Replacing France by Kathryn C. Statler

Author:Kathryn C. Statler
Language: eng
Format: epub, mobi
Publisher: The University Press of Kentucky
Published: 2007-07-28T16:00:00+00:00

ECONOMIC EFFORTS

At the end of the Geneva Conference, France was the economic force in South Vietnam. But the Americans hoped to change this fact, just as they had changed who controlled the military situation in South Vietnam. In late 1954, the French handed over a number of economic powers to the South Vietnamese during negotiations. France, South Vietnam, Cambodia, and Laos signed an agreement abrogating the 1950 Pau Conventions and dissolving the quadpartite bodies established by the conventions. The Diem government took control of its financial, customs, and monetary policies as of January 1, 1955—the same date that the United States began providing economic aid directly to the Diem regime, bypassing French authorities. During his meeting with Dulles the previous October, Mendès France had attempted to dissuade the United States from its upcoming plan to supply aid directly to South Vietnam, arguing that such aid was supposed to go through the French as agreed to at the Washington Conference in September. In another round of talks in November, the French wanted a formal Franco-American committee established in Vietnam to coordinate, direct, and control aid programs. According to Washington, the French would reluctantly agree to the inclusion of representatives from the Diem government on such committees but apparently expected the United States and France to have complete control of aid programs. They interpreted “coordination” in that context and felt that during the Ely–La Chambre talks the United States had committed itself to such a procedure. During the November meetings Dulles quickly backed away from former promises, stating that “there had been no specific agreement in September on the appropriate machinery for coordination.”40 Indeed, the Eisenhower administration decided to cut aid to France for Indochina by three quarters, transferred the last civilian responsibilities to Diem, and refused to keep the French apprised of how aid was distributed.

French and American economic aid to Vietnam had been roughly equivalent by 1952, but in 1953 American aid began to surpass that of the French. Although France still provided technical and economic aid to South Vietnam in late 1954, American aid had begun to “overshadow” French efforts. According to French statistics, exports to Indochina had steadily declined since 1954. In 1953, France supplied 80 billion francs in exports to Indochina; in 1954 it was 63 billion; in 1955 it declined to 50 billion; and in 1956 France exported around 20 billion. In contrast, from 1955 to 1960 the United States funneled nearly $1.5 billion in aid to Diem. In 1955 Diem received $326 million; in 1956, $213 million; in 1957, $281 million; in 1958, $192 million; in 1959, $207 million; and in 1960, $180 million. Put another way, U.S. economic aid from 1955 to 1960 averaged $230 million a year, or roughly 22 percent of South Vietnam’s gross national product.41

American officials advocated using foreign aid as a “major Cold War weapon,” and soon after Geneva, they determined the need for rapid economic development in South Vietnam to ward off the communist threat, especially as French financial assistance, technicians, engineers, and counselors “disappeared,” or were displaced.

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