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 -4-#2303, December 16, 7 p.m., from Saigon reevaluation of our plans for assisting Southeast Asia with special attention to proposal contained in paragraph 6, Part II EMBTEL 2250.

9. I am sorry to have to make such a discouraging report, but in all honesty I have to present to you my present convictions because of their possible effect on US 1956 budget about to be presented to Congress. Should it be determined, that in view of the unsound situation in Vietnam the US should gradually withdraw its support from this country, then it would be necessary, in my opinion, to increase the aid the the French expeditionary corps so that it would remain strong enough during the next year to permit the US to withdrawn essential equipment which might otherwise fell into Communist hands. It appears to me, therefore, that we should retain as much flexibility as possible with reference to financial aid for the FEC.

10. Conclusion: It is possible that by a month from now some radical improvement will have come about but I strongly doubt it. Meanwhile, I feel that we should make a sober reevaluation of the situation here before we commit over $300 million and our national prestige under current conditions. I will continue to carry on along same lines I have been following, but will await instructions while temporarily dragging feet, if recessary, with respect to definite commitments, as indicated in paragraph 8.

KIDDER

EL/1

Note: Passed Defense 12/16/54 11 p.m. AL Rh