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 :e. Turning over to Bao Dai of the No. 1 residence in Saigon, now occupied by the French High Commissioner. This is symbolic as well as practical. This is undoubtedly the reason why it is impossible for Bao Dai to take residence in the capital city, where his presence would be a sign of the reality of his Government. Even Pignon is opposed to this, on the grounds that it would affect French morale. Nevertheless this cannot be overlooked.


 * f. Statement of the French that their purpose in training and preparing for field operations of a Bao Dai army is part of their plan for the complete protection of the country by Viet forces, which thereafter would enable them to withdraw.


 * g. There are many other actions, most of them minor in importance in western eyes but highly significant to Orientals, that can be taken to set up the prestige and position of Bao Dai. Some of these proposals have been contained in Gullion's cables.


 * 4. Current Military Problems.

A French army of mixed but "regular" troops of approximately 130,000 men is maintained in Indo-China, chiefly in the Province of Tonkin, to prevent the overrunning of the Province and the Red River valley by the Viet Minh and to stand guard against Chinese invasion or infiltration.

The presence of this army is indispensable even though many Bao Dai supporters would prefer to have it removed forthwith. These people believe they could settle their differences with Ho Chi Minh by negotiation if the French were withdrawn. The latter point of view is not realistic, and there is good reason to believe that withdrawal of French forces would quickly lead to Communist takeover.

French-trained Viet troops are effective and loyal, and those embodied in the French army are said to be the equal of any colonial troops. The French are vigorously training approximately 58,000 Viet troops for the Bao Dai army. Such units, once tried and found satisfactory, can in Rh