Declassified per Executive Order 13526, Section 3.3
NND Project Number: NND 63316. By: NWD Date: 2011
TOP SECRET – Sensitive
more than 75% of the economic aid the U.S . provided in the same period went into the GVN military budget; thus at least $8 out of every $10 of aid provided Vietnam went directly toward security. In addition, other amounts of nominally economic aid (e.g., that for public administration) went toward security forces, and aid for agriculture and transportation principally funded projects with strategic purposes and with an explicit military rationale. For example, a 20-mile stretch of highway from Saigon to Bien Hoa, built at General Williams' instance for specifically military purposes, received more U.S. economic aid than all funds provided for labor, community development, social welfare, health, and education in the years 1954–1961.
In March 1960, Washington became aware that despite this impressive outpouring of treasure, material, and advice, the Viet Cong were making significant headway against Diem, and that U.S. aid programs ought to be reconfigured. In March, the JCS initiated action to devise a Counter-insurgency Plan (CIP), intended to coordinate the several U.S. agencies providing assistance to the GVN, and rationalize the GVN's own rural programs. The CIP was worked out among the several U.S. agencies in Washington and Saigon during the summer and fall of 1960.
The heightened awareness of problems in Vietnam did not, however, precipitate changes in NSC policy statements on Vietnam. Objectives set forth in NSC 6012 (25 July 1960) were virtually identical to those of NSC 5809.
Planning proceeded against a background of developing divergence of view between the Departments of State and Defense. As Ambassador Durbrow and his colleagues of State saw the problem on the one hand, Diem's security problems stemmed from his political insolvency. They argued that the main line of U.S. action should take the form of pressures on Diem to reform his government and his party, liberalizing his handling of political dissenters and the rural populace. Department of Defense officials, on the other hand, usually deprecated the significance of non-communist political dissent in South Vietnam, and regarded Diem's difficulties as proceeding from military inadequacy. In this view, what was needed was a more efficient internal defense, and, therefore, the Pentagon tended to oppose U.S. leverage on Diem because it might jeopardize his confidence in the U.S., and his cooperation in improving his military posture. Communist machination, as Defense saw it, had created the crisis; the U.S. response should be "unswerving support" for Diem.
While the CIP was being developed, Department of Defense moved to adapt the U.S. military assistance program to the exigencies of the situation. On 30 March 1960 the JCS took the position that the Army of Vietnam should develop an anti-guerrilla capability within the regular force structure, thus reversing an antithetical position taken by General
