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  4. Document 218

218. Telegram From the Secretary of State to the Embassy in Vietnam 1

Washington , June 30, 1955—5:19 p.m.

5681. Joint State–FOA–Defense message.

1.
Your 57692 studied and considered in OCB Special Working Group on Indochina.3
2.
Joint 55324 increased program funds CY ’55 by $11.4 million to $234.8 million. Latter figure short $15.4 million from amount requested reference telegram.
3.
Even if there were firm program submitted by Vietnamese Government, would be extremely difficult at this time obligate up to $250.2 million for Vietnamese armed forces CY ’55 since obligation of additional $11.4 million exhausts currently available funds. If developments warrant in last half CY ’55 additional funds might be secured by some means but would require more justification than we are able present on basis currently available information. However urge real attempt keep expenditures within presently obligated $234.8 million since expenditure FY ’56 funds in CY ’55 would only accentuate CY ’56 problems. In view fact presently obligated figure would allow Vietnamese obligations at rate $30 million per month during last seven months compared $21 million during first five months, appears Vietnamese might not require aid in excess $234.8 million. Comment.
4.
Disturbed over estimated cost CY ’56 program reftel especially as funds requested Congress based figures much lower than estimated requirement $336 million. Regardless particular figures forces and costs finally accepted, Vietnamese must begin face up to problems reducing total costs armed forces, increasing own contribution, and reducing U.S. contribution thereto. Under calculations reftel, costs U.S. in CY ’56 would be above those CY ’55, representing no progress in two years towards our long term goal reducing costs.
5.
Several basic questions arise connection Washington consideration your 5769.
a.
What political, economic, and military pros and cons maintaining forces CY ’56 at 150,000, plus 40,000 garde civile, comparison Collins’ recommendation 100,000 and no additional forces?
b.
What are probable Vietnamese plans and desires regarding forces?
c.
What are possibilities reducing average cost per soldier in addition to conscription?
d.
Why must conscription be delayed 15 months?
e.
Why cannot demobilization be pressed harder?
f.
Even if decision were favorable maintain forces above 100,000 might not further cost studies and increased control Vietnamese military budget lead to reduction over-all cost?
g.
Are additional cost and budget control personnel needed Saigon?
6.
Recognize paragraph 6 and 7 reftel are initial estimate. Further refinement and reduction over-all cost will be necessary so that U.S. can meet strength needs Vietnamese armed forces, and cost still can be kept within limits which will be set by foreign aid appropriation. Immediate future should be devoted to setting up mechanisms whereby U.S. control over-all costs would be more effective, especially with view over-all reduction costs. Advise what steps you have taken this direction, what cost studies you have made, and what additional these lines needed.
7.
In future further study will also be needed work out most effective mechanisms making U.S. aid available with maximum flexibility. However U.S. considers it inadvisable continue indefinitely in position supporting inflated import surplus and abnormally high standard living Vietnam as part of support military effort. Reduction over-all costs military would serve double purpose reducing level U.S. aid and reducing artificial import surplus. Vietnam must look forward to day when cost civilian imports supported by receipts civilian exports rather than military in payments. Faster progress this direction must be made than that implied reftel.
8.
Advise how cost estimates including force levels were calculated and whether reftel based Vietnamese data or U.S. analysis thereof.
9.
Since consideration points raised your 5769 will require further detailed studies, Washington agencies interested Saigon country team considered replies via pouch preceded by cabled summary5 if you so desire.
Dulles
  1. Source: Department of State, Central Files, 751G.00/6–1155. Secret. Drafted by C. Hoyt Price of PSA and cleared in draft with S/MSA, FE, Defense, and FOA.↩
  2. Document 208.↩
  3. See footnote 4, Document 215.↩
  4. This joint FOA–State telegram to Saigon, June 18, is not printed. (Department of State, Central Files, 751G.5–MSP/6–1855)↩
  5. See Document 227.↩