THE SITUATION IN SOUTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00826A001400010020-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 23
• Document Creation Date: December 12, 2016
• Document Release Date: January 14, 2002
• Sequence Number: 20
• Publication Date: October 31, 1966
• Content Type: IR

crrDr f-,
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31 October 1966
No. 0397/66
Copy No. 14 9
INTELLIGENCE REPORT
THE SITUATION IN SOUTH VIETNAM
DIRECTORATE OF INTELLIGENCE
BACKGROUND USE ONLY
NO FOREIGN DISSEM
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BACKGROUND USE ONLY
GROUP 1
Excluded from automatic
downgrading and
declamification
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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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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
THE SITUATION IN SOUTH VIETNAM
(24 October - 30 October 1966)
Cabinet dispute nears resolution.; Con.-
stituen.t assembly elections; GVN leaders
reiterate stiff peace terms; Buddhist
Institute developments; GVN attitudes
and actions in. regard to political pris-
oners..
Hamlet, area, and population. control;
Viet Cong resistance to Revolutionary
Development; Security measures in. Saigon
harbor augmented; Viet Cong defectors
(Chieu Hoi); Assassination and abduction
of GVN personnel; Psychological operations.
Prices; Currency and gold; Port situa-
tion.; GVN foreign. exchange reserves;
Manpower allocation..
ANNEX: Weekly Retail Prices in Saigon. (table)
South Vietnam Economic Indicators (graphs)
-Monthly Free Market Gold and Currency Prices
-Weekly Free Market Gold and Currency Prices
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Premier Ky has apparently persuaded
four of his seven dissenting ministers to
remain in. the cabinet. This resolution
of the cabinet problem, plus the govern-
ment's plan to resolve the fate of various
political prisoners, should tend to relax
current political tensions for the time
being. Meanwhile, the constituent assembly
elected a reasonably well-balanced slate
of permanent officers who will probably
n.ot encourage a confrontation with the
govern.men.t.
Among other developments, Chief of
State Thieu and Premier Ky tended to inter-
pret the Manila communique in. terms of
their own. previous stiff prerequisites for
a peaceful settlement. Militant and moderate
Buddhists appeared one step closer to a for-
mal organizational split following their un-
successful special congress.
Cabinet Dispute Nears Resolution
1. After returning from Manila last week, Pre-
mier Ky told a US Embassy official that on 27 October
he had obtained an agreement to remain. in the gov-
ernmen.t from four of the seven. dissident cabinet min-
isters. The four who elected to remain are Deputy
Premier Nguyen. Luu Vien, Social Welfare Minister Lieng,
Transport Minister Thuan, and Labor Minister Hung. Of
the three who are leaving the cabinet, Education.
Minister Truong and Youth Minister Trieu will remain
for a few days until replacements can be found.
Economy Minister Than.h was to be officially replaced
on 28 October, with former economy minister Ton.
taking over at least temporarily.
2. Ky did not mention. any particular concessions
to the ministers for their agreement, and none have
yet been. confirmed by any of the ministers involved.
However, prior to the Manila Conference, there were
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some indications that Hung and Thuan were looking
for a way to withdraw their resignations. In addi-
tion, one of those who did leave the cabinet, Vo
Long Trieu, implied to a US official prior to Ky's
return that he and most of the other ministers were
no longer pressing for the removal of police chief
Loan..
3. This resolution of the pen.ding cabinet
resign.ation.s, if in fact it is final, should take
a good deal of heat out of the current political
atmosphere by splitting the.un.ity of the dissident
ministers. During his conversations with a US Em-
bassy officer on 27 October, Ky explicitly indicated
his desire to avoid any further irritation of south-
ern regionalism, thus suggesting that he may restrain
some of his northern supporters from acting rashly
in,.situationsin.volving southern interests. In. addi-
tion, the government's release of various political
prisoners, which is now underway, may undercut to
some extent the more ardent southern regionalists'
ability to gain antigovernment sympathy from other
political groups.
Constituent Assembly Elections
4. In. its election of permanent assembly offi-
cers on 26 October, the constituent assembly generally
chose a slate with regional, religious, and political
balance that will probably not lead to any efforts to
disrupt relations with the government. As was generally
expected, Phan. Khac Suu, a moderate southerner and
former chief of state, was elected chairman, witha
younger northern. Catholic selected as secretary general.
Two assistant chairmen, three assisten.t secretaries
general, and two treasurers were also elected, and
included one Hoa Hao, one Cao Dai, one Cambodian, two
northerners, and two Dai Viet Party members from cen-
tral Vietnam.
5. The northerners, Catholics, and Dai Viet
Party members exhibited considerable cohesion during
the balloting, and their candidates for secretary
general and several of the lesser posts were success-
ful. In. addition, their choice for chairman, a
Catholic Dai Viet, was a solid second behind the more
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prestigious southerner, Phan Khac Suu. No militant
southern regionalist or known hard-line opposition.ist
to the government was elected to any of the top as-
sembly posts.
6. The assembly subsequently adjourned for sev-
eral days to allow for the official formation of
blocs, as established in the assembly's procedural
rules. In. the future, deputies will be seated ac-
cording to bloc membership. The selection of members
for the assembly's permanent committees will probably
begin early this week, with most attention focusing
on the important constitution drafting committee.
GVN Leaders Reiterate Stiff Peace Terms
7. At a press conference in Saigon. on 26 October
following their return from Manila, govern.men.t leaders
tended to interpret the conference communique as an
endorsement Of their own previous stiff peace terms.
General Thieu emphasized that the Manila Conference
has led to greater unity among the conference partici-
pants regarding a common policy for restoring peace
in. Vietnam. Thieu then cited as preconditions for
peace the cessation of all aggression and terrorism,
and the withdrawal of all North Vietnamese units and
hard-core Viet Cong cadre, with suitable international
guarantees. Thieu stated that once these conditions
have been met, he would request the withdrawal of al-
lied troops within six months. In. response to ques-
tions,botli Ky and Thieu made it clear that they would
never recognize the National Liberation Front as an
entity separate from Hanoi, or be willing to include
it in. a coalition government. Thieu also declared
that future meetings along the lines of the Manila
Conference would be held in Saigon at ambassadorial
or ministerial levels, and also pledged increased gov-
ern.men.t emphasis on the "Open Arms," or Viet Cong de-
fector, program.
Buddhist Institute Developments
8. After the extraordinary Unified Buddhist
Association (UBA) congress ended in chaos on. 22 Octo-
ber, militant delegates later met separately and
elected their own chairman and council members for
the Buddhist Institute, which acts as the UBA's
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executive arm. The next day, moderate leader Tam
Chau declared the election fraudulent, withdrew his
own earlier resignation as Institute chairman., and
stated that he would retain. the post until the ex-
piration of his legal term of office in. December
1967. Thus :there are now two separate Institute
chairmen--moderate Tam Chau and militant Thien. Hoa--
each with their own. supporters and headquarters in.
Saigon.
9. These developments suggest that a formal
organizational split between militant and moderate
UBA Buddhists, who have been. un.able.to resolve their
differences since the closing days of the "struggle
movement" this summer, is now on.e step closer. Mod-
erate Tam Chau, whose supporters were in a minority
at the congress, reportedly is considering the forma-
tion. of a new national Buddhist religious organiza-
tion. with non-UBA Buddhist support. Chau, however,
is a northerner with northern refugee Buddhists as
his main. supporters, and he may find it difficult
to obtain. needed Buddhist support in the delta in.
the present context of north-south regional ten.sion.s.
In addition, one of the more prominent southern.
Buddhists lay leaders, Nai Tho Truyen., has been
estranged from the UBA in. the past because of personal
differences with Tam Chau.
GVN Attitudes and Actions in. Regard to Political
Prisoners
10. The issue of political prisoners, a thorny
problem for Vietnamese governments for the past sev-
eral years, appears to be headed towards partial
resolution.. The govern.men.t has decided that those
individuals who are still under detention. as a re-
sult of the three most significant political up-
heavals in. recent years (November 1960, November 1963,
and "struggle movement" of 1966) shall be tried, freed,
or given. amnesty or reductions in. sentences.
11. According to a semiofficial press release,
the govern.men.t plans to conclude as soon. as possible
those cases still pen.din.g before the courts. In.
all cases to be tried, as well as in cases already
adjudicated, amnesty or reductions in. sen.ten.ces will
be considered if it can. be shown. that the defendants
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had acted in. accordance with orders of their supe-
riors or within. the framework of their duties.
This principle appears to be designed for those
whose major fault was being on the losing side,
although it may be extended to those who have been.
accused or convicted of such tangible acts as
physical violence against other persons.
12. No significant participants in. the at-
tempted coup of November 1960 are known to be still
imprisoned,, since most of these political prisoners
were released following Diem's overthrow in 1963.
Several officials who were prominent in the Diem
government were released this weekend in a gesture
of good-will before the 1 November National Day
celebrations. Among those freed, however, was Tran
Kim Tuyen., the head of Diem's secret police and a
long-standing target of the Buddhists. Tuyen's
release was described as "provisional" and he still
faces prosecution. on a number of unspecified charges.
13. The legal processing of large numbers of
minor participants in the "struggle movement" is
also expected to begin soon. Approximately 450 non.-
commissioned officers and men are to be returned to
active military service, other military personnel
will be arraigned before military courts, and a
number of civilian cases will be turned over to the
National Police for disposition. There is a pos-
sibility that some of the less extreme Buddhist
"strugglers" will also be released on 1 November.
14. Such action by the government appears cal-
culated to console both Catholics and moderate Bud-
dhists and to generate some good will toward the
government among these elements. It may also dispel
charges of "police statism" leveled against the
government by its domestic critics, and undercut
the ability of aroused southern. regionalists to
garner antigovernment sympathy from other political
elements.
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II. REVOLUTIONARY DEVELOPMENT
A modest gain was registered in the net
a-umber of hamlets (35) secured by the gov-
arnme"t during the month of September; this
raises the total of hamlets in the country
under secure government control to 4,190 out
of a total of some 13,000 throughout the
country. The Communists continue to resist
the Revolutionary Development program. Ac-
cording to a recent report, they have estab-
lished a counter effort to discredit it in
Chuong Thien Province. The vital Saigon
harbor facility has had its security, screen
improved by,adciitional water patrol draft and
a shore patrol of one company of the Police
Field Force. The number of Viet Cong defec-
tors;_dropped during the week~of 20-26 October,
but the total of 1,561 for the month is already
nearly double that of September.
During August, 67 assassinations were
counted in South Vietnam, 35 of which were
either officials or other government employees;
further evidence that the Communists are con-
tinuing their effort to eliminate the GVN
presence from rural areas. Revolutionary
Development Cadres (RDC) in training at Vung
Tau are now receiving instruction in psycho-
logical operations techniques in order to
improve their performance in the field.
Hamlet, Area and Population Control
1. Moderate progress was made in the Revolutionary
Development Program during the month of September, with
a net total of 35 more hamlets secured. Although this is
a sharp drop from the net of 67 hamlets secured in August,
it is slightly above the monthly average of 31 hamlets
so far in 1966. Part of the drop in September may be
ascribed to the emphasis by government officials and
Revolutionary Development Cadres (RDC)` on getting the vote
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out for the 11 September elections, thus distracting
the officials from pacification tasks. A list of the
number of hamlets secured during September by dorps
follows:
I Corps: 12
II Corps: -14
III Corps: 15
IV Corps: 22
2. This raises the number of hamlets now under
GVN control to 4,190, out of a total of approximately
13,000 throughout the country. There was a nationwide
increase in secured population of 0.4 percent, bringing
the total to 8,351,400 out of a total estimated popu-
lace of 15,016,300. Progess in securing the population
was accomplished:in one autonomous city, Dalat,rand in
24 provinces. No change in the secured population
status occurred in 15 pr:ov:ince;s and four autonomous
cities. Some regression was noted in the vicinity of
Cam Ranh (dity, due largely to hamlets previously de-
clared "secure" failing to sustain all criteria for
a..secured area. It is probable that the change is
technical and 'not due to recent Viet Cong inroads.
3. There was a net increase throughout the
country in.hamlets and population undergoing securing
of 30 and 0.3 percent, respectively. Most of the net
increase in the number of hamlets undergoing securing
may be accounte&f9r from the Cam Ranh area where a
total of 27 hamlets were downgraded from secured to
undergoing securing.:
4:: In the "undergoing clearing" category, there
was a net countrywide increase of 149 hamlets.
Viet Cong Resistance to Revolutionary Development
5. Refugees from several hamlets in central Chuong
Thien Province have reported to members of a civil ac- '
tion team operating in that area that the Viet Cong have
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initiated a program to discredit Revolutionary Develop-
ment Cadres operating in that province. The refugees
say that this campaign is in retaliation for artillery
and air strikes which have been directed against a
Communist training area where 50 trainees were killed.
The students in this camp, according to the refugees,
were being instructed in ways to counter the:Revolu-
tionary Development effort in the province. This
report is one more of several which have been received
which indicate that the Viet Cong are seriously con-
cerned about the effectiveness of the Revolutionary
Development program as it is being carried out at the
present time.
Security Measures in Saigon Harbor Augmented
6. Early this month, security forces protecting
the vital Saigon harbor facility were augmented by
additional river patrol craft and shore patrols,,.- Some
21 water.draft, including seven larger Patrol boats
supported by smaller assault-type craft, will establish
checkpoints at several critical locations on the Saigon
River. Four;ath6r _ ~?smaII-..-eraf,t:` '*ill".Patr61-4,_ass3:gr ed
beats on the river and adjacent waterways. In all, a
total of 98 men will be added to the river patrol:.'force,
raising its total strength to 253.
7. On the land, a Police Field Force Company will
patrol a troublesome squatter area on the Gia Dinh Prov-
ince side of the river, while the Harbor Police will
continue to watch over the dock areas on the Saigon side.
8.' The augmentation of waterway and shore patrols
in the Saigon harbor area should make it more difficult
for dockside looters to operate and should also provide
a tighter security Screen to thwart Viet Cong sabotage
efforts against ship and docking facilities.
Viet Cong Defectors (Chieu Hoi)
9. After three successive weeks of gains, the
number of Viet Cong defectors for the week of 20-26 Oc-
tober dropped to 392, a decrease of 85 from the previous
week's total of 477. A breakdown of returnees by corps
areas follows:
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I Corps:
33
II Corps:
194
III Corps:
38
IV Corps:
127
T97 (222 military)
10. Although the number of defectors for this
week was down", it is still the second highest for the
month; last week's total was the highest. So far this
month there have been 1,561 Chieu Hoi returnees, nearly
double September's total of 885. Since the beginning
of the year, 14,698 defectors have come over to the GVN.
Assassination and Abduction of GVN Personnel
11. In an effort to maintain their grip on and
extend their influence over the people and countryside,
the Viet Cong are continuing to use the twin weapons
of terror: assassination and abduction. A recently
received report from the embassy: in Saigon dealing
with assassination and abduction during Augustrpoints
up the fact that GVN officials and employees, whose
primary mission is bringing central government security
and services to the people of the rural areas, continue
to be prime targets of this "red terror," which took
a total of 122 lives during the period.
12. Sixty-seven of the deaths were assassinations.
Twenty were village or hamlet officials of.the South
Vietnamese Government, ten in each category. There were
15 other government employees assassinated, including
eight civil servants,.and three National Police.
13. Fifty-five of the killings were the result
of "general incidents" wherein hit-and-runr.type ter-
rorist acts by the Viet Cong resulted in civilian.
deaths. Among these were several civil servants, a Na-
tional Policeman, and 12 Revolutionary Development
Cadres (RDCs).
14. The Communists kidnaped 303 persons during
August, 20 of whom wdre government officials from
either the province or hamlet level. Thirteen other
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government employees were abducted, including two
policemen and 11 RDCs. The rest of those kidnaped
were private.citizens, several of whom were defined
in the report as "prominent citizens" or 'Inotables-.;11
While the number of private citizens kidnaped was
high, there is no accurate way of telling how many
of these persons were subsequently released by the
Viet Cong. Many of those kidnaped lived in remote
areas (Darlac Province 52, Quang Duc'.Province.119,
GoCong Province 60), and may have been pressed into
service as porters for the Viet Cong or propagandized
and later released. Insofar as GVN officials are con-
cerned, it is likely that they will either be killed
or held for extended periods of time; they will be
released only after they have been thoroughly "re-
indoctrinated."
15. The assassination of government officials
for the first six months of this year is running at
less than one half the rate for the same period in 1965,
(420 and 991, respectively). Allied military success
in the past year may have been partially responsible
for the drop off; even so, however, it is clear that
the Viet Cong are continuing their efforts to eliminate
or thoroughly intimidate government servants in the
rural areas. Comparative figures on abductions are
not available.
Psychological Operations
16. Under the guidance of the JUSPO representa-
tive at the Vung Tau Training Center, a course of
instruction in the fundamentals of information work
and psychological operations techniques is now being
given to Revolutionary Development Cadre trainees.
This training, instituted only last month, is stll
in its formative stages and the JUSPO representative
is anxious that it be on a par with other training
received by the trainees. Training in information
and psyops techniques should improve the RDCs' ability
to more effectively impart their programs to the people
with whom they will be working in the hamlets.
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III. ECONOMIC SITUATION
Retail prices in Saigon, which had de-
clined for five consecutive weeks, rose five
percent during the week ending 24 October
largely because of higher food prices. The
prices of two varieties of rice are now at
their previous 1966 highs, while the price of
the cheapest variety of rice reached a new
1966 peak. Prices of imported commodities
also rose, reportedly because of anticipation
of future shortages of imported goods and of
even higher prices. Free market gold and
currency rates, on the other hand, rose only
slightly in the week ending 24 October despite
public knowledge of the cabinet crisis.
It has become clear that the positions
of the US and the GVN on the use of the grow-
ing volume of GVN foreign exchange reserves
are still very far apart. The US Embassy
feels that there is no chance for agreement
on this issue unless pressure is brought on
Premier Ky. Fourteen provinces have been in-
structed by the GVN to establish provincial
employment committees to control the hiring
of Vietnamese by US and allied military agen(-'.
ties and civilian contractors. The US Embassy
questions whether a system for manpower allo-
cation is necessary and, if so, whether GVN
employment committees are the most efficient
way to achieve the allocation.
1. Sti.gon retail prices, which had declined
steadily for five consecutive weeks, rose five percent
during the week ending 24 October. Higher food prices
accounted for most of this :i crea.se;: ; the food index
was up six percent whereas the nonfood index showed
a gain of only one percent. Rice pricesc:continued to
rise because of hoarding in anticipation of future
supply shortages resulting from the recent flooding of
the Mekong. The prices of the most expensive variety
of rice and the type of rice used by the working class
are now at their previous 1966 highs, while the price
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of the cheapest variety of rice reached a new 1966
peak. Vegetables and most types of meat and fish also
rose during the week ending 24 October, although the
reasons for these increases are not yet clear. The
price of pork, which on 17 October reached its lowest
level since 6 June, returned to its early October
level of 85 piasters per kilogram (see paragraph 4).
(A table of weekly retail prices in Saigon is included
in the Annex.)
2. Prices of imported commodities rose for the
second week. According to the USAID price index for
selected US-financed imports, prices of imported com-
modities on 25 October were about four percent above
the previous week. The slightly higher prices for
imported commodities noted during the week ending
18 October reportedly resulted from increased demands
for materials--especially iron and steel products--
needed for reconstruction in the delta. USAID has
advanced a number of other reasons, however, to account
for the most recent price increases. Among these are
the news of a low import license application rate, in-
dicating a possible future shortage of imports, and an
expectation of even higher prices as a result of former
minister of economy Thanh's statement that there will
be a 30-percent increase in next year's budget.
Currency and Gold
3. In spite of public knowledge of the cabinet
crisis, free market rates for currency and gold on 17 Oc-
tober were well below those of the previous week and
rose only about two piasters each by 24 October. Local
sources suggested that increased supplies of gold and
currency might have come on the market. On. 24 October
the price of gold was 242 piasters per dollar--the
official;:_rate--or about two piasters below the rate
prevailing at the beginning of October. The price of
dollars, which had fallen to 164 piasters per dollar
on 17 October, was 166 piasters on. 24 October. The
rate for MPC (scrip) continues to remain, below the
official rate of 118 piasters; on 24 October the rate
was 115. (Graphics on monthly and weekly free market
gold and currency prices are included in the Annex.)
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Pork Situation
4. On 24 October the price of pork in Saigon was
85 piasters per kilogram compared with 70 piasters per
kilogram on 17 October--the lowest price since 6 June.
This low price resulted from official sales of frozen
pork and an abundance of live hogs arriving from the
flooded areas of the Mekong delta. The ship that carried
the 1,500 tons of frozen pork to Saigon has now been
completely offloaded and sales of frozen pork continued
through 20 October. About 550 tons of frozen pork remain
in cold storage in Saigon. The increase in the price
of pork on 24 October reportedly resulted from the fact
that this remaining quantity of frozen pork was being
held off the market in view of the large quantity of
live hogs now arriving in Saigon. Presumably, the price
of pork will decline somewhat as these hogs are made
ready for sale.
GVN Foreign Exchange Reserves
5. During the recent US.-GVN economic discussions
in Washington, it appeared that the two countries had come
fairly close to an agreement on the use of the growing
volume of GVN foreign dxchange reserves. It is now
clear that the positions of the two sides on this issue
are still very far apart. Former minister of economy
Thanh recently told US officials in Saigon that he had
suggested to Premier Ky the establishment of a GVN postwar
development fund. All GVN foreign exchange earnings
beyond a certain level would not be counted as reserves,
but rather would be deposited in this special fund to
which the US would make matching contributions.either now
or later. Thanh reportedly suggested an exchange reserve
level of $300 million to Ky, whereas the US feels that
GVN reserves should be held to $200 million. Although
Thanh reported that Ky seemed attracted to this idea,
US officials informed Thanh that such a scheme would not
solve the foreign exchange problem.
6. Further indications of basic disagreement on GVN
foreign exchange reserves emerged from the discussions
held by USAID Director MacDonald with Governor Hanh of the
National Bank of Vietnam and with Economic and Financial
Adviser Ton just prior to the Manila conference. The
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director of USAID explained to these officials that
the US envisaged GVN participation in financing im-
ports under the commercial import program (CIP) to
the extent that GVN reserves exceeded $200 million.
As GVN financing reduced requirements for CIP funds,
the US would use any savings under $350 million--
the amount of aid allocated by the US for the CIP--
to increase the project program above the $130 mil-
lion level now planned.
7. Hanh pointed out that although GVN reserves
currently total $263 million, there are claims of
$173 million against these reserves. According to
Hanh, therefore, the GVN has free reserves of only
$90 million, which is the amount that the US and
GVN should be discussing. The US insisted that dis-
cussions should center on total foreign exchange
holdings. Hanh then dropped his free reserve argu-
ment and asked if the exchange reserve problem could
be solved by GVN purchases of two-year bonds. Again,
the US held firm, stating that although two-year
bonds would be a good way to hold GVN reserves, bond
purchases would not solve the problem of the increase
in GVN reserves.
8. The USAID director made it very clear to Hanh
that the US and GVN would simply have to make a very
serious effort to solve this problem in order to
demonstrate that both countries are making a maximum
contribution to the war effort. It was pointed out
to Hanh that the US public would not understand why
the US should be making a maximum contribution in
lives and money while the GVN was building up its
bank account. Vietnamese officials said they under-
stood the US position, but that they, too, had a
political problem. The discussions concluded with
only a promise that this matter would be brought to
the attention of Premier Ky before his departure for
Manila. The US Embassy feels that there is no chance
for an agreement unless pressure is brought on Ky be-
cause no one of lower rank will risk being charged
with selling out to the US.
Manpower Allocation
9. The GVN recently confirmed that 14 provinces,
including the Saigon - Gia Dinh area, have been in-
structed to establish provincial employment committees
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to control the hiring of Vietnamese by US and allied
military agencies and civilian contractors. This
development, which was not discussed in advance with
US authorities, was discovered when the Bien Hoa
Province chief announced the establishment of the
"Bien Hoa Employment Committee" on 5 October, Ac-
cording to the rules of this committee, civilian
contractors and military units are to refrain from
employing Vietnamese personnel, directly. The com-
mittee, which is under the control of the province
chief, is to allocate personnel as it sees fit.
Ostensibly, the committee was established to end
competition for scarce workers and to ensure in the
process that US manpower needs do not deprive the
Ministry of Revolutionary Development of recruits
for its projects.
. 10. At a meeting with officials of the GVN Min-
istry of Labor on. 22 October, representatives of US
employers protested that this new system of hiring
would hamper their operations, which are already
burdened by urity clearances and other red
tape. One official declared that the GVN
really is being mo ivated by the need to provide
local politicians with an additional source of graft.
GVN officials insisted that the new system would ex-
pedite security clearances, reduce graft, and provide
job priorities for veterans, refugees, and relatives
of deceased soldiers. In a private conversation with
Nits or attache, however,
who had not been presen at he meeting,
stated that giving employment committees a monopoly
on hiring would only increase graft to the detriment
of the workers and increase the bureaucracy to the
detriment of employers. This issue is to be discussed
again with GVN officials,
11. The US Embassy feels that the basic question
is whether a system for manpower allocation is neces-
sary and, if so, whether GVN employment committees are
the most efficient way to achieve the allocation. At
a minimum, the system of GVN provincial employment
committees would present the following problems: a)
the committees' hiring restrictions do not apply to
private employers, who also are keen competitors for
labor; b) the committees would examine the manpower
problem only from a provincial viewpoint, whereas the
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problem is a national one that may require alloca-
tion of manpower among provinces; c) the provincial
offices of the Ministry of Labor are not capable of
handling the work for which they would be respon-
sible.
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