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Declassified per Executive Order 13526, Section 3.3 NND Project Number: NND 63316. By: NWD Date: 2011

Our capability to assist Vietnam is hampered by its own inability to make the best use of its available resources. A broad range of agreement between our governments on fiscal and monetary measures to correct this situation is urgently needed.

In spite of the increased insurgency, Vietnam has been making good economic progress. It has increased production and its exports have been increasing rapidly. Despite a steady decrease in economic aid, its foreign exchange reserves have been going up and are now in excess of its normal needs. On the other hand, GVN revenues are now inadequate, in GVN opinion to meet the increased local currency costs of further anti~insurgency measures. This presents the US with a difficult delimmadilemma [sic]. On the one hand, the enthusiastic cooperation of the GVN in moving forward against the Communists is essential, but on the other hand, if we give in to their request for more aid in support of the military budget, this might not only fail to produce additional local currency, but could provide a serious disincentive to GVN efforts to find more resources. More importantly, coming after a protracted Rh