed to have been 14%, probably would have been
greater except for production stoppages of two to four weeks
caused by the floods. A large part of the planned growth in
output in 1972 is predicated on a 22% increase from the
central industrial branches where a considerable amount of
capacity was restored to service last ye'.r. Planned increases
of 13.7% in the state-run sector of local industry and 11% in
handicrafts probably are based largely on more intensive
utilization of existing capacity, which in 1971 far exceeded
output.
3. In other economic sectors the plan calls for a 20%
increase in transportation volume and 44% in capital construc-
tion. Here again these goals no doubt include carry-over from
last year "as both sectors came under intensive criticism for
shortcomings -- transportation for failure to make efficient
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use of the claimed ample equipment at its disposal, and con-
struction for a large number of unfinished projects. Agri-
culture's less ambitious target was put at 8.6% above the
"average" for 1970-71, a formula designed to conceal heavy
losses from last year's flood. At this rate of recovery
agricultural production will be about the same as in 1970 --
roughly 95% of the 1965 peak -- and substantial imports of
food undoubtedly will be required at least through mid-1973.
The 1972 plan also includes reference to the need for study
of long-range development, a subject that has been omitted
from published reports on state plans since 1969 when policy-
makers were thinking in terms of a postwar 5-year plan, 1971-75.
4. In the aggregate, North Vietnam's 1972 goals represent
an estimated GNP slightly in excess of the record year 1965.
Industrial targets probably can be fulfilled with relative
ease. Agriculture's success in the sprirg harvest will depend
on progress in recovering from flood damage; in the larger
autumn harvest, weather conditions will be a crucial variable.
Prospects for fulfilling the plan, however, could be degraded
by current US bombing. Past experience indicates that if the
impact of air strikes against transportation targets is severe,
ensuing disruption may dictate a cutback in logistics needs for
the economy, in order to concentrate on military priorities.
In this event, the effects would be felt indirectly by construc-
tion, industry, and agriculture, roughly in that sequence.
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Construction
5. Construction activity during March appeared to proceed
at about the same tempo as in the previous two months. At
Viet Tri, work continued on expansion of the chemical complex
and on reconstruction of three boilers in the powerplant.
Finishing touches were being made on the dam of the Thac Ba
hydroelectric powerplant, the second of three generators was
put into operation, and a new transmission line was being
built eastward from the site
Reconstruction and expansion
of the Bac Giang chemical fertilizer plant continued. A large
new building at the Hanoi Motor Vehicle and Reassembly Plant
was completed
At Haiphong Port, construction continued
on the new solid-fill quay and seven cranes were observed in
operation.
6. Port facilities in North Vietnam may be expanded even
more extensively. In early March, Minister of the Merchant
Fleet, Guzhenko, headed a Soviet delegation visiting the
Haiphong area and later stated that construction of a large
new seaport was planned for Hon Gai with Soviet assistance.
It is not clear whether he meant Hon Gai, or the nearby port
of Bai Chai, the eastern end of a dual pipeline being laid
toward Hanoi.
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Agriculture
7. Cultivation of secondary food crops and industrial
crops apparently has fallen behind in the upcoming spring
harvest, while main efforts are being concentrated on growing
rice. In late March Hanoi admitted that areas flooded last
year still had "many difficulties" to overcome and the floods
were credited with causing late planting and late harvest of
winter crops. This slippage in the schedule was further com-
pounded by unusually cold weather during February which delayed
the planting of rice. Peasants subsequently focused their
attention on rice cultivation and, as a result, cultivation
of both secondary food crops and industrial crops has suffered.
With the exception of jute, none of the industrial crop culti-
vation plans has been fulfilled and industrial crop acreage
reportedly is smaller than last year's. No comparative standing
of secondary foci crop acreage was given although the context
of discussion clearly implied that this sector of agriculture
was in the same league with industrial crops. As for rice,
the emphasis this spring is on high-yielding miracle strains
that are claimed to make up 70% of rice acreage. Thus far no
statements on rice acreage have been released but total area
probably will be smaller than in 1971.
Free World Relations
8. The North Vietnamese delegation that visited Japan
from 20 March to 18 April apparently failed to obtain a
commitment for long-term loans from Japan's Export-Import
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bank. Moreover, no formal agreement was reached on the
establishment of trade offices or government-to-government
contacts. Neither side ruled out the possibility of future
agreement on some of these issues but Japan appears reluctant
to embark on significant new initiatives while the military
conflict continues. The North Vietnamese were primarily
interested in trade matters, especially the prospects for
expansion of coal exports to Japan, and Japanese technical
assistance for Hanoi's economic development program.
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16. Forty-six merchant vessels (including four Soviet
tankers) called at North Vietnamese ports in March. Thirty-
seven flew Communist flags (18 Soviet, 10 Chinese, 6 North
Vietnamese, 2 Polish, and 1 Cuban), and the remaining 9 flew
British and Somalian flags. No other non-Communist flag ships
have called at North Vietnam since August 19701
17. Congestion among dry cargo ships was a problem at
Haiphong. The average number of foreign dry cargo ships in
port per day fell to 20 from 24 in February, still well above
the 13 vessels which Haiphong is currently able to discharge
at one time. There was, however, considerable fluctuation
and by the end of the month congestion was practically non-
existent. Tankers, which do not compete with dry cargo ships
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for berthing space but unload onto tank barges and small
North Vietnamese tankers, also faced unloading delays during
the month, in the wake of record petroleum deliveries in
January and February. Two small Soviet tankers that had
arrived during February remained in Haiphong for more than a
month, apparently acting as floating storage so that other
tankers could discharge their cargoes and depart. The average
layover time for departing tankers was 28 days, compared to a
normal stay of 10 days. A greater than usual number of
lightering craft onto which the tankers unload were undoubtedly
being utilized in the southward shuttle of petroleum down the
coast to Vinh.
Conclusions
18. Announcement of North Vietnam's 1972 state plan just
prior to the current military offensive underscores the relative
independence of Hanoi's economic development from its military
pursuits -- "building socialism" while simultaneously supporting
the "frontline." Fulfillment of the plan would represent an
economic recovery to the previous peak in 1965. Industry's
chances of reaching planned targets look promising, especially
in view of new industrial capacity restored to operation last
year. Agriculture is still suffering from lingering effects
of the 1971 floods and achievement of its modest goal will depend
on favorable weather conditions. The transportation plan could
be adversely affected by current US bombing. If the bombing in
this sector should produce severe disruption, scheduled con-
struction projects probably would be rapidly curtailed.
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19. Conditions in the domestic economy appeared reasonably
stable during March and early April. There was no discernible
change in construction progress or other economic activity to
suggest strains caused by preparation for the current military
offensive. Press reports admit that planting of secondary
foods and industrial crops is below last year's outstanding
performance in the spring harvest. In terms of value, however,
the concentration of efforts on rice cultivation will have a
more beneficial effect on total agricultural production than
shortfalls in output of secondary foods and industrial crops
might suggest.
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US Bombing
The recently stepped up bombing strikes over North
Vietnam have been focused primarily on military targets and
transportation-logistics facilities.
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and assessment of damage is preliminary. Several warehousing
areas at Haiphong Port sustained destruction or damage, and
the Gia Thuong warehouse area near Hanoi was approximately 40%
destroyed. Cargo operations at the port apparently were sus-
pended for a few days following the 17 April bombing. Attacks
against petroleum storage facilities in the vicinity of Hanoi
and Haiphong destroyed or damaged about 50% of bulk storage
capacity, which corresponds to 30% of bulk capacity at the 10
principal storage terminals, and about 13% of total storage
capacity (incluc:ing dispersed tanks) in the country. Damage
to rail sidings and the oil jetty at Haiphong may cause some
temporary interference with tanker discharging and with the
normal pattern of internal distribution. However, the des-
truction thus far probably will not seriously impair North
Vietnam's civil or military activities, at least for the next
several months. On 22 April the Regime announced that
evacuation of Hanoi had been started to relocate old people
and children outside'the city. Some small industries, probably
handicraft enterprises, also were included in the evacuation
order.
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Assessment of airstrikes in the southern part of
North Vietnam also is incomplete. Runways at several air-
fields including Bai Thuong and Quan Lang were cratered, and
additional damage may have been inflicted on nearby airfield
support facilities. The Vinh rail yard was extensively
damaged by strikes on 20 April, although the nearby petroleum
depot appears to have survived unscathed. Petroleum storage
at Ben Thuy Port was slightly damaged but the bunkering pier
at this facility was left intact.
Only three significant industrial installations are
known to have been struck so far. One section of the Haiphong
Cement Plant received moderate damage and the entire plant was
shutdown on 17 April. The Ben Thuy powerplant also received
damage, the full extent of which is unknown.
14evere damage to the Thanh Hoa powerplant
sufficient to keep this plant out of service for months.
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