tli~:yie:triame s·e ·a 5 _rapid! y as we ·cart·~ .. ~;A·s~/f1i - USAID

B US .. ~·:P. .. U FOR VlE:TNA.1'.{ . ll.GENC:Y }'OR Il\ "1'E I\~ ·; 1:.. ·~c.~O NAL DBVELOt.='.lvi.ENT

DEPA::"'.Tr·1ENT OF STATE

'!'he cccnwmic independence· of South Vietnam is one of our broad

objcctivcs 1 as in~iCated in the. opcninf;! stc-itement made befo..-e this

Suhcor.nmittee .. · Ii i'eac•! ai1d security ar(' restored, we beUev~ that°

South Vietnarn can achieve this objeci:ive in about ten yr.R:rs)~ft~. i· the ,

.tt}rraiI]ation of hostilities •.

' . ,· p~3 : ~tep~ ' il~ th.i~ ' proce~s, we aim to phase-ove:r aid::prograni5 and •:. I , -_·. , ' · ,"·., ·_ ,· ·, , · , ' ,. _;.' I '< • •, > • I ' ' '

'. tli~ :yie:triame s·e ·a 5 _rapid! y as we ·cart·~ .. ~;A·s~ /f1i~ ·.:~ji~t,~~¥~:·~e: c~n prt'.:vid~ tlte furids and the . trained manpower to \a.s.~uine , :g:r~·~iq t ··:· ...

. ·. ·.' ' ' - ~. ' '" . .· - . __ -- · : ~ ;· ; :.:. _~.--:·;; : · .... ·::.: ·::"_.;; ; ,·._::· .. :.: ·.<<···.·.-.. · .·

respc;nsibility.·for the: progra.111s w .e help initiat~·; \Vci; c'riri'. ~c. ~iri: : ri~;~~~ ,a'.ml , .. . ;,''. '1 ·· :<1r .· •. < ·• ." ·. /:• :·;·.

. . . ··. · . . , .. ' .· · · · .·_.{· <: ·. ·. I ;i/.<.·X·;: ' ~',::·: · ._.· ' :~:·~··._ }: ·; · ··. ·'.'· 'J· '< eventu;).Uy phast::~o.ut .. .c\.1ne~·!.can · advisors and rn~ney o'ri.-:o.;-i~es~ior~al ' ,,

• . • ·. .. , . 'I . • ,·•. · ' • ,,. '· • . . .·., · . ... • · . . .

terms,.

-. ' fh~::·:!1~;~f: ~#1?.~~W :~~i. · p~ase-~Y~~ 'is .:intli~·: mii:iti·~~ · Ii~ld~ . As . you . ~ . . ' 1

know>· •.~h~-~.;~ :~ ·~if'Q),'i~}~~i~~ - ~··~~~.;:;·~;.a s · · .~~,i,~~~-~~:¥Y~t.~ .. ff;:~.- . ·a·~no.unc en~e~t . -. after · the . MicJ\t/ay_. m~~Hng.'i!(Jun~ ',::,:.196<] ;• ''1:hatVietnarncse .for.:e ~ ·.~o,1id

• • • .. ..... : ~ , •• ·'..; • • • •• • • \ .' · • • .. '_·,-". ~ ~:: ' • • ·~. : '~· :- ~\ /: :..:· . .... • ~· > •• •• l . • .

begin to i·.::place American troops~ ;

- 2 - .

Mibtary phase-cv~r affects ihe scope and pace of phase-over in

the economic and.sc.ci~l field. Military phase-o\•er increa1:1es the

military manpower requirements of the Vietnamese, thus further

straining their already severely pressed m9.npower pool and affecting

Vietnam's efforts t~ ,carry on and develop its economy. Similarl}r, ' . . '

military phase-over rai~.es sub~tantially the budgetary expenditures of ' ' . - .~·' :· '. ' : - '. ·', ' . . .. . ' . . . .

. the Vietname&e Goyei:;rurient~ wlli~h hripfriges upori its abilify·t6 ·pj~k . ·: ... ·. . .. , .,· , .. '• - .,. . . ,• ...

up. expendit\.1res fti.nde.d ,by·J\. I~ D. :o.n:the civil side;·,ind!·indeed:co~ld . .· ' , " ..

, lei:i.u l;ampora1·11y·to ·1ncreased·aid.·requircm'ents·~ . . ' ,,_ .... , ..... ,.. . : .· -···'· ..

Given these cir'c:umstances1. if is usefuFtc)]ook ;i.t"'th~ trend iri . ._· . .. . ' '.· ' . ·.1· '.: : .

recent years :with. respect to i'~burden.~Ghari~gir by.:the.:U;~{~-~:nd. So~th . ~ . '"' ·.: '. '·'. '

'.r.,,'.;.Stabilization:.·:.The :l~rg·e· ~~~tiri"l~ expendi.1t'1res 'a1id. bt~d~etary , . . . " . ' . ' ~ . : . ' , ". .:·· ' ' . . ' . .. ' ' . ', . . : .• ' : . ' .. . . , "· ·~· ',:. ' .

dt:fic.i~·~ssociated with military mobilization have created, _and cor;iti.lme .·,, ...

.. ·:.-·.'

to cr:~t~, i119~e:_asi~g.deman~·£~r goods and services. To some e:x"tcnt, .~ '" ' "

.. _'".' ' . '• ;', .. :·;, <i< ,,:· .: ·~(;f·: >.:: .. :: . . . - .

dome.s'tic produ.~:ti<:>nJ1~s.·rE(Sponded to rfomand incentiv-cs .fen· cer.tain. • • . . ·. . • '. ~ ~ •, », .'" ._ ' . ,1 . • ·" . • : . . . '

. .( . . ; ·. ·, ........ ,~,,:·.,,;S.f __ :··-.~: ~-- :1 ·:'·>.' .. ,·'~;,<,, ;~y . .:L···~'." ','. ' --- ' .. Si~~c~» e?'J?o .. rts .hav.~ fa:Uen:off substantial~y,·~y(ith the traditional

exports of rice and' 'rubbc'i ha~µ'..:hit by' the,war, three sources of '·. . .'·: .,:' •.. . ' ... . ' ... ·,. '•

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fo1·E:ign c~xchange or comm.oditie:s h:.vc perrnitted the Vietn?.mesc

Governrne:nt to mt!'et irrtport clcmand and, in turn, keep rises in prices

within rcason:ible limits. One is the large dolla.r earnings by the

Vietn~mese Government from U.S. military expenditures, the second /

iz the Commercial Import Program (CIP) financed by A. I. D., and the

third is the U.S. PL-480, Title I: program. In 1966 A.I.D. financed

almost two-thirds of total commodity Lrnports; today A.I.D. 's share has . . .

dropped to little mo1~e.·"than one-fourth~·

Conversely, ·the':-Vietnamese Government ·has increased its· share of the . . ... '\'.

impo1·t burden as shown by the following. table:

FY J966

FY 1967

FY l 968

FY 1969

Vietnamese-Funded A. I.D. -Funded. PL-480 .,

Import Lie ens ing Import Licensir1g Shipme~ (Millions Dollars U. s .. )

$150 $344 . $. 66

$306 $155 $156

$249 s sq $127

$462 $2o'5' $ 82

The Vietnamese Government has also sought, as buC:iget~ry expenditu_r.es

have risen; to limit the rise· in import demand~ :r_,,_ additioifto·:a majol" • • '• '" • • • i .,, ••• ,

devaluation in 1966, it has taken action, most strikingl)• in t9.69, to increase

- 4 -

tax rev<!nues. The following table shows the incrcasinc burden being

shou!der~d by the•Victlla1ncse in meeting budget expenditures:

Vietnamese Government Budgets -,.--

(Cash Flow Basis - in Billions of Piasters)!_/

Expenditures '?:._/ ___funding Source .

U. s. Local .Remaining Taxes Currencv Supportl/ Deficit _ Year

1966

i967

1968

Total l'vfilitary Civilian

61 37 24

·106 50. ..

123 51 ,_. ~ \ •• - • J

·9·6 ..... •'. ~ ;

40 20

53 26 .; f.'

. ' / r

,55 ...

77 2_/ 25

.!/.:.:l.J;i¢1~d~s,:e;#r,a:<hU:dgetary expenditures and receipts •. :1· . . . .

!:_/: .Ineltides:AJ:neric'an Aid Chapter and Assistance in.: Ki.nd.' '><' .,;, ·.·.,,,, .: •• ••• , '. ' ,,. • •

3/- ·N~'t proce~~fs' fr~m CIP ;and PL-480, Title I. - . . '' .... . . . . -·~· . ' . . .. 4/>· In."pr<;>cess .of.r.evision ..:- ·may i~crease by: 12 billio~.~pfaste·r·s~

,,,.,- ·' ' - . ' .' . .', ' . .

§_I .Likely.to be surpassed since revenues ran 97·p.ercf~nt;h.i~her'.:: in:~e first five months of 1969 ·thanAuring tlie·\:.o~~e·~'~61l'.ding:

'period of 1968.

1

27

48

43

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Despite the recent improvements in the Vietna.m.~se r~co!'d for

. ~

financing the budget and im1)orts, the future will be difficult. Budget

expenditures will continue to rise as Vietnamese troops replace Amt::rican

forces. Displacement of FL-480 rice by increased Vietnamese 'rice

production, favorable as it is in terms of e::onomic development, will

have the effect of reducing. U.S. local currency sup:o·rt of the Vietnamese

budget, thus further increasing the deficit.

At the same time Vietnam's foreign exchange earrings will declin'e

as employment cf Vietnamese by the U.S. military drops off. Therefore,

in order to meet the continued heavy import demand caused by the budget

deficit, requirements foi: A. I. D. funds for the Commercial In1port.

Program seem likely to increase for a while {in contrast to the lessened

o\•eral.l U.S. burden in Vietnam).

Consmnption and import demand can be restrained through increased

taxation. But a drastic reduction in the standard of livi:ng seems out

of the question for reasons of political comp~tition with the Communists.

Maintenance of full employ1nen-C 1 for exarnple, seems politically necessary,

• and will require positive measu1·cs as ernployment of Vietnamese by

the U.S. establishment declines.

To furnish employment opportunities for many of the Vietnamese

discharged b~r the U.S. establishment, we expect the private sectoi· in

- 6 -

Vieb3.111 to expand. Thi.:; cxpo.nsion of production should, over tir.ne,

lead to '1 n imp1:overnent in Vietnam.' s balance of payn1ents by providing

both competitive import substitutes and export products. To assi£t

in this expansion, A. I. D. i3 pushing p:r.oduct and market research. It

will also continue its efforts to increase agricultural production, and

will relax the inflation-caused restriCtions on assistance to the

industrial sector.

These efforts to increase production should,, after a few years,

lead to a gradually declining Commercial!mport Program. The rate ' .·: ' '.' ·, .. - ' . '·' . . "

,',l

of progress will, howe.ver~ be str~ngly. influ~nced by the security . . . - .

situation.

2. War SuE.Eort and Relief: . The "V;ietna·~~se Government .is taki:ng '. <' : ~ " .... ; , .. ' ! ..

increasing responsibility with respect to civilian casualties .of:the' " . . ·.·· . ,.'_ ·•· ·; ' ',' ·., ·.

war and refugees.

u.s. personnel inv?lved in medical treatment, which had r"isen from

41 in September ~ 9651i to a peak of 525 in. mid-1.968, are now down to

438. The A. I. D. cOmponent of these totals has declined from 131 in 1968

to' 89 at the present tinie. In hospitals receiving U.S. and· Free World

support, montJ1ly average p~.tient adr.nissions rose fron1 19, 000 in

1966 to 38, 000 in 1968 a.nd 39, 000 during the first four months of 1969.

Outpati_e:r:.t treatment at the samr:: hospitals increased from a monthly

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averf\.ge of 125, 000 in 1966 to lSO, 000 in i968.

Overall A. I. D. "personnel, direct-hire and PASA, involved in

the total health program h<'<.s decreased from 390 authorized positions

.. ·in 1968 to 236 in 1969.

Vietnamese :Ministry of Heal.th em.ployees have, on the other

hand. increc:.sed from 14, 159 in 1966 to 16, 830 in 1968. Graduations . ~ : ' '

of doctors have risen from 85 in 1965 to 187 in.1968 •. · NU:rsing 'and .· • '·. • •• • f' •. '

assistant nursing graduates rose from 2-80 .. i.n 1965't9 _SS~.;n.1'96S. ' ,.·~: .. ,• , . ·:-,,./· ;' .. ·:: ... ·!-·:·>': .· .,,, ', \ <. '·::! ,< ·. ,~·

Irrunediate objectives for pharma.cists·'arid·inidvr{i-&e_s.·haye: been .inet •. (" ~:· ' '; .. ,.~· ,:. '·. :: . .. . . ~··. . '. . . '. '; .

Forces are being corrected. Ab6utl70. :milita~ydcict'cits· .a*~: ~ow . . ' . •. ' .· : ' ... . .

detailed full-time to work in ·the government's ~i.:...flian hospitals. In \i' "' .,

recent weeks the Vietnamese Ministries of Defense and Health, Social'

Welfare and Relief. have agreed to a program which will establish

joint civilian-military treatment operations in 26 provinces and 185.

districts. Vlhen the Prime Minister's decision on this program ~s fully

• implemcr.ted, it is expected to involve an ac!ditional 4, 300 military

medical personnel, including 125 more doctors. This Vietnamese

' military medical contribution is equal to more than one-fourth of

th~ current staff of Vietnam's Pub~ic Health Progra1n.

- q ..

M8dical logistic::; sup-;_ . .,ort haz continued tc• i!:!prove during recent

months, with Vi~tnarr,1ese Ministry perno.nnel taking over an ever-

increasing share of the supply operating functions. With the

anticipated addition to the Ministry logistics system of a substantial ,.,,,,~···

nu.ml.H~r of Vietnri.rr..c :;e military supply technicians in the immediate

future, A. I. D. is planning the withdrawal in late 1969 of more than

100 "third-country national" supply technicians who have been augmenting

. Vietnamese capabilities for more than two years. Medical maintenance

technicians from other Free World countries will, however, continue . ' . .

to be required until Vietnamese militar_y manpower requirements

release personnel for training in. this area •..

The Viietnamese budget for public health has risen from .1. 5 billio.n . . . . .

piasters in 1965 to 2. 8 ~ill,ionjn 196_8 and 3. 1 billion in J.969 •. Total

·A. I. n: assistance in thi~:·ar.ea: has declined from $27. 6 million in. ' '· • • I

FY 1968 to about $20 millfon::in FY 1969, but rises son1ewhat to· $21. 9 ,• "" ,' .• .. ,, ,, .... '

million in FY 1970 be,cause·of '.the·:. need .to "re-finance contracts with four

volunteer a.gencies ea~lier f.inan<:e.~f':ri'.:Fy· 1968 for two vP-~rs.

A~ I. D. is. ~hiftirig.itsJocusJn.tiie· he'a:ltl{ area as rapidly as.: ·. . ... ,_ .. : ·>•:'··· ··. " ... -,' '

wartime circumstances. pe1~1nit from curatlve·.to preventiv.e i:ne'dical t•''·· " •.' .. . ...... ,• ' -- ' . •'

assistance· to the Vietnamese Government •. Once the:'War "i~~. ()ver. arid

- 9 -

civilian casualties have ceased, we would expect the assistance required

for emergency medical care to diminish rapidly, although it will not

be possible to terminate abruptly our assistance to hospital care

facilities.

In the field of refugees, the num.ber of Vietnamese Government

personnel working or. refugee rr1atters has risen from 400 at the

end of 1966 t.o 2300 at the present time. A. I. D. refugee personnel

position:> ~'iave increa::>cd from 55 in 1966 to 116 in 1969.

The scope of the refugee problem does not permit envisaging a

decrease in American personnel strength in this area during the near

!uture. In 1968 about 1, 000, 000 people were ciriven from their homes

during the Cornmunist offensives against the cities. While these people

have esi::entially befm taken care of, about 1, 200, 000 people from rural

areas were still on the refugee rolls at the end of May 1969 .. The number

• resettled or returned to village of origin has exceeded the number of

new refugees since mid-1968. The target for resettlement or return to

village of origin is 600, 000 for calendar year 1969, almost half of ·

which ha.cl been achieved by the end of Mc>.y. Security per1nitting, the

number of refugees should be reduced to well under 1,.000, 000 by the

end of 1969.

- 10 -

The A. l. D. budget for refugees rose from $11. 4 million in FY 1907

to $21 miilion in FY 1968, but dropped to about $10 milEun in FY 1969

and $11. 4 million is requested for FY 1970, The decrease in FY 1969

and FY 1970 is attributable to lessened r~quirements for commodities

as stocks Wi:-re built up rapidly in the aftermath of the Tet offensi vc

(February, 1968).

The Vietnamese budget, on the other hand, is expanding, particularly

·for resettlement purposes. In 1968 the Vietnamese buciget was 2. 0 billion

piasters, and in 1969 it is 3. 2 billion pi~.sters. Most of this is financed

with counterpart funds.

Once the war is over, we would expect refugee relief to phase-

down fairly rapidly since presumc:.bly no ne\V refugees will then b~

created. However, funding require:nents fer resPttJ.ement may remain

considerable until all refugees have been re-established.

3. Pacification: Pacification is essentially an operation of the

Vietnamese Government. The bulk of the security forces concerned

with ..pacification -- Regional Forces, Popular Forces, police, et cetera

consist. of Vietnamese personnel paid out of the Vietnamese budget.

'The U.S. role with respect to these forces is to furnish advisors I

and equipment.

- 11 -

Of these forces A. r. D. is conc~rne<l chieflr Vli.t.l;. the pol.ice.

This force is L~ihg e~pandcd by the Vietnamese Government becauf"}

of greater emphasis on tts nlission to identify and eliminate the Viet

Cong political infrastructtue at the village /hamlet level. ln a postwar

context it is generally envisaged that the police will continue to play

a major security function in addition to its civil law and order role.

Given the current expansion of the police an~ t}le future uncertainties

a'oout security, it is not possible at this j· .. mcture to establish a time-

table with respect to phase-over of A. I. D. assistance in this area,

The U.S. (through the Department of Defense) directly supports

the £w1ding of ire Revolutionary Development cadres who have both

security 2.nd development responsibilities in the pacification program.

At their origin the U, S. totall~r funded the S~t.laries of these cadres by . purchases of piasters with dollars, but the Vi~tnamese Government

began to pick up these r.:osts from the U. s. during calendar year 1969.

The U.S. expects to continue to shift these co~ts progressively

to the Vietnamese.

The A .. J.. D. responsibility with respect to Revolutionary Develop-

ment is inainly to fund a network of civilian advisors at the Saigon

- 12 -

headqu2rt·:::::-s, four ·reeional sub-headquarters, province and district

levels to •,vo:rk with Vietnamese officials on the development c.spects , . of paci.fication. The size of the staffs is under current review to

see whether reductions can be made.

4. D~vekp!nent: Exfraordinary requirements for goods and services

generated in the development area by the war have been met to a large

degree. A. I& D. is now focusing in this area on a more normal t}•pe

oi development program.

It has become possible for the A.I.D. Mission in Saigon to begin

to apply the usual A. I. D. procedures ~or project development. The

Missi<Jn is, therefore, now in the process of preparing Project

Irnplem~ntation Plans (PIP's) for each p1·oject. PIP's require a

p-rojection of progres 5 throughout the life of a project in terms of

' · inputs and outputs, and are in effect phase-over plans.

It should be noted that, in view of the scope of the problems in • ,. f

Vietnam and.the nature of the dev~lopment pro·cess itsP.lf, achievement· . . -··· -.. -

of fihase-over targets for a cur'rent ac~ivity under a project may no.t . .

mean that the project will be phas~d.crnt, but we shall rather move

on to another activity under the same project. For example, as the

rice prodtic:tion target5 under the Crop "Production Project are achieved,

ass istancc to other crops will get under way.

- 13 -

Pending the compl~tiar. oi p:.:cpa::::-alion of PIP':; for each project,

we are outlining b.dow ;t<::ntative phase-over pla.ns in the development area.

L-1 crop producti~~ we believe that Vietnam wiJ.1 have become self-

sufficient in rice by 1971. We have already reduced the time and resources

A. I. D. spends on detailed management of production of the new high-

yielding varieties program. It is now largely a Vietnamese program.

With respect to seed distribution, the Vietnamese· Governrnentis, in

fact, finding even its ro!e more lin1.ited than expected. Knowledge of

the new seed varieties has spread so :rapidly· that farmers. b~y nio~t:of

thei:r seed requi:rcn1ents from each other. However,· slnc:e·IR~B'.and m.:.s ' '. _, ,",I.'· ' ·, -

are not suitable as export varieties, the Vietnamese Government,

with our si,pport, is testing new, higher qualit:r varieties fot~ future

introduction. Other new problzms reql!iring OU1' help have emerged,

such <is drying, storage and processing problems related to the new

varieties.

A. I. D. continues through the Comm.ercial Import Program to

provide foreign exchange for fertilizer and pesticide imports fo,1"..,

the rice program, but their distribution has ~oved, or ~s .moving,

from government to private channels. Eventually. A_._I.,D~ :-~s,hbuld be

able to phase· down in this area as well. Investment surveys for.

fertilizer and industrial chemicals are anticipated, or in progress.

- 14 -

Pz-ivat•~ foreign ente:rp:-isc is expected to iurnish much oi tl;e capital

requirements, at foa"st with ref.pect to fertilizer.

'Ve '\re also moving in this direction in our r.uppo:rt of the

proteir':...J2.!0gram. 'l'he Vie.tname.se goal is to encourage, under the

free enterprise systen1, the establishm.ent in Vietnam.of PJ:'Oducers.

of all categories of swine, poultry, and fish to meet. the p,r6t~in: needs '·,· ....

of the nation at reasonable prices~ : Th·~ progr~m involvea the; . ' .. :· ... . · .. ··.

importation of breeding stock, the;· dev.elop~ent of .vaccine a?ld the "· '' / ',• ' .. ' '. . .

dis sem.ination of information· about.me methods of vacciriiltion;·. The. · "· ,., . '·-" . . . . '

program also invblves the esta~HshrI1erit of:a,'fe~·d ·g~airiindtistry, ·

the raw rnaterials of which.are .. iri..iti~l~y·suppli~cl bv.ifu'-oorts,· bu,t·with

p1a11s IO?° tne eventual·~.substitutfo.n:·()f.domestically·growtifecdstuffs. ·. '.. • • • ' t •• ·~" ' • • • •

It includes the purchase of special'.gea'r"aiiC:rsuppltEis:'f'b~. the fi~hinf! ~ ' ' . ••' ·'') '.' ' ',. ·'• ', . .., .....

inductry and t4e provisio'n of adequa.'te creciit.through::the~Agri~"ti1fu;al · ; ' ' ., ' II ''< • ' : '' "'I ' ~· : ',: ~ •./ . ' ' •.

Development Bank.. A.I. ·D. 's co11tribUtion is ~·cheduJ.~d ~for .coiri_ple.tion · . . :··

by the surruner of 1972 at which time both the GVN and espec.ially the

private sector should be quite capable of carrying on •. The importa.tion

of breeding st.ock.by·Vietnamesc enti·epreneu~rs is ~ell under way.

·A. l. D. has. ~~sisted in the importatior1 of both large and small feed . . (,' ·. ·.,. '

mills and this aspect of the program has been transferred to the

Vietnamese with USAID providing sc;>n1e technical assistance.

- 15 ·-

The poultry industry is expanding rapidly in t.he private . , I

sector with technical assi~tance from the Vietnam.::se. Government

and USAID. Incubators with a capacity of 450, 000 eggs have b~e_n. ·

imported by private operators at a cost of approximately U.S.

$400, 000. Breeder birds have also been imported by these new

businessn1en.

Swine and poultry productiL'n have increased with a sharp

reduction in imports of frozen meats. · The major- th:r:ust:hf. USAID

assistance is to reorient and train the Vietnamese- Gciverriment

personnel, at all levels, to support and assist the entrepreneur:.in

the privatP. sector and to assure the farmer and conunercial ,producer

of the proper economic and political climate. Progress is most

. satisfactory and indications are that th~ Vietnamese Government·

will be able to assume responsibility,for this project on schedule

with the exception of some additional assistance in. trai~ing and - . . .

information dissemination after 1972.

Regarding credit, much of the groundwork has been laid with

the Vietnamese Agricultural Dev~lopment Bank. Seeing to it that

vc-.rlous g rc;mps of hog and poultry formers and fishermen are able

to get suffi-::'ient c:redit when they need it, will probably require

A. I. D. 's technical assistance for so1ne time yet.

.. 16 -

In the are?. o'f agr~cultural production assistance we should

count on continued Vietnrtmesc reqdrem.ents during the 10-ycar·

period 2fter peace is re-eEtablished. With its present enormous / .

balance of payments deficit and a prospective decline in foreign

e>.:change earnings as U •. s_. troops .. a~e ·~~d.#c·~4~·and ·m~litary ··· .··· . . ' . - . '. 'i. ' ' -... ,. . • ;~,, 1· l.1'.~ . .. •• , ; ' ' '

' L·

conversions ofdolla'rs into,pia·ste.rs decline, South Viet~am. , -; .~. '· ·,. ·' '. .. ~ ·.' . '.; . " . . . ' .. ,. . .

·must explore all av~ilal:)ie_ oppc>~t\lni~ies to exPand exports· and .:·' ' . ,'". · ... ; ,. .

find import subs~ittltio~~: :,Tl'li·s. Irieans expansion of exist.i:ng .: ';1 ,.

line& of production.anCi·a~~elo~ment of new Droducts.··.·· Ii:i.solll:e cases,

. I• i ' .. . ~ . ' . '·1. ; . . '. . . " : .' _' . \ ' : . ' ,· . ; "' . :_, »: -_,··. . ... : . ·: -

the Vietnamese' m_ay dev,elop a produc~ without outside as·sistance ~-. . . '. . . ' " ' :· ' - . . . . ' .. :· \~ . ' ' ' ' . . . . .'

for ~x~pfe, they:ar'e now experimenting with the i11ti-~c:luction.

of s:C>rghurnwith.their own resources •. · But, in:_otlie't. case~; we' .·;'\

should expect, ~s we phase out of one lirie pf-pt.odtic~ion, ·F.uch a·~ ' . . . . . .

rice,· to put our resources into the expa~.sion:fr de~elopmei:it of

new products. Only in this manner ccin'Sou~h Vietnam gradually

. develop the tax; ba~e to .close. ~t-s b~dg~t.ar,:y. gap and the eco~omic

base to bring its.·foreigll:.accou:l;:ts int()J~.Ja~ce. This i~ the direc.ti~n

in w~ch ~·~'{;rrit,st_?g() ~!~e· ~~e gra.dually·~*-~}·.·aperiod.6.fye~rs. to··

reduce· the .·size.· of our pommer.t:ial ·.ImP~·rf:~i-p·r;~ram·.,,

. In the field Of education, the transfer or .pl1ase'-over is in .· '. . ··.· .. '' '. '.' '•'

progress and continues.

- 17 -

Initial A. l. D. efforts were directed toward classrooms,

equipme1it and preparation of teachers at the elementary level.

Subsequent emphasis has been pl2.ced on improving the quality of

elementary education, expanding secondary facilities and some.

technical as sistar1ce in the field. u.f vocc.tional, :::.gricultural arid:.

higher education.

Quantitative targets have been largely achieved in elementary

cduc~tion. Elementary enrollment increased from. 401, 000 pupils

in 1955 to 2, 000, 000 in 1968, representing about 80 percent of

all elementary school age children. This i~ just short of the

national goal of 85 percent for 1970.

Secondary education, now beginning to feel the impact of more

e].ero.enta:i:y school graduates, has an enrollment of 550, 000 students,

I

or 20 percent of the secondary school age population. The national

target for 1970-1971 is enrollment of 24 percent. University

enrolln1ents have similarly grown, from some 3, 000 in 1956 to

32, 000 in 1968. Further expansion of secondary and higher

education is expensive, and Vietnam will face som.e difficult

choices in the use of its limited resources in the futu::-e.

As the educational syfltem h<J.s expanded and improved, U.S.

inputs are shifting from construction of facilities to technical advice

- 18 -

i\nc;! enco\l:ragement of modern eclucatjonal ccn.::~pts. U.S. dollar

• I

obli~~tions have been reduced from~ high of $14, 500, 000 in FY 1967

to $7, 80$, 000 in 1969, while Vietnamese Government expenditures

!or ecluc;:at:j.on have increased from an ~quivalent of $50. ·1 million to

$57. 6 million during the same period. ",['he Vietnamese Government

ehare of the total educational program costs increased from 77. 6

p~~cent in t 967 to 83 percent in I 969,

This trend is expected to contip.µe, A, l. D. is r~questirig

$~, '$77; 000 for ;:i.ssistance t~ educatj<;m j.n F'1 lC,70, of ~hich .$4, 482, 000 .: ... \." . ' ' '. ,- . '

rn~nt o! education in VietnaJ;ii·will.have been completely reoi:iented · .

. tg te~hn.ical ?.dvice ::!or UJ:ip~~v~n'g:)he· q,µ~U.ty of secondary .~xid : • ), ,' •' : .... : • •• , .· i

• · •. ,.,. •. • .. • • • . • • , •• l ... • •• v:··. ·,,

higher educ~tj.op.. A~ I. D. 's' coiit,:act tQ improve training.of ele.L

, . . . .. .. .. ·: . .' . •.: m~nt~ry ~c;:hool teachers has .been pha:;;ed down from ··14 personnel·

• ' • ; oHO.

to Sin FY 1970. It should be completed by FY 1971. We expect to

phase down our contract to improve training for secondary school.

teadJer.s beginning in FY 1971.

Jn ~he field of public health, progres r; in U.S. disengagement

will continue to be slow, other than in the assumption by the Vietnamese

Govermi1ent (a.s discussed above) o! a ·.dsing share of the extraordinary

- 19 -

burdens imposed by the wa 1:. The longer terin aims in this field

are (1) to assist· the Vietnarncse Ministry of Health in the areas

of manpower development and organizational improvement, and

(2) to assist the Vietnamese Government to contain epidemic

diseases and concurrently develop the basis for good health in

the population.

Some of these more norm.al health activities are being phRr.ed

over to Vietnamese responsibility despite difficulties arising from

mobilization of trai.ned health and medical personnel. A. I. D. :iurses

are no·.v limited to advisory roles as Vietnam.ese nurses assume

more of the operatj.onal functions. This has ma.de possible a re­

duction in U.S. nursing staff from 176 in 1967 to 83 in 1969. Medical

logistics is also now :-everting to Vietnamese staffing, as pointed

out earlier. Foreign specia.Hsts in this field will have been reduced

from 196 in FY 1967 to 67 in FY 1970, while Vietnames: e personnel

will !1ave risen ovci.· the sani.e period from 106 to 200.

At the Faculty of Medicine of the University of Saigon, we

have developed a long-range plar. for the compli:!tion of a first-rate

medical training institution that will be able to serve Vietnam's needs

for the future. We continu~ to p:ro·;5de some faculty advisors ln the

basic sdences whi:te Vietnan1ese complete their post-graduate

- 20 -

training abroa.d. The next phasp,, already in progress, involves

' ·revamping the clinical sciences element of the program. The second

phase will culminate, with A. I. D. 's assistance, in the establishme:-1.t

/of a n1odern teaching hospital as pa.rt of the Medical Science Ce!'lter.

Assuming an early end to hostilities a.r,d optimum progress of on-going

projects, we r.i.nticipate that the Vietnamese will be able to carry on

.. with minimal advisory support by 1974. There will, however, need

to be long-term. support for programs for control of malaria, plague,

and other endem.ic diseases.

In logistics, we can point to a S\..'.ccess story. Funding has

decreased frorn a high of $39 million in FY 1967 to a proposed $8

million in 1970. The Thu Due warehouse complex, previously run

by au' .American contractor, is now in the hands of the Vietnan1er.;e.

Tho. civilian port of Saigon, managed by some 500 American military

personnel during the period cf congestion in 1966, is now run by the

Vietnamese w:th only 8 American advisors. Warehousing and

distribution of supplies :are in Vietnamese hands, but with continuing

U.S. advice. This is a difficult one to dis engage from i:n:nediat~ly

because of. the volume and complexity of the comrn.odities. The

remaining logistics functions rel.ate largely to our own needs for

surveillance aver commodities.

/ ..

- 21

In the eub!ic works area we have rn::Lde a specia.1 effort to

help the Saigon lvieti·opolit.>.n Water Office beco1ne a. self-sustaining

utility. Except for A. I. D. financing of war dan:age repair and

__,..emergency installatio::-is related to the war, and continued technical

advice and management training, it has now reached that stage.

Our target is total phase-over by FY 1971.

A similar effort is being directed toward the Saigon Power

Administratio!l. After the inctallation of gene rating, transmission

and distribution capacity being funded out of resources already

programmed by A. I. D., we anticipate that further development will

be financed on other than concessional terms. The target date for

co1nplete pha.se-over is the end of 1972.

In other public works areas A. I. D. 1 s activities cbring the war­

years have generally been aimed at n-taintaining systen1s in operation

in the face of war dan1age and mobilization of fr~tined technical

personnel. Development has perforce been relegated to the future.

Since much remains to be started in this area, it is too eady to .

develop .3. widely a!;plicablc phase--over plan.

Similarly, the whole area of urban develoEment has generally

been consciously de-emphasized during t.lic wa.r years, other than

reconstruction of war damage and tho beginning in 1968 of the

- 22 -

applicatio-:-1 to Saigou cf the pacification techniqu;:;s pre::viously used

in rural areas., AP. y, S. forces arc reduced and we mo·.,re toward

the postwar p~riod, a more active A. I. D. role in as sis ting the

Vietnan~ese Government in the n1ainlenance of full employment, in

industrial Jevclopn1ent, and in the development of other aspects of

an urban strategy will become necessary if our political objectives

are to be achieved. Such a strategy will also have to encompass

phase-over plans.