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Rh States with respect to assumption of training responsibility or direct military aid and have indicated that my final recommendations will be dependent upon the progress actually achieved by his government during the remainder or my stay here. I am in full accord with position taken by Secretary outlined in paragraph 8.

3. I thoroughly disagree with the suggestion by Mendes in paragraph 9 and  by Eden in paragraph 11. As I view situation there are only four acceptable solutions with respect to Beo Dai: either (a) he should return to Saigon and use his full authority and influence to force sects and all other elements of country to support progressive program of Diem, or some other Premier if Diem is replaced; or (b) he should personally assume active direction of the government as Chief of State and Premier; or (c) he should cease pulling any strings from France or asserting any influence, except as specifically requested by French and Americans pending establishment of constitutional monarchy; or (d) he should renounce his authority as Chief of State. I assume that these and perhaps other alternatives will be examined thoroughly in Washington as indicated in Embassy telegram 2477 and Department telegram 2599, repeated Saigon 386.

4. Quite frankly I was disturbed over the attitude assumed by Mendes as indicated in paragraphs 21 through 24. Inference in paragraph 23 that Vietnamese Government had been breaking Geneva agreements with respect to public utility services in Haiphong is not factual to our best information. I told Ely that I had issued positive instructions to our MAAG and USOM representatives in Haiphong to cooperate fully with French in preventing violations of the Geneva Accord in Haiphong enclave. No single report of violations has been made to date. I wonder whether Mendes' reference is possibly a removal of US financed mining equipment which French commercial firms and Sainteny Mission may be concerned with. Ely has promised to  valuable and better conditioned equipment of this character removed. However, Daridan only yesterday said there may be some question as to whether this equipment could be interpreted under the Geneva Accord as pertaining to public utilities.

5. Statement in paragraph 24 by Mendes that Collins-Ely agreement reference military training would have to be studied carefully from legal point of view again raises question authority delegated Ely end extent to which he will be supported by Mendes government in agreements made as indicated by Mendes in last Washington conference. If our conduct of training is to be hedged about with legal interpretations of the character in paragraph 24, then I would recommend that we not assume this responsibility. As indicated in an earlier message, Ely had agreed with me that if necessary, strength of our MAAGRh