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 OUTGOING TELEGRAM

FOR COLLINS AND DILLON FROM SECRETARY

Pursuant my talks concerning Viet-Nam with Mendes-France and Eden Paris (Paris 2601 repeated Saigon 388) I feel it good occasion for us all review basic factors Viet-Nam problems and spell out some guide lines our actions in near future.

1. Although there many complex and difficult factors confronting Free Viet-Nam, there is no reason admit defeat. During past five months since Geneva, situation has not disintegrated. People fundamentally anti-Communist. They have major resources in south. Hinh problem solved and resettlement proceeding reasonably well. In some ways, developments better than we predicted. Collins and Ely have contributed greatly this situation and their cooperation is major asset. Direct aid, reduction FEC and provisions Manila Pact all positive factors which will affect developments. Pace may not please us but major changes such stage of transition as Viet-Nam goinh through comes more slowly than in West. We must not overlook fact Communists also face formidable problems and if we create situation such that they can only take over by internal violence, we will have faced them with serious dilemma because of unfavorable effect Rh