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EYES ONLY AMBASSADORS PEASLEE AND SCOTTEN

FYI. Following are main points made by Secretary in conversation with Ambassadors Spender and Munro April 4.

(1) Situation in France is deteriorating and there is very real possibility that unless new element interjected into Indo-China situation French will seek settlement at Geneva which will amount to a sell-out.

(2) We see no prospect of negotiated settlement at Geneva which does not boll down to one of following alternatives: (a) a disguised surrender of the French or (b) a disguised retreat of the Communists. We have carefully studied other possibilities including division of Indo-China and consider them impracticable.

(3) In our view required new element in situation should be creation b e fore Geneva of an ad hoc coalition of states directly interested in area who had pledged themselves to work together and, if necessary, to contribute forces. Nations we have in mind are US, France, Associated States, EUR:JCHBonbright:bsm Rh

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