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Declassified per Executive Order 13526, Section 3.3 NND Project Number: NND 63316. By: NWD Date: 2011 TOP SECRET – Sensitive :::2.

France was anxious to get the FEC out of Vietnam (and into North Africa); the matter of turning the High Command over to the VNA was not a problem. Placing French units under Vietnamese command was a definite problem, however and domestic politics would not allow any immediate change of Vietnam's status within the French Union. Talks stalled until July. Diem accepted Ambassador Hoppenot (whose duties, if not title, were that of High Commissioner) and things moved a bit, then stopped when Diem arrested two French officers suspected of bombing electric power stations in Saigon and said they would be tried by Vietnamese courts. In October, France refused to talk unless the officers were released. The deadlock was finally broken by the French in December. Paris agreed the Quai d'Orsay would handle Vietnamese affairs, refused to accept the assignment of a diplomatic representative from the DRV to France and made it clear the Sainteny mission was in Hanoi solely for economic and cultural reasons. France had already recognized Vietnam as a Republic after Diem's resounding — too resounding — victory of 98 percent of the vote in an October popular referendum. Diem finally released the officers into French custody.

But these concessions produced no improvement in French–Vietnam relations. In December, Diem suddenly terminated the economic and financial accords worked out at the Paris conference of 1954; mounting US activity fast drove the former colony from franc to dollar area and stringent commercial regulations applied to French businesses in South Vietnam forced already outraged entrepreneurs out of the country in increasing numbers. Diem laid down these conditions on which he would consider renewed relations with France. France had to

"denounce the Geneva Agreements, to renounce to speak about the general elections in 1954, to approve openly and without reservation the policy of Mr. Diem, to break all relations with the Vietminh and of course to call home the Sainteny Mission."

Soon after this, Diem withdrew South Vietnamese representatives from the French Union Assembly.

There was little France could do. Diem spoke for a government no longer dependent on French support, no longer near collapse. By February 1956, only 15,000 French troops remained in Vietnam and 10,000 of these were to be evacuated by the end of March. The High Command was abolished on April 26, 1956. The next month, the US Temporary Equipment Recovery Mission (TERM) entered Vietnam and another 350 military personnel were added to the US advisory effort. Few French instructors remained at the TRIM. Rh