DEVELOPMENTS IN INDOCHINA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001000090031-4
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 13
• Document Creation Date: December 21, 2016
• Document Release Date: November 3, 2008
• Sequence Number: 31
• Publication Date: February 14, 1973
• Content Type: REPORT

 Approved For Release 2008/11/03: CIA-RDP85T00875R001000090031-4
Top Secret
DIRECTORATE OF
INTELLIGENCE
Developments in Indochina
Army review completed
State Dept. review completed
Top Secret
1)`i
14 February 1973
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25X1
DEVELOPMENTS IN INDOCHINA
The government has ordered its
troops to retake Sa Huynh at "all costs."
The Communists are trying to move people
into areas under their control. US mili-
tary authorities are worried about the
military situation along the Cambodian
border. The government is studying ways
to permit the Viet Cong to participate
in elections. Saigon prices are still
high.
Page
1
The North Vi` biamese are resisting
government efforts to take more ter-
ritory'in the Paksong area.
Fighting continues east and west
of the Mekong. Sihanouk says the war
will continue because the US will not
talk to him. Price reforms are about
to be implemented in Phnom Penh.
14 February 1973
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THAILAND
NO111N
IETNAM
QUANC
DUC
rl~uoi:
i nNo
Gulf of
Th;liland
MILES
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SOUTH VIETNAM
Government forces in. southern Quang Ngai Prov-
ince reportedly have been o r d e r e d the
Sa Huynh area "at all costs."
a second ranger group has been moved
into the province as reinforcement. Some elements
of the government's task force have been airlifted
onto high ground west of the village, but the bulk
of the relief force remains about five miles north
of Sa Huynh along Route 1.
Although sporadic Communist shellings and light
ground attacks continue throughout the northern
provinces, the army's chief of staff for the region
believes the situation has stabilized and that no
major new initiative by either side is likely. Some
fighting is reported in the central provinces, with
most of the action occurring in coastal Phu Yen
Province.
25X1
25X1
There are reports that the Communists in several
provinces near Saigon are trying to construct "in-
stant hamlets" and are encouraging people to move 25X1
COSVN has ordered Viet Cong military 2bX1
units and cadre in Tay Ninh Province to carry out a
reconstruction program to resettle areas under their
control. The embassy reports that the Communists in
Binh Tuy and Phuoc Tuy provinces are making similar
efforts to bring about a shift of population to their
areas. The government is moving to counter such
efforts and apparently will resort to air strikes, if
In the delta, US military authorities report
that the situation along the border between Kien
Phong Province and Cambodia is becoming "serious."
South Vietnamese forces in the area have been trying,
so far unsuccessfully, to dislodge elements of a North
14 February 1973
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The Economy
Commodity prices in Saigon have not fallen as
much as expected following the Tet holidays, pri-
marily because shipments of perishable foodstuffs
have not returned to normal levels. Despite a drop
of about 7 percent, Saigon consumer prices on 12
February were still 6 percent above the level pre-
vailing before the cease-fire. All roads into the
city are again open, but truckers apparently are
either fearful of using the main roads or have been
unable to get to them because of interdiction of
secondary roads. Even if supplies of foodstuffs re-
gain normal levels, however, there will still be some
permanent increase in the price level because the
government recently raised official prices for sugar
and petroleum products.
Commodity supply problems in other areas of the
country also appear to have eased somewhat during the
past week as :core roads were reopened for commercial
traffic. Price developments were similar to those
reported from Saigon. Kontum City is still cut off,
but food supplies are being brought in by airlift.
There are no other indications of any serious
economic disruption. Currency and gold price move-
ments--the best spot indicator of speculatorslatti-
tudes--did not reflect any changes in security condi-
tions. Saigon black market currency rates moved down
slightly between 6 and 12 February, while the price
of gold increased steadily in response to the move-
ment of world prices just prior to the devaluation
14 February 1973
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LAOS
tan Bac
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.Sedone ~~
~haleng , `i
Palson_Incteaged fightui
Sci Hene - , ZManng ildvUI c" cheponI
p,.' halane
avannikhet
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North Vietnamese troops on the Bolovens Plateau
stopped government efforts to move onto key hilltops
just north and east of Paksong on 12 February.
The Communist
units appear to be suffering significant casualties,
although they have built tunnels and deep trenches to
survive intense air strikes. In the central pan-
handle, irregular troops northwest of Muong Phalane
began on 13 February to move back toward the Se
Sansoy River, which runs through the town.
14 February 1973
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CAMBODIA
Fighting is continuing east of the Mekong River
near Neak Luong and Banam. Another attempt by four
government battalions to retake Banam has been repulsed
by the Khmer insurgents just south of that village.
Cambodian forces operating in the Banam - Neak Luong
sector are beginning to run low on ammunition, and
their casualties are mounting. More than 100 wounded
government troops were evacuated by air on 13 February.
On the opposite side of the Mekong, government
units trying to clear a section of Route 1 some 15
miles southeast of Phnom Penh are still meeting stiff
resistance. The military high command in the capital
has indicated that it will use the Cambodian Air Force
for close air support in the Route 1 area, reserving
requests for US ai- support for other, less populated
areas. 25X1
Sihanouk Blames the US
A French press report from Peking states that
Sihanouk sent a telegram to an unspecified American
newspaper on 13 February, asserting that the war in
Cambodia will continue as a result of the US Govern-
ment's failure to meat with him or to hold talks with
his "government." Sihanouk has made no further men-
tion of his recent proposal that insurgent military
forces reciprocate Phnom Penh's cessation of offen-
sive operations--a retreat obviously dictated by
the failure of the Khmer insurgents to heed his ad-
vice.
Economic Reforms
Phnom Penh apparently is about to enact several
long-c4-rdue price reforms recently recommended by
the International Monetary Fund (IMF). Despite con-
tinued government reluctance to incur the political
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risks of increasing prices on sensitive items, new
POL prices are due to be announced this week, followed
by higher electricity rates and rice prices. The de-
tails of the new price arrangements are not yet fully
known, but the POL price action--at least--does not
go as far as the IMF recommendation that controlled
prices be abandoned in favor of the free market. The
new price schedule is keyed to an exchange rate of 200
riels to the dollar and will continue to require a
large government subsidy as the exchange rate inevitably
increases.
The IMF also informed the government that firm
budgetary discipline was necessary to restore financial
stability and hold inflation to acceptable levels during
1973. The latest budget estimate by the Ministry of
Finance for 1973 is 35.7 billion riels--an increase
of some 16 percent over last year--and may go considerably
higher depending on the level of price subsidies and the
government's success at keeping a lid on expenditures.
Government expenditures last year, for example, were 6.6
billion riels greater than driginal estimates. Other
cost-cutting recommendations by the IMF included a limit
of 253,000 paid military personnel, a moratorium until
July on increases in government salaries, and suspension
of civilian hiring. It is not known what action, if any,
will be taken on these measures, but past attempts at
reducing military personnel expenditures have been un-
successful and recent labor unrest in Phnom Penh may
militate against a wage freeze. 25X1
14 February 1973
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