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 (2) As soon as current crisis is over, decisive effort must be made to persuade or otherwise force Diem to reorganize his government and to establish a cabinet competent to implement broad programs of reform covered by the Collins-Ely seven-point program, plus a program for integration of sects into normal life of Vietnam.

(3) If, after reasonable further period of trial, Diem is unable to constitute a government capable of implementing these programs, US should join with France and Bao Dai in assisting liberal Vietnamese nationalists to establish a competent government.

B. I recognize that General Ely may irrevocably be opposed to supporting any Diem government. If this should prove to be true, I would suggest we urge Faure government to replace him, preferably wth man of caliber of Devinat, or perhaps Georges-Niact. At same time, it would probably be necessary to replace General Jacquat (who has incurred violent animosity of Vietnamese during Binh Xuyen affairs) with man like General Cogny.

C. Reference step (3) above, I recognize also that it may be politically difficult to withdraw US support from Diem even if trial proves is capable of establishing an effective government. I still feel that even if Diem manages suppress Binh Xuyen, this will not change his own basic incapacity to manage the affairs of government. His present successes may even make it harder for us to persuade Diem to take competent men into government, to decentralize authority to his ministers, and to establish sound procedures for the implementation of reform programs. I am still convinced Diem does not have knack of handling men nor the executive capacity truly to unify the country and establish an effective government. If this should become evident, we should either withdraw from Vietnam because our money will be wasted, or we should take such steps as can legitimately be taken to secure an effective new Premier.

D. Throughout all this I feel we must keep our eyes clearly on our main objective in Vietnam, i.e., to assist in saving this country from Communism. No matter who heads the government here, free Vietnam will not be saved unless sound political, economic and military programs are promptly and effectively put into action. This will require wholehearted agreement and coordination between Vietnamese, Americans and French. Difficult as this may be to achieve, it is possible, in my judgment. If this tripartite approach is not secure, we should withdraw from Vietnam.

KIDDER

Rh