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U.S. recognizes that Cao Dai and even the Hoa Hao are genuine sects with cultural religious and political roots which cannot be forcibly torn up without grave consequences which should be avoided but we do not believe that any central government can exist as more than a figurehead if it does not have control over the national police and if this control is farmed out to a gang which exploits its privileges to protect vice on a vastly profitable scale and which exists by virtue of the backing of the self-exiled Bao Dai and the French.

We cannot see that replacement of Diem by any persons you mentioned will of itself correct this situation and indeed we have had the impression that Quat was less acceptable to the sects than is Diem.

There are two other factors to be borne in mind.

One is that it is widely known that Diem has so far existed by reason of U.S. support despite French reluctance. If, however, when the showdown comes the French view prevails then that will gravely weakneweaken [sic] our influence for the future both in Vietnam and elsewhere. Removal of Diem under these circumstances may well be interpreted in Vietnam and Asia as example of U.S. paying lip service to nationalist cause and then forsaking true nationalist leader when QUOTE colonial interests UNQUOTE put enough pressure on us. The French constantly assert that the U.S. has a primary responsibility in this part of the world but it is difficult to have responsibility without authority. In essence, will not the ouster of Diem on the present conditions mean that from now on we will be merely paying the bill and the French will be calling the tune. Any successor of Diem will clearly know where the real authority lies. Rh Rh