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MEMORANDUM FOR THE RECORD

1. Meeting was held to recapitulate the talks with the French, to analyse Saigon's views on the Indochina situation, and to review the proposed NSC policy statement on Indochina.

2. . According to available information, the principal results of talks with the French on their military budget were as follows, with respect to Indochina:


 * (a) Total budget for Indochina — 208 billion francs, or approximately $600,000,000. This is an increase of 60 billion francs over the 1950 budget. This increase is not directly related to the formation of the National Armies. It includes a deficit of 35 billion francs carried over from 1950, which was due, in part, to payment for native troops. It was difficult to get adequate explanation from the French of this increase. U.S. representatives stated that the budgetary assistance to make up the overall military deficit has no relation to the formation of the National Armies. In other words, the French could not take

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