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 DEPARTMENT OF STATE

SECRET NOFORN

Office of Intelligence Research

The position of the government of South Vietnam is appreciably stronger than it was a year, or even six months, ago. Within the past several weeks, however, signs of new political stresses have appeared and the Communists are apparently stepping up their campaign against the South Vietnamese Government.

The coming months are likely to see crises, in view of: 1) the Chinese Communist request on January 26 for a reconvening of the 1954 Geneva Conference on Indochina; 2) the absence of any real prospect that the nationwide election, stipulated in the Final Declaration of the 1954 Geneva Conference, will be held by July; and 3) the reported increase in opposition to President Ngo Dinh Diem and the Communist attack on programs strengthening the Diem government, specifically; the March 4 election for a national constituent assembly.

Since the virtual elimination of the Binh Xuyen as a military force and the neutralization of a major portion of the Cao Dai units, the principal threats to internal security in South Vietnam come from the clandestine Communist apparatus and from the remnants of the Hoa Hao sect. The Communists have an estimated 10,000 guerrillas in South Vietnam, scattered jn small groups in rural areas but presumably still responsive to control from Hanoi. The principal infested areas are the plateau region of northern South Vietnam, the southern peninsula (Camau), and the canal-woven area southwest of Saigon where the Vietnamese National Army (VNA) is currently engaged in operations against the Hoa Hao. Communist agents reportedly have been Rh