NON-MILITARY ACTION RECOMMENDATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80B01676R000400190040-6
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 3
• Document Creation Date: December 15, 2016
• Document Release Date: April 22, 2004
• Sequence Number: 40
• Publication Date: May 12, 1966
• Content Type: MEMO

NM`IRelease 2004/07/08: CIA-RDP80B01676R00040019 049-6----
I Es~cutice r,~.strt
THE WHITE HOUSE I - -
May 12, 1966
Mr. Bundy
,~I r. Colby
Mr. Gaud
Mr. McNaughton
Mr. Poats
Mr. Unger
SUBJECT Non-military Action Recommendations
The attached draft is the subject which Mr. Komer proposes to
discuss at the meeting at 11:30 a. m. May 13, Room 374-A, E. O. B.
preparatory to presentation to the President at 6:30 p.m.
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Decisions to be Requested of Presider.t
1. ACTION PROGRAM TO COPE WITH INFLATIO\T. Across the board
three-pronged attack will be
A. DOE) and AID will each make all-out effort to reduce to minimum
inflationary impact of further US buildup.
If SecDef agrees, DOD goal
will be to keep demands on local economy and manpower at FY 1966 rate,
despite increase in deployments and construction program.
B. US will make all-out effort to eliminate bottlenecks to massive flow
of aid commodities, especially port and in-country transpol-_ congestion.
US military will provide shipping, port aid, and in-country lift as required.
US will insist that GVN take essential steps speed flow of goods, if necessary
using leverage of threatened suspension aid shipments till bottlenecks removed.
If GVN unwilling or unable act, US should request Ky approve US military
takeover of Saigon port and delivery to importers.
C. As soon as IMF recommendations available, US will present to GVN
revised Honolulu package of maximum realizable fiscal measures to sop up
piasters. Goal should be an optimum package designed to sop up at least
10 billion piasters via: (1) tax and revenue measures sufficient to raise
some $VN 2-3 billion; (2) raising the piaster take from imports by at least
$VN 7-9 billion, probably via a combination of advance deposits on imports,
earlier payments of customs duties, foreign exchange surcharges, and some
degree of devaluation; (3) increased GVN sales of foreign exchange at
penalty rates for "invisible" transactions, as necessary to bring the piaster
recapture rate up to VN $10 billion.
D. Negotiating Strategy on Fiscal Package. Given the political weak-
ness and administrative feeoleness of the GVN, we must design an approach
which will minimize political criticism of the GVN yet achieve the desired
economic result: (1) while the radical surgery of devaluation may be the
only way to achieve quick results, it should be disguised as much as feasible;
(2) as carrots we should hold out US approval of a GVN pay raise and some
form of US help for Kyts PX system if feasible; (3) since sticks may also
be necessary, we must consider threatening to withhold US aid or limiting
further US buildup till inflation is brought under better control.
(1) Upon his return, Ambassador Lodge should again
raise inflation with Ky as a matter of highest level US
concern.
(2) As soon as IMF proposals are in, Bob Nathan should
go out as high level negotiator to sell Washington package.
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12 _May 1965
- 1C_1 Too C:~ PABT IT S,
-~~il 1 J?
~? ~i:rig w'il ~":O~'e , ,-Oi.,, ~
fro :. 19, COO `~- pt `y to increase annual ::a,-, of
to 39, C30 as last as instruct?` ar `l ~c?r Ci .~~'~~
qual_ty. I.OD wiL _,rovide s are available to ...c-..
construction
canter. r- resources needed to ~_ ovlde
.or.Zer will resolve issue of how a new
add-on is apportioned estir...e4 a:rong abencies. Y 30
rniliion
B. We will expedite ex
i
pa ns:
on of
boat, and ro;z;, r police Forces to 72, 000 end o: FY 1966
P- ~~tly s?zc;? `?rti:er ex
term interns pal:s.or. or
. police as the p,-
1 security rostra-neat. ``-c==ec longer VAIPO)AN R SO;; E^ZE
-----_. Aside from RD Cadres, SecDef and Komer will
approval of any FY 1967 GVNT manpower increases unties agree-
freeze ::rent is reached on civil/military allocati on, overall effect a or, all force ceilings at end FY 1966 approThis means in +
ve levels until a m 'pars y
bud get can be worked out.
arpowar
IV, NEW LAND, REFORM INITIATIVE:
~
revolutionary We favor if feasible a dramatic n proposal for Psychological impact. Since Cooper- ew
I;eWes
proposals are not yet in shape for high level decision, they i
firmed up as urgent matter by Saigon and Washin wi_1 be further
the week of 5 June wi,en porter is in Washi.~oton.gton, for top-level review
V. OVERALL PACIFICATION DIRECTIVE AND
t::ese to give focus to the civil sie. Sai~ MATER PLANT We roust have
Komer is preparing complementary ?on draft will be available late May.
priorities, Washington I\TSAIvI directive sottir0
SEC :R, T
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