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Rh 5. So far, Diem and his principal Vietnamese National Army (VNA) leaders have appeared desirous of maintaining good relations with the French. Diem's attitude toward Bao Dai has been less clear and there have been indications that he has been considering the suggestions of the Council that Bao Dai be deposed. He may be using ultranationalism to bring pressure against Bao Dai and the French. If he is thwarted in his objectives by the French or by Bao Dai, he will become more susceptible to pressures toward extreme action.

6. Diem has rallied additional support during the current military phase, and from this position of strength, Diem will almost certainly continue to gain adherents, inducing defections from among the Binh Xuyen and the sects.

7. The Vietnamese National Army. Aside from the French Army, only the VNA presently has the capability to enforce Bao Dai's authority in Saigon or to back Diem in defiance of Bao Dai. There are some VNA officers who dislike Diem and who are concerned by the developing rift between Diem and Bao Dai. On the other hand, there is considerable pro-Diem, nationalist sentiment in the army; Diem has gained additional support as a result of clearing the Binh Xuyen from Saigon; and most importantly, the VNA units in the Saigon area appear to be loyal to Diem.

8. If Diem should move precipitously to depose Bao Dai, or if Bao Dai attempted to oust Diem, some elements of the army might remain loyal to Bao Dai and attempt to overthrow Diem. We believe such efforts would be unsuccessful, however, even if General Hinh had entered the country to rally support for Bao Dai.

9. Bao Dai. As a result of Diem's stand against Baa Dai and because of the latter's involvement in what many Vietnamese nationalists consider to be a French-inspired political maneuver, Bao Dai's prestige has been greatly reduced, whatever the outcome of the present crisis. Baa Dai's authority can only be enforced at this juncture by the force of French arms and any such action would almost completely discredit him in Vietnam.

10. There appears to be considerable sentiment for the deposal of Baa Dai, and if Diem gives his consent such action may be taken at any time. For the present, Bao Dai apparently feels that the tide is running with Diem, and is attempting to preserve the institution of the monarchy by accepting the continuation of the Diem government.

11. The French Government. The French will find it difficult to accept Diem's success which came despite their strong and well-publicized opposition. We believe that fear of large-scale violence and of adverse domestic and world reactions will cause the French to refrain from oven action in Saigon to restrain the VNA or to remove Diem, unless the situation should threaten serious loss of French lives. However, the extent to which the French permit the VNA freedom of action and the nature of their dealings with the Binh Xuyen and Bao Dai can still have an influence on the outcome of the immediate situation. Furthermore, we believe that the French will continue pressures for Diem's removal; some French elements in Vietnam are likely to continue their covert assistance to Diem's enemies. If the French believe that Diem will succeed in consolidating his position, they may decide that they have no choice except to repair their position with Diem as best they can while making plans for accelerated withdrawal of their forces.

12. The Binh Xuyen. The military potential of the Binh Xuyen will depend on the extent of support they receive, directly or indirectly from the French and the Hoa Hao. It appears that the morale of the Binh Xuyen troops is low, a number have already defected, and that many of the troops may be susceptible to peace

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