THE SITUATION IN SOUTH VIETNAM - 1967/11/27

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• Document Number (FOIA) /ESDN (CREST): 03031268
• Document Creation Date: July 27, 2018

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mar
DIRECTORATE OF
INTELLIGENCE
/41 C
Secret
No Foreign Dissem
Intelligence Report
The Situation in South Vietnam
(Weekly)
Secret
27 November 1967
No. 0378/67
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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
receipt by an unauthorized person is prohibited by law,
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
THE SITUATION IN SOUTH VIETNAM
(20 November - 26 November 1967)
CONTENTS
Section
POLITICAL SITUATION
Government appointments; Loc's
difficulties; Legislative develop-
ments; Loan resigns; Tran Van Huong
on the new government; Possible moderate
Buddhist political party.
REVOLUTIONARY DEVELOPMENT II
Viet Cong urban operations; Anti-
infrastructure activity; Status
of hamlets being worked by RD teams.
ECONOMIC SITUATION III
Prices; Currency and gold; Highways
of commerce: Route 4; Routes 20 and
I (Map)
ANNEX: Weekly Retail Prices in Saigon (table)
Saigon Free Market Gold and Currency Prices
(graph)
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I. POLITICAL SITUATION
The government has announced the ap-
pointment of Nguyen Van Huong as secretary
general in the president's office and has
established a 19-man Central Revolutionary
Development Council to oversee all aspects
of the pacification effort. Prime Minister
Loc is reportedly having some initial dif-
ficulty in getting his job done ,because
of what he claims are conflicting direc-
tions from President Thieu and Vice Presi-
dent Ky. Both houses of the legislature
have established committees to intercede
with the government on behalf of persons
they regard as unjustly treated. The Demo-
cratic Bloc in the lower house has issued
a six-point proclamation dealing primarily
with the need to preserve Vietnamese sover-
eignty. An opposition grouping may be
forming a third bloc in the lower house.
Police Director Loan has again submitted
his resignation, reportedly because of
Nguyen Van Huong's appointment to the presi-
dent's office. Former presidential can-
didate Tran Van Huong has refused to accept
the chairmanship of the new Inspectorate.
The moderate Buddhist faction of Thich
Tam Chau may be working on plans to estab-
lish a Buddhist political party and begin
publication of a daily newspaper.
Government Appointments
1. On 25 November the government announced
the appointment of Nguyen Van Huong, an adviser to
President Thieu and his campaign manager during the
election, as secretary general in the president's
office. His duties in this position, as enumerated
in the announcement and as Huong had earlier outlined
for an embassy officer, will include administration
of all agencies run directly by the president's office
and liaison between that office and the prime minister's
office, the legislature, and the various ministries.
Huong will have the rank of minister.
2. Also announced was the formation under Prime
Minister Loc of a Central Revolutionary Development
Council to oversee all aspects of the pacification
effort. The 19-man council, according to the announce-
ment, will include most cabinet ministers and the five
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highest-ranking generals, presumably including Gen-
eral Nguyen Duc Thang, deputy chief ot the Joint
General Staff in charge ot the Revolutionary Develop-
ment Cadre Directorate and the Regional and Popular
Forces. Minister of Revolutionary Development Tri
will be secretary general of the council. Corps-,
special zone-, province-, city-, and district-level
councils will also be established.
Loc's Difficulties
3. Prime Minister Loc is apparently having some
initial difficulty in getting his job done. Tran
Quoc Buu, president of the Vietnamese Confederation
of Labor, recently told that Loc
complains that he is being hampered by conflicting
directions and statements from President Thieu and
Vice President Ky. Loc ascribes most ot his diffi-
culties to a lack of cooraination between Thieu and
Ky and claims he has to spend a great deal of time
trying to avoid being caught in the middle. He addea
that this is hardly any way to get a new government
off the ground.
4. Some of the difficulties described by Loc,
while possibly symptomatic of tne personal conflict
between Thieu and Ky, seem typical of those which
might occur in starting any new large organization,
and Loc is apparently finding it difficult to cope
with them. Buu commented that, although he has known
Loc for a long time and respects his intelligence,
Loc is apt to panic under pressure. Buu also surmised
from his meeting with Loc and from remarks allegedly
attributed to him that the prime minister has no great
respect for Ky and is similarly irritated with Thieu
for what he calls Thieu's "dilettante" approach to
the problems of running a government.
Legislative Developments
5. The lower house "Committee to Intervene for
the Release of Student Demonstrators" has elected as
officers three men who have been quite outspoken in
their criticism of the government. Committee chair-
man Truc Vien, vice chairman Nguyen Dai Bang, and
secretary Nguyen Trong Nho were instrumental in es-
tablishing the committee, which intends to petition
the government for the release of 17 students ar-
rested and subsequently drafted for demonstrating
against the presidential elections.
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6. At the house session on 21 November Nho
said that the committee had already sent a letter
to the government proposing discussion of the stu-
dent cases. He added that if Prime Minister Loc
refuses to meet with the committee, he will be called
before "us"--presumably the full house--to explain
his actions.
7. The Senate on 18 November also established
a committee to intervene with the government on simi-
lar matters, but its committee appears less opposi-
tion-centered than that of the lower house. The
Senate committee will concern itself primarily with
the cases of coup plotters arrested after the abor-
tive coup of 19 February 1965.
8. The question first arose when Senator Tran
Van Don submitted a petition, initiated by him and
signed by 32 other senators, requesting that the
case of former General Lam Van Phat be reviewed. Phat,
sentenced to death in absentia for his part in the
coup attempt, recently sent President Thieu a letter,
through the temporary Senate chairman, "explaining
the injustice done him." Following lengthy discus-
sion of this and other requests for Senate interces-
sion, the Senate decided that the cases of all 45 persons
implicated in the abortive coup should be reviewed and,
for this purpose, set up a "Special Committee to Con-
sider Applications for Intervention." The committee
is composed of two men from each of the Senate's six
slates.
9. In another lower house development, the new
Democratic Bloc has issued a six-point proclamation
which appears to emphasize the need for preserving Viet-
namese sovereignty. According tO a Saigon Post article of
22 November,the proclamation calls for so= revolu-
tion, true national reconciliation, reform of both
the educational system and the diplomatic service,
the protection of Vietnamese sovereignty, and economic
sovereignty.
10. In detailing each of the various points,
the proclamation criticized what it called "the policy
of unilateral determination of the course of the war
and peace efforts." In addition, as a step toward
achieving economic sovereignty, the proclamation called
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for a review of the "entire problem Of American aid."
It is perhaps significant that this added voice in
the recent clamor for sovereignty and against "American
interference" in internal affairs is that of the Demo-
cratic Bloc. The bloc is generally considered at least
progovernment, if not government-sponsored.
11. A third bloc may be in the making in the lower
house and could be the beginning of a concerted opposi-
tion movement there. Au Truong Thanh, a former economy
minister in the Ky cabinet who was disqualified as a
presidential candidate, told a US Government official
on 20 November that he and a few colleagues are attempt-
ing to form a bloc of independent deputies. He mentioned
Saigon deputies Nguyen Trong Nho and Ho Huu Tuong as
participating in the establishment of the bloc. In
view of Thanh's opposition activities and the professed
antagonism of Nho and Tuong to the government, it
would appear that the proposed bloc is intended as
an opposition grouping to counterbalance the essentially
progovernment Democratic and Farmer-Worker-Soldier
blocs.
Loan Resigns
12. Nguyen Van Huong's appointment as the presi-
dent's secretary general has reportedly induced Police
Director Loan to follow through on his earlier desire
to resign. On 24 November,
Loan submitted a written resigna-
tion to Chu Ngoc Lien, an official in the Ministry
of Interior, giving fatigue as his reason and request-
ing reassignment to a troop command position.
13. Van Van Cua, who is the mayor of Saigon and
Loan's brother-in-law, reportedly later told Lien,
however, that the real reason behind the resignation
was Loan's feeling that President Thieu had gone back
on a promise in appointing Huong as his secretary
general. According to Cua, Thieu had promised Loan
and Vice President Ky that Huong would not be given
any public position. Loan's objection to Huong is
reportedly based on his membership in the Dai Viet
Party.
Tran Van Huong on the New Government
14. Former presidential candidate Tran Van Huong
has turned down the government's offer of a position
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at the head of the new Inspectorate and apparently
intends to hold to his earlier announced decision
to remain out of the new government. Both President
Thieu and Vice President Ky had hoped to persuade
Huong to accept the Inspectorate chairmanship, par-
ticularly because corruption, which the new body has
been set up especially to investigate, has been Huong's
special interest and was one of his prime campaign
issues.
15. During a conversation with an embassy of-
ficer on 24 November, however, Huong said he had re-
fused the post because, "as long as there are people
in this country who feel they are above the law," a
body like the Inspectorate can do little more than
go after corrupt officials at the lowest levels. Dis-
trict and even province officials could be pursued,
he said, but "their higher-ranking protectors" could
not be touched.
16. Huong also confirmed earlier reports that
he had been offered and had refused the prime minister-
ship. He portrayed this position in the new govern-
ment set-up as one wedged in among the president,
the National Assembly, and the generals and indicated
he would have been dissatisfied with being merely
an executor of the president's policies.
17. Huong gives the new cabinet a life span of
only six months, claiming it is merely a transitional
body. As for his own future, he is apparently con-
tent to remain out of public life; observing the politi-
cal scene from a distance and occasionally consulting
with younger political figures who often come to him
for advice.
Possible Moderate Buddhist Political Party
18. An unconfirmed article on 22 November in the
Vietnamese-language newspaper Tu Do has reported pos-
sible plans by the moderate Buddhigt faction of Thich
Tam Chau to form a political party, which the paper
is labelling a "Buddhist democratic party." Although
the paper apparently has nothing more to go on than
fragmentary reports and its own speculation, it cites
as evidence "numerous meetings between venerables and
(unnamed) pro-Buddhist political figures." The party,
Tu Do claims, will be nationalist-oriented and will
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have the benefit of a wealth of "operating resources."
Considerable money, rumored to be some seven million
piasters, will also be available to the Tam Chau fac-
tion for a daily newspaper the faction intends to
publish, according to the article.
19. Tu Do speculates that these developments
may signar�tEg beginning of a "general counteroffen-
sive" by Tam Chau in the current moderate-militant
dispute over the Buddhist charter. Although the
creation of an officially recognized political party
would give Tam Chau a definite advantage over his
rival Thich Tri Quang and would enhance his position
legally, the US Embassy is doubtful of Chau's prospects
for success. The embassy points out that Chau does
not have a reputation as an effective organizer and,
more important, that most politically active Buddhist
laymen have remained loyal to Tri Quang's faction.
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II. REVOLUTIONARY DEVELOPMENT
An apparently increasingly effec-
tive Vietnamese National Police appear
to have thwarted Viet Cong efforts to
accelerate their urban operations. Al-
though the Vietnamese Police have elim-
inated a number of enemy urban cells, it
is still difficult to determine how ex-
tensive the enemy's urban organizations
remain and how much economic and politi-
cal support the enemy continues to de-
rive from urban operations. South Viet-
namese officials have still not accepted
the Intelligence Coordination and Ex-
ploitation (ICEX) concept; however, US
officials believe that they will soon
overcome their misgivings, and better
coordinated and effective anti-infra-
structure operations may result. Accord-
ing to the Vietnamese Cadre Directorate,
by 1 November 149 LE Doi Moi had been
established by the RD teams. Rd teams
are now establishing an additional 321
Le Doi Moi, along with 65 8E Cung Co
and 57 aE Binh Dinh. As of 17 Novem-
ber 25,765 persons had rallied to the
government under the Chieu Hoi or "Open
Arms" program. During the week of 11-17
November 217 persons rallied; this is
400 less than in the same period of 1966.
Viet Cong Urban Operations
1. During the past year, an increasingly ef-
fective Vietnamese National Police organization
has apparently thwarted efforts by the Viet Cong
to accelerate their urban operations. In this
context, the term "urban areas" refers not only
to the autonomous cities of Saigon, Hue, Da Nang,
Cam Ranh, Da Lat, and Vung Tau, but also to other
large cities such as Oui Nhon and Nha Tran. Over
the past year the Vietnamese Security flervicc (VSS)
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have broken up a significant number of Communist
cells in a number of these cities, including Sai-
gon, Da Lat, Cam Ranh, and Nha Trang. Neverthe-
less, it is still difficult to determine how ex-
tensive an urban organization the enemy has and
how much financial and economic support he continues
to derive from urban operations.
2. As of mid-1967, there were numerous agent
reports, derived from VSS sources, of an increased
Viet Cong interest in strengthening their urban
operations. This greater interest may have been
to compensate for military and political losses in
the countryside and/or to enable them to retain con-
tact with people migrating from rural to urban areas.
3. Captured enemy documents and a few interro-
gationreports suggest that the Communists' key con-
cept in their urban activities continues to be the
promotion of the "general uprising." However, the
enemy's awareness of the situation in South Vietnam
has apparently led him, despite his theoretical
rhetoric, to adopt policies which best fit local
situations. Prior to the September public announce-
ment by the National Front for the Liberation of
South Vietnam (NFLSV) of its new program, several
agent reports alleged that the NFLSV was seeking to
establish a "new front" advocating, under NFLSV
guidance, a neutralist peace and a coalition gov-
ernment. Any such Communist interest in a "new
front," however, may be a supplement rather than
an alternative to their concept of the "general up-
rising."
4. Viet Cong documents and prisoner interroga-
tions support the conclusion that the "struggle"
movements of 1966 were not under Communist control.
Communist documents tend to attribute their failures
in this regard to poor communications and a lack of
initiative at lower echelons. The documents imply,
however, that the Communist Party is preparing for
similar crises in the future and may, in such cir-
cumstances, allow its agents greater initiative
in creating and exploiting local unrest.
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5. Available information tends to confirm
the Communists' continued interest in promoting
an urban political organization and encouraging
urban agitation. Although target groups within
the cities remain the traditional ones--such as
student groups, tradesmen and trade unions, and
influential social organizations (such as friend-
ship associations and reading clubs)--there are
some indications that the Communists may in fact
be trying to meld together a "new front" with a
broader complexion, including individuals who have
some anti-American feelings, are apathetic towards
the political situation, or are physically or
mentally exhausted from the 25-year prolonged con-
flict. Propaganda directed at most of the latter
is likely to be in low key, while party or� NFLSV
members with "legal status" in government zones
attempt, as in the past, to penetrate and gain
prominent positions in target groups.
6. The Communist Party committees responsible
for the larger cities in South Vietnam are appar-
ently directly subordinate to the provincial com-
mittees. For the most part, urban committees have
their own staffs, organic communications, and mili-
tary units--generally a unit with a combined recon-
naissance, intelligence, and sapper capability.
Almost all of the city committees are located in
what the Communists term "safe areas" adjacent
to or near the urban ,areas. In some instances as
in Da Nang, the city committees may exercise jur-
isdiction over a considerable portion of the coun-
tryside surrounding the city.
7. The total enemy effort in the cities, how-
ever, involves a myriad of agencies. Urban opera-
tions may be conducted by the party committee di-
rectly responsible for the city, or by certain
staff elements at either province, region, or Cen-
tral Office for South Vietnam (COSVN) levels. Cer-
tain agencies in North Vietnam are also believed
directly to control some operations in the urban
areas of South Vietnam. Most of the operations of
the higher level entities involve intelligence col-
lection or financial operations.
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8. In order to operate the organizational com-
plex of legal and "illegal" agents and other types
of urban operations from distant bases, an extensive
and highly developed communication-liaison system
is required. Commo-liaison systems are generally
divided between those which handle written communica-
tions and those used for conducting agent operations,
and rigid compartmentalization is the rule throughout
urban operations. The enemy utilizes the traditional
techniques of tradecraft, including secret writing
and recognition signals, apparently reinforced to
some extent by clandestine radio communications.
In general, one of the chief threats to the Commu-
nists in their urban operations is the loss of lecal
status by their operatives.
9. Of particular relevance in Communist urban
operations are the activities of the terrorists. In
the past year this threat has not apparently mater-
ialized to the extent the allies feared or the Viet
Cong hoped. It appears that the urban sapper units
still favor large, dramatic attacks and are constantly
preparing for them, although they have been hindered
in their ability to carry them out. According to a
recently captured sapper unit commander, much of the
shooting and grenade tossing in Saigon is the work
of minor cadres, not of the urban sapper units.*
10. The suggestion that some terrorism in Sai-
gon is done randomly is somewhat borne out by the
statements of Phung Ngoc Anh, a female terrorist
captured in the abortive assassination attempt on
the press attache of the Chinese Nationalist Embassy.
*In the 25 September 1967 edition of the Situa-
tion in South Vietnam (Weekly), it was suggested that
with the roll-up of the Viet Cong Special Action Unit 69
in Saigon, 80 percent of the Viet Cong threat to the
city may have been neutralized. Further analyses by US
officials indicates that although the Viet Cong capacity
for terrorism in Saigon has been seriously affected, it
is not now believed that 80 percent of the threat has been
neutralized. The Viet Cong Unit 69 was, however, re-
sponsible for 29 terrorist incidents between 1 March 1965
and 10 July 1967 which killed 58 persons and injured 274.
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11. Anh's unit, the Viet Cong Armed Propaganda
Unit of the Confederation of Liberation Trade Unions
(Chinese Resident Team), carried out a series of as-
sassinations and attempted assassinations in Saigon
between February and September 1967. Other than one
ethnic Vietnamese, all of the unit's personnel--about
15--were Vietnamese of Chinese extraction. Among their
victims were several Vietnamese polidemen of Chinese
descent, apparently all "fingered" in advance, and
several Americans. Anh's statements made it clear
that although her unit appears to have had the mission
of assassinating three Americans a month, the US
victims were unknown, random individuals who happened
to be spotted alone in areas considered suitable for
a hasty withdrawal. In addition, interrogation of
Anh has not produced any evidence to indicate that
the members of the unit were anything other than Viet
Cong or that there was any Chinese Communist influence
in the recruiting, training, or direction of the unit.
12. Although the use of urban operations to
purchase medicines and other supplies is well docu-
mented, allegations of large-scale financial support
from the cities remain only allegations, and perhaps
exaggerated ones. While the degree of blackmail
which may be done by the enemy in urban areas cannot
be ascertained, a few documents and interrogation
reports suggest that urban operations are supported
from the countryside rather than vice versa. For
example, the activities of the Da Lat and Nha Trang
municipal committees appear to be restricted by
shortages of money, and--according to interrogation
reports--neither the efforts to the Saigon Market
Party Committee or the Saigon Intellectual Proselyt-
ing Committee have produced any significant funds.
Anti-infrastructure Activity
13. The Vietnamese government has still not
accepted ICEX--the acronym for the intelligence co-
ordination and exploitation program initiated by
CORDS officials as a means of neutralizing the Com-
munist infrastructure. The US ICEX structure has,
however, been established in all corps and provinces.
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ICEX is designed to coordinate, integrate, and im-
prove the existing anti-infrastructure programs of
the various US components at all levels, and elim-
inate organizational duplication and competition
for funds, resources, and intelligence assets. (The
Situation in South Vietnam (Weekly) of 9 October dis-
cussed the ICEX concept and the US organization for
its implementation.)
14. Since the burden of the anti-infrastructure
effort rests with the Vietnamese, US officials hoped
that the example set by the US ICEX reorganization
would lead the Vietnamese to do the same; but the
Vietnamese, at least at the Saigon level, have been
somewhat reluctant to implement an ICEX-type program.
Some of the Vietnamese "foot-dragging" may have come
from theirpreoccupation with the recent elections
and the political uncertainties inherent in every
change of government in South Vietnam. However, the
initial reaction of government security officials
to the program was disappointing. It is possible
that the Vietnamese were piqued at not having been
included in the ICEX planning conferences.
15. US officials have been working to over-
come Vietnamese apprehensions and have been reassur-
ing the National Police in particular that neither
their organizational integrity or modus operendi
is threatened. The National Police are now appar-
ently participating more extensively in the District
Operations and Intelligence Coordination Centers
(DOICC) and seem to feel that such participation is
to their advantage. CORDS officials in Saigon be-
lieve that earlier Vietnamese misgivings and misun-
derstandings concerning ICEX and the DOICCs is be-
ing overcome.
16. From a total of ten in July 1967, the num-
ber of DOICCs wholly or partly operational now stands
at 53. These are 14 in I Corps, seven in II Corps,
28 in III Corps, and four in IV Corps. At present,
115 DOICCs are programmed for activation during 1968--
20 each in I and II Corps, 53 in III Corps, and
22 in IV Corps. This projection possibly may be
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revised upward during 1968. In addition to the es-
tablishment of the DOICCs, CORDS officials are striv-
ing to upgrade the capabilities and the utilization
of the Provincial Interrogation Centers--subject to
National Police policies--and to revive the Vietnam-
ese Provincial Intelligence Coordination Committees
(PICC).
17. US officials feel that the US ICEX organiza-
tional phase is now largely completed, and that as
DOICCs continue to be established and US military per-
sonnel continue to be assigned for ICEX augmentation,
the US can now move into the operational phase. Aside
from completing negotiations with the GVN, emphasis
will be given by US officials to guidance, support,
reporting, the review of field operations, and to the
monitoring of the progress of the construction and
utilization of the new provincial prisoner screening
and detention facilities.
18. Problems still exist and must be overcome
before the ICEX program can function effectively.
Although ICEX was envisioned as a structure that
would derive its support from existing programs,
this has not turned out to be the case. The US
management and coordination structure, both now and
as it continues to grow at district, province, and
corps levels, will require additional resources,
personnel, funding, vehicles, and communications.
The key to the success of ICEX, however, still re-
mains with the Vietnamese. The creation of Viet-
namese ICEX staffs, in addition to the hoped for
reactivation of the PICC and continued expansion
of the DOICCs, could further drain the already limited
Vietnamese pool of qualified manpower and may not
add substantially to the Vietnamese anti-infrastruc-
ture efforts.
Status of Hamlets Being Worked by RD Teams
19. Statistics derived from the Vietnamese
Revolutionary Development Cadre Directorate indi-
cate that as of 18 November 437 RD teams were work-
ing in RD hamlets throughout South Vietnam. Of
these, 321 teams are constructing A..2 Doi Moi ("Real
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New Life Hamlets"), 65 are at work in AR Curl?. Co
(Consolidated Hamlets), and 57 are estEElishing
LE Binh Dinh (Pacified Hamlets).
20. According to the Vietnamese Cadre Direct-
orate, 149 LE Doi Moi had been completed by the RD
teams as of 1 November. CORDS reported that as of
30 September, 265 teams--58 percent of the teams
eligible for movement--had completed their move to
the Phase II hamlets. The difference between the
number of completed .T.T. Doi Moi and the number of
teams reported to have moved is presumably accounted
for by the teams which in their Phase I hamlets es-
tablished Cung Co and LE Binh Dinh.
21. The Vietnamese RD Cadre Directorate still
aspires to complete the 1967 goal of 1,137 hamlets
however, the 1967 program will not end until 'at
least 31 January 1968. In addition there are 38
RD teams, composed of only 20 workers each, in 38
villages of An GiangProvince. These Community De-
velopment teams are expected to stay in their pres-
ent villages for the remainder of this year. Of
the approximately 35 civil-military teams operating
in South Vietnam, at least 12 have established Ap
Binh Dinh--all in Binh Dinh Province--and have moved
to Phase II hamlets.
22. US advisers have been concerned with the
RD Cadre Directorate's recent actions in forming
new RD teams with the recent Vung Tau graduates
rather than filling in understrength teams. The
Vietnamese effort is apparently aimed at establish-
ing 550 RD teams by 1 January. The Cadre Director-
ate has, however, assured CORDS that the first Vung
Tau class that graduates in 1968 will be used as
fillers and replacements for the existing teams.
II-8
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M1.!,UK11, 1%we
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III. ECONOMIC SITUATION
The USAID retail price index for Sai-
gon was virtually unchanged during the
week ending 13 November, although the price
of rice increased for the first time since
early September. Free market dollar and
gold rates rose slightly in response to
rumors that a larger piaster banknote would
be issued. Route 4 is the most important
commercial route in Vietnam and is now used,
rather than waterways, for transporting
most goods to Saigon from the delta. Route
20 north of Saigon has become increasingly
important to commerce since the closure
of Route 1 along the coast.
Prices
1. The USAID retail price index for Saigon was
virtually unchanged during the week ending 13 November,
although the price of rice rose for the first time
since early September when the first deliveries of
the new crop began to arrive. This increase, attributed
to an attempt by provincial rice merchants to hold up
shipments in anticipation of higher official rice
prices, was offset by declines in the prices of chicken,
shrimp, and most vegetables. Inadequate deliveries of
charcoal and firewook resulted in higher prices for
these items, but prices of all other nonfood products
were unchanged. (A table of weekly retail prices in
Saigon is included in the Annex.)
2. Prices of US-financed imports rose about two
percent during the week ending 14 November, partly in
response to widespread rumors of an increase in customs
duties and the possible issuance of a larger paister
banknote. The price of wire rods rose five percent,
mainly because of low arrivals. The only decline was
registered in the price of cement.
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Ausie
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Currency and Gold
3. Free market dollar and gold rates rose
slightly on 13 November as a result of the rumors
mentioned above, particularly those concerning the
issuance of a 1,000-piaster note. The highest bank-
note now in circulation is the 500-piaster note.
The prices of green dollars and gold leaf rose one
piaster each to 156 and 202 piasters per dollar. The
rate for MPC (scrip) was unchanged at 115 piasters
per dollar. (A graph on monthly and weekly currency
and gold prices is included in the Annex.)
Highways of Commerce: Route 4
4. A series of reports by Vietnamese and US of-
ficials show that most commodities moving to Saigon
from the delta are now transported by road, rather
than water, and that the condition of the roads has
deteriorated rapidly in recent years from Viet Cong
mining and heavy traffic. Route 4 running from Sai-
gon through eight provinces to Quan Long (Ca Mau) in
An Xuyen Province, a distance of about 217 miles, is
the most important commercial route in Vietnam. Dur-
ing the first nine months of 1967 three fourths of
the delta rice delivered to Saigon was transported
by road and all of this was trucked at least part of
the way on Route 4. Most fish and pork delivered to
Saigon are also trucked via Route 4. Shipment by
barge formerly was the most economic way to transport
foodstuffs, but delta waterways are now to insecure
and many barge owners have moved their equipment to
the Saigon port area where they can make more money.
Rice and cement clinker are the major items still
transported to Saigon by barge, but barges must now
wait for convoys which travel only three of four times
a month.
5. Under normal conditions a trip covering the
length of Route 4 from Quan Long to Saigon takes nine
to 11 hours, but this may be extended into days de-
pending on enemy activities and the weather. The
normal trip often involves extended waiting periods
at several one-way bridges and the Mekong River ferries
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at My Thuan and the Trans-Bassac River ferries at
Can Tho. The hard surface portion of the road varies
from about 15 to 43 feet wide, but many stretches
have been heavily cratered by mines. Route 4 has
been attacked frequently during the past few months
with obvious effects on deliveries to the Saigon re-
tail market. Prior to the presidential inauguration
on 31 October, VC mining of a section of the highway
combined with heavy rain was the main cause of a six
percent increase in food prices in the capital that
week. In the section from My Thuan to My Tho the
enemy has cratered the road with more than 100 mines
and blown up a 168-foot reinforced concrete bridge.
This destruction closed the road for only two days,
but the continued cratering has slowed traffic con-
siderably.
6. If truckers learn in advance that a section
of the road has been closed, they can either drive
to the break in the road and transship their goods
to a truck on the other side or delay shipment until
repairs are made. Fish are the most vulnerable to
delays because they are shipped live in water con-
tainers. On a normal day the trucker loses up to
20 percent of his fish, and if he must wait over-
night, the loss can be as much as 70 percent. With
a two-day delay, he delivers dead fish. In addition
to the cost of delays, there are costs incurred at
the many resource checkpoints along the way and at
the ferries, where a bribe shortens the waiting per-
iod. One rice trucker reported payments to 36 dif-
ferent parties on a round trip between Saigon and
Vinh Loi (Bac Lieu).
Routes 20 and 1
7. A second important commercial highway is
Route 20 running from about 44 miles east of Saigon
north to Da Lat. With the closing of Route 1 in
Long Khanh and Binh Tuy provinces, and the railroad,
which parallels Route 1 up the coast, Route 20 has
become a major route for goods being transported from
Saigon to Phan Rang, Nha Trang, and Pleiku. Accord-
ing to an embassy report, security has improved
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considerably along the road in recent months, and
since July, the VC have not maintained regular fixed
tax points on the road. The highway, however, now
carries far more traffic than it was designed to take
and maintenance is poor.
8. Route 20 begins at a junction with Route 1
east of Saigon and runs about 143 miles to Da Lat,
a mountain resort in Tuyen Duc Province. It is a
hard-surface road averaging 14 feet in width, but
weather, traffic, and lack of repair have resulted
in several stretches of mud and potholes. There are
many bridges and culverts on Route 20, but most
could be easily repaired within a few hours except
for one bridge, not yet damaged, over rapids in the
La Nga River. MACV originally scheduled complete
repair and expansion of the road for 1968, but there
are no funds available and other routes have higher
military priority. With no military assistance and
province officials claiming inability to keep up ne-
cessary repairs, Route 20 probably will slowly de-
teriorate.
9. Route 20 is open to traffic with few serious
delays, except in rainy weather, but the normal run-
ning time from Saigon to Da Lat is still ten to 12
hours, or about double what it was five years ago.
The security of the road constantly changes, but in
Long Khanh Province the South Vietnamese Army and
local forces provide reasonably security with a
series of strongpoints along the road. The stretch
between Bao Loc and the Lan Dong-Tuyen Duc border,
however, is insecure, and the enemy can interdict
the highway for short periods when they choose.
10. No thorough check is made on the amounts
and types of cargo transported on Route 20, but one
survey showed that about 200 vehicles use the road
each day. It is known that more than 100 metric
tons of vegetables are trucked daily from the vege-
table growing center of Da Lat to Saigon and that
other products such as fish, salt, and nuoc nam are
trucked through Da Lat from the coast. If travel
time is normal, the vegetables arrive in marketable
III-4
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N., SECRET *IS
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condition, but when two days are required, as often
happens, about half the load spoils and both farmers
and consumers suffer. Traffic in the other direction
carries consumer goods for the civilian population
from Saigon to Da Lat and frequently on to Phan Rang,
Nha Trang, and Pleiku. Each day some 20 tons of
bananas and pineapples are trucked from the Saigon
area and then flown out to US installations in mili-
tary planes.
11. The closing of Route 1 has been a particular
hardship for the economy of Phan Thiet on the coast
in Binh Thuan Province. Phan Thiet used to be about
125 miles and six hours from Saigon by road, but is
now about 24 hours away by water. The area's current
major industries are fish, nuoc mam, and salt, but
an embassy officer who toured the area believes that
with adequate security and the opening of the road,
there would be a renewal of lumbering, the develop-
ment of vegetable production, and possibly the expan-
sion of rice production. The fishermen of Phan Thiet
have suffered heavy losses in transporting their pro-
duct to Saigon because refrigeration is inadequate
for the length of time now required for the trip.
There has been talk of acquiring boats with cold
storage facilities, but apparently the fishermen's
real preference is for a return to the old pattern
of commerce using Route 1.
111-5
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SECRET
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TABLE
Weekly Retail Prices in Saigon 21
13 Jun
1966 I/
3 Jan
1967
23 Oct
1967
30 Oct
1967
6 Nov
1967
13 NOV
1967
Index for all Items
173
225
290
304
300
301
Index for Food Items
190
2_44:324
345
22L
22L c/
Of Which:
(In Piasters)
Rice-Soc Nau (100 kg.)
1,250
1,700
2,300
2,300
2,250
2,350
Pork Bellies (1 kg.)
90
130
200
230
220
220
Fish-Ca Tre (1 kg.)
130
150
220
270
260
260
Nuoc Mam (jar)
70
90
150
150
150
150
Index for Nonfood Items
140
195
228
230
233
Of Which:
(In Piasters)
Firewood (cu. meter)
360
560
500
520
530
560
Cigarettes (pack)
10
14
14
14
14
14
White Calico (meter)
27
33
45
46
46
46
Kerosene (liter)
7.8
10.5
9
9
9
9
a. Data are from USAID sources. For all indexes 1 January 1965 = 100.
b. Price level just prior to the 18 June devaluation.
c. Preliminary.
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Saigon Free Market Gold and Currency Prices
-500 -
PIASTERS PER US DOLLAR
202
�156
115
1966 1967
GOLD: Basis gold leaf worth $35 per troy ounce
US $10 GREEN
-- US $10 MPC Military Payment Certificates (scrip).
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SEP OCT NOV
1967
68754 1-67
Secret
Secret
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r�iv
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