Communist China's interests are clear: It has publicly castigated Moscow for betraying the revolutionary cause whenever the Soviets have sounded a cautionary note. It has characterized the United States as a paper tiger and has insisted that the revolutionary struggle for "liberation and unification" of Viet-Nam could be conducted without risks by, in effect, crawling under the nuclear and the conventional defense of the free world. Peiping thus appears to feel that it has a large stake in demonstrating the new strategy, using Viet-Nam as a test case. Success in Viet-Nam would be regarded by Peiping as vindication for China's views in the worldwide ideological struggle.

Taking into account the relationship of Viet-Nam to Indochina— and of both to Southeast Asia, the Far East, and the free world as a whole-five U.S. Presidents have acted to preserve free-world strategic interests in the area. President Roosevelt opposed Japanese penetration in Indochina; President Truman resisted Communist aggression in Korea; President Eisenhower backed Diem's efforts to save South Viet-Nam and undertook to defend Taiwan; President Kennedy stepped up our counter-insurgency effort in Viet-Nam; and President Johnson, in addition to reaffirming last week that the United States will furnish assistance and support to South Viet-Nam for as long as it is required to bring Communist aggression and terrorism under control, has approved the program that I shall describe in a few minutes. The U.S. role in South Viet-Nam, then, is: first, to answer the call of the South Vietnamese, a member nation of our free-world family, to help them save their country for themselves; second, to help prevent the strategic danger which would exist if communism absorbed Southeast Asia's people and resources; and third, to prove in the Vietnamese test case that the free world can cope with Communist "wars of liberation" as we have coped successfully with Communist aggression at other levels.

I referred earlier to the progress in South Viet-Nam during 1954– 1959. In our concern over the seriousness of the Viet Cong insurgency, we sometimes overlook the fact that a favorable comparison still exists between progress in the South-notwithstanding nearly 15 years of bitter warfare-and the relative stagnation in North VietNam.

The so-called "Democratic Republic of Viet-Nam," with a greater population that the South and only a marginally smaller area, appears to be beset by a variety of weaknesses, the most prominent of which is its agricultural failure. Mismanagement, some poor weather, and a lack of fertilizers and insecticides have led to a serious rice shortage. The 1963 per capita output of rice was about 20 percent lower than 1960. Before the June 1964 harvests, living standards will probably decline further in the cities, and critical food shortages may appear in some of the villages. Furthermore, prospects for the June rice crons are not bright.

The internal transportation system remains primitive, and Hanoi has not met the quotas established for heavy industry. As for the people, they appear to be generally apathetic to what the party considers the needs of the state, and the peasantry has shown considerable ingenuity in frustrating the policies of the Government.

In contrast, in the Republic of Viet-Nam, despite Communist attempts to control or inhibit every aspect of the domestic economy, output continued to rise. In 1963 South Viet-Nam was once more able to export some 300,000 tons of rice. Add to this the pre-1960 record: up to 1960, significant production increases in rice, rubber, sugar, textiles, and electric power, a 20-percent rise in per capita income, threefold expansion of schools, and restoration of the transportation system. One cannot but conclude that, given stability and lack of subversive disruption, South Viet-Nam would dramatically outstrip its northern neighbor and could become a peaceful and prosperous contributor to the well-being of the Far East as a whole. But, as we have seen, the Communists-because South Viet-Nam is not theirs are out to deny any such bright prospects.

In the years immediately following the signing of the 1954 Geneva accords, the Communists in North Viet-Nam gave first priority to building armed forces far larger than those of any other Southeast Asian country. They did this to establish iron control over their own population and to insure a secure base for subversion in South VietNam and Laos. In South Viet-Nam, instead of withdrawing fully, the Communists maintained a holding guerrilla operation, and they left behind cadres of men and large caches of weapons for later use.

Beginning in 1959, as we have seen, tthe Communists realised that they were losing the game and intensified their subversive attack. In June 1962 a special report on Viet-Nam was issued by the International Control Commission, a unit created by the Geneva conference and composed of a Canadian, and Indian, and a Pole. Though it received little publicity at the time, this report presented evidence of Hanoi's subversive activities in South Viet-Nam and specifically found Hanoi guilty of violating the Geneva accords.

Since then, the illegal campaign of terror, violence, and subversion conducted by the Viet Cong and directed and supported from the north has greatly expanded. Military men, specialists, and secret agents continue to infiltrate into South Viet-Nam both directly from the north and through Laos and Cambodia. The flow of Communistsupplied weapons, particularly those of large caliber, has increased. These include Chinese 75 mm. recoilless rifles and heavy machineguns. Tons of explosive-producing chemicals smuggled in for use by the Viet Cong have been intercepted along with many munitions manufactured in Red China and, to a lesser extent, elsewhere in the Communist bloc. In December 1963 a Government force attacked a Viet Cong stronghold in Dinh Tuong Province and seized a large cache of equipment, some of which was of Chinese Communist manufacture. The Chinese equipment included a 90 mm. rocket launcher, 60 mm. mortars, carbines, TNT, and hundreds of thousands of rounds of various kinds of ammunition. Some of the ammunition was manufactured as recently as 1962.

When President Diem appealed to President Kennedy at the end of 1961, the South Vietnamese were quite plainly losing their fight against the Communists, and we promptly agreed to increase our assistance. Fourteen months later, in early 1963, President Kennedy was able to report to the nation that "The spearpoint of aggression has been blunted in South Viet-Nam." It was evident that the Government

had seized the initiative in most areas from the insurgents. But this progress was interrupted in 1963 by the political crises arising from troubles between the Government and the Buddhists, students, and other non-Communist oppositionists. President Diem lost the confidence and loyalty of his people; there were accusations of maladministration and injustice. There were two changes of government within 3 months. The fabric of government was torn. The political control structure extending from Saigon down into the hamlets virtually disappeared. Of the 41 incumbent province chiefs on November 1 of last year, 35 were replaced. Nine provinces had three chiefs in 3 months; one province had four. Scores of lesser officials were replaced. Almost all major military commands changed hands twice. The confidence of the peasants was inevitably shaken by the disruptions in leadership and the loss of physical security. Army and paramilitary desertion rates increased, and the morale of the hamlet militia-the "Minutemen”—fell. In many areas power vacuums developed causing confusion among the people and a rising rate of rural disorders.

The Viet Cong fully exploited the resultant organizational turmoil and regained the initiative in the struggle. For example, in the second week following the November coup, Viet Cong incidents more than tripled from 316, peaking at 1,021 per week, while Government casualties rose from 367 to 928. Many overextended hamlets have been overrun or severely damaged. The January change in government produced a similar reaction.

In short, the situation in South Viet-Nam has unquestionably worsened, at least since last fall.

The picture is admittedly not an easy one to evaluate and, given the kind of terrain and the kind of war, information is not always available or reliable. The areas under Communist control vary from daytime to nighttime, from one week to another, according to seasonal and weather factors. And, of course, in various areas the degree and importance of control differ. Although we estimate that in South Viet-Nam's 14 million population there are only 20,000 to 25,000 "hard core" Viet Cong guerrillas, they have been able to recruit from among the South Vietnamese an irregular force of from 60,000 to 80,000-mainly by coercion and "bandwagon" effect, but also by promising material and political rewards. The loyalties of the hard core have been cemented by years of fighting, first against the Japanese, then against the French, and, since 1954, against the fledgling government of South Viet-Nam. The young men joining them have been attracted by the excitement of the guerrilla life and then held by bonds of loyalty to their new comrades-in-arms, in a nation where loyalty is only beginning to extend beyond the family or the clan. These loyalties are reinforced both by systematic indoctrination and by the example of what happens to informers and deserters.

Clearly, the disciplined leadership, direction, and support from North Viet-Nam is a critical factor in the strength of the Viet Cong movement. But the large indigenous support that the Viet Cong receives means that solutions must be as political and economic as military. Indeed, there can be no such thing as a purely "military" solution to the war in South Viet-Nam.

The people of South Viet-Nam prefer independence and freedom. But they will not exercise their choice for freedom and commit themselves to it in the face of the high personal risk of Communist retaliation-a kidnaped son, a burned home, a ravaged crop-unless they can have confidence in the ultimate outcome. Much therefore depends on the new government under General Khanh, for which we have high hopes.

Today the government of General Khanh is vigorously rebuilding the machinery of administration and reshaping plans to carry the war to the Viet Cong. He is an able and energetic leader. He has demonstrated his grasp of the basic elements-political, economic, and psychological, as well as military-required to defeat the Viet Cong. He is planning a program of economic and social advances for the welfare of his people. He has brought into support of the Government representatives of key groups previously excluded. He and his colleagues have developed plans for systematic liberation of areas now submissive to Viet Cong duress and for mobilization of all available Vietnamese resources in the defense of the homeland.

At the same time, General Khanh has understood the need to improve South Viet-Nam's relations with its neighbors, Cambodia and Laos; he has taken steps toward conciliation, and he has been quick and forthright in expressing his Government's regret over the recent Vietnamese violation of Cambodia's borders. In short, he has demonstrated the energy, comprehension, and decision required by the difficult circumstances that he faces.

Before describing the means by which we hope to assist the South Vietnamese to succeed in their undertaking, let me point out the options that President Johnson had before him when he received General Taylor's and my report last week.

Some critics of our present policy have suggested one option-that we simply withdraw. This the United States totally rejects for reasons I have stated.

Other critics have called for a second and similar option-a "neutralization" of Viet-Nam. This, however, is the game of "what's mine is mine, and what's yours is negotiable." No one seriously believes the Communists would agree to neutralization of North Viet-Nam. And, so far as South Viet-Nam is concerned, we have learned from the past that the Communists rarely honor the kind of treaty that runs counter to their compulsion to expand.

Under the shadow of Communist power, neutralization would in reality be an interim device to permit Communist consolidation and eventual takeover. When General Taylor and I were in Hue, at the north end of South Viet-Nam, 2 weeks ago, several Vietnamese. students carried posters which showed their recognition of the reality of neutralization. The signs read: "Neutralize today, communize tomorrow."

Neutralization of South Viet-Nam, which is today under unprovoked surversive attack, would not be in any sense an achievement of the objectives I have outlined. As we tried to convey in Laos, we have no objection in principle to neutrality in the sense of nonalinement. But even there we are learning lessons. Communist abuse of the Geneva accords, by treating the Laos corridor as a sanctuary for infiltration, constantly threatens the precarious neutrality. "Neutralization of

South Viet-Nam"-an ambiguous phrase at best-was therefore rejected.

The third option before the President was initiation of military actions outside South Viet-Nam, particularly against North Viet-Nam, in order to supplement the counterinsurgency program in South VietNam. This course of action-its implications and ways of carrying it out--has been carefully studied.

Whatever ultimate course of action may be forced upon us by the other side, it is clear that actions under this option would be only a supplement to, not a substitute for, progress within South Viet-Nam's own borders.

The fourth course of action was to concentrate on helping the South Vietnamese win the battle in their own country. This, all agree, is essential no matter what else is done.

The President therefore approved the 12 recommendations that General Taylor and I made relating to this option.

We have reaffirmed U.S. support for South Viet-Nam's Government and pledged economic assistance and military training and logistical support for as long as it takes to bring the insurgency under control.

We will support the Government of South Viet-Nam in carrying out its anti-insurgency plan. Under that plan, Prime Minister Khanh intends to implement a national mobilization program to mobilize all national resources in the struggle. This means improving the quality of the strategic hamlets, building them systematically outward from secure areas, and correcting previous overextension. The security forces of Viet-Nam will be increased by at least 50,000 men. They will be consolidated, and their effectiveness and conditions of service will be improved. They will press the campaign with increased intensity. We will provide required additional materiel. This will include strengthening of the Vietnamese Air Force with better aircraft and improving the mobility of the ground forces.

A broad national program is to be carried out, giving top priority to rural needs. The program includes land reform, loans to tenant farmers, health and welfare measures, economic development, and improved status for ethnic minorities and paramilitary troops.

A Civil Administrative Corps will be established to bring better public services to the people. This will include teachers, health technicians. The initial goal during 1964 will be at least 7,500 additional persons; ultimately there will be at least 40,000 men for more than 8,000 hamlets, in 2,500 villages and 43 provinces.

Farm productivity will be increased through doubled use of fertilizers to provide immediate and direct benefits to peasants in secure areas and to increase both their earnings and the nation's export earnings.

We have learned that in Viet-Nam political and economic progress are the sine qua non of military success and that military security is equally a prerequisite of internal progress. Our future joint efforts with the Vietnamese are going to apply these lessons.

To conclude: Let me reiterate that our goal is peace and stability, both in Viet-Nam and Southeast Asia. But we have learned that "peace at any price" is not practical in the long run and that the cost of defending freedom must be borne if we are to have it all.