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Declassified per Executive Order 13526, Section 3.3 NND Project Number: NND 63316. By: NWD Date: 2011  of the forces. The South Vietnamese insisted, for the outset, that they could not raise the piasters required.

The basic question of whether the South Vietnamese were bearing a reasonable share of the burden devolved into a number of technical issues, such as the effect of the program on inflation in South Vietnam, and the piaster/dollar exchange rate. The Gilpatric/Lansdale draft of the Task Force Report proposed that Diem be flatly assured that the U.S. would make up any deficit in the Vietnamese budget. But State objected from the start to giving any such assurance. Instead a Joint commission of U.S. and South Vietnamese economic experts was proposed to work out a joint program dealing with these economic issues. This was one of the proposals Vice President Johnson carried with him on his mission. Diem accepted the proposal. And the U.S. team, headed by Eugene Staley (president of the Stanford Research Institute) was dispatched to South Vietnam in mid-June.

By the time the Staley Mission left, though, Diem had written the letter Just quoted asking for U.S. support for a large further increase in his forces. Staley's group, with its Vietnamese counterpart, found themselves serving as the vehicle for the discussions on force levels. The report they issued is mostly about military issues, on which the economists stated they simply reflected instructions passed on by their respective governments. Here are some excerpts on the military issues (in addition, the report of course contained a discussion, rather vague as it turned out, of the economic issues which were nominally its purpose, and it also contained a good deal of very fine, vigorous language on the need for "crash programs" of economic and social development).

Viet Nam is today under attack in a bitter, total struggle which involves its survival as a free nation. Its enemy, the Viet Cong, is ruthless, resourceful, and elusive. This enemy is supplied, reinforced, and centrally directed by the international Communist apparatus operating through Hanoi. To defeat it requires the mobilization of the entire economic, military psychological, and social resources of the country and vigorous support from the United States.

The intensified program which v/e recommend our two countries adopt as a basis for mutual actions over the next several years is designed not just to hold the line but to achieve a real breakthrough. Our joint efforts must surpass the critical threshold of the enemy's resistance, thereby putting an end to his destructive attacks, and at the same time we must make a decisive impact on the economic, social, and ideological front.

The turn of events in Laos has created further serious problems with regard to the maintenance of the GVN as a free Rh