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Subj: The Current Situation in French Indochina :Viet Minh for their counter-offensive against the main French position in the Red River delta.


 * (b) It would reduce the field of vision of French intelligence.


 * (c) It would completely upset previous French plans for extending their hold on the rice-growing delta area of Tonkin.


 * (d) It would open up a corridor from the Viet Minh mountain stronghold in Tonkin into Laos.


 * (e) It would have an unfortunate psychological impact on the already deteriorating political situation tending to cause a large number of Vietnamese in areas under French control to seek an accommodation with the Viet Minh or even to revolt openly.

6. A review of the situation in Indochina in the light of recent developments leads to the following conclusions:


 * (a) French military and political efforts have failed to date to restore order in Indochina. The fall of Caobang to the Viet Minh without French resistance will probably encourage the Viet Minh forces to further aggressive action.


 * (b) No significant build-up of Chinese Communist ground and air forces has been reported in southern or southwestern China, although rehabilitation and construction of airfields and roads in the region is in process.


 * (c) It is estimated that Viet Minh forces are building for a large-scale offensive to seize complete control in Indochina. This build-up is being fostered by aid from Chinese Communist sources in the fields of training and arms supply and, reportedly, by Soviet technical assistance.


 * (d) The Viet Minh attack and capture of Dong Kha and Pakha, and the subsequent withdrawal of French forces from Caobang and other border posts are considered indications that the initial phases of the offensive have commenced.


 * (e) A carefully planned Viet Minh offensive with clandestine participation by a portion of the 150,000 Chinese Communist troops in South China is more likely than an overt Chinese Communist invasion.


 * (f) The French are not considered capable of conducting an offensive in Tonkin, with troops and equipment presently available.

Rh