CONFIDENTIAL
control, protect their logistic system and discredit the RVN. The
North Vietnamese logistic system has been greatly improved by the
extension of main supply routes and fuel pipelines from the heartland
of North Vietnam to southern South Vietnam. The North Vietnamese now
in the South
have sufficient stocks to support an all-out offensive of many months
duration. There are an estimated 180,000 NVA combat troops and
30,000 Communist guerillas in the South.
Economic situation
5. This military pressure makes it extremely difficult for the South
to run down its armed forces (comprising 465,000 regulars and 525,000
militia, a total of some 370,000 combat troops). This prevents the
Government from releasing resources (almost 50% of the budget is
devoted to defence) and skilled manpower for the task of restoring the
economy and building up exports. In 1973 total export receipts were
US $60.5m. compared with imports of 715m.
6. This gap can only be bridged by massive US civil aid, currently
running at $708m. a year. The US Senate have however demanded a
timetable for the phased reduction of US aid to South Vietnam before
they will consider the Administration's aid proposals for the coming
financial year. In a continuing war situation there is no prospect of
aid from other donors or private investment making good any reduction
in US aid.
7. The Saigon Government are also faced with a high rate of inflation
(over 65% last year), exacerbated by the rise in world commodity
prices, and with heavy unemployment, to which the withdrawal of
US forces has contributed. Unless means can be found of holding these
economic strains in check, public discontent could threaten the
political stability of the present regime.
/8.
CONFIDENTI AL
No comments yet.
Private notes are available after approval.