Declassified per Executive Order 13526, Section 3.3
NND Project Number: NND 63316. By: NWD Date: 2011
TOP SECRET – Sensitive
Diem's recent successes as indicating redeeming qualities. But, Dulles pointed out "Vietnam is not worth a quarrel with France," and offered U.S. withdrawal in preference to allied disunity. No decision was taken immediately, and during a recess Secretary Dulles received advice from the JCS that Diem seemed the most promising avenue to achievement of U.S. objectives, and that while withdrawal of the French Expeditionary Corps is "ultimately to be desired," a precipitate withdrawal was to be prevented since it would "result in a increasingly unstable and precarious situation" and the eventual loss of South Vietnam to communism. Secretary Dulles then proposed to the French that they continue to support Diem until a national assembly were elected. British support for Diem seems to have swayed Faure, and he accepted Dulles' proposal. The tri-partite meeting ended on a note of harmony, but the undertones were distinct: the days of joint U.S.–French policy were over; thereafter, the U.S. would act independently of France in Vietnam.
Backed by the United States, Diem refused to open consultation with the North Vietnamese concerning general elections when the date for these full due in July 1955. Pressing his military advantage against the sects, he moved to consolidate his position politically within South Vietnam. In October, he won a resounding victory in a popular referendum in which voters were given a choice between Diem and Bao Dai. As Diem's political strength grew, his relations with Paris deteriorated. In December 1955, Diem suddenly terminated the existing economic and financial agreements with France, and called upon France to denounce the Geneva agreements and break relations with Hanoi. Soon thereafter, he withdrew South Vietnamese representatives from the French Union Assembly.
On January 2, 1956, general elections in France produced a government under Socialist Guy Mollet, a third of the members of which were communists or avowed neutralists. In early March, Mollet's Foreign Minister, Pineau, declared in a speech to the Anglo-American Press Association in Paris that France would actively seek policy position bridging East and West, and that there was no unanimity of policy among the U.S., UK, and France. He cited UK Middle East policy and U.S. support for Diem as country to French interests, and condemned both powers for stirring up the Moslem world to France's distinct disadvantage in North Africa. A few days later, at a SEATO Council meeting in Karachi, Pineau proclaimed the end of the "era of aggression," and called for a "policy of coexistence."
Action followed Pineau's line. On March 22, 1956, France agreed with Diem to withdraw the FEC altogether. On April 26, 1956, the French High Command in Saigon was disestablished. On the due date for the general elections agreed to at Geneva, France possessed no military forces in Vietnam. And the date for the fulfillment of the political portions of the Settlement, July 1956, coincided with the inception of the Suez crisis.