THE SITUATION IN SOUTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00826A001000010055-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 19
• Document Creation Date: December 20, 2016
• Document Release Date: September 20, 2006
• Sequence Number: 55
• Publication Date: July 25, 1966
• Content Type: IR

oWlease 2007/03/06: CIA-RD6 '~d 000010055-4
25 July 1966
No. 0383/66
Copy No . ,
INTELLIGENCE REPORT
THE SITUATION IN SOUTH VIETNAM
State Dept. review completed
USAID review completed
DIRECTORATE OF INTELLIGENCE
For Release 2007/03/06: CIA-RSTC
10055
GROUP I
~.xcluded from automatic
4 downgrading and
declassification
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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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No. 0383/66
CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
THE SITUATION IN SOUTH VIETNAM
(18 July - 24 July 1966)
C O N T E N T S
POLITICAL SITUATION I
Government observance of Geneva Accords
25X1 anniversary;
Develop-
ments within government-opposition groups;
Election developments; Possible govern-
ment moderation of its policy toward Chi-
nese minority.
REVOLUTIONARY DEVELOPMENT II
US military civic action programs; Re-
cent developments in National Priority
Area IV.
ECONOMIC SITUATION III
Prices; Currency and gold; GVN actions
on pork; Port operations; Labor problems.
ANNEX: Weekly Retail Prices in Saigon (table)
Free Market Gold and Currency Prices (graphs)
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NORTH . ong Hoi
VIETNAM
a Nang
\I CORPS
GULF OF
SOUTH VIETNAM
CURRENT SITUATION
0 25 50 75 100Miles
0 25 50 75 00 Kilometers
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1. POLITICAL SITUATION
The 12th anniversary of the Geneva
Accords afforded the South Vietnamese Gov-
ernment an, opportunity to publicize once
again. its uncompromising views on. ending
the war. Other aspects of the anniversary
ceremonies included supporting speeches by
government figures and the repatriation of
13 North Vietnamese prisoners.
25X1
mean-
while, antigovernment civilian elements,
including militant Buddhist Tri Quang, pub-
licized their views at a public reception.
sponsored by Catholic Father Quyn.h?s "Front
of All Religions." Regarding the September
election. for a constitutional assembly, the
US Embassy generally reported favorable
trends following a preliminary countrywide
survey of candidates. A lack of prominent
candidates in. the Saigon, area, however, was
the basis of criticism by one well-known
Vietnamese politician.. The mayor of Saigon.
recently cited several government actions or
plans as evidence of a new, enlightened gov-
ernment policy toward the local Chinese com-
munity.
Government Observance of Geneva Accords Anniversary
1. At ceremonies commemorating the 12th anniver-
sary of the Geneva Accords on 20 July, the South Viet-
namese Government once more publicized its uncompro-
mising views on. ending the war. A government communique
stated that the bombings of the North would cease and
that allied troops would be invited to leave the South
after Hanoi abandoned its war effort, including the
withdrawal of PAVN troops and the dissolution of the
National Liberation. Front.
2. The communique represented n.o significant
change from previous statements on. the subject, and
left virtually n.o room for any negotiations which might
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end the war. In private, South Vietnamese Foreign.
Ministry officials also were reported pleased by
Ho Chi Minh's recent public reaffirmation of a "hard
line," feeling that it should dispel any "wishful
thinking" on the subject of peace negotiations.
3. Negotiations which might lead to reunifica-
tion. once the war has ended, however, were alluded to
in. the communique and also were reportedly touched
upon. in. a speech today by Tran. Van. Van., the chairman.
of the government's Civilian.-Military Advisory Coun-
cil. In another speech at the anniversary ceremonies
in Saigon today, chief of state General Thieu is re-
ported to have stressed the continuing need to strike
at the North as long as the war lasts, and asked for
more free world aid to achieve complete victory.
4. Thirteen North Vietnamese prisoners were re-
leased by the government at the Ben Hai River bridge
dividing North and South Vietnam. Three others were
scheduled to be repatriated, but were said to have re-
fused to leave at the last moment. As a gesture of de-
fiance toward the Saigon government, the 13 who did
cross the border removed their outer clothing provided
by the South Vietnamese before reporting to North Viet-
namese officials on. the other side of the river. North
Vietnamese prisoners who were repatriated during the
Tet holiday period last January also discarded govern- 25X1
men.t gifts as they crossed the border.
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Developments Within. Government Opposition. Groups
7. Catholic Father Hoang Quynh's "Front of All
Religions" continued to proclaim its opposition. to
Premier Ky's government and the September election
for a constitutional assembly by inviting a number of
Vietnamese an.d foreign journalists to a reception. on.
21 July. The reception. was highlighted by the atten.-
dan.ce of militant Buddhist leader Tri Quang, who made
his first public appearance in, more than ?a month.
Quang expressed particular support for the Front's
election. boycott, its demand for an. interim govern.men.t,
and its call for the un.ity of the army and the people
in order to defeat the Communists, and declared that
the realization. of these three points would allow him
to end his fast.
8. Other notables attending the reception included
three ranking monks from the Buddhist Institute and
southern. Buddhist lay leader.Mai Tho Truyen. Truyen.'s
decision last week to take part in the Front as an
observer, although withholding "active" support for the
present, probably gave Father Quyn.h's group somewhat
of a boost, since Truyen. previously had been quite
critical of the recent Buddhist-led "struggle" move-
ment.
9. Thus far, Father Quynh's Front apparently has
limited itself to declaring its opposition. to the gov-
ernment and the September election. Whether the Front
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or any of its supporters will embark upon a more ac-
tive course is not yet clear.
acing positive action against the government, al-
though he is opposed to the regime and believes that
he must clearly state this if there is to be any
hope of future unity between Buddhists and Catholics
in South Vietnam.
Quyn.h has no intention of
10. There continues to be no evidence of a con-
certed effort by the militant Buddhists to conduct a
widespread election boycott, despite the cooperation
of several militant leaders, including Tri Quang,
with Father Quyn.h's Front. It is possible that Quang
and other Buddhists currently view Quyn.h's Front as
the most convenient vehicle at hand to continue pub-
licity for their opposition. to the government without
inviting direct government retaliation. Meanwhile,
policy and leadership problems within the Buddhist
Institute were perpetuated last week by the stalemate
between. militant and moderate Buddhists, with few
significant developments reported.
Election. Developments
11. Former president of the Saigon City Council,
La Thanh Nghe, who heads one list of candidates in.
Saigon., recently expressed concern to a US Embassy
officer that the forthcoming elections would not live
up to what he an.d others had expected, at least in the
general Saigon. area. Nghe, who expressed con.fiden.ce
that he would be elected, complained basically of a
lack of prominent candidates in. the Saigon area. Among
other factors contributing to this situation., Nghe
cited pressures from the Buddhist Institute, Father
Hoan.g Quyn.h's group, a number of old-time politicians
who had decided not to participate, and the Viet Cong.
He also criticized the list system of voting, and men-
tioned a lack of confidence in. the intentions of the
government to conduct an honest election as another
reason contributing to the scarcity of prominent candi-
dates.
12. Meanwhile, following a preliminary survey,
the US Embassy has reported that the number of candi-
dates who have filed throughout the country is impres-
sive. Candidates generally appear to be younger than.
25X1
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those who ran. last year in. the provincial and munici-
pal coun.cil elections, although a number of these
councilors have also entered the September election..
Small businessmen. and educators are also well repre-
sented. Although their total numbers are not avail-
able, civil servants and military officers apparently
are the major additions as candidates for this year's
election.. The embassy has also commented that the
government's administrative performance regarding the
election appears to have been. most satisfactory thus
far. Although public interest in. the elections ap-
pears slight in most areas, it can be expected to grow
as the candidates become known and as voter registra-
tion. progresses.
the Viet Cong in Dinh Tuon.g Province are planning to
disrupt the forthcoming elections by various means,
including the seizure of identification cards immedi-
13.
ately before the election.
Possible Government Moderation. of its Policy Toward
Chinese Minority
14. The Ky government may be in the process of
softening its approach toward the Chinese minority in,
South Vietnam, and trying instead to win its coopera-
tion. and support. The mayor of Saigon recently under-
scored this trend in a conversation with a US Embassy
officer by pointing to a number of steps that have
been. or will be taken by the government to improve re-
lations with the local Chinese community. The low point
in. the present govern.men.t's relations with the Chinese
was probably reached several months ago when. a Chinese
merchant was publicly executed for profiteering. In
view of the importance of the Chinese in the economic
sphere, the elimination of hard feelings toward the
government by the Chinese could in time have a favor-
able impact on. current government difficulties in.
managing the economy.
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The June summary of the revolutionary
development program prepared by the US Mis-
sion. and the week's tally of Viet Cong de-
fectors have not been received, and there
is no other significant data available on.
these subjects. However,
the pacification pro-
gram in South Vietnam is being positively
affected by the very fact of the influx
of approximately 280,000 US military per-
sonnel. US troops and advisers are en-
gaging in civic action programs specifi=
cally designed to raise the standard of
living and social awareness of the popu-
lace with whom they come in contact. Re-
cent developments in the southernmost na-
tional priority area have also been.-noteworthy.
US Military Civic Action Programs
1. An unheralded but increasingly signifi-
cant contributor to the social and economic improve-
ment of Vietnam's rural populace is the US military
establishment, now nearly 280,000 strong. Military
civic action programs have been in existence to a
limited extent.since the advent of the advisory ef-
fort. It was not until the first quarter of 1965,
however, that military civic action was intensified,
following the influx of US combat units operating in-
dependently of the advisory personnel.
2. The objectives of military civic action. are
twofold: to improve the living conditions of the
people, and thereby help remove the sources of dis-
satisfaction upon which the insurgency feeds; and to
gain and maintain the support of the people for the
GVN through the psychological exploitation of civic
action projects. Although methods vary among indi-
vidual combat units and provincial advisers, most of
the programs are short in. duration but high in impact.
The programs are targeted toward the general areas of
education, public health, sanitation, agriculture,
public works, and transportation. A peripheral but
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important aspect of US military civic action is in-
creasingly to involve Vietnamese military personnel
in big-impact projects that serve to heighten the
villagers' acceptance of government troops.
3. Military civic action is closely coordinated,
when possible, with USAID's numerous activities and
with JUSPAO's (USIA) communications-media programs.
Since there are US military advisory teams in every
province capital and in 153 of the districts, these
teams are in a favorable position to initiate and
follow up not only their own civic action projects
but also those of other US agencies. The ultimate
distribution of USAID's commodities to the lowest
level of the accessible population is more easily
accomplished by advisory teams at the district level,
where the military are the only permanent US advisers.
JUSPAO assists military civic action mainly through
the Vietnamese Information Service (VIS), which pub-
licizes noteworthy achievements for distribution. to
the target audiences.
4. US military channels are used almost exclu-
sively for the distribution of commodities under the
voluntary assistance programs of both the Catholic
Relief Services and CARE. In the first five months
of 1966, military personnel gave approximately US
$750,000 worth of foodstuffs and kits for woodworking,
masonry, sewing, textile, and educational projects
to the Vietnamese people. Military personnel also
distributed nearly 13,000 tons of CARE food, cloth-
ing and medical items during the same five-month
period.
5. Medical assistance, widely recognized as a
means of eliciting popular support from the peasant
base in developing countries, is a prime element of
military civic action. Over six million. medical
treatments ranging from innoculations to successful
harelip surgeries were administered from February
1965 through May 1966, primarily to children and
young adults. The six 16-man. US surgical and med_
ical teams who serve the provincial Vietnamese popu-
lace have built up an outstanding reputation under
very trying conditions, not the least of which are
overcrowded provincial hospitals and inadequately
prepared indigenous assistants.
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6. Other tangible military civic action. proj-
ects from February 1965 to June 1966 include the
construction. or rehabilitation of 122 schools, 65
bridges, 470 miles of roads, and 35 dispensaries.
Technical assistance for the construction, of the
above projects is largely provided by four 13-man
US Navy engineering teams. The recent assignment
of 25 military men as provincial agricultural ad-
visers has reportedly already begun to prove its
value to a most significant element of revolutionary
development.
7. The most demonstrative result that US mili-
tary forces have achieved in relation to the pacifi-
cation, effort, however, is probably the provision. of
basic physical security to the Vietnamese people.
Some 80 percent of the population is rural and largely
apolitical, except in relation to essentially local
issues. This rural populace, according to JUSPAO,
is generally unaware of or indifferent to both na-
tional political issues and the revolutionary de-
velopment program as such. It is understandable,
therefore, that the most meaningful form-of:-as i'st-
ance to the rural people is the satisfaction of
their basic desire for the protection of their lives
and liveliho.odirom the terror, coercion, and general
harassment conducted by Communist troops.
Recent Developments in National Priority Area IV
8. In. An. Giang Province, the national priority
area in IV Corps, an experimental pilot program to
establish a selfcoxitai:nedcommunity for villagers
and resettled refugee families will be developed on
a 6,000-hectare (nearly 15,000 acres) tract of land.
Approximately 5,000 acres of the property will be
distributed under the first enactment of the pro-
posed land-reform measures. USAID and the GVN will
provide agricultural credit to farmers and arrange
for the supply of seeds. Training cadres will be
available to instruct farmers in. farm and home
management and veterinarians will innoculate and
treat livestock. Land and existing canals will be
improved through the use of mechanized equipment
rather than traditional native farm implements.
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9. The US draft of the complete land-reform
program for An. Giang has been, completed and is con-
sidered enforceable by the province chief and the
minister of agriculture. Officials do not expect
any serious objections from the province's control-
ling Hoa Hao religious sect.
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The prices of domestic commodities went
up only slightly during the past week, but
the prices of imported commodities continued
to rise rapidly. With pork remaining in short
supply, the GVN announced an increase in the
official price for hogs and other measures
designed to ease the situation. Initial
ARVN/MACV actions in managing the Saigon port
are promising. A one-day strike of construc-
tion workers at Cam Ranh bay appears to have
been settled, but fears of a renewed strike
in the Saigon area have grown.
1. The USAID index of retail prices rose by two
percent during the week ending 16 July. No particularly
large increases were registered. The price of Viet-
namese rice went on rising slowly despite the continua-
tion of subsidized sales of American rice, which is now
accounting for about 20 percent of Saigon consumption.
Hog prices leveled off at more than double the official
retail level, and pork continued to be in short supply.
Since the 18 June devaluation, the retail price index
has risen about 20 percent. (A table of retail prices
in Saigon is included in the annex.)
2. Prices of imported commodities continued to
rise substantially during the past week. As of 6 July,
the wholesale price of wheat flour, round iron bars,
and wire rods had increased by 100, 137, and 135 per-
cent, respectively, over their price of a month earlier
when rumors of devaluation began to bid up prices. These
increases exceed the price rise anticipated from the
devaluation. Substantial price increases have also been
recorded for cement, fertilizer, and chemicals. Although
the unclear GVN announcement on customs duties may have
confused some importers, the reasons for the continuing
increases are not entirely clear.
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Currency and Gold
3. In the week ending 16 July the prices of gold
and dollars remained at about the same level as the
previous week. Gold sold at 308 piasters per dollar,
up three piasters. Dollars rose two piasters to a level
of 207 piasters per dollar, and the price of MPC (scrip)
remained at 123 piasters per dollar. The gold and dollar
markets appear to have stabilized considerably since
mid-June when prices soared to predevaluation peaks of
462 and 270 piasters for gold and dollar, respectively.
(Graphics on monthly and weekly free-market gold and
currency prices are included in the annex.)
4. On 16 July, Minister of Economy Thanh announced
a 20-percent increase in'the official price for hogs in
Saigon, and the introduction of a sliding scale of
bonuses to suppliers in accordance with the number of
deliveries. The official price was raised from 5,800
piasters to 7,000 piasters per 100 kilos. Retail price
ceilings for pork bellies and lean pork were also raised,
and the GVN is requesting bids for the import of 1,000
to 1,500 tons of frozen pork. The GVN's Office of
Supply is proceeding with air shipment of hog carcasses
from An Xuyen Province for sale to GVN and certain other
employees. Shipments since 14 July have ranged between
2.3 and 5 tons per day, compared to daily requirements
for the general population in the Saigon area of 120 to
150 tons. As of 20 July, the increase in the official
price had not yet had an effect on arrivals, which con-
tinued to average about one third of daily requirements
in the Saigon area. Retail prices of pork, other meats,
and fish fell slightly, however, in expectation of in-
creased hog deliveries to Saigon.
5. The outlook for the eventual success of the
measures announced by Thanh to ease the pork situation is
uncertain and is unlikely to be clear for at least an-
other week. The new official price is still considerably
below the black market price, which had reached 9,000
to 12,000 piasters per 100 kilos prior to Thanh's an-
nouncement. The lag of nearly four weeks between the
onset of the suppliers' strike and the raising of the
official price gave the black market a chance to become
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entrenched and the problem of policing hog deliveries
to the Gia Dinh Province area remains unsolved. On the
other hand, the new official price provides suppliers
with a sufficient margin over the prices in the main
producing provinces of the delta where prices have re-
mained 6,000 piasters per 100 kilos or less. During a
recent trip to the delta, an embassy economic officer
confirmed that hogs are available in the delta and that
there has been no falling off in the hog population in
recent months. The GVN proposal to import pork would
presumably require the use of a ship with refrigerated
storage to serve as a floating warehouse in the Saigon
harbor. This move would add to Saigon's port problem,
and Thanh may have suggested this proposal to pressure
local suppliers.
Port Operations
6. On 5 July, the military commenced the movement
of tax-free cargo through the Saigon port on a small
scale and has since been accelerating cargo movements.
The US Mission reports that Brig. Gen. Lam, the newly
appointed director general of the Saigon port, is very
energetic and aggressive, and is taking over the running
of the port with firmness and dispatch.
7. A walkout of 4,300 Vietnamese, Filipino, and
Korean employees at the RMK construction project at Cam
Ranh bay has apparently ended. On 20 July, about 40
percent of the strikers returned to work, and the rest
were expected back on 21 July. A partial walkout by
Filipino and Korean workers began on 18 July, and all
employees cooperated in staging a completely effective
strike on 19 July. The strike apparently was triggered
by management attempts to tighten work rules. The US
Embassy does not yet have details on all the issues
involved or on how they were settled; initial reports,
however, indicated that wages were not involved. Workers
at the Cam Ranh project, which involves the construction
of major port and airfield facilities, did not join the
strike against RMK in the Saigon area last month, al-
though Filipino workers were reported restive.
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8. RMK officials are concerned that a strike for
higher wages may resume in the Saigon area on 25 July.
Recent management soundings indicate that a wage strike
is probable in the Saigon area after the distribution
of pay envelopes that will include the increase effective
3 July. RMK indicates that the increase will average
17.5 percent, while a great number of workers apparently
expect to receive the full 30 percent that they originally
demanded. Vietnamese Labor Ministry officials doubt
that another strike is imminent, but the US Embassy
comments that there are rumors and reports of worker:
discontent.
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Weekly Retail Prices in Saigon J
(In Piasters)
Index for all Items J
Index for Food Items J
Of which:
Rice/sou Nau (100 k9.)
Pork Bellies (1 kg.)
Fish/Ca Tre (1 kg.)
Nuoc Mam (jar)
Index for Non-Food Items bJ
Charcoal (60 kg.)
Cigarettes (pack)
White Calico (meter)
Laundry Soap (1 kg.)
3 Jan
13 Jun
20 Jun
27 Jun
5.. Jul
Percent
Change
from
Percent
Change
from
1966
1966
1966
1966
1966,
Mo. Ago
Yr. Ago
160
173
185
193
217
+ 32
+111
169
184
196
206
234
+ 37
+120
800
1,250
1,350
1,350
1,400
+725
+ 40
70
90
90
110
170
+143
+278
110
330
130
140
170
+ 48
+227
50
70
8o
85
85
+ 21
+ 7o
124
134
14+5
147
157
+ 13
+ 77
440
460
X00
500
550
+ 12,
+112
10
10
10
10
10
0
+ 25
27
27
32
36
40
+ 54
+ 82
30
34
35
37
40
+ 21
+ 90
Appro
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sou
Ell
Monthly Free Market Gold and Currency Prices
JANUARY 1964 - MAY 1966
pi2sPrerS per
U5 Do!V?r ?b End c~r //'fok M
aG a a
0~0 0 n 0
Weekly Free Market Gold and Currency Prices
3 JANUARY 1966 - 5 JULY 1966
0 ma
arZ3 eC:Z:) O O 0 m Opp
mm mm cl= C~:3 co = =
oooomaoaoooooo ? 000 00000
1 icsfrQ.s
er 411 !"a&kir
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d
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M
G
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.
GOLD (Saigon) - Piaster price per US dollar of gold calculated on
the basis of gold leaf as worth $35 per troy ounce.
o US $10 GREEN (Saigon)
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