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suggest you consider possibility generating piastre counterpart through direct programming ECA dealer aid Indo-China now going indirectly through France.

(2)

Vietnamese very auspicious of all negotiations conducted in Paris. They have as yet no official representatives abroad. Moreover, they seem to trust Pigeon more than other French. Consequently, as much economic and political negotiation as possible should be carried on in Saigon, if it is our desire increase status new governments.

(3)

In principle Vietnam, Laos, and Cambodia should be direct recipients of economic aid and it is so recommended. Allocations deriving from French funds already appropriated or allocations of French counterpart would of course require French authorizations, preferably large scale en bloc.

Aid agreements should be with each separate state, but French will have to be handled with gloves. Extension of some kinds of aid to associated states en bloc has many merits; tends to promote regional understanding, but strongly opposed by Vietnam and to lesser extent by other states as device for continuing French control. French repudiate any idea such control, claim quadripartite cooperation as provided in March 8 agreement is necessary to prevent wrecking complementary economies IndoChineae countries, to preserve Laos and Cambodia from encroachments of Viet Nam, prevent corruption and inefficiency. Claim their only interest is as counselors. (See Leg. tel ).

Present intransigency on both sides, Viet emotionalism, their impatience at delay in applying conventions for application of March 8 Agreements, feeling that latter la already outmoded, bode no good for forthcoming

Rh