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 should give priority to: (1) bringing the armed forces to authorized strength, (2) improving their morale, (3) carrying out conscription more effectively, and (4) obtaining qualified civilian workers. 70/

Before he was able to make this report of 2 May, however, Ambassador Lodge had a showdown meeting with Khanh over the failure of the GVN to carry out many of the necessary actions called for by the NSAM-288 programs. On 30 April, accompanied by Westmoreland and Brent (USOM chief), Lodge met with Khanh, Oanh, Khien, and Thieu, to discuss the GVN failure to provide operating funds to provincial and lower local levels, and to correct manpower deficiencies.

Lodge opened the meeting with a prepared statement which he read in French. He said that direct observation by U.S. provincial advisors throughout Vietnam proved that nowhere was there an adequate effort to provide piastres to Corps, Division and sectors, to increase the pay of ARVN and paramilitary forces, to bring these troops to authorized strength, to recruit added forces, or to compensate incapacitated soldiers or families of those killed. In fact, he said, there were confirmed reports from Corps and Division headquarters of deceased soldiers being kept on the roles as the only means of compensating their families and preventing further deterioration of ARVN and paramilitary morale. There had been a steady decline in the strength of RVNAF since October 1963, notably including a decrease of 4,000 in March alone; and the current strength was almost 20,000 below the authorized figure agreed necessary by both governments. Likewise, the force level of SDC had decreased in the same period by almost 13,000, leaving that force 18,000 below its authorized strength. The Civil Guard was almost 5,000 below the required strength. The ARVN and CG desertion rate was double what it had been in February, and SDC desertion rate was up 40%. Only 55% of the conscription quotas were being met and volunteers were below the expected level.

Failure to provide funds was blamed as a major reason for these military manpower deficiencies. The shortage was so great that the current trend in effectives could not be reversed before August in any events Lodge went on to say that USOM and MACV visits to the provinces also confirmed that failure to provide piastres to local headquarters also led to shortages of resources for pacification efforts. The result was that most of the McNamara program of reforms and improvements (of NSAM-288) was failing, not due to lag in support promised by the United States, but simply because the Saigon government did not provide piastre support for the joint pacification program agreed upon by the two governments. The war, Lodge concluded, was being lost for want of administrative initiative in printing and distributing the necessary local funds for the agreed programs. Lodge conceded that the government had made a forward step in announcing its intentions to decentralize procurement authority from the Director General of the Budget and Foreign Aid to the ministries, but further decentralization to provincial and district authorities was advisable. Rh