THE SITUATION IN SOUTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00826A001300010014-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 21
• Document Creation Date: December 15, 2016
• Document Release Date: July 15, 2004
• Sequence Number: 14
• Publication Date: October 8, 1966
• Content Type: IR

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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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NORTH ?D6ng Hoi
N..~ VIETNAM
l r DEMARCATION LINE
?Quang Tri
Qui Nhon
C A M B O D I A
,Sihanoukville
PHNOM
PENH,
.Phan Rang
SOUTH VIETNAM
\` ~{ Hui?
-Ji
r Kontum?
.Ban Me
Thuot
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In sessions held thus far, the con-
stituent assembly has exhibited a tendency
to digress somewhat from its constitution
drafting function, but has stopped short
of creating a controversy with the govern-
ment.
Political maneuvering among the
deputies is continuing, but no well-defined
trends have emerged as yet. The first real
test of political power in the assembly
will be the election of assembly officers,
which will probably not take place until
sometime next week. Actual work on the
constitution will not begin until late
this month or early in November.
Assembly Sessions
1. In sessions held thus far, the constituent
assembly has generally avoided taking any contro-
versial measures affecting its relations, with the
government, but at the same time has shown some
tendency to diverge from its sole legal function:
to draft a constitution. After listening to open-
ing speeches by Chief of State Thieu, Premier Ky,
and acting assembly chairman Nguyen Ba Luong on
27 September, the elected delegates staged a short
but lively debate on the assembly's initial order
of business. Sessions held during the rest of the
week, which were interrupted by a holiday recess on
29 September, dealt mainly with the formation of
three subcommittees and the discussion of one reso-
lution and several messages.
2. Two of the subcommittees established thus
far--on credentials and rules--are in accordance
with the constituent assembly decree law, which pro-
vides that procedural rules must be adopted and
that the credentials of at least two thirds of the
deputies be certified before an assembly chairman,
secretary general, and their assistants can be
elected. The 25-man credentials committee, chosen
by lot on 30 September, will soon begin the process
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of certifying the credentials of the deputies. Some
23 deputies whose seats are being contested were
barred from membership on the committee. In addi-
tion, the courts thus far have convicted two deputies
of election irregularities, and unless the decision
is overruled on an appeal, their election will be
invalidated. The 15-man rules committee was elected
by the assembly during the afternoon session on 30
September. Although more celebrated deputies did
not contest seats on this committee, the election
did serve to some extent as an initial test of
regional and bloc loyalties, and pointed up the po-
tential strength of southerners in the assembly.
3. The third subcommittee created by the as-
sembly will deal with the question of relief for
flood victims in the delta, and represents the
assembly's determination to concern itself with
issues not directly connected with constitution
drafting. In addition, a resolution urging the
government to release political prisoners was
adopted by the assembly on 1 October. However,
the resolution left to the government the deci-
sion as to which individuals or groups merited
amnesty. The delicate problem of political pris-
oners: is apparently being considered by the gov-
ernment in. various ways, and the general nature
of the assembly resolution will probably be of no
particular concern to government leaders. In. fact,
the US Embassy has commented that there were some
indications of prior knowledge and approval of the
resolution by the government.
4. On. 1 October, the acting assembly chairman
was given the authority, within some general guide-
lines, to draft messages to the people and soldiers
of Vietnam, the United Nations, allied countries
with troops in South Vietnam, and to other friendly
nations. The texts are not yet available, but
there was no evidence that they dealt with any
controversial subjects.
Assembly. Schedule
5. Various sources have indicated that the
assembly will not be ready to conduct the election
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for assembly officers--a chairman, two deputy chair-
men., a secretary general, and several assistant
secretaries general--until next week at the earliest
The actual drafting of a constitution, which will
be done by a subcommittee, will probably not get
under way until late this month or early in Novem-
ber. Finally, there is no firm indication as to
whether the assembly will give early consideration
to Article 20 of the decree law--the government's
controversial veto over the assembly's work which
lacks a two-thirds majority.
Maneuvering Among the Deputies Continues
6. Politicking among the deputies continues
to be widespread and conflicting reports of influ-
ence within the assembly by various groups con-
tinue to be received. However, the real strengths
of these regional, religious, and political blocs
have not yet been clearly defined, and the first
significant test of such alliances will come with
the election of assembly officers.
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8. Meanwhile, military leaders are continuing
to seek and receive advice from their South Korean
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counterparts on the problem of retaining the balance
of power while effecting the transition from a
purely military regime to a broader based, repre-
sentative government in South Vietnam. Missions
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GVN Officials Reject Peace Negotiations With Viet
CODg as Separate Party
10. Both Premier Ky and Foreign Minister Tran
Van Do recently rejected any peace negotiations which
included the Viet Cong as a separate party. Premier
Ky flatly rejected the idea in a talk with newsmen
in. the delta city of Can Tho on 30 September. The
next day, Foreign Minister Do delcared that inclusion
of the Viet Cong as a part of a North Vietnamese
delegation at peace negotiations might be acceptable,
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but that separate representation for the Viet Cong
was not. Both officials, along with other govern-
ment leaders, plan to attend the seven-nation con-
ference on Vietnam which is scheduled to begin some-
time between 18 and 24 October in the Philippines.
The agenda for this conference has not yet been
finalized, but will probably include discussion of
a common policy regarding a peaceful settlement in
Vietnam.
Special Vatican Mission Visits South Vietnam
11. A special mission from the Vatican headed
by Archbishop Sergio Pignedoli arrived in Saigon on.
28 September to study the problems of the church in
South Vietnam. On. 30 September, the archbishop read
a message from Pope Paul VI to the Catholic hierarchy
in South Vietnam which stressed the need for Vietna-
mese Catholics to seek harmony with the Buddhist
majority. Government sources indicated that the
pope's special envoy had requested a meeting with
the premier, to which Ky would probably agree. No
specific date was immediately set, however. The
archbishop's desire to see Premier Ky indicated
that he might wish to discuss the general framework
for a peaceful settlement in Vietnam.
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GVN-FULRO Relations Progressing
14. The US Embassy has reported that the
agreement between the government and FULRO, the
dissident tribal autonomy organization, seems to
be holding firm. Plans are now being made to hold
a small celebration in Ban Me Thuot on 10 October
for the return of about 500 FULRO supporters to
government control. A major celebration is scheduled
a week later in Pleiku, which will be attended by
some 5,000 montagnards from throughout the central
highlands. USAID assistance in resettling returning
FULRO supporters has been requested by II Corps
Commander General Vin.h Loc, and US officials are
now assessing actual needs.
Village Elections May Be Held in Selected Areas Soon
15. Nguyen Van Tuong, the governmen.t's commis-
sioner for administrative affairs, told newsmen. on
1 October that plans are being made to hold elections
for village councils and hamlet chiefs in government-
controlled areas between February and March of next
year. Between 700 and 800 of the country's 2,550
villages will probably be affected. At present, both
hamlet and village leaders are appointed by the prov-
ince chief. After the elections the elected village
council would have new legislative powers and would
choose their village chiefs.
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II. REVOLUTIONARY DEVELOPMENT
During August, slight gains were regis-
tered in the GVN's control of rural hamlets,
population, and land. The number of hamlets
under GVN control increased by 67 to 4,155
out of a countrywide total of at least lp,000.
The people under GVN control, however, are
now listed at 55 percent of the total popula-
tion. USAID's programs, along with the trans-
portation and logistics situation, were af-
fected to some degree by the provincial pre-
occupation with the constituent assembly elec-
tions. In general,however, progress was evi-
dent in the distribution of commodities and
in the maintenance of adequate quantities of
supplies.
On. 19 September, the second class of rev-
olutionary development cadres, numbering 5,128,
graduated from the national training center.
The number of Chieu Hoi defectors from the Viet
Cong rose slightly during the week ending 21
September. The recent daily average influx of
defectors, however, is still not up to expecta-
tions.
Hamlet, Area, and Population Control
1. In the six months (March-August) since revolu-
tionary development (RD) was accorded priority atten-
tion at the Honolulu Conference, there has been a net
gain to GVN control of only 197 of the country's some
9,000 insecure hamlets. The addition of 67 hamlets in
August to the "secure" category raises the total to
date under GVN control to 4,155. The process of "se-
curing" these hamlets is the heart of pacification
around which the other aspects of the program revolve.
It is a slow and painstaking effort to keep ahead of an
enemy which places very high emphasis on control of the
rural population and organizes most of its military and
political forces to influence them. The monthly net
gain in hamlets secured during 1966 follows:
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January
February 30
March -9
April -93*
May
156
June 42
July 34
August 67
Total 252
2. Small gains were also made in the numbers
and percentages of population and land area secured
during August. The addition of four tenths of a
percent in secured populace and one tenth of a per-
cent in secured land brings the totals to 55 percent
of the people and 11.5 percent of the land area now
being controlled by the GVN. During the month, 26
provinces and two of the autonomous cities showed
progress in gaining control of their areas. In. nine
provinces and one autonomous city, there was no
change. Eight provinces lost ground to the Viet Cong.
USAID Programs, Transportation, and Commodities
3. Generally, the transportation and logistics
bottlenecks previously reported as inhibiting the
implementation of civilian programs in Region I (I
Corps) were overcome somewhat during August. Short-
ages,of construction materials and insufficient de-
liveries of commodities, however, continued to hamper
progress. USAID programs generally bogged down in
Region II owing to the preoccupation of GVN officials
with the constituent assembly elections and to active
enemy interdiction of transportation routes. Commodities
*Unusual fluctuations during April and May primarily
reflected changes in the data base and reporting
criteria by MACV.
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were in short supply in some provinces, adding to
the already high cost of construction materials.
4. In. Region III, RD was subordinated to as-
sembly election preparations and the situation re-
mained basically unchanged. Hamlet school construc-
tion. and refugee programs were, however, on or ahead
of schedule in all the provinces. One province,
Binh Tuy, was hard hit by a flood and had to rely
almost entirely on sea and air transportation for
relief. Viet Con.g roadblocks in the province ag-
gravated the natural problems. The USAID effort in
Region IV improved as a result of helpful develop-
ments in the economy, logistics, and transportation.
The completion of projects increased because of the
delivery of adequate supplies of commodities. The
primary reason for the high level of deliveries was
the successful use of river barges as an alternate
means of transportation. Only Kien Tuong Province
presented a transportation problem because of contin-
uously poor security. Construction costs continued
their upward movement in Region IV due to competition
among GVN, US, and private Vietnamese contractors for
labor and materials.
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Viet Cong Defectors (Chieu Hoi)
6. With 36 of 43 provinces reporting for the
week ending 21 September, defectors rallied by corps
areas as follows:
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I Corps
II Corps 76
III Corps 79
IV Corps 77
Total 266 (163 military)
1966 total through 21 September -- 12,941
1966 average rate per day -- 48.9.-
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There were several encouraging economic
developments in the week ending 26 September.
Retail prices in Saigon decreased to their
pre-election levels, and prices of imported
commodities remained steady. Free market
gold and currency rates declined slightly.
GVN sales of imported frozen pork in Saigon
apparently are going well. The GVN industrial
production index for the first quarter of 1966
showed a nine-percent gain above the corres-
ponding period of 1965.
At the same time, new problems have
emerged. The Mekong Delta is threatened by
a major flood which could result in the loss
of substantial. quantities of rice and live-
stock. The sharp fall in the number and
dollar value of commercial import program
import licenses issued during the past three
weeks could have an adverse effect on the
economic stabilization program.
1. The week ending 26 September was highlighted
by the return of retail prices in Saigon to their pre-
election levels. the over-all USAID retail price index
declined three percent; the food index was down four
percent; and the nonfood index was one percent below
the previous week. Although the prices of most meats
and vegetables declined, the prices of all three varie-
ties of rice edged up for the second consecutive week.
Rice prices, however, are still well below their 1966
highs. Pork bellies were 85 piasters per kilogram on
26 September--the same level prevailing just prior to
the elections. The prices of all the nonfood items
sampled were steady or slightly lower. (A table of
weekly retail prices in Saigon is included in the Annex.)
2. In general, the prices of imported commodities
remained unchanged during the week ending 27 September.
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As previously reported, tighter bank credit coupled
with the need of importers for cash to pay for ship-
ments now arriving continues to influence the price
level of imported goods.
Currency and Gold
3. Free market gold and currency rates declined
slightly in the week ending 26 September. The price
of dollars and the piaster-dollar cross rate in Hong
Kong each moved down one piaster to 168 and 167 pi-
asters per dollar, respectively. MPC (scrip) remained
at 115 piasters per dollar for the third consecutive
week. Gold fell 6 piasters to 246 piasters per dol-
lar--four piasters above the official rate of 242.
(Graphics on monthly and weekly free market gold and
currency prices are included in the Annex.)
4. The 1,500 tons of frozen pork purchased in
Austria and the Netherlands arrived in Saigon on 18 Sep-
tember. Distribution began on 22 September, when the
GVN Office of Supply placed 50 tons on the market.
Some 600 tons are being placed in a refrigeration facil-
ity on shore, and the remainder will be held aboard
ship until sold. Although this is the first time that
frozen pork has been marketed in Saigon, sales appar-
ently are going well. Whatever hesitation the public
may have had was overcome by pricing the frozen pork
substantially below fresh pork and by temporarily
closing down the Saigon slaughterhouse.
Impact of the Mekong Flood
5. The Mekong River continues to rise and may
cause a major flood disaster in the Delta--possibly one
of the worst floods of the century. Chau Doc and Kien
Tuong provinces are particularly threatened. Other
provinces in danger are An Giang, Kien Phong, Phong
Dinh, and Vinh Long. Although the extent of damage to
rice in the affected provinces is not yet known, a pre-
liminary survey indicates a loss of 50,000 tons of milled
rice in Chau Doc Province alone. According to US Embassy
estimates, as much as ten percent of total Delta rice
production could be lost.
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6. The flood could also cause a loss of livQ-
stock. Farmers, fearing losses by drowning, are selling
cattle and hogs at reduced prices. As long as water on
the highway from Chau Doc to Can Tho in Phong Dinh
Province is not too deep, livestock can move freely. If
the rising waters cut off this road, however, it will
become difficult to save the livestock.
Confiscation of Imports
7. According to the Vietnam press, goods belonging
to 17 importers including USAID, were confiscated by the
GVN for failure to withdraw them from customs within the
prescribed 30 days. This is believed to be the first
time the GVN has carried out its recently announced
policy of confiscation. Although the quantities in"
volved were small, importers may be induced to speed up
clearance of their goods and thus help reduce congestion
at the port of Saigon.
Commercial Import Program
8. Both the number and dollar value of import
licenses issued during the past three weeks ha,ve:'fallen
drastically. USAID reports that this decline is caused
by: (a) the tightening of bank credit, (b) the large
backlog of commercial import program (CIP) commodities
for which financing still must be obtained, and (c) con-
fusion among importers about new CIP procedures. Earlier
this month Governor Hanh of the National Bank of Vietnam
expressed concern about the deceleration in the CIP,
noting that a continuation of the level of CIP licensing
during July and August was unlikely to have the salutary
effect on the stabilization program envisioned by the
projected large-scale CIP effort.
9. The GVN industrial production index for the
first quarter of 1966 shows a nine-percent gain above
the corresponding period of 1965. This increase was
caused mainly by increased output of foodstuffs and
beverages as shown by the following index numbers
(1962=100).
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First Quarter First Quarter
1965 1966
All Industry
Foodstuffs
Tobacco and
160
106
174
123
Cigarettes 158 156
Beverages 180 214
Textiles 159 148
Electricity 230 N.A.
In addition, it is probable that increased output of
electricity also contributed to the over-all gain al-
though complete data on this branch of industry are
not yet available. The seven-percent decline in
textile output stemmed mainly from lower production of
woven cotton fabrics, gunny bags, and jute yarn and
string. Output of cotton yarn and jute fabrics, on
the other hand, was well above that of the first three
months of 1965.
10. According to the official GVN index, indus-
trial output has risen steadily since 1962--the base
year of the index. In 1965, the index showed a gain of
20 percent above 1964 and 36 percent above 1963.
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Approq
Weekly Retail Prices in Saigon a/
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(
In
Piaste
rs)
3 Jan
6 Sept
12 Sept 1
9 S
ept
26 Sept
1966
1966
1966
196
6
1966
Index for All Items b/
160
211
249
21
9
213 c/
Index for Food Items b/
169
215
264
22
7
219 c/
Of Which:
Rice-Soc Nau (100 kg)
800
1,300
1,300 1,
32
0
1,370
Pork Bellies (1 kg)
70
80
180
10
0
85
Fish-Ca Tre (1 kg)
110
170
220
18
0
170
Nuoc Mam (jar)
50
85
85
8
5
85
Index for Nonfood Items b/
124
196
198
19
2
190 c/
Of Which:
Charcoal (60 kg)
440
660
660
60
0
590
Cigarettes (pack)
10
14
14
1
4
14
White Calico (meter)
27
33
34
3
3
32
Laundry Soap (1. kg)
30
40
40
4
0
40
a/
b/
Data are from USAID sources.
For all indexes, 1 January 1965 = 100.
Preliminary.
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Saigon Free Market Gold and Currency Prices
PIASTERS
PER US DOLLAR
--
i
31 AU
GUST
237
167
1966
1967
JUL AUG SEP
1966
to Hong Kong-, calculated by reference to
PtASTER-US DOLLAR CROSS RATE- the exchange rates to the Hong Kong dollar
US $,10 MPC Military.Payment Certificates (scrip)
26 Sept
246 .
168
167
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