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Rh-2- PART II.

Possible alternatives to Diem Government:

As I see it, we have 3 possible courses of action in Vietnam:

(A) Continue support of Diem Government.

(B) Support establishment of another government which may be able to save situation.

(C) Gradually withdraw support from Vietnam.

2. (A) Difficulties and risk of support Diem have been covered in EMBTEL 2108 and PART I this message and other cables. Recent accomplishments have been minor considering magnitude of task ahead. Favorable developments include:

(1) Diem made first anti-Communist appeal to people 16 November.

(2) Diem-Hinh feud has been resolved, for present at least.

(3) Diem made trip to South Cochin China to observe work by Army in its rehabilitation program.

(4) Rang-Phan Thiet affair has been compromised.

their new offices.

(6) 13 December Diem issued proclamation expressing confidence in the Army and calling on it to unite with people in the fight against Communism.

(B) Realize abandonment of Diem would embarrass US in view our public support present government. However, if it proves necessary, believe such embarrassment would prove insignificant compared to blow to anti-Communism in Asia and throughout world if US-supported free Vietnam were lost to Communism. I believe it would be better to take slight loss of prestige in near future while time to attempt other solution remains, rather than continue support Diem should failure appear relatively certain. We have not reached this point, though I have grave misgivings re Diem's chances of success.

3. In view of possibility that Diem will fail to rally Communism, believe we should consider other solutions. Two alternative (neither of which is too promising, but each of which should be considered in event of Diem's failure) are suggested: Rh PERMANENT