CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 0005339973
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 7
• Document Creation Date: June 23, 2015
• Document Release Date: July 15, 2009
• Case Number: F-2008-01829
• Publication Date: October 3, 1957

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COPY NO.lF
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3 October 19,57
APPROVED FOR RELEASED
DATE: 06-29-2009
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CENTR'AL INTELLIGENCE AGENCY
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 3. October
pressure to reach a settlement
ofconciliation, there has been
that restoration of government
ment. In fact, Souphannouvong
are preparedto make signifi-
commission that the Pathets
no.indication in the negotiating
South Vietnam's President
Diem and other top officials
have vigorously sought in the
past several monthsto increase
their country's prestige.`. Diem
is also attempting to quicken
the pace of economic develop-
ment in South Vietnam and to
head off incipient political
discontent.
Since his trip to, the
United States last May, Diem
has paid successful state visits
to Thailand, Australia, and
South Korea. In early.Novem
ber, her is scheduled to visit
India and confer,with Prime
Minister Nehru." Plhile disdain-
ful of India's "unrealistic "
neutralism, Diem hopes to enlist
Nehru's moralsupport .for South
.Vietnam's status as a sovereign
state and for its claim to rep-
resent true nationalism: through-
out Vietnam.
On the domestic front,
Diem continues to feel that pro-
grams designed to' promote sta-
bility in South Vietnam are
moving too slowly. He has al-
ways held that Vietnam will:.not
remain divided forever, and
that if the South is to.win out.
over the North, it.mustout-
PART II NOTES AND
control over the.two disputed
provinces must take place si-
prior.to, the establishment of
a coalition government. The
Pathets, however, may be e'x-
pected to maintain a climate
favorable for negotiations
while ' attempting to build. popu-
on Pathet terms
strip the Communists in econom-
ic development.
To help achieve this goal,
Diem is now placing major em-
.phasis.on the rapid economic
development of the remote high
plateau region in the northwest
which borders on Cambodia,. Laos,
and North Vietnam. Hehopes to
resettle,-in this ,strategic but
underpopulated region some 100,-
000 anti--Communist farmers and
military veterans who would con-
stitute a "human wall against
communist infiltration and sub-
version. The President regards
this project, which began last
spring, as so important that he
has repeatedly stated that the
very existence of South Vietnam's
government depends, onpits sue-
cessful implementation.
There are indications the
South Vietnamese government may
also be increasingly troubled ,by
what appears to be a developing
undercurrent of resentment over.
its tight political controls,
The, local.Chinese are.undoubtedly
still smarting under the various
decrees, forcing them to adopt
Vietnamese Citizenship or suffer
severe restrictions on their
means of livelihood.Vietnamese
COMMENTS Page 13. of 16
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 discontent :has also been.indi
cated by newspaper articles
written with an antigovernment
slant.. This sentiment may have
been hardened by the recent
destruction of the printing
plants of two papers publishing
such articles by mobs:which, if
.not organized by the government,
operated without interference
JAPANESE PROPOSALS IN TRADE DISCUSSIONS WITH PEI PING
nist China and have outlined
entry-and operating urivileees
Japanese . negotiators at
trade discussions under way
in Peiping have proposed an ex-
change of permanent trade mis-
sions between Japan and Commu
The Japanese delegation
ostensibly represents private
trade organizations which have
concluded three previous trade
agreements with Peiping. In
fact, however, it is acting
with the semiofficial backing
of Prime Minister Kishi's gov-
ernment.
The initial Japanese pro
posals call for an exchange of,
trade missions of no: more than
ten members each. Five of,the
Chinese members would be ex-
empted from the fingerprinting
ordinarily. required of. nonof-
ficial aliens under Japanese
law.
within Japan, and exemption
from customs duties and taxes.
To: emphasize the "nonofficial"
status of the missions, national
flags would not be displayed
outside mission offices.
Peiping has made, no spec,if-
ic response to the Japanese pro
posals, made public as early as
2 September, and renewed Chinese
propaganda attacks on the Kishi
government for its pro-American
.and allegedly anti-Peiping poli-
cies suggest that Peiping does
not intend -toconclude an agree-
ment without further concessions.
Tokyo's,figure of a$90,
000,000 trade volume each way
is essentially an exploratory
move. Japan has not achieved
lower export goal's set in pre-
vious agreements,. largely be-
cause of Peiping's refusal to-
deliver iron ore and significant
quantities of coal unless ex-
changed for Japanese products
which have..been, or remain, em-
bargoed for shipment to Commu-
nist China. Moreover, Japa
..nese exports to the China main-
land, which totaled $67,000,000
in 1956,. declined slightly dur-
ing. early.1957,and, ironically,
dropped' sharply after Tokyo
abolished the CHINCOM differen-
tial. Peiping has announced
that because of increased domes-
tic requirements, its foreign
trade, in 1957 would fall below
th. 1p,..1 nf 1t.
Concurr~e
-steRf
NOTES AND COMMENTS Page 14 of 16
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 NW 28307
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ARCHIVAL RECORD
PLEaSB RETURN TO
AGENCY ARCHIVES, BLDG. A-18
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 CURRENT INTELLIGENC
DEVELOPMENTS IN SOUTH VIETNAM
South Vietnam, nearing its
fourth anniversary as an inde-
pendent state, has made remark-
able strides since the July 1954
armistice, when it was threat-
ened by an early take-over by
Hanoi. Today's surface tran-
quility, however, belies South
Vietnam's continuing struggle
for long-range survival and for
eventual unification of Vietnam
under non-Communist rule. The
acceleration of Communist ter
rorism'in South Vietnam during
the past year, together with a
more aggressive and imaginative
.propaganda offensive on the part
of Hanoi, attests to the intens-
ity of this sruggle.
Internal Security,
Saigon had achieved a high
degree of nationwide stability
by early 1957, but the security
situation in the rural areas of
the delta region and 'in the
western provinces bordering on
Cambodia has deteriorated. In
addition, there was an anti-Amer-
ican terrorist incident in Sai-
gon last October, when Commu-
nist bombs wounded 13 American
MAAG personnel., Despite tight-
ened security measures, there
is a real threat of further vio-
lence against Americans in view
of the Communist objective of
impairing American support of
the Diem regime.
The resurgence of Communist
terrorism has been marked by the
assassination of provincial of-
ficials and central government
representatives at the village
level. This coincides with in-
tensified efforts by the Commu-
nist underground to gain the
support of entire villages---
either by persuasion or by
threats. There are indications
that these efforts are meeting
with some success in the more
isolated areas. The renewed
security threat has reinforced
the Diem government'sdetermi-
nation to place primary emphasis
on strengthening its military
and paramilitary forces at the
expense of basic economic and
sociological progress. This low
priority for economic matters
constitutes the real danger to
stability over the long run.
A major breakthrough in
Saigon's efforts to improve rural
security occurred in May with
the rallying to the government
of some 1,200 dissidents of the
Hoa Hao sect, the last signifi-
cant force of indigenous rebel
groups whose combined'private
armies once threatened the Sai-
gon regime. The remaining few
hundred native dissidents are
widely scattered and are con-
sidered under Communist 'control.
Actual Communist underground mil-
itary strength in believed to
be 2,100, with a larger number
of political agents and sympa-
thizers. Since 1954, the Commu-
nists have sought to perpetuate
local armed revolt against the
Diem government to further their
own terrorist activities, which
run counter to Hanoi's public
espousal of the Geneva armistice.
Relations With Neighbors
The surrender of the Hoa
Hao force should also help to
improve the chronically poor re-
lations,between South Vietnam
and Cambodia, as this dissident
band formerly. had operated on
both sides of the frontier. In
instances where Vietnamese troops
have crossed the border in pur-
suit of dissident elements seek-
ing refuge in.Cambodi.anterri
tory, armed clashes with Cam-
bodian forces often resulted.
South Vietnamese - Cambodian
hostility stems from traditional
animosity between the:two races
and from the divergent political
policies of the present-day re-
gimes; The recurrent border in-
cidents have frustrated sporadic
efforts to achieve a modus vi-
vendi.
.Saigon, concerned over grow-
ing Communist' influence in
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 CURRENT INTELLIGENCE WEEKLY SUMMARY
26 June 1958
Cambodia, has vacillated between
conciliation and toughness in
attempting to influence the
Phnom Penh regime. The hard ap-
proach has been particularly
unavailing and risks driving
Cambodia closer to North Viet-
nam and Communist China.
The Diem government is also
alarmed at the recent Communist
electoral gains in Laos. It
fears a leftist-oriented re-
gime will eventually emerge in
Vientiane which will facilitate
Communist infiltration across
Vietnam's remote and hard-t'o-
defend frontier. The contem-
plation of being isolated as
the only militantly anti-Commu-
nist state on the Indochina
peninsula is disturbing to Sai-
gon. South Vietnam is taking
direct action through its dip-
lomatic mission in Vientiane to
support the merger of Laotian
conservative forces against the
Communist political threat. In
addition., the two governments,
recently exchanged preliminary
ideas for closer trade. relations
and improved communications.
Military Strength
South. Vietnam's military
capability to face the threat
of external Communist aggression
continues. to show steady im-
provement under MAAG training.
The army of some 137,000 men is
considered firmly loyal to Pres-
ident Diem and continues to be.
the government's main pillar of
support. Together with less
developed air and naval forces
numbering about 4,000 and 5,000
men, respectively, South. Viet-
nam's army is capable of-initial
limited resistance in the event.
of overt aggression from North
Vietnam. Steps are also being
taken to streamline and increase
the effectiveness of two major,
paramilitary forces--the Civil
Guard and Self-Defense Corps,
each with about 50,000 men.
0
L A `\.V I Ii TN A M
%
omy continues to be precarious.
Agriculture, the nation's eco-
nomic mainstay, is recovering
.slowly from wartime ravages.
A limited start has been made
in industrial development, but
prerequisite foreign capital re-
mains wary of the Diem govern-
ment's suspicious attitude to-
ward private investment. The
government's predilection toward
strict controls and its ultra-
conservative financial policies
have aggravated deflationary
tendencies in the economy. Com-
mercial activity is .. generally .
slow at present, and growing un-
employment is a problem. In re-
sponse to heavy pressure from
business and labor circles, how-
ever, the government recently
has taken a few cautions steps
toward easing the situation.
American aid still accounts
for about 85 percent of Vietnam's
imports and more than two thirds
of its budgetary revenues. In
In contrast to its militaryl 1957, however, a sizable budget
strength, South Vietnam's econ- surplus:was..realized by-stringent
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.?
C A M B O D I A I
,SOUTH
rcompo.e cn.m?
PHNOM r r
PENH t m.. rt.a?
T ?_'?, VIETNAM
 CURRENT INTELLIGENCE IVEr,,KLy
26 June 1958
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Box
budgetary controls and imposi-
tion of new taxes. Vietnamese
exports last year, moreover,
earned nearly $60,000,000 in
foreign exchange, compared with
only $34,0O0,000 in 1956.
Greater economic progress has
been hampered by the Vietnamese
leaders' lack of experience in
this field as well as by their
primary interest in political
and military matters.
Diem's Leadership
In one sense, the princi-
pal factor in South Vietnam's
early stability--the strong
leadership of President Diem-
today has become somewhat of an
unsettling influence. Diem's
continued unwillingness to del-
egate authority and his reluc-
tance to grant greater individ-
ual freedoms at this time are
hamstringing government opera-
tions and contributing to popu
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lar discontent. Senior v,I,,t?,
namese officials, including
Vice President Nguyen Ngoc ono
and several cabinet members,
have expressed serious alarm in
recent months over the govern-
ment's apparent loss of popu
larity. These officials belie 0
Diem's narrow approach to politi-
cal affairs is seriously weak-
ening the regime.
Criticism of Diem's author-
itarian ways is not new, but has
become more insistent now that
relative political stability,
which would permit more repre-
sentative government, has been
achieved. Diem is undoubtedly
aware of this criticism but has
given no indication of being
dissuaded from his belief that
more liberal government, however
desirable, cannot be afforded
during the present "national
emergency." He speaks frequent-
ly, however, of having . only"two
or.three years" in which to
hammer out a strong. political
and economic base for the nation
before internal pressures
threaten to force a modifica-
tion of the present driving
pace. Diem has been shrewd and
far-sighted in his leadership;
his decisions on several major
issues in the past have proven
correct.
South Vietnam has made con-
siderable progress since 1954
against great odds, and to-
day is a going concern. There
is a good economic potential
for continued development toward
greater stability and econom-
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