ECONOMIC EFFECTS OF US/GVN AIR STRIKES AGAINST NORTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78T02095R000800030006-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 2
• Document Creation Date: December 12, 2016
• Document Release Date: January 7, 2002
• Sequence Number: 6
• Content Type: REPORT

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FC011a MIC MUMS or, US/GVN AIR STRIKES
AGAMST NORTH VIE UT
US/GVN air strikes against the prrdornin ntly rural areas of
North Vietnam have had a predictably mall economic impact. The
cconmie repercussions are beginning to be greater, however, as the
attacks move no thward. The recent strikes on the Hanoi - Lao Cai
rail line, for example, fielded economic results more significant
and directly measurable than all previous strikes on North Vietnam's
transport system.
Direct economic damage is estimated at about $13 million ?--
measured in terms of the cost of reconstruction and repair of bridges,
and of electric power and other economic facilities. In addition,
measurable: indirect economic losses amount to about $,6 million --
mainly reductions in forei trade arid. agricultural output. North
Vietnams is transferring a considerable portion of its small resources
of skilled labor and construction materials to reconstruct its d=,-
, d econartmic facilities. This transfer constitutes an appreciable
drain on the amounts available for North Vietnam's planned investment
program and calls for either a reordering of invest rent priorities or
a rapid increase in aid, from other Coiununi.at countries. On the other
hand, the bomb dwaage has not yet impeded the ability of the economy
to support its present military requirements. Furthermore, neither
the direct nor indirect effects of the bombing have as yet accumulated
sufficiently to endanger the food supply of the population.
North Vietnam is barely self-sufficient in food, not factory
industrial output is less than 15 percent or GNP, and there are
ambitious plans for cconocmic expansion. Thus, there are strains in
all elements of the economy and any disruptions add to the serious
problems faced by the reg:irime. The damaged and destroyed bridges and
power plants represent years of construction work which was made
possible only with foreign assistance. Costs of reconstruction of
the bridges, power plants, and POL storage facilities will represent
about 6 percent of total annual investment and about 12 percent of
annual investment in industry.
If the North Vietnamese should make the decision to attempt coLs-
plote restoration of the damage they will be assuming a task far beyond
their own limited resources. An attem,it at complete restoration would
preclude the continuance of considerable construction activity in the
economy. Moreover, the steel for bridge and petroleum tank reconstruc-
tion, and most of the equipment, for the restoration of power generating
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capacity must be obtained, from foreign sources, mainly Corm,uniet China
and the Soviet Union.
About 13.5 percent of the country's electric power gcpcrating
oapacity hac now been rend red Inoperable. The loss of electric mower
has undoubtedly resulted in an indeterminate reduction of output in
some nsining, ore procossingl fertilizer, food processing, and other
industrial plants. The recent successful attack on the Non t)Inh power
plant forced the IRV authorities to attempt to spread the resulting
power shortage over a large area by directing power from the Hanoi
power system to Tian Dinh.
The recent disruption of traffic on the Ua.noi Lso Cai rail line
and the continued disruption of traffic on the Tank Hoa - Vinh line,
plus the general harassment of other modes of transportatioa is affect-
ing the economy in two wain ways. First, since the lines carried a
number of bulky heavy items, especially logs, lxriber and apatite which
it will be difficult and expensive to move by other means, there will
be a drop in eacport of these and, other coin noditiea and a consequent
loss of foreign exchange. Second, the interruption to the normal flow
of heavy materials within the country will delay and curtail doi eetic
economic construction and reduce the output of raw material producing
and processing industries. The combined economic effect to data is
.more in the nature of an economic act-back than a significant disrup-
tion of economic activity.
Some 18 percent of the patrol etem storage capacity has been
destroyed. However, the loss of POL storages capacity has not had any
measurable effect on the economy since there was excess capacity and
the main elements of the PQL storage and distribution system have not
yet been attacked.
The observable social and psychological reactions to the air
strikes reflect no diminution of North Vietnweaese determination to
press on with the war. Hanoi has continued to stand on its demands
that the US must accept the DRV four-point proposal of 8 April. In
recent weeks, however, these expressions of victory have been tempered
by the considerable emphasis which regime propaganda has placed on the
probable long and arduous duration of the conflict. This latter theme
in DRV propaganda suggests that the Vietnamese Ccxnaunin is have been
sobered by the evident US determination to prosecute the war and by the
attrition of the steady air attacks. There is, however, no firm evi-
dence that Hanoi Is as yet willing to make any concessions in its
position regarding negotiations. Recent reports have revealed some
deterioration in the morale of the MV
determination of the regime to persist in its attitude toward the war.
era is no
sa.gn t?ia't concern over the morale of the people Is influencing the
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25X1 C
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