THE SITUATION IN VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00826A001100010039-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 20, 2016
• Document Release Date: December 20, 2006
• Sequence Number: 39
• Publication Date: August 22, 1966
• Content Type: IR

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INTFI.LIGENCE REPORT
State Dept. review
completed
No. 0387/66
Copy No.
DI R LC"FOR ATE OF INTELLIGENCE
USAID review completed
1 Ul 0
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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
(15 August - 21 August 1966)
Montagnard
affairs; Buddhist Institute developments;
Election notes; Anti-election activity;
Political prisoners.
Cadres; Local administrative developments;
Land distribution; Latest Viet Cong re-
action to revolutionary development; Viet
Cong defectors (Chieu Hoi).
Prices; Currency and gold; PAC report on
the economy; Labor developments; Rubber
production and exports.
ANNEX: South Vietnam Economic Indicators (graphs):
-Free Market Gold and Currency Prices
(Monthly and Weekly)
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y Sepone?
VIETNAM
?Quang Trl
t.' 4 Hue
Saravane
Kontum?
.Ban Me
Thuot
? Vinh Long
? Can Tho
T uy Hoa
CURRENT SITUATION
5c; 'ti ROM~ies
25 5(' '5 I'10 K.Inmete,5
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I. POLITICAL SITUATION
The threat o
renewed antigovernment activity among the
montagnards has been averted by Premier
Ky's acceptance of demands for greater
tribal autonomy. The Buddhist Institute,
in a 16 August communique, stopped short
of calling for an all out Buddhist boycott
of the September elections, preferring to
"remind" the faithful of their "right not
to vote." The government continues its ef-
fort to heighten voter interest in the con-
stitutional assembly elections, including a
dramatic move to suspend press censorship
during the campaign period--26 August to 10
September. Father Hoang Quynh has aligned
his non-Communist "Front of All Religions"
with the latest Buddhist Institute position
on elections, i.e., "non-cooperation" just
short of a boycott.
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Montagnard Affairs
3. On 18 August, Premier Ky told Ambassador
Lodge that he had just signed the agreement meeting
all four of the demands for greater montagnard
autonomy which had been put forward by the dissident
FULRO organization. Although there is still report-
edly some FULRO skepticism over GVN good faith, Ky's
action has apparently staved off a threatened renewal
of FULRO-inspired antigovernment activity--including
a threatened boycott of the elections--in the high-
lands. In addition, the action is leading to further
discussions for a phased rallying of FULRO-controlled
troops to the GVN. Ky also stated that he had given
FULRO until 30 August to nominate candidates for
montagnard seats in the National Constitutional As-
sembly, extending the 25 August deadline as requested
by FULRO's negotiators.
Buddhist Institute Developments
4. The Buddhist Institute, on 16 August, issued
another communique which came very close to being a
formal call to all Buddhists to boycott the constitu-
tional assembly elections, now just three weeks away.
The communique was issued after a 14 August meeting
presided over by Thich Tinh Khiet, the supreme monk
from Hue. It reiterated the Institute's position that
the present government is not competent to administer
the forthcoming election and called for the formation
of a "transitional" government to assume this task.
Without actually calling for a formal boycott of the
election by the faithful, the communique--signed by
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the Institute's acting chairman, Thich Thien Hoa--
reminded all Buddhists of their "right not to vote"
and repeated that it was Institute policy "not to
cooperate" in elections organized by the present
government. It is apparent that the prestige of
the aged Thich Thinh Khiet is being exploited by the
militant wing of the Institute. However, even the
militants have not yet dared to go so far as to break
off the dialogue with the government by an unqualified
call for a Buddhist boycott of the elections.
5. A visiting Japanese Buddhist leader has in-
formed the US Embassy in Saigon that Thich Tri Quang
has declined an invitation to visit Japan. The
ostensible reason was that Tri Quang was too weakened
by his protest fast which has been in progress since
8 June. However, Quang probably fears that, if he
leaves the country, he will not be able to return.
Reports about Tri Quang's physical condition continue
6. Preliminary analysis by the embassy of the
542 Vietnamese and Khmer candidates for the national
constitutional assembly indicates that 55 active mili-
tary candidates--mainly officers--will be contesting
for seats. Because of provisions of the election law
which are designed to prevent any single group or
faction from walking off with the election, it appears
that this number of military candidates will not be
enough to become a blocking element in the assembly,
as feared by some observers. Only 17 of the military
candidates are running as individuals in single-seat
districts, while the balance are on lists of candidates
as required in multiple-seat districts. In several in-
stances, entire lists are composed of military men,
whereas only the head of a list is likely to stand any
chance of winning in many multiple-seat constituencies.
7. The GVN continues to mount an intensive in-
formational program in a determined effort to get the
vote out in the September election. There are signs
that it is beginning to stir up voter interest in the
urban areas of the country, particularly in Saigon
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where interest in politics tends to run high. There
are, however, scattered reports which point to con-
tinued apathy of the voters in the delta provinces.
8. One of the steps recently taken by the gov-
ernment to heighten voter interest was a decision to
relax press censorship during the election campaign.
The order is to go into effect on 26 August, the open-
ing day of the election campaign. The suspension of
press censorship will not, government officials warn,
preclude legal action under existing laws which for-
bid the publication of inflammatory articles such as
those creating dissension among political parties or
ethnic groups.
Anti-Election Activity
9. Reports continue to come in about anti-elec-
tion activity being conducted by dissident Buddhist
elements as well as by the Viet Cong. Many reports
deal with Viet Cong plans and intentions, rather than
activities now under way. However, there have al-
ready been some reports of Viet Cong threats against
candidates, as well as of voter intimidation and anti-
election propaganda activity.
10. Premier Ky, in a conversation with Ambassador
Lodge on 18 August, expressed some alarm that the Viet
Cong would increase the tempo of terrorist activity in
Saigon in order to disrupt the election. He predicted
that terrorist activity might be directed at high-
ranking Vietnamese and Americans, and spoke of the
possibility of attacks by 100- to 200-man groups to
accomplish these ends. In an effort to counter ex-
pected Communist moves, Ky said that he had ordered a
more intensive security effort in Saigon, on a precinct
by precinct basis, to ferret out possible terrorists.
11. Father Hoang Quynh, leader of the non-Commu-
nist "Front of All Religions," has told the press that
his organization is taking a position on the elections
similar to that of the 16 August Buddhist Institute
communique (see Paragraph 4, above). Challenging the
government to contest his organization's stand, Quynh
was quoted as saying, "We will not go to the polls,
but if we do not prevent others from voting, if we do
not organize public demonstrations, how could the
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government outlaw us?" There is no indication that
the government has been considering "outlawing"
Father Quynh's front, although there have been re-
cent rumors in the Saigon press that sanctions might
be taken against groups of individuals opposing the
elections. Quynh, according to the press, has de-
cided to accept a reported offer by Premier Ky to
debate with anyone who opposes the elections.
12. Ky, commenting on prospects for the release
of political prisoners, recently indicated to Ambas-
sador Lodge that the problem was "complex" and was
not amenable to a quick, easy solution. The political
prisoners in question include those connected with
the former Diem regime as well as those involved in
the more recent Buddhist antigovernment "struggle"
activity. Ky remarked that he had been considering
the possibility of turning the whole matter over to
the Peoples Army Council (the civilian and military
advisory body to the government) or to a special
tribunal. It is clear that Ky has not resolved the
question of how to handle this extremely delicate and
potentially explosive problem, and he is probably not
ready to come to a decision in the near future.
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SEGREI,
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5-
SOUTH VIETNAM
\ NORTN
vIETNAM
?( DEMARCATION LINE
---~' Ns
Sepone (~
(Treponell ' 0
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REVOLUTIONARY DEVELOPMENT CADRE
As of 25 June 1966
lei Provisional Revolutionary Development Cadre Groups
iota) Personnel: 18,753
59 Man Groups: 211
40 Man Groups: 156
s Recently Trained Revolutionary Development Cadre Groups
Total Personnel: 4,518
59 Mon Groups: 76
Montagnard Peeples Action Teams (M;PAT's)
Total Personnel: 2,990
65 Man Teams: 46
National priority area
Revolutionary Development Cadre 23,271
Montagnard Peoples Action Teams 2,990
Total Cadre 26,261
THAILAND
Phuoc
nh
h ti..V AnS r iOC
Takeo
one
Pau uoec
Moe' sue.,
'6; 'i 'go
CORPS
`TAMS STRENGTH
2z 1,141,
2 -130,
1 CORPS
TEAMS STRENGT t
? 119 6280 '
0 25 50 75 100 Miles
0 25 50 75 100 Kilornoters
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Khanh
dung
W CORPS
TEAMS STRENGTH
? 84 5961
r 28 1511
0 0
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II. REVOLUTIONARY DEVELOPMENT
A map showing the distribution of
pacification cadre teams in the provinces
is presented in this week's report. Premier
Ky has signed decrees simplifying the dis-
tribution of land to the peasants of Tay
Dinh Province. Although total Viet Cong in-
cidents have lessened lately, the Communists
continued to target against pacification
projects, the latest incident being the raz-
ing of two new-life refugee hamlets only
three miles from the capital of one of the
northern coastal provinces. The Communist
defector tally is still running at a level
lower than expected. Only 254 Viet Cong
rallied to the GVN during the last reporting
week.
1. The accompanying map depicts the approximate
locations of the pacification cadre groups or teams de-
ployed in the provinces as of 25 June. Since only one
class of 4,513 personnel has been graduated from the
reorganized Vung Tau national cadre center, most of the
pacification work, which is the mission of the cadres,
is still being done by units improvised from existing
Peoples Action Teams (PATs) or by technical and rural
personnel recruited under various other programs. Al-
though some problems have arisen with the new teams, it
is probably still too early to make any definitive
judgment of their future worth.
Local Administration Developments
2. During a recent government-sponsored seminar,
the response of provincial administrative officials to
a GVN proposal to reestablish village autonomy was
largely favorable. Since then, steps have apparently
been taken to begin the training of selected village
officials. The government's plan is to raise the level
of expertise of what has been traditionally one of its
weakest links with the rural populace. Six-man civil
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affairs teams within the 59-man revolutionary develop-
ment cadre groups will play an integral part in the
training of village and hamlet officials so that the
latter can eventually play a more effective role in
bridging the gap between the national government and
the peasantry. On the map at the beginning of this
section, each group represented by a red dot has a six-
man civil affairs team attached to it.
3. Premier Ky, during a conversation with
Ambassador Lodge on 18 August, disclosed that he had
recently signed decrees which would simplify the dis-
tribution of land to the peasantry in Tay Ninh Prov-
ince. Although the land involved is located in areas
deemed to be secure, Ky said that he is in favor of
extending the program into less secure sectors in the
future because of the psychological effect. This en-
couraging action is the second instance of progress
made recently in implementing joint US and GVN studies
on land reform. The first project is being initiated
in the An Giang Province national priority area, where
a 6,000-hectare plot of land has been provided for the
building of a completely self-contained community for
refugees and villagers already residing there.
Latest Viet Cong Reaction to Revolutionary Development
4. The latest acts of violence against a success-
ful GVN pacification project underscores the increasing
Communist concern over and determination to disrupt
allied programs designed to satisfy the basic aspira-
tions of civilians who are dislocated as a result of the
fighting. On 16 August, the Viet Cong burned to the
ground two recently completed new-life hamlets, totaling
120 homes, about three miles from the capital of Quang
Ngai Province. The inhabitants were first ordered by
the Viet Cong to evacuate the hamlets, leaving their
food and belongings behind. USAID is providing emergency
supplies and shelter for the several hundred Catholic
refugees who were left homeless.
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Viet Cong Defectors (Chieu Hoi)
5. During the week ending 12 August, 254 Vietnam-
ese Communists rallied to the GVN; 174 of them were mili-
tary personnel. They were distributed by corps areas
as follows:
I Corps 32
II Corps 82
III Corps 53
IV Corps 87
The weekly take of defectors during the past few months
has been at a level consistently lower than that during
the high period of February and March 1966. The weekly
defector rate had been expected to rise in the wake of
the resolved political crisis in I Corps and as a re-
sult of increased military contacts. There is no satis-
factory explanation of why more Vietnamese Communists
have not rallied lately.
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According to delayed information from
the field, retail prices in Saigon rose three
percent in the week ending 8 August, but
prices of most imported commodities continued
to decline. (No official information has been
received as yet for the week ending 15 August;
press reports indicate a decline in retail
prices during this period.)
The price of gold on the Saigon free mar-
ket fell to 237 piasters, per dollar, the
lowest price since 14 March, whereas dollars
edged up to 193 piasters. By 12 August, how-
ever, gold had risen slightly and dollars de-
clined. The recently formed Peoples-Army
Council considered a report from its economic
committee and submitted recommendation on eco-
nomic policy to the GVN.
The Vietnamese Confederation of Labor
has decided to seek the right of consultation
on GVN economic and social decisions that af-
fect the life of the worker. Meantime, the
GVN National Labor Advisory Council has raised
minimum wages for the Saigon area. A threatened
strike of workers at the Caltex installations
in Saigon has been averted by intensive negoti-
ations among government, labor, and company
officials. Recently available data show that
production of rubber rose in April, but both
production and exports of rubber during the
first four months of 1966 were well below the
levels of the corresponding period of 1965.
1. Saigon retail prices rose moderately in the
week ending 8 August. According to the USAID retail
price index, prices were three percent above the pre-
vious week. Higher prices for both food and nonfood
items contributed to the rise. The price of pork bellies
rose to 150 piasters per kilogram compared with 140
piasters on 1 August. In association with the rise in
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pork, the prices of fish, chicken, and shrimp also
increased. Vegetable prices, on the other hand, de-
clined, and more significantly, the prices of all
three varieties of rice were lower. The over-all food
index was two percent above the previous week and the
nonfood index was up five percent.
2. Prices of most imported commodities continued
to decline as buyers held off purchases in anticipation
of a further decline in prices. The most notable de-
clines were for those items, such as round bars and
wire rods, that had led the earlier rise in the price
of imported commodities. Neither retail nor imported
commodity prices changed markedly for the period 8-
12 August.
Currency and Gold
3. On 8 August, the price of gold on the Saigon
free market fell 28 piasters to 237 piasters per dollar,
the lowest price since 14 March. This new low was be-
low the official sale price, which was recently lowered
from 249 piasters to 242 piasters per dollar. By 12 Au-
gust, the price of gold had risen to 249 piasters. Dol-
lars, on the other hand, rose eight piasters to 193
piasters per dollar on 3 August and then fell to 188
piasters on 12 August. Although the reasons for the
contradictory movements in the price of gold and dollars
are not clear, it is possible that gold fell initially
in conjunction with smuggling and then rose again as
smuggling eased off, whereas the demand for dollars,
which are used to finance the smuggling, followed this
movement. On 8 August, the price of MPC (scrip) fell
seven piasters to 123 piasters per dollar and was hold-
ing steady at this level as of 12 August. In Hong Kong,
the piaster-dollar cross rate moved down to 181.5 pi-
asters on ?8 August. (Graphics on monthly and weekly
free market gold and currency prices are included in
the annex.)
PAC Report on the Economy
4. At its second regular session on 10 August,
the Peoples-Army Council (PAC), a military-civilian ad-
visory council formed in duly to advise the cabinet on
various aspects of nation building, considered a report
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from its economic committee on the present economic
situation. Professor Thuc, an economist who is Dean
of the Faculty of Law at Saigon University, drafted the
report, which was highly critical of GVN economic poli-
cies. The report also criticized US recommendations
on economic policy and noted the harmful economic ef-
fects of the American presence in South Vietnam. On
12 August, Minister of Economy Thanh appeared before
the PAC to answer questions raised by the report.
Thanh denied the charge that US pressure had been re-
sponsible for the GVN decision to devalue the piaster
last June,
5. According to the secretary general of the
economic committee, the committee felt that Thuc's pro-
posals were a harsh indictment of the GVN and of Min-
ister Thanh. Consequently, the committee submitted a
new set of recommendations, which were approved by a
plenary session of the PAC on 16 August and submitted
to the GVN on the following day. The PAC report noted
the steps already taken by the GVN to improve the eco-
nomic situation, and expressed concern about the future
of the economy. The PAC also announced its intention
to discuss long-range economic policy at its September
session and proposed the following immediate measures:
(a) abolition of the 38-piaster surtax especially for
those goods essential for daily needs and for indus-
trialization of the country, (b) reexamination of the
entire plan of supply for both civilians and military,
(c) assistance to the rural population by reexamination
of official prices for farm products and by improvement
of means of production and distribution of these products,
and (d) consultation by the GVN with the PAC before
promulgating important economic and financial measures.
Labor Developments
6. The Vietnamese Confederation of Labor (CVT),
South Vietnam's leading labor union, has decided to
seek--nationally and regionally--the "right of consulta-
tion" on key economic and social decisions to be made
by the GVN. CVT President Buu has explained to the
US labor attache that the CVT will demand the establish-
ment of a national economic and social council to consist
of representatives from labor, management, and government.
Buu plans to have a CVT delegation discuss this issue
with Premier Ky.
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7. In the meantime, CVT regional congresses are
pressing the issue, At a recent CVT Congress in Khang
Hoa Province, some 130 delegates representing 42 unions
in the province passed a resolution supporting Buu's
theme that organized labor must be consulted on gov-
ernmental decisions that affect the life of the worker.
The same point also was made at a recent national con-
gress of the Tenant Farmers Federation, a CVT affiliate
with some 68,000 members.
8. On 10 August, the recently revived GVN Na-
tional Labor Advisory Council decided to raise minimum
wages for the Saigon area. The new monthly minimum
wage rates are as follows: 2,000 piasters for men;
1,760 piasters for women; and 1,540 piasters for chil-
dren under 18 years. These rates represent an increase
of roughly 60 percent above the previous minimum rates.
The CVT had asked for a monthly rate of 2,500 piasters
for men, or an increase of 100 percent.
9. A threatened strike of workers at the Caltex
installations in Saigon has been averted by intensive
negotiations among government, labor, and company offi-
cials. In an attempt to maintain office discipline,
Caltex managers had recently fired both a union and a
"management" employee in the hope of demonstrating
impartiality. Union bargainers, however, had threatened
to call a strike to make it clear that the union employee
should be reinstated. Caltex agreed to take back the
two employees, the only sanctions to be imposed are
warning letters and short suspensions without pay. Ac-
cording to the US Embassy, the current settlement is
only a stopgap measure, and long-term labor peace will
come about only through more fundamental changes in
Caltex labor policy.
Rubber Production and Exports
10. Recently available data show that production
of rubber in South Vietnam in April rose to 3,500 metric
tons, or about the same quantity produced in the cor-
responding month of 1964 and 1965. In spite of this
increase in April, however, production of rubber during
the first four months of 1966 was about 30 percent below
the level produced during January-April 1965 as shown
by the following tabulation (in thousands of metric tons):
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Exports
19.9
23.0
11.8
The 50-percent decline in exports results not only from
lower production but also from difficulties in trans-
porting the rubber to Saigon from the plantations.
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Monthly Free Market Gold and Currency Prices
JANUARY 1964 - JUNE 1966
100 am is 00,pr
?
soft a
woo
A M J J A S O N U J F M A M J J A S O N D
Weekly Free Market Gold and Currency Prices
3 JANUARY 1966 - 8 AUGUST 1966
4 e i' '1( MAY JUNE JUL
GOLD (Saigon) - Piaster price per US dollar of gold calculated on
the basis of gold leaf as worth $35 per troy ounce.
US $10 GREEN (Saigon)
PIASTER-DOLLAR CROSS RATE - Piaster-dollar exchange rate in Hong
(Hong Kong) Kong calculated by reference to the
exchange rates of these two currencies
to the Hong Kong dollar.
US $10 MPC (Saigon) - Military Payment Certificates (scrip).
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