Declassified per Executive Order 13526, Section 3.3
NND Project Number: NND 63316. By: NWD Date: 2011
TOP SECRET – Sensitive
had been helped in this endeavor by Bao Dai and French colonial administrators. The Binh Xuyen controlled prostitution and gambling in Cholon and the Saigon–Cholon police force — reportedly because Bay Vien paid Bao Dai some 40 million piasters for these privileges.45 Still-dissident sect leaders such as Ba Cut, whose 5000 Hoa Hao adherents denounced Geneva and refused cooperation with Diem, and Frenchmen opposed to Diem abetted Binh Xuyen intrigues against the government.
More than the Vietnamese power struggles and Diem's inability to consolidate his rule, French activities during the autumn of 1954 galvanized the United States. From acquiescence to U.S. demands in September, American policy makers felt France had moved toward opposition to U.S. demands by November. That this assessment of French actions was either objective or fair is questionable.
After Franco–American discussions in Washington in late September — the first in a progression of monthly meetings on Vietnam — the United States seemed to have scored highest. France promised to support Diem, to grant independence to Vietnam quickly.46 The transfer of financial, administrative, economic and other functions to the Vietnamese had begun and would be completed by December 1954. That France balked at U.S. demands for an immediate grant of independence outside of the French Union is not surprising: French cultural, economic and political interests in Vietnam were still strong; the Frenchman's belief in the validity of the French Union was deep. No French government dared defy public opinion by seeming to hasten the end of the French Union.47 France felt the U.S. had an "almost psychological attachment to 'independence' without giving sufficient thought and attention to the practical problems and risks involved."48
Secondly, the U.S. had been able to defer a commitment to finance the French Expeditionary Corps in Vietnam although an indication that aid would be resumed, if not resumption itself, had been the first order of French business at the Washington Conference.49 France agreed to maintain the Corps in Vietnam but was told no aid figures would be available until December.50
Both France and the U.S. thought their respective economic aims had been won. France objected strongly to the idea of direct American aid to Vietnam on the grounds that it violated the Geneva Accords, would needlessly provoke Communist China, promote graft and corruption in Vietnam, and intensify the political struggle. Plus, "past (French) sacrifices on behalf of Vietnam and their obligation as a member of the French Union" made French supervision of aid essential.51 To France, a compromise agreement drafted by Walter Bedell Smith meant the U.S.