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EYES ONLY DILLON AND ALDRICH

FYI Following are main points made by Secretary in long conversation with Bonnet this morning.

1) We see no prospect of negotiated settlement at Geneva which does not boil down to one of following alternatives: (a) Face-saving formula to cover surrender of French Union forces, or b) Face-saving formula to cover surrender of Viet Minh.

2) Division of Indochina impractical. QUOTE Mixed UNQUOTE government would be beginning of disaster. Both would lead to (a).

3) In addition to consequences in Southeast Asia solution (a) would create gravest difficulties for France in Europe and North Africa. Future of France as power is at stake.

4) If we are strong and resolute enough to make Chinese Communists see clearly that their conquest of Southeast 46133 Rh