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To estimate French Union and Communist capabilities and probable courses of action with respect to Indochina and the internal situation throughout Indochina through mid-1954.

There is no major expansion of the Korean war.

1. Unless there is a marked improvement in the French Union military position in Indochina, political stability in the Associated States and popular support of the French Union effort against the Viet Minh will decline. We believe that such marked improvement in the military situation is not likely, though a moderate improvement is possible. The over-all French Union position in Indochina therefore will probably deteriorate during the period of this estimate.

2. The lack of French Union military successes, continuing Indochinese distrust of ultimate French political intentions, and popular apathy will probably continue to prevent a significant increase in Indochinese will and ability to resist the Viet Minh.

3. We cannot estimate the impact of the new French military leadership. However, we believe that the Viet Minh will retain the military initiative and will continue to attack territory in the Tonkin delta and to make incursions into areas outside the delta. The Viet Minh will attempt to consolidate Communist control in "Free Laos" and will build up supplies in northern Laos to support further penetrations and consolidation in that country. The Viet Minh will almost certainly intensify political warfare, including guerrilla activities, in Cambodia.

4. Viet Minh prestige has been increased by the military successes of the past year, and the organizational and administrative effectiveness of the regime will probably continue to grow.

5. The French Government will remain under strong and increasing domestic pressure to reduce the French military commitment in Indochina, and the possibility cannot be excluded that this pressure will be successful. However, we Rh