Review of Certain Problems Relating to Administration of the Economic and Technical Assistance Program for Viet Nam 1958 - 1962

This report concerns primarily the administration of selected special counterinsurgency activities of the economic assistance program for Viet Nam and certain problems relating to policies and practices of the Government of the Republic of Viet Nam during the period 1958 to 1962, that directly affected or impeded the administration of the program and the attainment of its objectives. Other phases of the program for Viet Nam included in our review for that period will be presented in separate reports now being prepared. The administration of the economic and technical assistance program for Viet Nam has been complicated, and the attainment of its objectives has been impeded by certain policies and practices of the Government of Viet Nam. At the time of our review, the Government of Viet Nam had not taken means necessary to assure that it would obtain a reasonable share of the country's financial resources in order to better support its economic development and counterinsurgency activities, nor had it used its financial resources at hand to benefit these activities to the maximum particularly in such matters as the continuation of an unrealistic exchange rate and a seriously defective tax system and the imprudent use of its foreign exchange for luxury goods. The inability or unwillingness of the Government of Viet Nam to take substantive steps to remedy these defects in its economic and financial policies has had the effect of obstructing achievement of the objectives of the aid program. The Agency for International Development has informed us that its latitude in dealing decisively with these problems was limited by the overriding policy of the United States to support the Government of Viet Nam against Communist insurgency. The Agency has informed us also that it has sought to accomplish reforms within the recipient country which would overcome these problems. In view of the subsequent changes in the Government of Viet Nam as a result of the coups which overturned the existing governments in November 1963 and January 1964 and of the current reevaluations of the administration of the Viet Nam program which we understand are being undertaken by the Agency, we are making no recommendations.