the South Vietnamese. Some 80 Chinese agricultural specialists are helping to increase crop yields, and experts in psychological warfare techniques are instructing Vietnamese military personnel. At the time of our visit, the Nationalist Chinese were seeking additional ways in which to render technical assistance to Vietnam.

The Republic of China also carries on a number of modest, but successful, agricultural aid programs in Africa. The United States should encourage the expansion of these efforts with whatever limited assistance may be necessary.

HONG KONG

The study mission was briefed on the situation in Communist China by members of our consular staff in Hong Kong. The members of the group were impressed with the high caliber of the staff of our Consulate General headed by Mr. Edward E. Rice and the depth of their knowledge with respect to conditions within their area.

REFUGEES

Hong Kong continues to be a haven for refugees from Communist China. The burdens of providing housing, schools, hospitals, and other facilities required for these refugees are immense. Nevertheless the local government still accepts and cares for these refugees without differentiating between Hong Kong-born and the mainland Chinese. Since 1954 the U.S. Government, through voluntary agencies, has contributed a total of $52 million in supplies, food, and financial support for these refugees.

REST AND RECREATION USE BY U.S. ARMED FORCES PERSONNEL

On September 1, Communist China formally protested to the British the increasing use of Hong Kong by the United States as a place for rest and recreation (R. & R.) of its servicemen from Vietnam. Interestingly enough they did not complain about the R. & R. visits of U.S. servicemen from the 7th Fleet and other Far East posts. Hong Kong continues to supply the Chinese Communists with upward of $400 million annually in hard currencies. A large part of these earnings are possible because of the heavy American tourist trade, including nearly 150,000 servicemen annually from areas other than Vietnam.

As our commitment of forces in Vietnam grows, the problem of finding adequate recreational facilities will increase. Therefore, the study mission believes that early consideration will need to be given to the development of alternative places for the use of U.S. servicemen for rest and recreation. For example, Taiwan might be encouraged to develop facilities to enhance its attraction as a tourist stop. It has good weather in the southern regions and excellent port facilities are under development at Kaoshung. With some assurance of U.S. support, hotels, a free port area, and other facilities might be developed by local government interests which could be used for U.S. servicemen as well as to attract tourists to Taiwan.

VIETNAM

POLITICAL SITUATION

The study mission arrived in Vietnam on November 30, 1965. It was briefed by leading United States officials, including Ambassador Lodge, General Westmoreland, and AID Mission Director Mann. The group also met with Vietnamese Government officials including Prime Minister Ky, the Foreign Minister, and key officers of the 10man Directory now governing the country.

Despite major political upheavals, a government structure characterized by divisiveness, cumbersome administrative practices, and continued political factionalism, Vietnam continues to make some progress. The present Government has been in office since June 19, 1965, and there has been no concerted effort to depose it. It started with a public posture of revolutionary zeal and is making considerable effort to move forward with a number of constructive and worthy programs. It is subject to all the same political pressures which have plagued previous regimes, as well as the continuing Vietcong military activities. In regard to the latter, however, a certain spirit of confidence has appeared among the Vietnamese populace that the Vietcong will not be able to achieve a military victory. The improved military situation in recent months has, no doubt, relieved some of the pressure on the regime. The South Vietnamese Government controls the 43 provincial capitals and all 232 present district capitals. As a result, present attention is being focused increasingly on building viable political structures for the future and on taking measures to deal with mounting economic problems. It appears that the present Government is sincere in its stated goal to move toward a civilian government at the proper time.

ECONOMIC AFFAIRS

Rural development program.-Without the support of the people the Vietnamese Government and the United States could win the major military battles and still lose the political contest. Therefore, one of the most important U.S. efforts is an integrated program supporting the South Vietnamese rural construction program. Basically, this program is designed to extend the Vietnamese Government's control and support in the rural areas and win the commitment and active participation of the people in the resistance to Communist takeover. In the past the Vietcong terrorists have been able to dominate the rural population, because they lacked protection by Government forces. The rural construction program provides not only this protection through the establishment of new life hamlets, but also economic and social welfare assistance, At the time of the study mission's visit, over 2,500 new life hamlets had been constructed in the rural

areas.

The aims of the rural construction program are: (1) to provide military security through the training and arming of small units composed of Popular Force and Homeguard troops; (2) to provide effective local government through the training, supervision, and provisioning of

local village and hamlet councils and of Vietnamese cadre to assist in the organization of the rural areas; and, (3) to improve the livelihood of the people in the rural areas through community development projects such as schools, wells, road improvement, health facilities, and agricultural development. Important agricultural programs are agricultural credit, livestock improvement, distribution of improved varieties of rice seed and of fertilizer, and the introduction of improved varieties of secondary crops like corn, sweet potatoes, and sugarcane.

In the view of the study mission, this program is extremely important and essential to an effective counterguerrilla effort. The political future of Vietnam may, to a large extent, rest upon the success of these efforts to give the people physical protection, establish simple Government services, help them to defend and help themselves, and show them above all else that the Government cares.

MILITARY AFFAIRS

Military situation.-Since the heavy U.S. ground and air forces. commitment began in early 1965, there has been a gradual shifting of balance in the Vietnam struggle. It moved from one of losing to an almost stalemated affair, in which South Vietnam appears to hold an edge. The Vietcong have had no offensive successes in months and there is evidence of a definite decline in their morale. This is due, in large part, to U.S. air support which has kept the Vietcong on the move, causing ammunition and food shortages, as well as health and hygiene problems. With their tactics, however, the Vietcong manage to engage our forces and maintain a balance that prevents us from achieving any distinct military gains. If there is no further escalation on the part of the United States other than troop introductions it will be a long and costly struggle without any definitive ending.

Escalation. Several Asian leaders of other governments with whom we spoke felt our military actions should be guided more by military rather than political considerations. It was maintained that the United States could destroy North Vietnam's ability to make or support any war by immobilizing Haiphong, bombing Mig jet bases, bombing industrial complexes near and in Hanoi, and lastly, by bombing the dams and dikes of the Red River Delta. The area served by this incredibly complex irrigation system produces 75 percent of all rice produced in this already food-deficit country. To destroy the dams would cause a very heavy loss of civilian lives and create severe famine.

Some South Vietnamese leaders with whom the question of bombing the dams and dikes was raised agreed this should be done, although realizing the severity of the action. They pointedly and emphatically added, however, that it should only be done as a last resort.

Since there are military targets inside North Vietnam which remain to be struck, and conventional military tactics which have yet to be used, such escalation appears inadvisable at this time. Should Hanoi remain unconvinced that the United States is determined to stand firm in Vietnam, however, additional steps may be necessary.

Logistics. While in the Philippines the study mission observed in Manila Bay the backlog of cargo vessels awaiting an opportunity to proceed to Saigon for unloading. It was with great concern, therefore, that the study mission questioned General Westmoreland about the