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 for the French because of the cost to the Viet Minh and the relatively greater loss to the Viet Minh combat forces. Politically and psychologically the loss of Dien Bien Phu would be a very serious setback to the French Union cause, and might cause unpredictable repercussions both in France and Indo-China.

10. In regard to the general situation in Indo-China General Ely's views were essentially as follows. The loss of Indo-China would open up all of South East Asia to ultimate Communist domination. Victory in Indo-China is as much a political as a military matter. The French hope to get agreement with the Viet Nam in current discussions in Paris which will implement the July 3rd declaration and lead to more enthusiastic cooperation and participation in the war by the Vietnamese. They hope also to get more positive leadership from Bao Dai who, at this time, is the only potential native leader. From the more optimistic point of view, assuming that Dien Bien Phu was held and native support assured, he expected that military successes but not total military victory would be achieved in 1954-1955, following the broad concept of the Navarre Plan and within presently programmed resources. Ultimate victory will require the creation of a strong indigenous army, extending operations to the north and west, manning and defending the Chinese frontier and the commitment of resources greatly in excess of those which France alone can supply. He envisages some sort of a coalition or regional security arrangement by the nations of South East Asia. Rh