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 6. . One of the crucial requirements of U.S. policy and operations in Vietnam is to determine precisely what French intentions toward the country are. It is clear that the French in Vietnam do not speak with a single voice. I have entire confidence in the integrity of General Ely and have no doubt that he believes what he has said to me during the course of our association in Saigon. However, the presence in Hanoi of the Sainteny mission, the conversation I had with Sainteny in Ely's presence, and excellent analyses made by our Embassy in Paris, lead me to believe that General Ely is not the sole representative in Vietnam of the French Government. This view is reinforced by a continuing and undisguised French desire to remove, Prime Minister Diem in favor of one of their own candidates. I believe that the French are preparing two possible courses of action:

. If free Vietnam should be taken over by the Communists, the French wish to be prepared to make a deal with Ho Chi Minh in order to continue trade and cultural relations with Ho under some form of "co-existence".

. If, on the other hand, free Vietnam, largely through U.S. aid and support of the Manila Pact, can be saved as an independent state, the French still wish to retain their special economic and cultural status, claim a large measure of credit for such success, and thus, perhaps, hold free Vietnam in the French U:n ion. The French Government, however, is still undecided as to the outcome, and so teeters back and forth between these two policies. I feel that our government should have this matter out with the French Government once and for all. With full and faithful support from the French, Diem has a fair chance of success. Without such support, particularly if instead there should be covert obstructionism from the French in the form of support of rival leaders, perhaps with Bao Dai's connivence, Diem's chances will be materially lessened.

7. . . Diem's virtues lie in his widely acknowledged probity and nationalism. His disadvantages as a head of government are his lack of executive experience, his conspiratorial past which tends to make him suspicious of those who do not openly support him, his naive trust in those willing to flatter his ego. his lack of "know how" in selling himself to his people, his narrowness of view, his tendency to exaggerate his insight into the problems Vietnam, and his great stubbornness. Moreover Diem has surrounded himself with members of his family whose defects tend to intensify rather than offset his own. Rh