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United States Department of State / Foreign relations of the United States, 1951. Asia and the Pacific (in two parts)

Indochina,   pp. 332-582 PDF (99.7 MB)

Page 334

second level of recognized leaders; the government senses some of its
inadequacies and is turning increasingly to US for advice and assist-
ance; and, very importantly, the Viet military forces, armed religious
groups and ethnic minorities have stood firm with Bao Dai and display
will to fight.
  3. Lack of unity among IC's neighbors within SEA and divergencies
in Far East policy of great powers are further weaknesses in IC situa-
tion. These in turn make UN position re Chinese aggression in IC
equivocal. This general lack of cohesion and clarity in west is today
one of the Communists' greatest advantages in its SEA march.
   (C) Economic situation at end 1950 as measured by traditional
indices no worse than for past 18 months. However, attention called
reported pressure on exchange authorities convert piasters into francs,
slackening rate imports particularly in north, and near-panic condi-
tions latter area with French trying dispose of stocks in real estate
in anticipation VM victory. Military success warranting belief French
and Bao Dai regimes could remain Tonkin might reverse these
negative trends. Basically mass IC are relatively better off re food,
shelter and clothing than many other Asiatic peoples. Only breakdown
in transportation such as occurred 1946 in Tonkin could bring about
famine conditions. On other hand economy for decades has been under-
developed with chronic state of semi-unemployment in north and lack
full employment in south, while for last 4 years its balance of inter-
national payments has been balanced only by massive imports financed
directly or indirectly by French payments for military costs, for other
budget deficits, etc. To attack either of latter two problems, however,
is long-term project requiring provision capital, improvement agri-
cultural practices, etc.
   Only important immediate emergency economic problems would
appear to be: (1) Handling of growing influx of refugees, particu-
larly in north and (2) financing additional'military burdens as ex-
pected to incur, while building up their national armies early 1951.
Hitherto burden military expenses almost entirely French, but with
signing Pau and December 18 [8] military convention,10 states are
given all public revenues from IC sources and in turn expected by
French carry appreciable cost of national armies. Out of total re-
sources of about 2.1 billion piasters for instance, Viet expected by
French to earmark about 500 million and secure another 500 from re-
duction other expenditures, increasing tax yields, and levying addi-
tional taxes. These conditions might cripple VN government at start
to say nothing of drastically limiting necessary social and economic
reform progress whose absence hitherto one of Bao Dai's greatest
   '0A French-Vietnamese military convention signed on December 8, 1950,
 lished a Vietnamese national army by effecting the transfer of certain units
 from French to Vietnamese control.

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