Ijl~nt ,p.i tAB, UJi\~ted States and ,the'. ,Go¥ennment <'li'VietnamfbJ!"tIie economic future of Vietnam j . • ... '.' •.. , ". ;Mi1)"~'i'IJ\I1EI\.,Iw,ould haMeto say generallyi'No.'h' .. ,, , '.': ,,;Mr.. ,M(j)~&",l',hel), Mle ,aIVe cin, this !it-rllinge situatiol'nvhere we haiie 9. ,~laJ;!"YQu,tel];meJwe!do,haye-tH4-,'" " '. ',.; ";c: .. , . '. ;,:." · , •. M"" NOOTEI!,' 1I.,dl<iL J.il.ot 'say,·we had a plan;' I'sald:we. weretakl1'lg certainactions.l"J'lil:'!. ,,!(. ,j, 'if

i .,' M~,.M088: .Y01L89JidJ·lY0U, have, ,bliltithen'Ybn saytherearenqdocu­ments "listing, :"'~ich dem., these plans. 'H?", :do you hit ve cb\it'in~i~y, lIppla~mng ~I~hln the Agency, for Inte'r~atl'Oml,lDevelopment'll:'ia the varIOUS ImSSIlmS (!):E. the 'Government-of V illtnam q' " '., .. , Mr., S.LYcER.; J:VI,may\' Mr, Moss\, 'uhe' 'plannin.ii that 'has heeiih,est ol'g.ll!uized, in· Vietnam,dur~ng' th~ past:f~'" years'l1aSbeen.whlit'milill.t be, te~lJled sector~l.l'lanulnl( 'rather t~al1l1lacroe,Ci)ll0Ih:'C 0; .gI90~], planmng. And thIS IS understandable, ·JiJeCfluse"ivEl'haq techn~C1aUll. In ounmossionworkin$with; establishe'd'lhil'lisWies who in turn'had planning units withm their own organi!ZatiOtl\'Whl\1>eas the' Girli:atIi­menti· of. Vil!D"am ,<ilii(i-!not: have' 'a 'W'el[ twgan·izetl,· competent central planning organization that could pull all of these things together.,WIJ. dohavecertain documents which deal for e)tllnij1~il;'wlth the lojIger­

·t.erm; :pi>wem)equi~.em<lnts' M"Vi,etn~m' for' uHtiiniite' .~~(llibtnic· ti~v<ilop: -moniA': <), k·: "i,1 1 ·:nr)l:·' ,':"'' . ;:';'1: ;)'=');. :i\) .' ,: I, ",' ' .'

·1 Mi~, M08aji,~t US'8top,"Hhnt pbilltJ:.Wh\"ti \'l,tllgriil98 'do we hav~ to, .make· ,South<, 'V Ietnrum: ':seH lsul!l(nelit "Ih 'the :'l)ro'diili~l<ln "0:£ ')electrl'ca~ @lie'l'~>1V~\' ';1 -\' i'Oj:":;'[-!""';::"': Ij;·','1.':. ,;' ; j!\,~-i oi 'j"I',i,',:i,:, ",:" i"'::)

Mr: SUN!"' .. We have right now) o\wltoing'iV\niJ"'f~~eh"in~~llittion of..t",a:additional"powl.l'i\lan~s:ril1 ,the 'Sruigoll;'aI'eltvlkfioiwn a,s 2 ana 3,. w h\ch h~ ve tiedlMmi<!led I In 'ptim'lyMi'ii,: 'w,{d I'l'e' j\}ti<lj W!lJttirig 'it' ~tlitr:t Wh1chlM'1)ru~"'k.')u!; .1.0' yelllrs:h~ll~e !\S'M' ~M '!bpget t~rin'Y,flidS(' !' ''')¥'l'n>'d~)!Jsl \At iovlllltpbilltJ du'\'Iiil b~tlp1Jse M'lil\'v~ 180U~h 'gUtahi' ~eJ-F:" sufttcient in power produC"titlMJ~)Jll t.Cl.hll'; 1_;"( 11 !,~ J: 'rl!J.dd ob '(,il!, j: ~~p,:td-:_ Ill,n,_

, i ,~", '$rrNFlm.l\I!he:po"'~l).1>IiJ:hitsi thiit ave g(jihg'inljbW'~tn 'be' iid~9.hate :OOFJtheiv pr<JS~nt'llM(tSra!lcl fill' theiheJtt bil'lJi'f\it\!'re." . <I,it"i'''''''),'", ':'.:. i) I Jli[ll;' 1111<;)8$1' iW91i1<iRt@y ~0Jh'}lie~ p<Jwet dllt\J.lng'dowft'frofu't'l\~ 'fioi'th'? ", ,MvSn,.vJilll.i¥olllrr/eMi.l frol1'rthe):\')aN~j\!l' ~'O\%'er~aM~J!.I"":1 ".11 ':' · '"Mr,' Moss',! I !'tJ1I1'n@t ~ijrtaijj'Whl~h p'Oo/e~plah\i W'ls'.J'I'krrdW.!the't'I!'ii! power brought..in~'fl[>91ll'tH)ft}!iOVrr4t11blIw.l J, I (I' '.',1: H"'J (d :;h'Jo.~l.J!:,r: ),.!:/;.-!!' , Mr. N O\,T1!R.< N\;)~Sl1<'f a:il'l~r,Ii'is IfW\,>,il"'"r 'bt'otightfl'otn1t!liffih'Wettlb.m. !JJ.IIfr;)$l:tlV}ll't:Jl~ Q!tJ thut I~, ItltoW,!Itf\siri' II 'c!io:l'ti'lf kflliwJ ofi'\trtiY pb'*er

being-snld. from there. . ,),(J''-''ildo'H: ~ . .-'!,dlr;·'i( J~' rdf/o)1 !~·!ql·;:.:!·,I': 'i')!jl~~! · ,"M",) 'MiJA~ .. , (W/h\lv!ll)i:et')lJl'is lsolli!~r:dti,ii whi/tl. wi'll it'b~dl:>h'i'e\;flf:RIiffi­cIEmt.'Withill1ltih~' cOl'I'R~~Y\WithblitiPtirbliiises £t6'ffl,tlil:tHae~ '" '." ' .. : <,.' i.';"

Mr. NomrER. I danot think S'1>"'~J:iW!~~jjiitrl.:h'a:B'ev~~~eMi'liEi<iJ :po:w~r f~l)l'I1'otiMia~'ll!JlatSiblhlttd!itlr~ Iohat't1!i1fl ~Wa,\~i{j£! ['"iVl ,0(: .... ," " c" i 1. . "lfi.Mit' .. 'M!>!iSS"!!If. ·1l.keti'tJ,l>iwe~ "'. ·.~M\lS. ')li'tli"' .. !I.'.WQll\l. sIJiiM'fiIl.:jjl.elli. ~th.entMh. ~.tI.' tis !tllll'illfg'S'; . f~!lll'6£ iL!pIWli!'l"Jfuo~J tll~t~"ha'i>'e'l>l\i<liJd'i$biiils~dlts it'lJoll~ ~111l\1!i)6~f jWo !lJlfi$'Ifn" ltllW!' 'Mru/.rii\ f [lad 'fiat 'tllin]{;W&' iW~I\n"enin~ 'flje ~!I!t'(t~'ti$f'4G\;' Itl1'ldJ fr~fdt,'lbJ a.h~ rjt\~hlilj~~ )~t'<\tNti&li~lf6I1i\WI!"WI\.~fe ddM ~jjtl.~!¥Ltblb!. e. "ti.'t'i:llICW. In. liltlJ,t\~'ffictof'tlie'r~.!W~'II.. 'i!'v .. M\Ii~ frlillll .. ~r(\tls'tl.l\i~s.'

. magclCulture, put I hUYce thl' sellsethltt th¢i'~!m1\tJ114~1ff It'dell:fi~j)le plau,or plal'is frM~i#;iiI~ 'tM '1t~'tel\titiU'b~ 'tll'~l (l}1j~~riitjl~nt.61' 'th~ 'United Sill MIl' /I·hnJ.tlitl \Qiovel'WfuM'Ii 'o'f ''Vi~'fu& a:m.wllat: 'Ill'e i :)'o'tt,:d Qing' In ~I/\ur . ,':. . , ,,: , .,'" '.' .. ,','" ,.",

'68

,pl!ogrltmstb;i$, year to encourage 'more effective'tilixation I1hd"tax <coliection ! ' , , ,

In ,Your statement on page ,2 you state :that efforts'toimprove:'do­mastIC ,tax, revemles we~e liplJited to administrative 'measures to'in­creaSe the collections of tal<, es under laws ,alrelldy',pI). ,the books. Do yon.h!,v" a,t~rget there as to what would be a desirable, level df col­lectIOn! Is th,s an area where there is something defined,! _ ,Mr· .NOO1'ER.~~ere isa target ,for tax collections for this'year",and III addItIOn the VIetnamese.intendtointrmdilCe legislati<!)flwhen theil' '4ss~mblyreconvenes .in, October on the, revision of ,the domestic tax :structure. That planning is ,going, on :at the pl\es~nttime . . Mr. Moss.)V,e!l, how much progress an. they,mliking 'on'improving ltlIthink ~ou)ndkated about 35percentmoredn the first 4 months ,oiWn than,m the comparable period af 197@.

Mr. N OOTER. ThaUs correct. , ' ' , , .Mr. Moss. But what percentage of taxes owed are they coHecting

WIth that 35-percent increase!, ",,' MI'. N OOTER. Frankly their present taOS: structuI'e is not a desi"able

one. , :Mr. Moss. I realize that. ' , ' Mr! N oOT1'1l. Jt is, a hodge-podge.of, various, kinds of ta;xes bUNt up

<over the years. The percentage of collections-I do not have the'fig­ure-I am sure is reiativ,ely'smllll. In,some:oMes' the taxes, Oll'the hooks are for itll' practipal purposes'Uhcollectable.',In'the longer:run, 'of course, the answer to, that is a systematic 'revision of the domestic, tax structure, which is under,study now. " , ' " " , ' , Mr. Moss. ])0 You,hav~ any ,¢sti~at~ of, the anio/lnLoftax,h6w . ,owed the,QQveumj\ent ofYletnam w),llch"s unceUeetabl.,!" ", '

Mr. N OOcrER. No, I do not 'have a figure on thttt.,(tenerallY·we ,l<>,ok a;t thighase.;! on. collections frolll, 1 yean ,tOt 'the ,)lex:t.'Of"cdrtrse, on that basis they do show a substantialinoUea$e., v , ,;,', "'" , ",' ,

,l\!r."Moss. tIt.se,ems,to me that, if ,any:thiilg .;s,el~m<iJjtIliLin.'develop­ing the economy oiMIY' QQUlJ;try",it.isits 'ability,t@,colleot revemie. 1I'hi8 i8 an:ar,~a wl;1ere w,~,n,eed, a concentrated eff@rt.,We:have'liIeen'tOld in the past ,you,c,oulduot 'mlike puogtess.,Abol:lt"thetillletYQUmove a:headtl),eychange, the final).ce, lllimst'1r, , and it "WIIS 'always a, 'Ci,se of starting over. Is that one of the,p.p:M~mshel:e'l\ow:j I 'I:"," "" "

""Mr:~PO!l1IHI.'.N:,!,,,sir;it,isn~:\tiPr.o,hle\n,,atthe!1n9111eht .. "" ., I, " ,1I!tr" Jl!l,oss.,At: the mpm!lll.t' It;)Sno,t,,a.,p,1''olillero; ':J;f,t;heycl)ll>uge€\l fi· , nance'ministers would It become ,a prob16m,~ ,':"1') ',I '.'i' i,,' !'.1~' ·'"il:-.,.'",: , ' ',l\1:r;,NOO','ER." J;n i ~~Qt. ,they; <;liq,:,ju$P, :,~nge'~i¥l~,[mi~ia~\'$l!l1~-

cently, but at,.t4e,~~c!i!Mc)l,ll",v,~li,~l\~lp~pp~ft WO~~,,oD.rtl4!li~IJ!lr,01lg~atn aJie)still,th~re,anil,~v.6.¥,''w!,w,',(\ ~IPvg",WI, ~t"i, ',""l, h',ii "I> ,:1. """J,";' "U,

, Mr;, Moss, So when'y,ou .. ten Jts"theJi!l' h.lI<§'tl;\~\\1liI!ll,jl,Ii~!lfe.el)t)lrp~lIIl!i~ , iti,th"amo)lnts, '1'll>U.~ct)'iI,.we 4a\Ve, I).PI,v!llJ.l"'fm:WIP",;~~ijl~",suil1):l)giiji¥, .'

, ,eJl',I'~i v"e,·:~e,s, ,s, . IQt, i ~hI'1Ji, fI;~, l<"lI',r8gra'Y~\, ,liI,e~aMl!, ,~~ ll.\l11i;eD.~, :LIl0~~it~~4 ',.t, , . P,QIt\",;+~aiY, thai)' h.iti\, 9~,~1"C9~leptlllg,)W',p~Jfc,el) •. /:l,~~lle"!lilll~!J:Tht\?Wl;ltg '/tnd"ipcr,easeQ.lt,l)y apPNl\!'I1\:':te~iYi'Qne-~\IljIiil." t:,'\J.~t,l8,nQtl al S1gl)?I!fjolll,lt, ,amell/!:, t., Ot, '" tOF!},,! J1;~l!e, ,s,' . ,,\)Uel$lble ',tha,t, ,ar",' :,~ Il'lHng"Q~, ~'Wt.e<;l ibythe IG'P,li" <erJl,mr2to;fY;'letnam,; ISIt! " :q.:, n'" AI' "I'''J /' I:' ",'1'."" • r "l\tillNoo~'!w.:;Wo\1·;,itWQ\I;Ip,nptwe,»nderJ;))'Q~e~ssU;i)1{J,ltIQns. ,I, "" ",,'~' , .1ler'1'. ,.Mos •.. ,:W),l,at ;doe~, throt ~9,,pel'Cent, ,r~Jll'e6eJilt :1£ lYon ;CI)l))!61't! the piasters to dollars! '

69

Mr. NOOTER. That would be $185, million, Mr. Chairman, approxi­mately'$185miUion converted atthe275 rate.

MI'. Moss. The '35-percent increase would represent' $185 million! Mr. NOOTER. I am using the target of domestic tax collections for

'this year, which is to increase domestic tux, collections by $185 million over the 19'70 level. The 35-percent increase for the first 4 months would'he in the neighbor;hood of $50 million.

Mr. Moss. Mr. Nooter, are we pay-ing OUT taxes more promptly and in greater numhers in order to contrlhute to this?

Mr. NOo·rER. You mean than'the Vietnamese are? Mr. Moss. Yes. Are ,we paying-we have heen paying 'taxes there.

I thittk it: is a figure of about $14 million a ,Year that we are paying in taxes on certain installations and properties that we rent officially, the'(lievernment of the United States.

Mr. 'Nmh'rlu. The U.S. 'Government does not payany'taxes in Viet-nam, Mr. Moss. ,

Mr. Moss. If it dees not, you ought to inform theC()mptroller Gen­er,lil'of'the United stdtes, because he is under the imp'tessioiJ.'that you do. If ;)'ouwould like, I can goi ve you the direct ')u<,>tes here.

Mr: NOOTER. The orilythmg 1 am aware of 18 m cilSes where we rent property from individuals-those individuals, Of cnurse, have taxes to pay-and in that indirect sense you may s!iy that sorne n.s., support goes ·to taxes; but any properties th, 'at are owned by the, Government are made available free of charge, to the best of my knowledge.

Mr. Moss. The ComptrollJer Gellara1's representativeinstat~ni~nts before this committee yesterday made this comment.' "In Vietnam, for examplel ~h~ ,united S~ates ?ver a 2-year period paid taxes' of ahout ,$28 nl'1l'l10n'1!1COnnectlOn WIth rentals of'real ):ito'perty by· U:S. miUtlliry aud, civilia111 agencies.'" , "

Mr. NOOTER. Well, I am not certain----.o""- ,., . ",Mr. Moss .. '!'hisisnot the; first ,time ,the committee has encounter,ed the charge that we were paying this. We asked the AID missi'OhAast year willen: we were there rubout this, ·and there was no 'deniaHl!er~ !tihat we-were,payiirg,taxes, , ' , " " ,,) ,I I', .. Miu.1NoolrER .. ['assume ,he is .refening to the 'taxes paid by.i1)diiv[dtrwl landll;)"dson,prorerty",,'hich thilyrent·tol1s.' ' "'" ljjlll"""'>"/'

. ,Mrl .. Moss,; Lets· g~t .into that,>becaiuse we undilr;stood -tliateJtltte 6;0Iv., ' , ernment of Vietnam was extremely competent in c<i>ililecting'tll!:kies,iJ)D@'}i)(["

lartdlordS'irenting ,t6, the'·Golverhmerito£the United S'tateSj(liH~heV its military or civilian. ageucies, much more so than theywera;at collleat;. " , ,; , fr6m'aUa,nillordirenbing Iio·a N;etnaimesenati@')l\ll:]v'Andirtl1e '

bti.(!)'l'ej.· ',I f'H~!,;·t

j ,.).\'lr,; ,:M~~~'; ,4/\ ,~ddition, j~I';.' t.h.I.· ~.' t.here. is ,}\ ~1.lljJ.'Stl'lIt~\1J,.a,»oq,lltl: of property rented by Ameri~!,n nation!,!~ themse!yes"~~PJi"se',,,,e Ill}qerr stand ~he same p!1ttern is, ,followe~ m, any Gas.e i:O:YQINlng. ,a. ,W.s.: ,!Ia-tional, ff they .are renting, th,e landlord seems to !i'I1Y 4is;tIJ.I'~. J, ::'.'.

Mr .. NOOTE!l.' Well, I: S)lpP9se,You are referl'lng ,to tj1e .fllct, t4at. f,Q, relltals through official ch,annels, we <10 supply the GOVel'n;m~1i't :wjtn lists of those rentals and it is.p@ssjbletl\at that ma/resite.asi~r~or,tAelll to collect the taxes.! suppose thatis the reference 'you are m~ing.!,

Mr., MO~R. It. is cer~ai)lly oneo~~he. pOssibilitle~, when we, supply such hsts, Isn't It! If It creates a SItuatIon to the dlsadvantageoi our personnel, why do we do that! . '. '. " ,

Mr. N OOTER. Well, actually housing £01' official Government persoll-neUs ,rented by the mission, I think,in every: case. , '.' ,'!J:

Mr. Moss. Il'lt there are others who are not official GoYernmmtp,el';' s0i'ne] who are. there, aren't there I We have many U;t;i. nati<mals t))ere £01' other purposes.' '" .' .'" ''''

Mr. NO()TE!l. They would prQyidetheir .Qwn,renta;ls.. ,. .r 1'. , .)Mr .. Moss. :PI> you. sllPply ,those,addr~ss~stoo to: tl:w qo;ver/jJl1.~ll,tllf VIetnam? ;,.":', ,I :" '. "I' ,: -:.t;i:':j ·;;,,'il,dJ

.. ]\fr. N ?O~ER.N Qt. t~ my .k,!\l)VJ~dg~,bllt '! IlJll nQt ,c~I?tal,lJ,., ~£th"y !are :u .... t;i.\l. atl.Q,jlal~ ,~h., ~~.e9jl Phe. Ir ;0., WH, ".; ~, dO., .ntlw<!.]'V, .. tP\\t w:.e .w .. 0. u.!<1.J;I~y,r lIjly.partIculaJ;)mtmg Rft4\'lll9r ,alll)Ity!,Q. suPPlY'~lI,ch!!'I,I~t: I" ,,"; · . :&fr. Moss. Well" i~wo,u.1d bewterestIng to kl)o;]'V, SO thpecQrq,)I,p, curatelYfe;f;\ec~st4efac,ts. ",' .,.....;,,' '., ,'".,,,," I "l\fl;\:lf9~~R,W~qanol;>tll'n~hllt,ajldsu)j\pl:pt ... I ,', .,'1 :,i "".C;p;)elllf.orm'ltI,oll,.fono'jf~i)):."., . 'I' , """"\

· ; ,'l'he:. v,s.: m,is.sion in .Yietnam does not,.supply, :the ~Go,vernmen{ ot- Nietlltulli Wiith Iih.na"l~ • .oP~\ldl~"<lvVjlo ,rent,p"o!,~r\y.to '1ol)plllqil'l ;U,~',l'aJ<l,onAl~. '. '." ,I'" I. i.fI

Mr. Moss. At.the moment, to get to the''',vdl'q;>a;rtMithelecol}@m~,oI Vietnam, not the military, what lru.e:vouv''Priojit\es!ill'ld~aJitig''vith the. p~oblemsl,df.Vi~~nam ini.idev~~oping't'helecori.omy of·VietnMn! Whatareyour\prlOl'1Ues~.·:, '; ,ii" ,I,' ':.: ,,<,'J; ,;';1: 'i :;,,; ,);,,~'~Ld', If! I

',. ,Mu.N<I>OTERJl1he ']Ilrinoipa;l 'pniorities' auB"o£ the' economio' ",lid 'pro\ gram to work out with the Vietnamese an economio 'P.Qlioy$itu~tUTE\', htducili~g, exchange., rates, ;dol11'*'tretal'atiolJ.;,rwnd;"ollhet' 'l'e~la;t!ions regardmg the mnmng of thee'conomy\;tl:iat<'leadi't,,!a'r~agOnllibiI!Ide~ ·gree of :stalltlitiY'and:channels, investmentr ,jnto>proiluc'ti(m 'i>hdlle'co­!lllOniiQi ;d~'v~,O'plt):en;b;:· j I, ,!>' '; i",l,: L:! i '.i',1 '().' "i!t ~'l i /"", ".:' II f,!;,: ~ 'l''"',i) :1; ~ _ i {i !~.II1'F,1 'I:! · ',i Mr., MOBS; 'What ,is,tJie tdtget ,dat~' £01' ha "ingi th~ei }i>olioies Iwor~d autY, ',. -:" ','," ,:- ',::' l': ':'j":,11 ',:"i:i': ;'y: ~;',!; IU.:!!I,,·' :' '}'fJ:,il,il'iI

",' Mn,' NbO'JllllR. ,]i think inrth,lisense tht yon'asU !itl!there<is' ho'o011'lplili tion date. This is !In on'going problem which,.!Wi~I,~':'Jwitl),ius"filr!!I$ lon/!, rag: wei :~e ;i~iV!?!:ved ;tJ:rere, IX 'llJll~lIll'e.' Cartai,!! ,;sWJ>s,ha+e IMen taken,;! others liT" 'bemg pla\lnell, tOl'·i11hi~rrvear$lndl.tli!<l' fOlloWtittg 'y~ar and: iWe M'e lIilQ¥inglllhead! as ,,,,e(sll<i,~h!\t ,difi'erent"stepsiane possijlle.1to

tat!~; ';~f~~rd~ ~~i :~e£~rr~~'~~:~'8~~t;~b~~i~~&;I~ltb~e~',~~~~;,~~::~ mentIOned, ifolloil)ied I by othe'r>:<lhanQ,'es m I !Mlttch\.1 some! sll11Ul 'fJhlt1i\'/tils in May to. meMnew situationsli8 the:y:a,.."s~;.J~hJecifiCl.tl'lY<OUt'doltimstic taN:atiml.! the.int~ntiOll is ,W'int,ociluc!..Tegisllltiani ~Il"@otob~rl t, :: ;! , 'Mi'.'M@9S.Youltalk, about ,tH~aldmjt.n~dl'ldmideaullte ioffi!l'iltl JP'Ait~hr inc~easiir~lY' inappiroprJate iSI thQlwordingiyo11 il~i<, on 'Pllge 4'0£'10'11-statement. ,',", i~ j';T: J"< :', :L~ ')\ :,,":",~ I\')!' 'j J 'I,'! I

,MI', N OO'rEI\., 'rhe request o£the Congress as written wa~pe':fectly fair '1nq. ,equitable; " ",', """"",' " ,',

l\1:r,l\i[oss. And It was, a ,35B 1.0,1 exchange rate fora,ccommodatlOn; '!'hat was the rate we recomfi!ended"Z58 to ~, Not 275, Th,at was-you p"id you were familiar with the exchange of correspondence between tpjs pommittee 'lnd, t.heSecretary of State, If you are in, fact, familiar with it, you will lind thlllt is in'th,e eXcllange of cOl'1'espondence with the Secretary of Stale. " " " ,

1\'1:1'. NOOTER. But we officially and Ipersomt1Jyhave never,agreed tha,t tl!.atwa~,the,lIppropriate 'rilte. , '" '

Mr:. Mo~s, Y: \l.ii, m\':Jr disagree with;t as to.1tbeil)/l' appropriate. But as to, It bemg £ileir,a,l):c1 eqUItable, '[ don't tlvnk the Congress has been inclined n,,!t to,!l~£~i\,,!tnd equitahle, injt~ ?,ealings with th~ G,wern­ll,L~ntofVletnppi\~ m If4qt I.regll!:d It, as bem~ wost openhanded and generouS,"jYitp t4e.Gpy~rnI\lent o£Vietnam. ,.,'.,' "",

Mr, MOORHF.AD. Mr. Nooter, are you famIhar,wlth the March,)969 1', eport of, the joint dey, elopme,nt gr,o,u, P, c",ll~q. t,hH,' rost-War, Develop-Ijlpnt oftlie RellEl;lI~£,()f Vietnam Policies ahd Progralps,j ,

Mr. NOOTER. res, ~,am., ' ,,' " " Mr. MOORHEAD. When you mentioneilyourplll;n~, ~;'el)t.ho)1ght)leY

weren't in one document. are they relateil to, tlii~repoitl Is it help'iful? Are vOl1 using.jt,as,~(g)1ide 1. " , :' " '. :, ( , , Mr., N90:r'ER" A,',' eTl'" O!\m,' 6, n, .of,th,' ,i~repqrt has.bee,)l help,IUI. ,1',', ,h,at, is ,I,' I., h'fs heel) drawn on(\lll'J;~a~,8erved asa;backgrC;lUnd.,Bllt my'cpmpwnt re­ferred to the fact that It was I)qt , apcepte<l ,or ltilop~ed,.spemjiql\I1yasa plan or a program for development fQr"hl)!W1)ber,o£reaso)l~.'havin/l'

'to do with.t)le ,)lllt1R'll¢.thep~!fn its~lif~n'~ fhe :w,~yit ~as;dev~19f'ed and made up. Frankl:v, It wits somewhat preml'tu~e ,at, t\lg ,tI1he ,twas d~ne in terms of ,w:I'\I~t,w!l,S gO~I!:,on iJ1 'Vie~ap), ap.,ilit':1"I'~ d'me:..yli:h VIetnamesecooperlthoD\ bnt wIthoutmvo1vmg tONIV great,extep,t t,he active, ll1inistril*,!: tger'l: in a way /;hatm~lde it, It u~efwl i'\ocllmrint. i! ' ,

Develonment ~lans :ten.d ~omehow .not to ;be nseful m;»~s'e~~fly"lli1e developed in Con] lHwtIonWl~h, ()Il"gpln,g ,aqti'lll~ ,I\nd,py, .tfiQ~e/re~'Oo~­Sible, ,£0, rmakil), I!:, ,c,lW,re, 1)~"pqllCY 'de,cis~o,!)S., !1\n,,<l t)lIt,: nnf,9];~U,lI'It>~lY"i18 tlie ~istQrv ofthat.wl!I)l:nlllg:effol'~' It, 'I'I'<ts u~e~ul; It js:gQpd haf):lljg'J'A'I1]lK/, bUtlt falls short,of,,\lll<ll!lg 'an· .actlOndQc1l;Jl)!lnt ,'\V):l!o1\,can,I)OWI ,b.e ,1m" p]p;rnented as writt.p:n. ,':,., i·;", !',·ilJt ,~,,".',,;M, O()"'HiJilA,~"iW!lat ,]I),ortiQll, s· did, y:q'l,fi!ld"p,ei:pf'l)) !))nd '~$ll:fUi1.II~·he lI/I1llc)lltnre, <PQm,Illni it,l;ted",~e~tm' ,)j>()~tlOn. ,m!I1;IIib;l)y, 1<iW: ;l'l'hlltl>,:". ,'I:'

, • Mr •• iN o.QlJ1FJ\t.W\>Jilii itlt"if,pu",il!,,#o)ls'on"'Pot~)ilt.illlle"Jil<\1'ts :flm ,Vri~t; mWl"thil, kinds 0.1' develoDlnent that. would lead no eXl'lort:expamJ!l;iQA,·,i$ e",tremely well dO)le J!\li\<li,'Is"fJll'anol isel'iv.eil' i,I:I ,'PIlll'~I\$,IjlY'lInS,~er,trl', an e/1nlj~l',o,l1e$t,ioI)l~!t<\ the,~I\i1lhe'el\OnomY!QQ'II!Ildwelo!il'i I ,"n '" ".:r , " '~o1. flo V.Oll want to comme.I1-~'Qn,that ~l, ,~'), i!: q';',(;;) ,l i/\'.!,;1;u'il ·-d i "!\J L Ii

;)\f1C., :Sla),V1'l~, ,H".l: Inil<Y,' Jl:Ir, ,QJ!l.II)rm!lll!l"i)he, l'e1il0r!;i ~!t~'.iI'p')ilH~!I'e .n¢fer­ring; to was really !Ii ,rep9nt.t(j),~'\I'iQI;I?,re~idelillts,C(F\i;esj,\l:e)lti 3ihi~~I'iflnfl l?,re$i!I elilt) i l)l'i""!>I).I, iQJill!:tJw '~<i'li\!liep, ,tsrm il'll'Q~lI>,el\t$. aill d~o.1l'I11'o9krf~'r, . Ntet,. nam . .assumhl.g; some reasonable settlement, of ,the i'\l'i!.l<Vf~Mel;r,,""<i>\lJ;<!l Permi~ ,t);te:Yiilte!ilI}ll!l.'M\~' (tPV<ll'!):\n~lilt, tprltOFeJ1ll ,iIrI $,'i>~th;i¥~,,/;l;llll)'l'i 0{ " .I,nnf. t hA . ~rW,Wn'fnt" ,~~IJ" :Y'.'JG ,neVIl, :JtI!l\lrljS~ljlt\lld;'~i 1111 :!W!)I\ll,', m~, c,!iW, vAl"n~Ant, ):)l"" .. It wa~ " k,"d of" ners):)ectlve. a kmd of a ,h~'B"" £@,v 111ft !f",tHrRo.·n; kiinit.<lf ;)l<li~~tj())n,l)f: thRl \'l~!1~n·p<6 m~gl\itu<le'(}I1Jh~ .ili-rllc. ",. "

, ;(: ,;, i i: ,-, "It'", '\i ~:i- "(',,1> i:' ";;;-.'-: jfl tdq

ti9J;1~ ,on~ mi~htpursue. Be,4ind this doc~ment there are a whole se~ies of techmcal stUdies, one was Ii very detaIled study, of e'{port potential, which was done in a very sciimtific and, .in my view,.l\very rational way. It was done in two parts; one a look at the e'{ternal markets as they might develop over the next decade, and then a look internally in SO\lth.V:ietnam as to where South Vietnam has some natural advan­tag,esln prod]1ci.ng, for ,thjsgmwing external market, the Japanese market,otherJ),s)an markets. . . .

TheN were a series of, detailed plans on the development or the Mekon~:mv~r and the .Qeltareg!on. There weiesome studies on the forests,..studles on the Central Vietnam, et cetera. So that . document itself was not a development plall" but it was backed up by a whole serIes ofi\arlicularly f?6)ised studies. And to the extent that this laid out'foru~ "itd' fqr the "Vletllllmese the broader horizons, it hiisbeen v~rr.usefhl,'btiVitiS n6t a, plan that one can:s~ynow let's start doing it',ilfi1 it'w,as ;n~ver intEiI\ded,to be that! , l\:fr, MpoR;HEAD:Sb.puldwe,have sucn a plan ! . .' ' .M,l-.Sl"'YE~ES~9h ,1I.pllm,Mt. Qhairllla,n, must be develored pytb,e

VietnameSe, even If With our help. If we attempt to, let's say, hire tl)e I;Iarv~rd,~rour ?r Robert Nl'than, w~at-have,you, to go ou.t:and'db a plan, It 'WIll' gilther dust. When the Vietnamese are ready with a plan­ning organization, with people who can concentr.ate their efforts on tb,is, then I t!).ink ,,:e s,hould start on it. But until, then .1 don't think it iSllseiul forus'to do plannipg on o.ur own, 'Phat is wh;y I have said before t4.M the most useful pla\lning that is b~ing d?ne' now is sec­t~rli!1 Pl~,!,lli'n~,hec~lISe;,th.erewe Jj~veOl\-g?ingm. in:istrie~ that are in­tereste(l 'Ill' Ide\7~16p1Iig '1!lJ'jger 'term 'pllinil'£.ot the rartlcular sector that tliey:'a,lJe~nV?l'Vedi~; '. ,., .

. Mr. MOORHEAD. Mr. 'Moss . . Mr. Mos~. The last statement of yours raises "question in mY mind

th~tI think y01Jragen~y sl;!6uld be.far more ,coi):cerl!;ed ~I)out, You ar~ gomg to request oNhe Congress thiS year an allthorlz\LrlOn and an. ap­propriation for what, three'quart.er$ of a billion dollars for commodity Imports in Vieblam i '.. .'. . '" ' .

Wb,a.t is t/le'to\al' p~cl\'age fP! all of ;your assistance to. Vietnam throughth,e Agency for IilternatlOnal.QevelpPUlenti. •.

Mr. NOo?",ll."The ~e9,u~stt.o,I;!iscal,y<lar 1972,is~.56,~ mWion. . ,. . Mr. Moss. $56'5mI1lrOn. Cilid that IS notcountmg Public L\l<w,4~O,

Now,. Congress is going to. ha~~,t~ ,arprRl;~riat~,a~thpriz~~itd.ap­rrove.thls.mo,uey,. Do ;you thmk; 'it illiquid' d6',sowltrrout haVing a,bet­fer un<;TerSttj,ndjtlg Qf ,\,hati~ 'p)annedi!\0\iih:llill:; wear~ corrin.iitting o~rselv\lS. to.in·VI~tn!1ll1l\l ~~v~!O}?,in,g, ~lillyOUl\t~ll rh~re~i¥lm~to,b.<r mY;li~ls~~ct.?~i:,tll:iM~·I:.e~f;~~. f!;~~<i.yt.I.1l~.' .. ,~.J$~9,!l:n.tW.~IJ.t., Oll,.t.AI'P\L'\"t of \: e .ffmeTican peop' e w lOU olll'1uvolveillent.

If we are g~iljg to,ri1~i':W;~li,~eJpi~;' t4\.~gti'1 tlwpoib,tl w);l~r~.it, be­cOll1~~s~l1a?le,eQt~~: purh~".l' tWH\~ c.<i~!\~~SS; ",~e~tp Ipl-v:~a better Ilriderstatldlllg of whatydur planning IS, not se"tQral p:WC1\IJI,ng" what-everthat means." .' . ' ... '. '. . . . .' , Do yo~' ill'~an; economic 'seCCQrs, or,sect<ii:~ of th~·cOl)\l,try, geQgraphic_

9,11 or'wnil'tf""'" ,'" ."" . '. , .• ' . . ,j1r. S~""ll.EcoIH:i"'i6. SP.P.tQrs, ,aO"nic).ll+ll"e. jno'".try nOW"r' , . \'{:<'~ (: I (' ':; ,-, J'7- 'S,V (!;" (j f'J';~ ;~' !-.-'q.':-'j': '" ~ ,tJlr,- - ,', ,-~. l") • ., '''')''~''''r-, ,~, ~, K t

, .. ,_ ,j' _J", ',_ '

,i :t~r, ~[O~R. Ca)) yp)l!pTa~~i1~qiat~iY 'i~ t~~t 1i;\~d:}qf,~, dqwviirtmeni t~hz~ilform~tI qn~,1fea~s 1,\p~IJJP:e ",tq.~~"" .', '" ,: ,,,,,,, "Wi' ,'" li( "Mr.SU;'vEll.Tl):!ttlsGorrect., ,,' ",', " ,!,,' "."" , .'

, 'M!r.~:rpRp'; aim y<;>u thens~gpleA~ iUn ~\j,ch~ f~~,lliol) ar~)wvg,\~

sUM:~~d J'L vER. I(i~ IJ6ttheid~ai''C!tY~0 ,ilr~~~ed: Jt, \s'rios~i~le"hl'r; ConP'l'essman, to take a look at the D,e:l~!l;'i~qri e'fa,fl1,Jlle"jM.,a,s,~cFI?""1 ",lj,ic.b, is,Jh{jn, gr"icu,',ltl};rl}! pr,ea,rlb~,S,~~, ,n, ",l~,;y,o",;W'lL,l,,9f thee, ~unpF,Ji! fln,' (j develo? schemesJQrb~tter,W.ate!: ,cp~tr,ol" t!l1i't 18, IW~Y'lll~ HPQl1/,l)g .Il' the •. ra, my s~ason, prpvlde l~rW~~19JJ,tn: ~~AriV ~e.a~gn"preyeJif, B,alln" i(YJl)tru~i(!)n !It the coastal r~glOIlSill:l)q ~p, P/,\.,,~9 U\crea~e ,~h~"J>!q<il)lc­tiXity. J?el'~cre, to iutroduce, ~econd cN'p~):sMhat;YP\l ,jl1!:v~ :"l~ejn, ~p.e 1!l0)'\S9oj) seasonal)a 'sorgl;\l}m or· corn ith,eI~Il~.te~, Pinit~o!m~ t,'1, 1J;l')rea,s~ p~rh~J?sdOllble, th~ 0'1t.pl'~per !,G.r~of .tIwre~19n, tllrsmg~ Ith~",s~;'If seed and water and fettllizer, pes~lol~~!,}l4A'p,oll, ,iifl~)lJl~t,JWq~S~~tl!M having "',fllll, yin, teg,rate, d p~lt", "lhN,h,in, ",<:Ily,\lS,' )]rIl!lS.Posta,Wlll;\l!UdfJ"Q,m­JJflJnjr,at~Qllandsoon,N 0,:,(, It "loul<il beb~~t~'f it ;)i})IIJ1\li~,I"t~f,tlJc,at. ~ut IJ l~ altogetherp~S/llble I and tlWYlare,,(lolllg',th!t~,lm),d, ,of

p W·I~os~. D(j!l'~ yo~h!\y~tp,t~ke !11oo1q,t 't~~;t~If~~~~i~~t(~~:aV>l),~l: ~qlhty.lnth;e,~rea,t:: ' J~'.); II,:" {"I;! '.""!1 if,,'I: .JI"lii.~i:;i{jf;':)'1 ',,~I{l' "l\1:'r. S1;HYE~.:rJ;eds~Jy. "1(\ :: ::',t ,} I Li!"\I:; ',/I ':;[!:, \ ,;-',:;, ,:It I

, ,', Mr. Moss.f,n O,rAW, ito<l.e~erl)lil).e,th~<\lIrm~i which m.111d'iPi"9flJ!qe,~h,e hI\{, he,st,l,evel~,of"I,n,9q.'he,f<)r,~, p.e"flj,fmerJ" ,",':",', 'Ii'" I,);!' 'i'),' ,"III",,'

M, t., SILY)ilR, ,,1:, f, ,', y,on, t.a:l!:,et~e, ?-~lt, II! £p,v el'", ,\I)\IIPJ" ~IJ ,afo, "II ,~rw\W\q., jw,e, ',,40 ~HP:W, t"\lec'l-n~lsi aT,e I tQ.e prmmpll!,!1;v:el)\).l;!\, Qf ,traWlPP,r~,t<;>, tQ.e,l)l"'11l markets in SaIgon. And they are there. Tile: :r/l,~,t'l!\t)y,c.'thlww"", double does not mean that yon are g9.iP.g;to, haXflt9,P1,1ti'j:rl'!lWre

~,,:<) I i. ,'1 f ;:

~~f.~:J,¥i!~~,j~~'~i~tJ:!~~,. th~ ,C,<I'I\ H~1ll ;~;t~~~;4~?~~~t!t~Y;2~~

IU

'Mr.'. SiLVER. Tes; the tirQdnce and v,egetitbles ate! movirig in ullother directi'6IL'TMy arii 'coming down by truck prlncip~lly; 'yes. My poilit is that itwould be nice, it would be better if .we did'have \tn integrated pliln'Whlch t60kthe'a;griculttiral'sector ,audthe 'iiid)istrial sector, and tho. pomhj'ti~i~ations seeto~. a~d so~n;',\tnd ap Pl1t to,gethe~. Ip the "b­seuce ohn'1d): a ;plltn, yOIl haveaclicllce of domgnothlug ordolllgsome-~~~~;:~~~ .~~. mostprodtic~ive Or p(jt~ffti~ll:yproducti~r ~~ct~r~!of the

" As Mr.1i[o,oter said before, it is an agrarian ~coribmy, its natural ad­vantagil'li'es i\l'ifs climateaud soils in t\te delt~ and .we put very high pfio~itY;!ls ':"~ hayealt·eady douew!th the introq,uctjon .ofthe mira" el~ twe seedl .the IhtI'oduchon of pollltry and hog feed, that sort of thmg,·to usethenaturaladvantag<l of the ,w:aterand t~edelta. , '.

Mr. Moss. That is fine; at the moment your roteritht)is dominantly in the field ofagrjculture. Yet we have trli:ined literally hun<;lreds. of th.l>~S"}la~ of:pet~olls,weaned 'them, away from thefarm,brougllt them into 'th~ ei~j'es alld' thosepeopl~'hi1ve' Rcquired new.'sIHlls. What plan­llingdowe·ha .... e W Iltillze the talents· of those persons.! "

They are going to become displaced when the war willds down; aren't they,! "Y:41)U.have:to have some, economic opportunity. for tlIe;m. What.plQ;n~inlt !~tlIere'toprovidethat opp(jrtUlii~yl. . ., •.• '. ' . ,,~r. ~:rtV1l~;'Mr. Congres~~all, we ~r~ (jepen.,dmglJ?,0\lr own thl,!k" jIl!L I),f t!).e Il.\t1;lre, ,very ,he1j,V).ly on toe m*at~veand .elltrepreneurlal $kills,o~ toe'.J?rIVate sector to absorb these newly trained people and to make maXImum use of the newly created infrastructure in power an~ roads,a.nd,Ports and, so. on as a result.ofthe:war. There has grown npIn: S01j.th YwtlltllI)::I:IS areS\llt of, the dIslocatlOnofthe war.a whole set of new demands, new levels of consumption as well as a new set of sJ,:iUs,l\,!dmphil~~J: ~hicl1 Y.Qll qrdinatilocd(lU't &din a stagnant econ­ow oran theltm(hjJ)pna~ag.r!lir~\tn,soCletM·: " ., .', .' , " .• ".

It is our feeling, it is my feeling:certl!<i~,thaHhia.wilt he' a great asset in a.peripd.o~pefl~; ,and,thethin~ QJ,l.ehas to,l)0ncentrate,@U',in order to energize and l?rovide the incentwes for .this ili>r;\v,ate'sector and for the~e entrepreneurIal skills is the incentives by the establishment of ~PPf,p,.pfi!\t~, e~~i!,i¢ic ,pqlid~s; r~to~t: t1\all·, bi'".,det"'U.eiI.l~oy~rllm.ent pf!\nRlng .. ;tl',OH ex&mple, the,estab:lishment· of. proper,exahange rates,: so that '@!le'Ganl""rnpene'favorably with ,the' rest of the world ifor' foreign in'v'estmel\.ttait~fbr'Stria,ll'lrldustr"'~t'Mterli:' .' "".' '. " ",'TIf,A, :.Ili\;J,JJ. ).'+1

1 "ld···'''l'''.,:I.J.:tit )idY',tr' bl~JI"""-f"~,' ,~~.~' earS,Qr, ':th' r~. i~'no;r,e:;~;\vlit4{h!V;fflt~ah1,'~rl:~~:~;Q~~~r~~lce.me~t~nd. ,t~is would represent a savmgs of.$80,0;rl$41il011 $50,rnllh0na'yMiP'mUnl'orts;

Ther,~'i~, ,n,q',l'e~,S9n,,)'II,.h, Yt"h,,~.~eXtil~j~' VJlt,E:l\iQ!W,, ;J;\~t~,e,;elli,p,!fn, d, ed, tom,~,e, t, ~h;e <lom,~F)1l ;tjequl1'ements,anllJ.S"Iy.'!i 29;;tA·$?O"q:nlllO)!l.It'year qf t~"tIle HllH,l (1)ts •. r,he" re;!lI,l'e""" ,'~,4ol,e.y\tI'"~,ety,t,JW;l,, ,;g~., r,' Ii" "" 'fI"." ,j, ," , :', "h~1r. Mps~.l\])t )'IIbe.r.e in,oflicillrh\la!ll'~g,>1')'e,MlY o~,therpconsid.r~d.

Mr. SII.VER. We, h'!-Y.e"ah;ea<ly, .<lpne.~uw.~y~,'$i~, ,fo,!', the" Vietnames,e

~M~~Mo~~~Wli'~ih~v~th'!; d~~~~fkt;-~~~~ ':~: ,'~li ,",,';: :,('1 ::", ,r,' < ["~,~' f",'''··'v; ... '''''''''''',' '~1!'I" .. ·,L~lt'1"" n,.rJ./()I ... , .,.,Y tY"th' 'Ii ',T':" ' "1 bl I!,/"t :.'f.1:!J,<tll\,,,'II"HlI, .,"'(1)).... ""qw,,,yl;\ .' 1I-.\l~ne)1 .. p, 1\ ".h' Wa.VaI,!) " ~

t()dtl;lem .. :'f<I;.\" lin '.)JI: 11\ -f:',;," h"~!.'llI ,,_::,~ ~'f' ,; 'i,~;':'I"::, II" "'

Mr. Moss. That does not deal at all with my 'Problem or'thwproMem <IJ~"OlWjiwJl!llilil.!:M~'i'l1helld <'If, Mr. ll:eiq, ,or, Mr. ,Erlellborn or ,1\lJ,y,oif the

ot!:ter . member~. of t!:tis .cqrn,mittee .w!:to. !:tave to .take your policy. IlJ'0-posalsMldtr,anslat,e t4el1l1ntoJaw and take.the heat f.())!'suRm~r,tmg the lawsihve deci~\'.tfl'! . . . .• .... ..• ".

W)1at you;ha;ye, ol1~t.tpl9i .me ,wouldn:t mall:.e a very; g,?odppesellt,\tlOn out m mY d!stNctas,plstlfic!tt!on,~Orme. gOlng.ior .tl)ree,q'1arJ;~rs,of!\ bi.I.1iQI1(\.oU",rs, o.'!fj!\is~.·. ~tinqe.r I~ ,4. .w.p.i~.\1nswe .... r .• e. (\.' a: sillg.le iJ.. ue~tioli;'.I .. ,g~ut "'hat werea]lyar,e,<lpmg: Df\Pend~pp"the enterpr,'$eo~,t}w!Ni,et!1.a':ll., ,e.~J'I~ I don't think there IS a great deal of confidence at thIs moment.lli,tpe enter,prise'?Ithe ~ietnamese" .. .. ","; , , ","-.nil that,',is Il'. O.t.".tp iI)£.,er .. that :r.-,----1 t.h.ink th. ey,ar .. e. h~g!tly.,int~l.l.is:ent ap,(\ c.o~pete'\t J?eople but It does I)Qt answer the need O)f}he memRel:S of Congr.~ss, or,\J;l,e;Americans a.t ,t!:tistime" who NI'~4 tQ~e "",little ~OV~ infor.med,;wi)o. ". I)~. e)l \I.,g., .!eaterl re,~s .. 8. Ura,ll~e ithlljt.hejls,nQj1J.u~tCQ!'tF)rmt: Ing,to"'p;P]:Itl1o!IY,t#at :VII] i)jtve,lJttle lastmg,eil'ect. ,; " ", :'

'l:hq,t,IS all"Mr. Chalrman., ..., .".... . ." , Mr.,.J?;.ffIL)<IPs,. I ha)"e a"c'Iu,pleqiquestJonsJ;, wOllhUl~e:~o,'1~".'>, ,',

I allll!ilfiPIgue,d, by) a story, ,Ijlthe W;'ashp.lgton :P:2fq -fRrlv,liaj)1, li(Jl!l1li It has a Saigon dat~Hne.an<l,wa~wTltten liy¥r, .t;:e~er,A,.,:J'q,y.d;,et'\lle q.uo\eit,it,is,verY,brIef. .' . .. ", . ." , ,T,hls weekJ,61i.e,iAinrel':iqan' EmbalSSY !annoUnCedljthatlitfi'g~liutld4ig 'a'v~w r'esta:ui..' rant and swimming p,ool: fpfl o\1';\\,\lIs; :ptinl*',;HY;'''IPplQwe,~$i of"tllitii

renWWious, ,;lIII) mls.&l.on /In .. 4 .. '.tMI1' fam.i)'i~,,:.'I;I\., ~,~.esta .. , .. f.J. r .. a .... t Wl!l, .. ,D,!"t ... ~I\.:~p. m. I'\~\e. 'I~,~q .. ,~,A'I'}l. s. t .. T,h:e sWh:n,mm.~ poo~,w:i~l ,o~l! S91Ut t,il»~ lr;t.,O.~~o~e,~, ':T.c,!U~dn·t Qe !~v~ ~at.",,~~n t iIe»r4." one~iblolJ\a!'s~r'd, I'IIlrt! f ~,ttPl>ose ,you could say It!S ,a liealffiy, sMW, q£ canfldehc;:e'ln tha, fU1rure, (Ii!t'l 1-ea:l!lt'~t~ ':ftitltlre) df Ametiicarti, tim i 'al1d) IO:l1 etf.lufJM lftJ wllHake the,'p~esaure off'tM <!IerNe,SportW'.,

Are these0:(jverlrl!ilent·~l!fid~:tl'iaet\!re M~dfor thispu;'pose l' )," Mr. NOO'rER, ''I'hisis' th:(l1fl¥st'Idl\~vefjeattl 'of 'it: T m-dir't see it ih the

newspainsr. ".-:':. , ',::"~Wl ,-,(:,'>,~,:./,"' .. , :" "if:.~ "'''!<~~;:' ;,_,:,)

Mr.'F'BlLhIPs;wi>wfajt<!1i Js'Uii>J!ly: ~il~ the: t¢""~t:I the 'dollar .anI0tliit of the project, t):t~ na~e 'if :Hie cont~~ct6i',an\'l"~lIebNsti£lM1!ibi)llItid rational~ bilhi1ld' tlli!!'itll'il"end"fi,lilf~ j "", " ,"" 'I' ,n '.',1 ';C' :",

, Mi''' ~OO'lfJ\R:',We ''ii11s,\i'Pply!coinplet.di\,fbI'm~d()n iopthitt! "',, '(')'1l'ielnf0I'IRUtionfbl~blwii):1·1" •.. , ' '" "" ",.,'

ga~rztd~~;~~:;i~~~~e~~~~~~6tw~~~~,tJ1$~~\~!it~'i~' ,~1&i~ff.ji1Mfni~ swiiI>ml!1g ,W61"and 'dln'lI)'~ 1(~6111jjj ... )fot' 1llI~' 11Se' of' its ,ttleblUe.s: The ,t6t11ll lclJl!t. of thls,~ol)'st~u~t\.)l, iSle.tljJ)llItIldjt,"'b.,$lI~~@OQ; .wd an :Al)iepl.all ,compwn(l" In, Salg",,; Demau:o Construction. Co. is t~.{~~~\Villtqlj'i.NP[:q;~'1 q\'!Y""lIljllmt"f.W'4!lf'l.;r~,m' Y~lr.!<l'l~,Fh'?f,cgn~,\r\l~b9,~" ,'I;4,~.,,~s~,qc lit .,'1-:,1, t'lllq~ C9.wd:lrrm,VOml1~(I.I;y,fPIJ.Y,Jl\.nt o+l'U~s Hud evenue's, ;tront ,tlie bp~tatlb .. or 'tnf a$~6Glat Qq'. f~dflltles. TH.' new. const'Mtlo1t W""'d""!d.~)uMn't6"j#"'l'ltle( ·sulfllbl .. reC~eatlon:IIrqaClnt!e.' dlle to tIW,laQ1<rrif"iIqJ:\1Rci'1\l1.i3\ton\!llijs6ciatlilhfh1mIib,,~si'( . ,'. ,('I',"'" i', "

'··:M'r'.'J;'ilfiL~;rp~.(Tl\I~)Yj"''l'*hg:il't',(J'iibk;Ancle,.s'on's'coljjmh;lti'th:eiw,rllsIil it\'~OI1!P<'JBt't.lfll. f~".k 'Itirl!'ItJHIGl~':'th'at'd~'b.US~i!$' 'I"i':S!"il'tV. (jW~Wt\\ht''fIi. ) Vietl)-I\mese offshQre oil dl'l11~g. !:Jtt'diMe)l$SM s!Jine 'bf''lfuIl:.A'tUeri~iib~1I11 coml'lan:ie:~tli'!tllllii;~'lfJM1;\ist.dlill1"&tdd\i)ilnill' l'eilSes ,~~iI' So1i~Q,v,'I,t­llameseGove~n\n'eht'l'Eligdlng't6beC6nsid'ering:shorti1. ,'!." . I ) ", .". .,

The last paragrap~,~)f ~~~s~~~~j~n,1 of, h,is a~if!~,S~\I~~S r"',;';':.,'!/" I

grti~!~12~!ht~ ~g;ri\mfg~1rR~~~~,fW11~«~~:~~~~~~~\~~lf~tfii'~iri[4!)~~h~ Hannffh, in secret meetlngs has. urged a guarantee to the, oil compafif-es,r:!tiut wll~4ontJ(~u~d~ssc .' '!'~:\':;l ','I'll (l'thf PI,' ,~, r\~'l[; ·\·';'C','<l('!l 'hiIT '~',,()lIr ,,'t:r , '1 Wbuller; could' yo\hi<lm'ti!&ti~)ohJtJik tb1J€ of A>JtElli'6'~MsiD'<llfilgiltmlJI~

Ml:.,~ QO'l1'''' I <J,id:see, tpat\llrticle. D\',Hal).llahwa~,o,1\t'QttP~ buUd, ing when I came in, but ;Iam,qiljt,eicertaillthat It!J.at"is. \lIn,inllccuullte r~fle.qtiQn'Qf .l;Iis actiQns in that matt~)'f beClW~no; oneiu,the,U.S. ,Gov­el'll/pent, to, :rny .kn9wl~dge ',h~ ever ,cQll-tIl,mplate<l' V;,S,"(j;@;vermnent gtllE'I'.nt.ees. ~Qr Q~. ~)\().re.'dr~~l~n.g. <'1r.eJ<.p IQr ... a,t.~O~l." I· .. , . ,. .'.'" .• ;W~ have b~n '~l"aregenerall;v Qf, whu.t.hltsl1eeng\l\ug on in.tbls

areu", I;i,l,\t Qnr· PQSltlOll. ,isthllt it·'IS: stdGtly, /l, I\lattel' between. the :V;ieb n,!\lII<¥Je, and tile iuteql'\tion!\~QilcOlnplIllies,. " ".:, 'I, ,: '.,

¥r, fII'LI,J;~S., )£ ¥r: H:l\unlW shQulo;!i ISsne a stlltement 011; t,h~ artICle, cQnld yQU sUPJ?ly it fQI' the recQrd j

Mr. NQOTEll. W:" willi' J\e~,. ,! ""'. • :' (The infQrmatiQn fQ IQws:)

The column by Jack Anderson III t!1:e W.~lq~on Post of July 9, In discussing offshore oil exploration in Vietnam:; staled that i'AID Administrator John ,~annah, l;n,,:,secret ,p:1~t1ngS, has ur~~d' a guarantee to the 011 companies but Without success," , - . .

That statement Is completely without foundation. No such proposal bas ever been made nor has there been any discussion of guarantees to ()lt4)~~tipns'~n ~r~etnam q:r,:~lsewher~ by the,IAID Administrator. ,<. " <,,' n', .'

, 1.1\{r. PlIII'UPS. ,Getting\>ack to, Mr. MQss' discti$siori(J,tth~. w@sin 'l':1:Iich cu~rency is .smugg!ed Qut. of Vietnam'and"into other bap')i: ac­c0unts-aiiil Mr",Reid tQuched Qn this also-under the Vietnamese CUI'rency system we understand that there are five categories Qf what are called "nQnresident accQunts" thltt ar. e re~lIgJlA~~q ~!l Yi~tl1!1M:,' ... ,

I WQuld like to, give yQU the titles of each Qf these 'fIve aCCQUllts and then ask yQU to, suppl:v fQ" t1)Jj'~ct\~d'~~:Y ~n.ti,\;tfoltji\l.Ja~t'l\yefi,rsas !Q the amQunts ?f fund~ tHat flo",: t'1,l\'(j~1i 'tp<\Sil .. ffve 'acboulft1lS;lnc!~d­mp:amQunts whICh leave the cOi1b.tty'> ". ' •. ".", I" . '.," .. II.

~,'I'. wlH'jrive :y"oh tMrlefivl! '£(\'17 the record, 'Fhe fi.rsl/'QM iscaHed' the "free, piaster accQunt." rhe secQnd tlneli~lt!le "loretgrtPlltStel' 1w91>Unt." TWe1tMrd 'is cal1ed the HnQ\i¥e~id~nt intefillI' 'IlM6ullt. "ITM'foul'th,1 ihe "i~dlvidtta:1 pilastlll"~!llpe!Ise,'acJbtllh:'" A.rtdthelast; the "ca:pital> piast~r a~cbufi't:H\ 11;,i'! it,','" ,"I(n I,'ir}') '·~':l Ii 'I?! ',' ":11: ":"11. i 'I' ,! ":,,,' "

'l, ']) l~ah"l!'ive' yoU''Ilhe' definitloJils lojl,~!tch ,jj\ you want flhem R:ft:cr ·th,'" hearmp:.""'" ., , ..•. '" i'MlI.N'OI'l't'lll'IC'l'hank<VQu.· ':;i'''''''/ ,i' ,. i ,i'

·i411('I1heinforrrl.lltiowfullewsl' )". !' I',,, Ii. 'i' 'i' I' .:

.:ii;;;::,~ 1,:.1 ,,:::_-" ""I f:' ,::;;k~~~~T}~ :~il~~\O~_~, h~:~!'~~t~R~~M·.~ri~\11r WM'! 1\

;htJ "[i ,I'l,~~i ,J (I:' "_:'.\-I~,~, \1486 ",-. "19811 ~i(I:rt98{J '.'-1tW9 i! '1970 ,"HI ,- (; '1-,iI hi f. fll -, ,j j

, I ndicates account category was not In existence in that

<n,Nt~?li~it~CriJ~: ' - ,

68~094 o· 71 • 6

ask y'OU t'O'Supply' f'Or the record the amounts 'Oftitxes that' were{in fact,collected and'not rebated 'Over the last 5 years. ."

The' first 'One is called the "dredging ta,,"; second, "the Clam Ranh Bayturllabout charges"'; third; "Da Nang ),ortch!l'rges" ; fourth "pier eqnati'On tax 'On POL containers"': thqslJare'Oil drums;, jifth, "~'Ot'Or vehicle circulati'Oji re!rlstrati'On' tax." That is a type of tax' that we have in' this col1rttry: ,rTaxatioj], 'On U;S. G'Overnment c'OncessiolYaires." the "G'Overnment 'Of Vietnam reSidence tax;" ,,[,his is impOsed 'On'ltll for~ighers'thatdive in Vietnltnl. Aild, the "GQvernment' 'Of Vietnam lab'Or permit fees." , ", ',' ,,' " , , ,

Those are the eight categ'Ories that we W'Ould like data on. (The informati'On f'Oll'Ows:) '" , '

jih' niliildn~"ofplbstll,gl " . , , ,

.:, i,: I:,

1 Notax!~vled.,_ '. _; '<'\'1'>" ,., ,~' 'I '. ".

~~~II{X,hOli~.l~II~~~~~'~~,~I~g·~h~~lr!ars:' ',;,,~ :,. ",f:":'!" ,

]\fr" ~'OPaH,EAP\ A,ret,1l~re Qtner,qllesti'Ons j' , ' , ,;Mr"r:OIlN~~lj:"rllst;Qll,~,.¥p"S;::hll'~m!\m if,!:mIlY"", ""'." , Mr. MOORHEAD. Certamly, Mr. CQrpwh., d' ," ."" ,ti, , ' '"

Mr." Q!\lRNIsH;,.¥r" iNQoter"is, it still y'Ourposit,i<mthM no wage and pric!lcQntrolsarel1eeded hi,Yietna,ml",:,," '.'" ,,' '. ','

Mr;NQa"rnR.: Well, t}j~re:!t~!l.~)Vnol~$e;tl\es.of Prj~",;c!lntro~s ,m Viet' llam,~l,O''\l. Oil' th/iwhole,they ,nre,ineff~~ti~~,.QUF,·belief !i~, th(ttothe economy wi\! functi'On better with less controls rather than !'nOFe. ,But I do nat wllJnt t'O be quite as, ,categoric~l' !IS, yon, implied, ,that there should 1;>e Ilone. , " , ,,"

Mr. CORNISH. Now, as the, American eco.n@mie,ll\'IIo~vementgFltd­ually sCRlesd'Own,llver the years, do, yQu",seetJ!;n)'t,Jlelld,,for imposing WRl(e und T?rice Gg!].tr,p.1~,I1'1ril\g;,Jl'~tB~r~9,~;rf~J,;haps I should say tllRt J.RreQ,}ql'teNi~tq(jest.l!in ~P'Onth~ feelmg,tliat s'O~ewher~ al'Ong the Imehere Vl<ltllam is, ~rtamly gOIng to have to tIghten Its belt as U.S;ec0no!'nic aid be/l:ins t'O decline", ", , 'Mr. N<'l,\'ITER. W~l1, it ntldOllbtwill have to ti/l:hten its belt. Iamjust

Slll(l!;esting 'that Mom a, fechnica:i.and adm" inis,trative Vie,W"jiP,lP.,t,:iWJllli, ',e, ,

n,J\d l?ric,l\icQn,.,tr,o,l~."are"nO,fj.a,v.erYI(Qo~, way, t'?"ac,c,olU,',P,lisj)", ;;~!!!\",ti',·'gi'Veri the SltuatlOn,'m YJetnam. S'O,d there 1~'beIHlglttemng, Itsn'OU d take place in other ,ways. " :;: l,,:,! ,.,' ,.I:';WJtJ~r, i,J :r'i-':: "_"~" "'. ~';l,,. i'lIl~ ,\, ./. ".':

;;,,~~~, <:~l'l\tWV;!.'~'~~ ~~~, Jl:~g~,~lJdJ1r.i~er9~~t~PJ,a ,i? IJ~1)qh ,II,e ,tPfire

noi~; l'N~~~Il;l~<i:t~'!1<iib'w, ~\It .t!!~c~~\ii6 ;9;'~iNd~~rit .onth~k:'· /.Mr; .('6t!Ji''y~i¥:J iJi!1lri~)iQu~Hll' IIM,l!herf~'r~~'" ,1'---'.. ....:

\. ~1~Ir~~~i~~p}'~i~~'d~1i~~~~i~~~~i~~~sif~~it~~$:!n~~ Of 'Vierfiamo'ver'itM\"ertiJ'd 19'66t1it6'ukhlli~rr1'Ost durreht y~ad" ;

Mr. NOOTER. Yes.

:(!F1\e'inf(!)imatiQnfo~lowSI)" ' .,' ., . ,I ,,1!1' ['. '- 1 1 ('"'' -,',,:,',"',' "1, -.,' ;'. i"

, "" O'Q.,.(j><S' e6x,tE~TiONS

. " ; ',(-,In: billions· of',piasters)'! .

~~[~~~;~~~~~~~~l§~~J~~·.~i M1'; C"'PE~H~VE\V Mm;C~il,irlnIlJ!llfirst !rl1t~,!I;I11~J~.~ "'I'eq'1~~!T~ave

wep!'red, ~,s~~~e~q£ ,,<Jue~t,wp.~»'.J1~YAW~: ;4!l' i}~~ ,,~~ve time, to, .gt\ltitO today-- .. ;!:.:, J',,; "I,'.' ." ·";-,,t :i""jf.: -;-'- :'\' " :; "1'/'1"', ("1 ' ,"/

.Mr.Mo,?RHE~D: Would you;be Wmhlg'~o,a~s:wer~u~tionswe sub-mlbtoyoUl!1,Writmg! ' ,,' ".' "'.'. ".' " .. '1,;, ""'"

Yr. ~9~1\' ¥<;s .• sir ... , ", , ""''j,'',,,,'''''' " J:;r,h~ m~ql'!ll~tfQn requtlStei/ ~91l0:W;~;,:), Ii ",'"," ,! '

,,;! Quesiilm'1. Weren't nla\lY 'Of i:l:ie'ilct:!oils tal(en'bY''Ilie' GVN'ili'Ql!toberlt!70' aM ~~reh f~,l;' •. lr;:· ildvll:nM.'d~p.Ostt.s· oW'Ihlpbtfsi IlI'c~~a:~~t!'llli):!ort i1ut!M("llowln~ ~lI:t>o,r.'lh~ Irate :ot ,27~i ~aIltamdulit tl'rl,["a~j 1q<)t»'dJ!\'o,ilfilt~on'?''W'~\ll~ 'it ;iI~t liiall¢ lilor.·" 'seil~e' to' press .. for~ 'a""". r~.''UeVaIi:ia~!o. n' Wl'iUlli:~. ,dl~; O\fDll\iat<;(1!i., •... I)~~. ~.' fO .. " a sense of ad hoc measure wh!el) attempt to, do, tJje 'Mhle"lhlpg~ttt"whl~h .. l\'1Ply a greater degree oN"on:t"OI.:tIdl!tiVblV't!nlbjjtby't1I~'GVN'?' ':: " . ' .',",'"'' d,

Answer. Yes, these- measures did 'represent a.'tia1tfiH:Jd~Vd.lua.tid'Q."A"getieral deVIHUi;tl!bn "'dum h&vo' \ll'I'oNM"leg!slatli<b abU6n'W'&angil bo!!!' qie:'excMbge rate '.ond tbe tar!ll'st~ul!tu't~;, 'WhlchWdlllli' ha .. e"bee!ltltl!~'~bn.ui\i!ng, 'A: ma16r

~!~~~;!~~l~~i-~~:l~~-~~ff ,:~~~~,U\~'-\\lri.'.~r;-~~~~t~m·I~~~~~~f:\~~d;' J~>~~~~~, ,~tud~ "'9u~tio"''$.'l!Ib'''' \vas,tlie' 2.75)llllste'l!' t6 $!1:00':l)~c\lJriiir~~~tlon 'r~,~'~gt,~e4

nptl:tt,?,·,·; _ ,·,d,· '.;'-I,J i_> " .. :'- ;J. i;, 1 ,i ::: A' f,,1 'I:; "~I .', lI .. ')·' I ,-I" '.'.J. J~, _' :.': ',( • ,,_ .,.

I '>\"'SWB1\',Inl'jo!ntl dlscu •• lo\lS' be~ween 'the, GlVN'"nd"lhe'U:S:,Mltmlollf an! ex­ch&ngo; .• ateof'275 piasters td' me,dolll,> ,,ya.'~gr.~d :uponrt., ,aqMPt.~Wto"bPt\! paDbles .. ,The· pr!meo6nslderatlons. !nv"l~edw.er~tb. le"er of '''.dnie~tI,tip:rI~eWI\'1d .the' need 'to}ke{ij)'(lurverl.oy-coniVtlrsltJns!in'.'offiola:l TchffnhelS'/- A/: .:' i~" ", -' •• _,,' -'_'~' i<l' :

Q-ueBtion -3. Has the International-Monetary Fund or any other'#rbllp -made''ah anal~~ls'!'bfF tQe-'fVletnaro -.excltang~ .1'atew,' ,or} Ilia"de ~any ,iiooommendo,:tfo:tis '.for-Dlilu/i~ •. I!i,the ratesof,excMnge? '".,,,,, . ",...: ,',: 'n.' .. " .' "

An8wer. Since V'fetna'in is a member of the International M'.;:metaryJ'IJ'Und (JIMIF ).f 'any,s!gn!llcaHt' ,oIlamges' 'in "Ihe ' oflltllal'".xcbange".ate' .liq1iir.''P'I~ •• ap­i>~6~ .. p"bYl,th •. ' Fund, 'fib" '~',pa,Jjt!c!l>a;ted:i.!nllY'1n 'lhe,ll'kollang.".ate' reVlilu' !lll~!l .. oe,hollb,,'196~ '""d'l97O-tt"was"Mvlsed ,'I\lN.dvll;noe;'suppUed"ttloIln!oal . . ~'1pP~r~i8loh~8i.I)..d:Con,(!u~red,lntbetJPPle~enta:tiQJl~t ,i",-,>" ,:_,,;,,",', ',,';',:;: . },.,.!;/ . ; ',;1.: ' . • , jWhet i[.M]p. bontinues· 'to . moh.1tf@l':(fIhe,'rQsults:ofl tbe···varlous (VJe~8,m:ese'· econoiqic refOrin'l <ll\eIl'U~es;'~.om·, Wit8hingllon,' and' )jerlod!eal1y,' :eolisi1Its"'<VIllf tire" G'V1N .r~lal'.diI)g'futu.re·:poUoles a,rtd pro'gvams"11' ;~.:"",j, .. '[\1 ~",;;.<, "~'I';'f: .J,." '-'. ' ',',-:.

""Q_Uon. ~,A:".' not ~urrant,GV.N and U,S:!iOl!cle. oveilstr •• s!ng'lInanc!ar stllb' !illy ',at. tne. prfce of saerlft,clng grpwtb and, development i 'WHatM."'boon ,tlI~ ,recent

:~~~;tl:::mf~;·~~);~~?;~~~~?f;;?~~~I!~:~:~ ~'·~~~~,T:~~~~.~.~~~fNf.,II·~~f.~~:?'~·~,~fr~f· ',O,~~tff~~r '!.<I!II8IV ••. Flnancio!l .• tabillty' l.a'pre-"equl$lte', fdr'.oiindl'",oiloth!"'gr~wtli lind'

d':I!llo,i!Jf1ell1tj il\l,,! "'It~.,.n.o,!r"ged!"'l;'''''1 'o:tijtn:P.Uts·'.Uflll!l~nt.l to 'prov,lde'.elat!ve 1»!;iI .. llIi." .. U!tjo,<'''-. t'.the'SQ.'.in. e .tI. in. e/ltbel-lmP.orl. IIlI"h .. a. B. 'b .... II;,gDII. dUWll)lJ.~cb.·a. iI~ng. ~1!h :'I~"\lll\lte'I!1J.a"d! lcap!tel:'I\)ll1iirfs !n~r.ij.S!uJl .• t tll~I.1"I1i1n •• r.Q~\d~...,t,:"oti­sdm •. hooas. The balance betwMrr stalJi81£tllIfohlilind: d"v.jop'hrent!}r~ltet~~ I.'under t!l!1I:t\u1faF",~ew und' as' I\ve"·ali,,'bnd!t!on., Imp"!>" .. ,! oMlpijlltile.'\vltF lndveaslngly Bblf&~'P011tan(nJiof«1evEilopmentfMtd!~p«iWth~i, ,'H.':,4lW\' .";:.·:I'·I'd~ '1'n~'!>('<" ,])';; "

NI!11I«nal'!ll<lOme and prOdn<itl'''''0j'l1lJ1t.~t~tr.11I~ .• ;'nHi\(t.in~~'~~6, 1I!!,,~"II1IYl Uli'~li' lI:1'I'~MI;fo\fllhltt'rM'dll","''''h .. !tdt.it,,:qUot.'dl •• otlll'!troml1lh'.In",lIJhes~'.t.t!.t!es aOI'M~~~" t\lJ'id Id'b~a;" :"ut'~e'llim.v.Uyl1f.ld 'b\!ll<lf! IIhIiH""IlTiMlIegUwtlrOdU'" t!6IV4Iilslt\1!'(lltllnUd'ml1ll'l' bUt, .teiiillli" !ne."M"'tl~'fli ,tilll'tl!st'tlJVlt. 'l'eftrs-lip""<ill! j>Ji1by S1I!!m l&_% 'lI1tI!ltralljl, '4n'aullll'iai" dtta·"«g~lriul~1Ilill\o; 01IiMuDftEineti!!l1!lltll6 l~"" lYe r!s!nllln i\'e.1 terms' at allllllnlllll' rlliteiof' $~td~'''''ti~ 'l~'%;''Rirq"'pr«dllt!t!'''' 11l!t.'1foW ,1'H)" 'HftTH"[H 91N'I 'J~')'llr:d·.,~·) .,'1 1 U'd"ll',':, ,dif~l1dltf~j.y; 'lilt "f 1';:-1'11 .,,~, iil';\-~,')~;~) til:';' 11";'1' ',f,)HI((f ;,' 1\ld 'H;' );.·,!1·)":!1; ,'r',"!"'1 ':'rn w\j,!il\;' ... ·~r 'II ':' "i ;~! ~"xli'.f")

reGover.ed to the. pre,war level .. ~b. labor marllet gelle'411yr.emalnstlgbt,desplte declining "employment in the U.S. sectOT. However, some pockets of-unemployment Ilr,a: ,likelyAt;> q~yeJop especially in, tlu~ .nortbelln haJf of.the country as U.S. wlth~ dt:aWft;ls.contW:ue: .. -;' '-, " ,"-'- "." , '. " QU68t-«in, q~' 'I~- ~~,ht o( .october -Ilud .Mar,eh,.~·austerlty" .measures, :and policy d~~i~9i1a, to pres,~ on with higher piaster, rate, bow- will wage demands, e,specially .tJ,19,~~ o~-:w~~ker~,1n. the· public sector,. be effecUvely contained without'strikes, wQrk etoppagee,_moon~1~ting,aecepta-nCe9f,bribes;etc,? ., .'-'-: :" 'I' ,',.

:; ·At1'-~tf?er; Despl:te the.,eroston of re:al ty.qo.rne, there have· been~few, it any, strike$ ~Y' ~a:reer' GVN civil servants. However, pay increases will be necessary ta~~a.~, ta~n the,' ll)~x:~le,,:effectiv,enes$j and integritY.of, tbis',gt;oUP;; One ot the purposes' Of ~l1~t~f,\t~ l!!~)l.ll,!'," Is" to, j!l.ve, the goverWl!Mt.tbe Jln)lllciaUee",ay,il1, Wbl~h to ~~ken~esl3aryp'ayadjus~I;Il~tS., ,: ,_"",' ,', "" _.,_',""

''With!!).' the'"p.r1vate, sector strJkes, and 'work' stoppages '. will contirtue to occurl We:,do. not,_ how~ver, expect these to b~ ,J)~ajor problems. ' , _' ;:; .~9",eiit!o;".6. A.l.Ji).lndlcaws. ~b",t sll!.ce. O.ctober 1\170 ofllclal converslons'Imve

increased greatly. Please provide a breal$:down of ,these ,con,versions" cl(lB,sUled-;as tQ,W.m~-ary, U~S.civili41n"commercialorothersources. .,_'0 _' ,', ~ ,,' ,~!

A:nawer. Conversions for ofI'1cial purchases, tor ,,,,hleh th~ 118' to l" r~te '1~ -~till applicable uave Mt Incre.asoo .lgnIJlcantlY.:ll:bWllveri sllice October 1970; when··the aqqo.",mfld!l~Oll'f.a!,e,.o~ ,exQbangei W~.II\Qr~a.ed, from 118 \0 27;;, plaster.·,to, the !\.Q qllft.$i; Jler~9". aLa.J,co.m.m. 0. d. at,lo.ns b. ",Ya ~4. o~ as. Ignlll~a. n .. Mncr.e. ase.·.'r<ltal 'Wr .• SO\1l1/ ,aqc.q'1\moda 1;IOI),~~~I)!I.a!ltIQI! •. i totllJ;l.d ,$7 4i4,mjlllon, f~o.", ' .. OCIOOOD I197Q thT?)lg\l.ll.4: ~y"onb;l ..• ye~.t .•.. ,.q. t,,,,bl<;b .. , $.Tl}9. w~.r~tr!fll ... ~~tIQ.ns.9{. u.~;, !Illllta.~ fotO. e. and,~2,~,mlUl~I\(1'Qr.tl.a.ij\vlll~ns", " , , . , " ,. '.' "'.'.

/iueatlon 7. (a) Wbat Is.tpe GV,I1I;d,QjlJg.tomea.~t.tax revenu.s? . . " (,b)·Wbat,lst\l~U,l:krole;il<wet i' '" i. •.• . .••

.. " (q)'. ,9JlU1~ t.1ie" G~I'! "ben.ft~, frpm n~~.tecp.nIQl\L as.lstance In .tllO' aQmlnlstra· tlon willcn.iIil;Q,mall ... ayan.b\e.t.,·pth~~,re.s dev.~opedcQuntrle.?·· ... , .. " , ', .. ···'.:An8wer, AJ\.Ai!Il/Il'I.!I, I.~~ \las b •• n"n'Yletnam.81I\ceSeptemb.r;t9~6. ,,,,,\\l.an average strength of's:6out siX' fUll-time advisors. Collections in domestic' taxe's AOtve 11Ier.a.OJ! ,from 7.S bWIQnpja.te~lI: In1Q6,~. tile year before the tax team arrl~ed. to'·81.4 billion In 1970; On the"wboie,'tbe work <>f tbe advisory team bas re.ulted II). the Intrq,puctlon .of new.,anil ie(f •• tl.e.,teQbplql\" ·In· tax: admlnlstratlon, Par. 'tJ.~ularly:;.ri<lsuch areas as;t1le examination of.-tax returns) ,training" taX!payer l.nformatlOXI' and .ed1ll:!atlon, manual alld .mectlanrcal proce.slngof .tao< ret\irna'~M the procesSing and accountlng·,for tillC receipta;;::ollgantzatJton and, methods; .-and ,~latedf~l1ct1ons.'_" ' "" , .' _ ~ ,;_"_,_ ,"

. Que8tion ,8. According;, to ,Y911r, testimony. tb,e'12'15' Date was also applied to ex~ p:orts (Vietnamese), What __ has been the affect:of. the new rate in stimulating exports?",.. . '_,' ,: "i' ,;

Answer; ,,~o date 'there has· been,;np\~slgntficjlnt change ~tu:'eXiport levels. W1lti~ t'here Is no~mally Q, lag betweel). exchange-rate: changes and export response,-this ~ag is likely, to' be longer;than usual· fu Viettiatrij beca:tJse 'P9tentlals, ,fol', tJ;,Rdi" tional exports suffer from either war damage (rubber):_or domestic"needs (He_e);

QuesUan",9:'1 The; irlttel,wRs',Rpt)ltrently, also)ls:ppUed, itO: f'lessc'Qssenthtl \ihlports." How has the new rate helped: tQ,\,redll~~ the tlQW of: less essential':tmports?

An8'wer. By increasing the iuhounf Of· ptasters the lmporter'~ must· pay,. the new- rate on imports -raises the', 'effective ,cost :6f! importtng,"'thereby dtscourffging colistihlPth5li'ofthese-h1~her~ostitemsl '::::'\ ;1';""",; - "'d-,.!_ or:, "'. ' I ""',J -i -' 'i, ,> :.,QU.BStion 10. What teats do won-, mak~lof,the'bllt:ck";ma1'ket rate-10r l bt:rger'trans­'actions? Don't the' ,rates for"sUch transactions 'differ markedly.-from-';tb:e' 'dlt$"'to'.; day !,'retan~"·r_ate'for small,exchanges/j .. "", ,;,'1<: '<1: ,::--",d-:i';',,!", ;';+'I:~\r~':·" -', ,-,.,;

. ,.tln.w,,", Jl!o .uch,.le.t. fo •. 'larg.,tran~actiou.; .. r.'m"de·I>Y' USAJll:·~be U.S. MIs.lon"generally· check. ,the :tllte "pplioabl<itto:,!I!~II'dol\aT ,billS .andtbe'!'fa~lojlal ;B~nk ascortaln. t1\. ~Rte on.,~OOdol\a~' bllls.,,¥Ween:)the .. t .. OfTM ••• ·i! .• P~~MI ·oH· to 7 plasters per·dollar Iscon.ld.....,d·normal' "':. , , "':., ... : . '.' . . "."y

QneBtio!> 11, In 'Rddltlon.\to.,·,tbe:D~\ltln" iWstln1t,of .<tMblaell 'ffia~ketln ,vl.e.t, nam. d.ofn1t the tJ;8. con. d1,1ct intemg.enc .•. j;re .... ie~s:!aS,-rb)',the,-naturel:,d.eptlj~ .. :: .. If<I)..d. makeup ',blac6; market'curl'eucy.'amlgold,-tl'f;l.nsactions?'" '" ,h, L'.-' .. ': i; ",; "p":';

. An8we , A.lde from, routillep1'l.<recMcks and,attetnllt~·to:.xplaln .. black-mR~l\.t pdQe ft1l6tqMlon ••.• ·AID. has"not .maa~(l"')y,. dl>1;(>lIed anaJif.sls,ol, the dsPlq :An4 structll:1'f!,' pf the black market. Tt,.er"lnfl~l!J:~: o:r!i8tn'l1UellaI.·~arket 'ls'.such"i_thf:l_t _,It woul.(llbe,moslidljl\cllltito ."tam. ,Info,matlon"on tb.,dept;l!:oVll!e, ~;u",eAQY,)Jl\IIr. ketaud,ihencean:Viml1nbers.gene1!ai:~ai:WOl'ld be ausMct;, , ,: 'r. ", ",:, ,!;,~ "c.iI· ,,'.''"';-:;

Que8tion 12. What ts the relationship between the exchange rate lind the black market rates? If less dollars are converted through the black market wtll that

I .• ;

)'1,"

1:111,ij,j',.it: '~j,ln"r,,"ft' ;,;~, I ~ -I ~t0 :'1 j.:!:;t- 'I

• ' ~ , ' .. , " j - . , ; ~ .

,Que.tlo.. '16.',What' ijs tile level' of"GVN'ftrianced Impo~ts for 1969. 1010,' and 1971'? What controls are maintained by the GVN or U.S;; ove:l'~he:type b't Hnpilt'ts 'permitted ?'Plle'sent{ a "Uat .of' l~a.dlng C!ategories of- GVN -fillanced" imports' ,'for t:h:ese past:,:t!htee'!fears;:, f.''. ,.,-, " " :"_' I::: ! .:,,;'.-L. , c. ",I",n:',; ".c. :',

.. ·'an."' .... ill1h., level ofG'VN-ftnanced Import. wil$ $468'.080;OOO'ln',Fl'''lOOQ, ;$377.­'888iOOOllt, F~ 1970. '.nd, $342.632,000 iln Fl' 19't1';'eolit.ol~over tII.type.,ot Im­,ports 'ftn.need 'by' the GVN' a.e mtllntalnedilly .. the GV-N.,thfOilglltll.l~ 'r#Vlolv' arid ·a~l>roval·ofdmpbrtllcens.s. TheGVNproh!blt.tho'lnlp~rtiltiohofce~tlibi;luxury itemol'th. Iistlng"f banned' IlnpOrts' ehalJIgll" 'fronf tIfjW'tU',tlme; bUt' currentlY includes such items as fruits, liquors, motorbikes, and RutomobUes.'-EjxceI(t' 'by ·speclaL 'agreement· -wIth" USAlInl' th~' 6VN'd'd •• 'Mt '!lbanile itelnsfor which' 'CIP '~und. are"a~llllabl •. In"addltlori.' the'GYJ\f"dlil<!ourages'tfte Import· ot 'commodi­ties considered to be only marginally essential 'byc',lmposing exchange rates 'alid taxes 'resultlng:in -'ett'edtive ',costs 'aJf Itlgh 'as' 1;284 pfasters to -oo'e dollar: 'Follow­il')g -Is' If -Hat of the ".leauihgi -categori'es"of' 'GVN~ftnanced Imports' tor the-' past three :years'(Thoustind Dollars): -,I' : "1,'.,1 !, l' i ",-,

, c,";_':· i'"

",; ,"

",,',

Fistsl year 1'969";

"""'1', ,Percent ',y8,1~',) , Of, tot,1

totaL .• ~ .~~ _ ~~,:_~~, _.'}'~,_.~~~'~,_'.",_~_.'. ~_~. '~$; o~p, '-ioo! 0 '~87:7. 8~~: ~:;' !'~.o. 9 ,.$342.63~1 ' ,0;';,10Q, 0

FoOd and liv_II l!.,imals~ •• ~~'.'~."',.'-:'_ •• _",_~wr,.. 701806 ' 15 3 123,750 ,,, Iaz. 8\, 7,7 '318-, Mln8l'al h~els; I ullricants «n'd related'mate-rIMs:' __ .-.. 14; 1411 ':i. 0 ,"' 50 0251

',1'''-'' '13: '2 ' '49:'85g" Ph,armaceutJcalssnd medlclnes .•. _._ ••..... ~ .• ~ •• , "4802,,,8999~ ,., ":j9 •• ,3

5 25;798 6.8 46,290

Machinery and appliances_ ........... _ ••••• ,_.~,.~.~ l!' , 63,892 16.9 39; 4$1 Textile yarns and fabrlcs .•• _..................... 64,912 14.0 16,250 -4,3 23.990

~a.;::::f~~.~~,~~~~~n~::::::::::'::-:::.::~::,:,::::::: r.,o:·m' ~ ~. ": '~t4:.7t. JI~:,6L26I~ 335:.~3 111902','71~8!' lron,sleel, and nonferrous mela,ls •••....•.•.•.•.•.. 21,4 , 't

,Anlma1'and ve._table fats and,Oils_ •....•• : •• __ ,".' :111',796'(8 '1.,0 5,871 1. 6 .11,005', Newsprint and paper ___ .. _:~' ....••••••. ':.·: .• -.... ,{;; /6 1-3,144 3.5' 8;'818" Aliothercommodltl8S __ • ____ ._ .. ___ .••. __ ._ .• _.. 51,ISO 11.0 34,819 9.2 43,753

22.6 14.5 13.5 11.5 7; 0 5.6 3.5 3.2 3.2 2.6

12.8

"QUe8tif.J?to ,1"1. On ,page 4 of_ Mr. Nooter's statemE!nt, he indicates that the ofllelal ,exchange 'rate of 118/1 is unrealistic: and that an increase,in U.S, economl,c:! 'f1iUP­)rirt to South Vietn"am is being sought from 'Cpngress as an inducemen't to: 'get 'the GVN--to agree to an adjUsted r,ate. Behliu:1: this Is the philosophy that ,the GVN has become accustomed to an ;'economic', Ufe-style that the U.S. mu'St.' ~On .. 'tlnue to supJ,lort. Thus; the"O::Ssumptibn is mad(l:that a reduction in DOD spenei' .. Ing must.- be offset ,by an increase in- AID economIc support. Need this" be:,so, 'however?' 'Oannot' intlation, 'be curt.aJled am,].,. budgetary defic1t-s be curta~led ,tQrough _,ft, ,reduction in GV~ spen~l~g rat4~r than steady or increased 'U.S. spending? ,

111MWm". The increase in the AID request for econ'o:ri;l~~ 'i~:UP,W?rt '~~I,Jresent,s a shift from DOD financing to AID funding of essential requirements and. repre­sents no net increase ,in:-U.S . .-spendlng. ,At'. th'e: I'same .time;1'the, Govevnment of Vietnam has increasing military" ~:pq ,e~senthq, ~~vil1an budgetary requirements during the coming several years,_ which tt' win tie required to fund .. The curtail­ment of intlation! which,is an.itnportant,objeCtiye of, tbe 'program in Vietnam, does not increase reso·u·rcIHtvaifabilities"b.hd''thel'etore d.oes not decrease the need tor torelgn assistapce;_ '; "", ,", " . ("'Que8tion',lB. Isn'!t -it true;'{lbat the:,-Government of South VletnamIL'pays'",fewer piasters per dollar purchased by the U.-S.· Government tha-t -it receives from ,the ,~~$ale ofJhe dolla~s and thei~evenues;;whlth,tbe imports'financed generate?

Answer." Yes. ~he ,dollars,~r~ acquii:~ 'at -a"rftte of,; one dollar per 118,p~ast~,rs a'4d, through the import pr.o~ess ge1'l8tate' an~'iverage'of-some 200 plaSters:'per :.(lollar.ln government revenues. ;' :. " , ~

Que8tion 19. Doesn't the' -importer, also realize ex'cess profits as a result':of t~elr ptlvHege ot buying dollars at liftxed exchange rate while selling thegood$ ,at evertrlslng prices?_ ',' .,

An8Wer .. If domestic prices rise while the exchange rate is fixed this, W,o'Qr$) :be tr,'QQ"" How_ever, dllring the. Jast '12 'months,: prices have risen only maJ.1g,~ha-nY whUe import duties and foreIgn exchange' taxes were increased, and licensing wa$l1beral1zed. This would tend to reduce any excess proflts. " . ; ,__ , .' '

'" _QU;¢8,tiOtj. .!O., __ Actually aren't the uwindfall" profits realize'd'f)y the--tmporters a substaritltilloss to 'the Government-of South Vietnam of U.S. financial support?

,':'Answer. To·tbe·,extent that ·~wlnd.faH profits" extst,there"could be'some"Ioss of pote"tlai )ll.ster .menue to the GVN. ·Thls-· "Would In· turn' l •• d. toa los.ot,the eftectlven~BS"of-'U~S;'support, " _ '.1,:1.-. .,~ : ,.r

'QU6st#m -21-. -Wh'at'ts th'e approximate ,dollar 'lOSS in. U.S. supPort:},J)eoa.u~e'·of the',loverevalu:a:tion of-,the t>laster: com:blned 'witlr~-the -chaottc.·'"Wetnamese ,:llscsl situation?, ' ' . -. ,';',~ ,'f ",' "',,1

An8wei\t!A!lth'ongh·,the 'offi'eial exchange rates ,appear- to be-Iowl )Vhen,'Dne,lopks at the ."etrecth'e(,le:x:change' rate" ,and-, the ,present f.appai'etit".,balance:-~b~tween sllPl\1Y .nd' II~Wllldi It· I., llot at ",,11 certOilnbh.t· the ""te of exchange. I. overva)ued,", ',,;' '. .' '. . .... ,;,,;1: .1'J·".!i , '. " .',. 'J,",

, 1h:: atiy case,.: U'!Wouldl<seem ·that· the~e ·.w·ottltl-*be novdirect ,dnlla·r .. lnss ·of· U.S. support ·'bee8.u's'S .of overva:lua.t1on···.per··8e~·'The· level:of imports ,.required'lto "main:­taln·, 1'.01, cotnrnodlty'avallilbl1lty, In'· the • ·economy~.ub.tltutlng_ partially .tor dnmestic resources drained off by' the war eifort--,.,has been met.· Increased: tax: collections could ease'''fnifi~tt()t1: and ;·~duce· idemand!ibutl:they' "Would' not::prnv!de 'addttio'nar ·".esources 'Q'ridf1the'r~tor~ W<J111di 'not· Deduce.: the': nelld.,. for !liJIS,:' suppnrt.

Que8tion: '22:.' .PI~ase' l,1eftn¢' foriithe !StibcdinmlotteEf what Ian ··'!eft'ectiVG e:xtihange rfite"·Dlean.s: "".:·;"~.~"'!'.':(.i, .~" '.,J: "'.' .. t.I .. : "\ "<if'.:!; ;)I,,! :1\(\1 :'; U!n8w.&f.~ The:.'/jeffec1i1v~ exchange' rate".:·is'lth~ .. ·t!OtDJ) (pell<jd.oUar: piaster: cost tn

'Im!>o~t"n: commodity" 'til.,. ,,~)l~o)lt;!ate ,\iomlr1al'."change .af. 'pluij' aW r.l.v.nt ~.nr.eign e:x:~h.ange taxes, C2~s~om dt:lties, and import· ta:xes.' '.Dha 'presenti Il'effective exchll'iille ¥af." for Ihtt>orts'IWabout'll9O pYa.t.r.-fo th.'dolla.,"'· " '." ,

QU6Sticm 28. 'Vhat Is the average effective rate lpaya;ble, byl"importeM:.after aJlnwiIW'for import duties? ''', :'.; , A'n8Wt#j·,~t"1!lle .pJ.te:sent'til11e· 'we· 'estimate' ,the.-av:era:g'& effective e;i::chtUlge, rate to be 290 piasters per OlV dnUar.valuelo1!,lmP6rts; The a~eIl'f.lge'·eme.ctive: exchange 'rate'''~"IM'\)ver' ,llmowltll oh\mge,Hn,tM t." ... ate."andliil"bhscompo.ltlon of dmtJOrtsjj'~ . "'; ,i'.<·: ,'::d·" I"",.>" ii, .; ,/;',. ,,', 1,:>/

Que8tion 24. What needs to be done to establish a cnmpet1ttvely~deteDnlined eft'ective rate? "1:" '-:i 1)" '1, ,,' i ,,,", '".'J", ·Ii

;,: Ain8weru')]o :·establish· '8:' 'cl)n1Petltiv;e1y~detel'ntined:,l!ate(\the gOlV,evnment .could '})etliliit<thof ·rat6:',to go free; but::thls mtty uot",pDove;rp1"ltc:nicl\ilfduring cttln6S:,nf war and would require legislat:l:ve1aetiofil ,A:lternati·v:elyvtbe ·governmentrcnuJddP.ermit

~'ElO'nle: d'evaluatl1'onJQ;ndi then Idetenmine·whetb,er'oitlil3r$u1llcient, Ibase,dluppn :demand , .. lid' wpplY 'cbnIlUloll.,us .well as.,~"b •• 1iuenb,mQv.ment,QMb., hlaok, m~fk.~ rate. -The •. plteaent, l'atEf;structure .approxhnate$" :t\lla :s~enl)..cllcondit~ml,\ since: ,thBl!$ !~!S now .open licensfng of ,mnst .GY,N finan.cad cnmmodities ie~(Jwt",Jl.i ~ew>lex«lua~d!~\l~llrY

·;)~~~~~~U~;~~~:E~~~··ii .. ~'\~~~~~tl~'~~i'~;d~t~~;~~,d~~J~~tJ~~:~t~'~~~~,,~~t~~U~4ea, . woUIllW,t ItMr'<>le1<lst. lIe,need ,tor. a; pe~loalcr <l~v!)J,ql'tlolJ< ,qr Jln !Illtrod1lcti9D ot ,",o,me type .of ... ,tlexlbl.,exchange ~at •• y.I.D).,e.p.clallY,Il\~Ql\thJ.¥i.t~m )V,h.r~4 ~Q,u d).a-v:e·.ahl!ev8r11.1nl,esentjkltl8tU1onal1~t!3Jt.uMt~m!?;· k! i; ,. J' ,d . i{I.:f ,~"'.. ,'] {A '1<.1'! " "'"h ' .. (. L ,,,I lAm"""", At, need,,!or f'l·perielllo·d,WlIluatip!l t.l;bYI,Il.\).IlII)1l.\\.la,~qre&.))\l,P.!!~lu­;.Ij>nlISklllful',m"nasem.nt,ot'the,.conomy,,,mplUlj,l!lf,(OJ.!l!\lllnt~aJl,.Mlmlnl/l.trpMo!)' l-SUPtiOl1tel$ ~b¥'. an')I.a:de'quate-'¥41d lErve4,ic():uJ.di!(.I~\lS.e .-f,ljIl<-iR~l,tng~ I"rtt-m··,:tQ-' ~l'l&~P appropriate indefinitely." '."', ' .-' . '. ,.i'l'fJ..( ::',~;':'<.l :"l :;',.'i"!: ..

,<IIQ,,, .. !i<m'~6"'1ilge$!lih~ulJn1t.d! Stat •• ha.~ ~Q~,.P9l!c~,!(\ir~Qtj"l~',~~la.\hl~. ,t~,.an !~j6:lfe~uv.&eX:.Ch~ge ra. t(n:~oriiVietW;l. ml?'- I. ",".' il' .. I\"Hfil.i~~. ';"'\H)f.~.···"iH'.K "\f.\,~';~' ·~IiJ:·,;d i"~ .. ~q (nAnlIW.".- !Ph" ,d.olslon i()n"th."del.rmlnaJll~n<o(, ,al\. ~~qtl;V"hQ~cR'M9J~m"",r "Vletnttmd",'''lw.'~''on. th.t<n.qll.I~,'SiIl,gOod/;J,\M~4ll!1gllll!p. ~f!.PDj .. ~\ot. 4<b~,p.rJJp.nt '~Il.tO.s. !.1iI1. It.il "I11to, ~o. n .• Ider.no. n. a~. e the: le •• lohll'.o,tl~fuC!fW~.I!\\lInWlQ1jrG.I. nI;P)­·.lltlon'b~'1lI;te,GovelJl1tn.nt-Qt VlI.tn"m,\t!I.,Iml.ll\iQI\~ f.lIQlo~"jVfP))tjl.l/I.I.I\QlJ,qm;y, 'lJI!oSp~ot. ,tnr,' stablll •• tlonJ',and.1>I\ll,.pric.. ~e ,g,Q,oi/iwjlll,tJI.'Ill\'ll!IImw"ll ,) IW,'" I ,d , ( "~'.IQ~~~OI)1 2~.( ,Whll t ,djltith,e idovalll.Vi Ol;l,iu (Ooteb.»ryJJ)7Q lRII).QlJnttllll!er.e!!Mse­"wisa' IU'I\'olatlol>,t')'Itl).,jJn!Or 1(\e,vMllatll!>n?" Pnrill&' ,t1l.'~I)IllWIP.xIQII, QMI\I\el.i N>l\at ,·di4 tl),e,-lncl'!3a.se.i1;l 'Ilr~ces"fl:r;nO,\1"Q.t.to? ;' ; "";' .' ' . .";. ,: I)' ,·'"l': ' ... ,,'~rdW(·~.".' >.t;:;> ,

f': .• A1V8W6ri The lre'J!o~msi of ,Qotobe:r·, .1010;(l1esulted.Jiin .. 1l; 2~.: lleJt<l.~,lXt, :t.lT~:rftR$e.)tllAhe ·,e •. 2tsIQf·!n.'l>prt."1 ,mJI81. Rcr~.~~,~OI1.o",~~. ,a. '!.1<.,1 t19 .• " .•. f '~d!J'W-tPI.W ~1.1 ~ .• I. ~"'I~. 4'~h~~I.lng '4uijle.' " ~nd"t,a"es Hpal4' ,on .<\lIlpopts, ""I!led ~"'i~e~H'I',,· .e1l\!ll1,Ui1Jlll!r.te, ,If"," 91 'plaeters .to. thil doll"", (iTune !l96ft),;1I<> .. the' P~e •• I)j:!"ItoptI}\!\'JM!!1:\lf!jftMQ',J!I", .. t~~ •. , 10

,,'th~l qoll.r;"aDllno""." of, owop 229h11.~c.l\t. 1~$Jac)<\i~1q1' ","I~,I\I~!"d:VlI.nce, depOSit. '''b~dno. V/Dequlrl\<'lo., on"a:,w .. 1.<1. e' r~n.ge':,of" •. Onll)\o .... ~.!.t.l#.l 1I.'.' m.!Wl\~.1l,!"t~~; ),n ..... cr~.~ .... , •... ,t. be ,pla.ter ,co. stoliO. t,Jl\lp,.ortlh. Ii. ',l!doao'd.lJ,tiO' ;V1~.tuil. mfl.lli'. i<l.' "'.'l,!J. ,til .. ~ .. \!1I.6., r)odJ . .r .. ,olll' .. Jnne, "1966'tO' (j).,tb»er';191(j!rQ"''''IW'1'0}l!ewhat·l~~~'tt(\11l'~~1P,~Dc!!ll~;! l" i.,', ,.".':', ' .'; "', ,Qu 'Btl.,,: 28 . .w oRidn 't It appeilii'<bhlllt' In.!l1 illbua,tJ!6u"~h.Jiel.apn u"tjJ"!". 'Incr ••••• . of over:aO .p,ercent are expec~ed,'an effective.eichange.rate:·wo"l:lld hav.e to increase somewhat more than proportinnately? .

A,tll8wer, No'.- The: establishment of, an unde.r~valued ;e~chauge: _\,at~ also ,couiu bring 'ecoD()n:lic' problems' causing, >amc;mg other tbtngs, an·.ElxpanI1!10,J).o(· ~po~tlJ and a c"QDsequent reduction hi-total Rvailab1l1ties on ;the_-~om~stic,;m.arltet. Mor~ -over; in the' co~text' of'the present, day situation_,ot the Vietname~e-. ec'oJ?~my;,_'"as

· noted In: my te.tlinQny. the rate of' pnce Incre •• e. pver the1 •• t 12 l1Io»tl1 •. I1"".be\lIl held, to less tha:tl4- percent; , " (. , : ,'Question $9~_ Did; the establishment'of"tbe ·new. accom~oda,UQll: r~te,.last ,Oc-

tobel~-in etrect "cost"the·Govex'nmentof SQuth'Vietnam anyt:t\lJig,'i- ,'. :,' .,i -i • > : 'Answer; Yes,: since 'the larger number ot piasters made' ayalJ~ple -tQ.' fQreig~e;rs gave them a claim on a larger share of the Vietnamese economy. The enla~gedcou~ fioW' of -plasters, (llso bJcame' ,part 'of, the expandJng ,Ip.,oney' ,supply t,' and, adde!,! to liltlfttl,():nary pressures.:~t tbe'sametlme" the new'rat~' ;reduced pUl'chases 1;n the black,:l:Darket and thUs increna,ed tbe amount of fOl·ei~I}·~xchange._avana'ble. to Ule GVN.· ...... ..... . . -'"

",Q'ue8twn 30.:;Please cbmment on:the f_ollowiJnr stateme:nts'~ ',," . (1) 11he:Qv.e~ei~luatlon,ot thepl •• ter tends to' maintain it .ub.\I!,n.tla.llo ••

_ ',of ,U.S,i' /llUPllort ,op ImportslPY allowing ,iP1PQrters \e~cesslve profits,' -,'.', ' . (,2) Inflation tends to increase the aforementioned profits'to bnp,orters: OJ.) -An inc,rease' ip. -i~port~related: taxtl',s wou~d nar:ro.~,JmpQrtelif.!l': pr.o{lts. (4) There has b~'-1.ncreasecl GVN sIle:nding while no' real,inc~$e has

re.ulted ·11\ <\OmeStie' taxes. . . .' . • :. .'. . .. . '. . . . .: (5) 11herecontll\uee to be large .. dellelt •.. wi1lch ".sult.ln add)tlol"'I.U.S. aid, primarily in.1mports. 1'-' " . •

An8wer~ . . , : '_ '" " .. , " ' ' (1): ,AS. ~lot.ed in our answer ~to :questlon. '21,pial;1ter, ~ov,erey:aluation by itself

Will not cau.ea.do\l1U' 10$' of U.S, .npppr~. .: .... " .•• '.' . '. (2) A. notedlpQl1r ·an.wer to' ·que.tlon 19. thl •. I. only. true. where the

etrective, ex~hange' rate:' remains fixed and import levels are administrl\tlv~Jy c.o:natrained .. ',- ',':, ' ._ ',' ':-' '

'(9): Should excess profits eXist',t.hiS ,would be true." "", _ ' " . . (4,).'Durlng 197() domestic ,~e+~nues •.• "cl\t41i1g:lD1po~rrel~t~dltem~. ro •• by Sqme 46% over .the1969·flgureJ i~b\ce·the Inlla.tlonlavel. durlng.thls,porlca was ,~~qjjt'3~o/t.o; .d.,o~estic,.rete,tiU~.in~,re4~~dltp!:re. a~'te. " .. JP.~.;V- _: ... <': I '.J.'-': ·'.""L _, . ' .".

(5')"11h"re ha.)een\ In .th~ 'Iai!t ~\>Vi year •• no :.llI!Ilftcatjnncrea •• s.ln.tl1e oV"a1lleW otcoiilln~rclal.1mpo.t.: .It. 'lhQuld be rememb~e\l.tii.t. tjl.GV.N·. d,~flcit ~s':not _(lIlly-on'e .'Of ,rev~n_ues bu~_also--one 'ot, real-reM'll,~,es, 'Q:rid'-tlllpoJ;ts mitigate bom tM •• problems; ...... . .". ""." ." .

Que8tion 8~ .. I.n·t It a fact. that me Gov.ernment01i!outll Vle\li.rii trin.t develop ~ moll; elrecfl:t(e9<inoI\lIC 11~l1cytl\lt~II1I'1U~Mafuealill)gful~.v~luAtI?~......,)h me o'i!tcial- rate f\s( w~u as.' the __ ~c¢o'Iilmo.dat1pil' 'rate-taX" 'reform,s and~po$Sib1y­wllgi(.nd:'prlce~ontrl>l$?· "' .. ,...... •. ... , .. ' .• :. "':.,..::' ' .

. An8wet'.~Il •. GVN l1as.peen an!) 'S'edlltlnultjg to.lle'liel<>!leconomi¢i'l'olteles·, to ii!l!blllie aM dev.~Qj)i tM _~conl)\P#. ·.'rlle lJ;YN bR". !to 1\lJ",~d aildllcYotmQ~:fu( the

. ;.,i<dl)!l~g~ · ... tfij!ld't~~or'j!)lng·\'a"eM'·str!lcture.'Flhweve •• ·n~ alreadjihidtc;lted Iii tIly test!mony,Ciliitrols'l!1 Ytetllam'hail." not l>roved·.lrectlve on tho •• Item. currently regu~6.,te~., ' ,':' ,'_'" . , " '

'. (la.8ftd,\; 8$. 'l;il.e61f\callY" "'1I.t· have :been 'me mIiJo.:.eformS-"'ecoMmleMly. p. o .. lItie .. 8'.I.Y.'. ~n. a. .0~.ll~ lIY-. ·I.nltlate.d .b.Y til.·, pr". sent<' S. A1g0ngO~""nmeil. t.'·vlh.ICh ~~I\OW,d. >·ii.~e.,1I'4 .. fr!rel!. '. 1.111\> .•. C.t on"redu~hg t.l1~ .tev. el..' o. ~ U'S .• conotil. te asslatan. ce? ','. A~er. Mtlle·Vl.trtaill~1Ie econoinil'·~lIIrtlnu.g<togro'" !lnd·economl" d""erop­iW.llt'MC'.ler.t~~t'4"·g~.duai'r.d1ietIon' IU'UiS .. a'ssrsti",ceafter "F'l:'! 19~3,c8.b':be a:litt~ljltttM; 'Ii1~ll;tlli!' ~ttted(>p'ndelit· upOil. tl1e ·r.te·of .VletnameSeeconomlc·de­

.. yelopJi\<¢t ·atid"t!ie·tMer: of'kSOI"tanh I'orthcomhig'trom other 'nationS <tn/HosU-tqUl>ns: ··'I1h~'. ~MiidnM ; \h.a.ur~ •• deechlb"d! Fpre"louoly' 'will' help" 'j>rd~1ge' <the stab111ty wh1<ilf\$. e .. enlhll"for thl. growth,al!wlll tlie Improved ,ecnnWI\! the 'couhtrYSide,,' '-," ':_,"'_:_'_'_' -'" ': "'':', "'1"''''-' ,''", -,,',l,'I,; ,''':

,J 'QIleBtiOw38·. Doh'A;r;D; cortsld/tl"Sottth"Vlelll1illl1·.tidmlnlstr.tlOIi oBhe' iwv­'er!lll1~!lt'l!Il!e~tlte:'fI(lr 'alldi h6nellpilli tM Implementation' Ot,!'!J).$.'aldi!lfog~am.,l '." .. it ",we.<.' .~<!, I (lliV'N'.'. Pl!\jforYrrlln:d~' • \VI thl-'re/ilar<\ tp ·A. lID. 'prQ\!rlln!s i hil. ·.-been '1>rojlii' .... I'V~l~· illIpt'oVlng,a!l'd'_'eime~t·'Mn1l1nuM·lmpr6r.ll1ent'·Glven· \ihel>'~­'.nt··.e~of'dl~dum"tlln"''': ~.·"bnOld~r. th~,.p ... ent le~el ofp •• til>,",ul,,". to,",,~ibOth .

"', ;reft:~onO:ble"alid,.:accepta~l~j,:'weH(t. ~InPt~t(f'BtrQut!ure-'Ol1:r._ 'nrogra:11isISQI.'flS ,Ito:, Ob. taln 'the" -n'ul'~um: jd~~r.e-e( rit- e1'teDbl'vej -:f!atlV- iUtdi·<h'One:at ,QWtIQ\'plU,ttii:!lpaitioni' _. i·,,-·' f~ • . ·1iI1I~.tlo" 34. A.l; th ••• · any:bOlld~lvjlbl~ •• a¥J<in.,f~" .Q'IIN1dftlmale .no'~W.trongly

'.,ppe •• for,reaUe1I1c."ohangeirs1lffil ilJId'prlde<li!ablllt3\l""\<' ::,' ,., .

Answer, Thet(Hitla fears:llha't a more pealistic,eXChange .. ra~~li~~~l~~~ti~I!~:.~~ of living and' :wlll have 'undesirable political .repercussions. ha'Ve ,n-otedJ,ln"ttly, testimony, plIEfssures- oli 1:he'iGVN to' devalue in tUlln,'- W'o'uld"reduce'the·'level· ~rom DOl) !Indlrect to AID

QU68UOh.-,36J rIff/the_ Vietnam that .

86

imports that tend to' raise Vietnam's_ consumption levels that SOme day must drop radicallY,1 '

An,810er. There· is a need tor tax, reform and improved collections, and the government is, eR·rrying out reform programs with the help of AID. However, the'problem of resource availability which-the government has,faced Is tl'uly an economic p,roblem. Domestic production ,has. been greatly restricted by the Wa"f. Its ·exports have been reduced-'and-lt- has, been unable to' produce sufficiently to meet domestic Ill?eds. ·U. S., assistance bas provided imports to supplement domes~ tic "production and hold down inflation.' Howevep, 'we do not -believe that thelle have been significant increases in per capita private consumption.' As the"war winds down, resources 'wn!' be released ,from the publlc'sector back to the'private sector.' Unless domestic, production increases rapidly, ,consumption levels will decline .with reductions' in, foreign assistance. Domestic' production is, 'however, increasing and we have hopes that it.' will nccelerate.

QuesUon 41. It, would' appea-r ~at if GVN's' fiscal irresponsib1l1t-y continues, consumer demands will: remain high because the public Will, as now; have no real ftJ.Jth in Ute stability. of th~<piaster; A!s a-, result, tpe Vietnamese, will continue to spend'what they have 'rather' than lose :Q1oney by saving. '

An8wer. As note!i prev,iously" the 'piast~r haB' been relatiyely sta,ble"in value for the past year, inflatIng less than' 10% ~tiTing: tile past year,: and commercial bank savings d~po~1ta ha:ve,doubled si!lce';~a~t,Sel>teniber's"inte'~'s't t:atl1 ~~drtns. !~~5r.~iS~I!nCe the reforms of la~t Octobe";~otnmodl\r spe""lntlonhas ·~relitly U ioilowli;g state­

not. reduced to

assist·

needs,',in' ~such ';areas. as thednftltlonat police, ,torcej , lWtlr _:veu}f~ll' ~y~entsi ,l",n(l :r~r fQ"m'lIiIld, "efogoe, reller, aiL ,considered ,of ,I;l.\gh 'V~IQ"lty "Co"~,Qml\ant:wltjl, ,the~e "iIiQreasesl,tbererhas :be.en. !Ui/_effOllt, ito·:elimtnate, otl,l.e:r. ,p.rogr~U;nfJ ;Wb,icb" are,' no~ considered: less, than tessentlal :tt) ,the..tasks ~c:url'E!ntl.y ,c,Qnfrpntl~ tP.I~\gQ:ver,I;lw~t, , 9U.8!ion4~i 'Would ,,. ,devaluation ,having tbe ell:ect,of ,Inl';!'.as!pg"t~., Plaster

'cos1nof· alL1mports,-·ba.ve' -any- ta~ible':effect-on· V:letIuun's own oontr1b.,uti9Ji .to. t;l;ie ;m1l1tfll"y<bu'dgetand·t(}"o:ther..elenlentslof"kts-.eXtpend1tul'es?' '." ,_,' i ,:" , ' ,_'-,' .

An8wer'. Increasing tlJe cost of imports would reduce-._b:nnol't"de~an.d."tr~is 'would· ,redUG8 lresour.c.ela.vailabiUty: -.wltMn· the eCQllmny :an5l !aqY~l!'sely, ~n:e(lt ~U ring standards;' 'DependIng-ron, ',the:'felasticHy. 'of ,impol':u idE'lI)lalld) such, ,,3Q.! aQt1QJli migbt or'might;not w;ithdraw~more'-,moI.l~ ,fi'oID'lciDQula-t,iQn. It it, d1d"this wou~st,~reJ!l:ult iti:sbme<g8lfnin,0:ViN1'9V,ellUelk , f1t", . '" Or:, l'L ) i hQ,ueBUon'. ~&,·What/is, 'Monetary" GapiAna:ly.slINtnd ,hQW :dQeJ3 41.-1.1>, :~,pply',lt fn V;ietlna·ml?", ',:>' ,;:.: 1\ ," " ..::;,,\'~ .;, j',~"'i"!"', ,I, 1'.'1\'1,', '(', ;., ",,~:, .. ),i',','" ;-'",

Answer. The monetary gap analysis Is ail attempt to: asse$s!lncrelDe,ntalcb,~J;lges ~in:)lthe.lllldney supplY, and;its~·lmpact,upOn' tl1eLFll'-ioe strucbure .. -'MQr.e' sP,ecit1q&Uy, 'tJllei.lll'OUetamYI:gBlJ) :<!an,'-be, di-'V'ide'd Into,,:othose ,:IlaetQrs lwhioh<ad,d:,to the, InOney:,'suP~ ply and those that tend to withdraw-.,m·one~; !frolU'! oi'l'culation~1 Ltc,is· used in Viet,. nalmto)'project, potent1-ft11',pl1icelaffect, of\ ,t1hallge.s in, the imottey ,supply.' undel" ,vary­ing·a$SUlllptl01Ul.'.-:I f" j;'," "~;"h'dj- .. :,_ Y:;',~ I;' ,/,",'-""f')'rq,i: ,,',;, ',", ,\':Ii')-'

,.: Q,u6a.UnnJ 491!lWihd1e1'fecblhas; liT .<8\ 'miUtanYi' pW!cha.set1'loll the pia8teri~O v'ietnl\:In '·h~d~()n.1Jhe-'Ui'S.ntttemptS'to SUPPol't'¥ietna-m's,Qconomy?! r,..,w',:-. ,,,: "::'i "" .oj1';' ;, j

i~~H,:A.mi09f!. Il'hs''ConsideDable pUlIohases{of piasters/by[ therJiI;·S.'<lDllitary baS' beeJl;;a form of ,indirect ald. Ther<dQUalls~.'eQi1lned.'.;by' ,tIre. ,Na,tJlonal' Bank 1of,l;v.ietnamdi­'uanue iilitJ'ortsj which,lim t'urn:Jfau1l1tates) the(stab1J.IZ1.l1tionl~,.eftlOl)t. ;G~N, llnanced !1UlPO.rtSl raTe', -taxed" .nlore 'hea V'ilW- thanl'IAl'D,!ilmpoDts': 'aIld-, a:ecol'dinglly, (gel1E!rate gre_Rter per dollar tax receipts. These have been a"majot factor in the';'st8Jb1l1z8-;tiob-leffoDt: ;:-f~ "", ,~ '''''::''':'~ ,', 'I';:")'rdli :j~"JIi!'t 1'1';11'''_ ;1::;- '" ,,;\1, ,",9_1'1<>11,,601'1 [.dt"true tham. ,GVN.' budg.~ n6venu\lSM'e' vo.tuall~,dep.nd.nt 'on the U.S. presence? For example,<:;e1.ist6m~j'ooll.eQt&d'10n-lhn~t$rll111t.need-.bY ;the .G:V:.Nrwitlr .n011u'ks, ekDned )jJUOlll" U. SJ r1)laster' lPui[fohft1.lew:d&eldetlliVj~mten itha' budget. "!!-L4tnB'Wrm~Asi'8h'dwh'ilnl'm;v'f6Penmg ,statement,:Jarrd!!.ioo: attta:ollment 4'~ :that) state­.mentV;aPlJllo<S!tmateJw!- ~halt'ldt i GVNi re"'~nues fresult,;fDOml'ld~ree't :or111ndtl'8Cu"'itJ.S. (Qs8-istancQ)JiloW$\'w; ':,'). 'ie'.;,',."" "II,! oj ': 'H"Hlll) ,;':, Ifi ;, r::>; ,1- (" ok ,cti;lf,'j' li(" ; 'J i.-l L :' d-':' ; i >:'

Q1il:8tion, 51. Are the value$ of commodities importe~d, for directJ.:'uselliil'.'jolnt ,(j,;v.N,z<tJir" .. onoml\!/'tedhnl.al, •• anw,colll1tl!r.ln8urgI>1lcy<'·actld.~ill1"ludOd"ln','the 'Gi~NjJNO)Uonti.l ;Bttd.get:'l 'flqf)'J ,,~.y, ,'"tWH;'.'Wl'.dt 1)'9'r, ,:5-I'lUW J .. ~i·;:WI'il\11 wt,:~"", .. ,r:J I;r:t J:.l, ,An-8W»n,{f.Th:et value .0:11 :,(!ijni.modlt1tes;r1m,porte'dbfdr t'H1I8ct'JUSe, ,1tni ·jointl-'G'VNVl!J:S ~l!mlw"t.elinlilaIV'IU<t,i\jounteMn~U.geney<' D'C'lYItles·; aue' ftoblliolUil.d 'witHin ';t:he)G.V~-at1onaU B~tlgell~ 1H@Mre:ver.;')t'il'~mrist;;lnstai:nfies;ifthe::G'VN doesl·tnclude :tn 'theriippl-op.niMe 'ehaJkjteJ',~o1\'ihe"nation'8:Wb\1'd:geb ai;iplae:teb>cumponentl-nec~gsnrytto cover local costs in Impltlhl&I)1lbigjthe;dS8ignedlJU~fof:Jtlieil!om:il1otIttYIl\f :.-:i'J, i" : I .~ ~~, 1q;:u,e~ttuw.'6S1·~V~at. reviews r.01H anrillyses! byi mr iSS )o1H.ciaISj:wttel tntl'dl!l!l dtrG'VN 'butlge~ tM1' ,\p.e!y6.als ~"drr; j commentingI' c.v~jJalU 'el!perl'<tI~"",~llNelll1!Jl!),mh'DHOSE GmNERA']J:m:ID,'FR(l)M"E'.'$Jlatt~:f.l'I"!t'l/"l·\ :I''!'l:f ,~i~'{ -:"!'JH~q "OJ 'tn"·r.')7ifjW!:~~nl"(Uh ; "l'il4tl6iv,,,,"i/d,,.U ..ninljjtill!"")~"". ~he"jl~6c~.s I "f') tl""~'O\>Ingt~b~~: tiO'jo\luni<' 'O'f'ithe ,lludlletmt •• 11 ! themsollv •• 'lo1l'>.h&',nd ,u,,_'IQUII ,tl!I\l1inl.wnroll~\!ttJt.~I!JttCIi11:h'" total bpdget",ls put, togethe" USArD and 'MACV l'evl~W Itifor"MlIsfstMct,fWltli"oua­b'Ytll,R1Jll;ojtlloill ~o"p.rtlon.loNIt .. ,blldptr, namlli3t'I'1!hfi,@IIfj\II1!", •• ctIOl!'·'ll'ndl'the ;_rea"'LMd',@hll'vt""" (,:A!AtO')'lBir~.'»eIl!1;W.dtlh ·lIrell!!l det!lJ!l' bY. lllJAIilV'/lJIId 'tl S';l/tID '","d~"I>P~olVllb'or·,{lI.lipPtomll¢$"dndol<lat~d',_'UiI'ftl\llil'06\1 ,"ltbl!Ulil~,(fo~,)ajj~h '<!tlII,\m!JlrI6y.~:;rthati)li •. coun1iIi!'l1J! lfuo[!I.t\'§tlem~jjlt<.ln')tM Ifa'.t1\thlitll'lt illf) lilfe 'lNlIl® II1llIr1>ll!', itnI)o»bf>/lbpm lof llIi,,'®ef.nse~"'","n!f~n4M JfutOJ1\<' u~untl!i'lj)al!t' gell. erated by our Oommercial Import, P'rogr~_dl*ont tHtwsakf('0'fflPllJ\46!O -COM­tntf(H,.tte8Hil~}if .. dt;jj{", 'H!J\khr/HC; :19h')1t1)' .I){t ,fnnf'!Ii t;m;H'4l~~''', HP"" "p.c,.o\:,m'}\,!tfl:":r~·\i

9uc8Urm 69, Explain the\'IDIS""lJIIalltob.bjID~~.klpm.!lt 'S1l!lP""'t'wltIl!1i>.rtloit~"r l!<lII~l\eIlc\liitOl .. n{vc""h!eY.ol'1ents"Wqu>.~bUnn.~Jl$.!ht~,,,,,,pp'o"~brl~r!t.cf.tow.ntl' bco· ~~"'~s~l:plf:lnhlB3-?''110''wbatd&klroo'lll-1f.: -,"IJ,l't!f, j;'!tll -<)dl _1'9'/0 ,(rrJ1Ltl1n-j~.llrt,'~ "~.I'I"ltlwugh IlJiJIl·"n<ph~ats.~j) IAI.M!!~lInpBmg.alll'lln" MI<ltn'llmf'b". 'iIl.lhi£On ecpf),+mtc ,.t~lll.'!atll.n,!,pa~llIelitlol\l .. lJ<b<li<~p""tll>f' ,,,""';, wl.tllnls!' tA'~llil;) IIllls· ~lso s9PDorted J>h.'fD!OlJe'!fuJadl_41bJa8~ •• tol"~1I$tlona!)<d ... er6pln.nt.lsuoh'<aw,.grloUl. ' ..... 'l!m~M;Ipl)IIi>UbJd;c.,a1lllllnll!iJ.a tlOlllflluJ>lI!\'h.a!th<d~d,pllb!lo wot WI' ,w" \\ \" " ','

. M.jorcont~I1iJltl.n."ha(ll."b"'nl nu~d.,tql~noe'fblrel .J1rljllh.c01lOmy, ibhl1oul!1h mt.~Mn~a40-.\Q~t,w.o;d{-naw~~PlIMc1etrn1cer)·Btrb&t:\S\I'~relfsed,:produatien of~(1prfiltetn ll1iM'I./IIla.JJh"fl1UP!Nrre!!tabtcn,,~f, .. ,.tBnd~.fo»~lpn.g·~aJ:)l,'';\'L.Ii),,'ha~lnol\l~d· PJ)o, ·i1:l _Rfinlf)'r~)h '~I;fI)n()'I·) <)1(-1 :;f. ,v)hltl!rJmn<,\ 'i;lllbfti;{,' ,:,j 'I': fl'~T!'-:" "d 'l,fhJl,'''-I':

88

n\oi¢uil,!~ei.~l elelllentaryedU,CUlon,' v!Ihl$e, •• lt.govehtment: anlf the ,popular ~h;ct\oh of comu1unlfY lead~r.blp'~nd thO expansiOn! tif h~alth set"lcesthrough. out Yletnllfu,:>I"I,D. 'h~ •• lsoworked' with 'the GYN', toward'e~Olvltig ,and, Imllle· metlttng' ¢coriomk'sttaJegtes:.to' advance the South Vietnamese-,'e~o~oiny 'l1iid--tp­w~rd-'p)l1nnlng; -whetle--i>o~sible, Nr the l~ngE(r. t~rm future.',ln thl~>respect"it is enci;niraglng t6 n-ote the _ i'sBufiut!e :by GVN: of',an, agnicultural sectof plan ih support of _rural development and the"e!;ltabl1shmtlllt',Of a Dew "Mlnistr~ of, Plannln~ and Nattorr8.l'Pevel'Opment". :,": ',' ::' .. ,. " .. -' ',' ;'.:,: . ,'"

. Q1te~ti(1)} _51,. -Iloes th~ Vie~na~ese, :.n~ed 'a str():qger 'ftnall;'cial sector ill: otdel' to mob1Ur:e' savings: 'and _capital' and to : make_ ll1onetar:v,- poUcie&!" e1!ectite? ,'-_ ,'" " ':AMwer. A~' noted' preVlpusly', ',over ·the' _ last year -monetltry -' policies, ,have 'been quite. effective .. '~ str.onger tax, 8tr.u~tuI'e 'Y:ould, of course. ,reduce the '~eed, tor deftcltftnitnclnll' andllence oontr\'bU,to to 'price stabillty, A. r noted In my testl· mony- high¢r lriterest rates bave _lncretl~ed' savings by over 100%, since' last ,:fiaU's 'fnter~erate"reforms;"','" '-: :, ,'_ ,I - ':_ > ,' ___ -' ' ':_ '" '.' ", ',;!

"'!?u;"!loo 55, 'One of the dom.stic t.a""lIleasure. taken by the GVN InclMes wltl)holdlng 'on Wage iirid •• I.rY'lnoome: Slrlca thlsl',dlrected ,pri1llarlly at wage ea,rners,,ls'-i,t-a',mRjortax :reform'Qt'-lt'lequltable? , . f '_ '

Anawet1; ~-Th~ ,1ntroduotion o~" wlthhdldlng on; wage' ,t!--'nd- salary,- income 'repre­s'imts a c()llsplcuous improvement in tax "ndminfstration in the _se;ns_e:that;, prop­'et1y ~dmlnt.terOd, It promote., the cbllectfon of bloom" tax.,onwage's and salaries as the lncolhe is' eartle~ _ andl cali'be "correctly termed, a, major,·-tax ~refomn. -·At the ;sa'rIfs __ tlme;< t.a~ P~OgJ:Mluf,in, 'iVletltlam', are'! 41reoted" towarddncreaset:l_coIlecttons !~6m tll:~f.'pa'Y-er8! Who a-teinot th' the W'-t\ge~sal8:ry.,'cate#6rY6' f,' -, :,'.' ,,', ' "" QueaUo-n- {'6.- P~e'ase', c'ommetit "on the' c,ontlnuing!'lncrease' hi..'th~'IGVN mo¥ey rrnpplYI ' ",'hat, 1'8 'the. r~lat1on8lr1pi betwMnt di'e-increase ',in' the' :money sUPPI~" and ·iiJ:llfit't-oil'?; i.' '! '," :>'c: ." 'i --, '

A~8wer. In the longer _ run, an increase, in, money $upply, all' other'.'" thinis '-reril'8intngJttnch'an)(ed'" 'usual1;r,itends t'o.ln~re~u,;e :pri«esl I.n the 'short'tun.,-;however, --'varlous-1eitdS'tlnd~la~~dbscurelthls,JJelationsbLp,:_", 'f', , i·'" ," ',''', , '-"i.- ,. '

': nefi'CltJfinanMng -is! a"tJa.x' dr'~la8t n8sort.- ,".Qhe: resourtl~'-needl3 of;,tbe'_)g(jv.er~ment are ive'try la'rge' and: its--,tax bAs.e iV:e1W",~nal'row. \Tb(Hlifferenc'e-hetween'.government rev~nuefil' -Il.nd 'expendltures."are-finanJ!ed ,througl1iAflatll;mar1 deftClttlt'Ql\nOingi !A. sugta:lne'd and' continuil'ig effort lUiS' been made to increase 'revenues fl'DCL'constr'a,-ln ex:pe~'dltu'resl:,'_;'-';(' '·~t:'i 'I)' ,').:. ,;", '~/-! ~,'i1;" : '1"";1"" ': /' '''; ,,'.- ': . :',~ ,: ;-(), ',\: ", ;ii~!)' ':< ~,; _ tQne8tU>w :S1.jp;],'Qase :oorit1l)ent'-oD.,;the10lrl'O-Wiltg', statement ~ 'uWbimlp'eople' ()1)S'ei-\re that money ts losIng its worth year after year"YQu.know that_the stock\o:&:m6ney 1$: ~,,"mIY::b~llrg ,Iner.ased, thro"gh"g~ve'ntnent" de6<ilt., ,th~y att~tnpt ,to: hold 'n.ltnost' ;.u~lill!lig"o~,:v.lue· othe."tMit 'money,: TbI."attelnpteii',1I!!ibt:,t~9jfi, money ,qaIinot-r ,reduo~ tl1~(;s:totm:_,"Of! ;!ffi'oneyj, ,in~, ci:tcula,tlon.1 ~Irlst~df' it :lncrell:SQ,-ll }D1oney ;spen(l1n~,,',Andl ,!nci'e-fl'sed;'money, de~an'di !for '. goods:, raii3es,_',tpeht 'prices futfthel\tt Does,this h:olilitr\le-iniYletna:m,tiow;\8.S we-ll'as'in~tbe }last?'!!; " "t ' "( '-, i:'," < ".,',",,­

'. Answer:· :,]he)strnt,eln~nt "l,~,igeneral)Jy_:tl'Ue: ;J!or"any.; cOllntry:" 'when, ,that ,'<loullt,ry JI:I{,exper-lell~iilg\ht-jl:h rates 'iO:ll' i,nfiatiori. However;;, as',noted'rin ,tn~ teatb:pon:r, ,~pur:­chlisin~ power d~·the- piastre -has been relativelylstable' 'over1.t1htHlttst_' 1.8a1\'>1'-! -_J

,! .Que8tio~r~8 .. ,1l'as!';tltftlht,g~e~.,leV~l.of int~FeHp ~a;t~'(bJb~Ita:ctedt,sa!y'.il'lgB;' sl9,Wed ~(':oil.sUtneVt -,.ct~dit"\d~uu!:nds~ ~aiI1d\, _pno'Vtd~'d;l lfuerea-Eied\: 'fu:nd~,'" ford investmel)t·;la~ ':,p:redteted?'I"';'-/!(;"I''':_'''' ';,\\:'i"""'ji! 1,,-1 !,-t"-i)'j,,{!I',:,,)'1 :I{ ',_, 'i',,',l ",";t"8W"'" :~ii,·m.en!lorled"eO:"lIer 1n m:v.:opimlng' stMement,the' hl!l;Mr dnte""'! ,,~ate. h~v .. led "to, al\ :lnQreas",tn ttme,and".a.d.ngs,'dQPoslts '~rolIl"w'i"ve]-of,16 bl,I11, !m<','li, 1".10"0",1\0.:83, 1.:bllll,OIt ,1111(, s, t".s. 1Atn6tl'O, , " ... m~".lm, riI,tbank, ,cr,edl,t""lijI,:W"rls,!,, '~.r?m ,8<1; bllllQll ,\lla~.~.1Indleptembjlt,'~Q70",~~'lfi7 !>l!lIonon Jun.,J,91-h.,lJ)il!r.'.Il. ... 'I(~'~r~ .. ~I'tdl,!Illi~j\i\l.ll! ;~~ii.nrl.l.,orlj)JjI.f!\I.'Cpnjm •• ~!9.! ".~.nkll\g)~~~I1I'th!s 1!I'IVI~t. :l\Q:lU' fl»t;a:a~llll'cn:II~I)-r,~ -fQ,_cOnlm-m:6,tB',\",~11~1 t:<.ij;,:'rL, t i':n,r i f:'J!" ;i"": l' ;_l.,! nl :,_,." t:·~" "Que.!lo"~~9,.':w:nr'sl/Vltigs In, facf'bEi,'eft'ectedhi ,V'letl\amnntlt some:'drlisUc ~?tIQtl'l~'\, 11i1<""',' !,0, "", M" ' Ce'~h, ~'"utl:, ~.~t"l.l!I:"nil\,dl,'~,IIlI,'~,tI(),\lI?",'1 t, ':J,,,: ;",I.,C,: ,I "',:',',:';',"1,',' , \ ,.it 1I""""!'il'N ;rHppt~il'lttilm)'l,I>Il~nl\l:. ;'~\l'tem~t\t, 'S~vI~g."Mve '/beeRHnore«.In~ ."1\stantl.nybverthe'IMt year, WfUh"tMI entrent tretld"dfil contl!ni\1~hlllil"" ,.tabUlt\V,and, '4t~~tlvalrate.: .• f,tnterMt, It,~s ,."pooted t1iiit i,hltire)t~ ,Ii\':sa,vit~~. 1'1"111' ,collti!l tleYld, ta1t.\,nUtI, .. " '01 thol'J!hi : p4vli.ji.'at'ilU ir",te 'n'W'!«\iIMq~~ Y~mli': '0' ': speeta,cu-larnn's' ,'thnrtrlfbl~6"~lhgf :last f $ititem~_er{[oll~rt~erestr)foite "'I];I_e1o~it ,i\~),I·,li)l)qlH. ',i:'iJ" •• tioo'PO;:l'I<h'~lblb\\e;t!iat)'th.'V>l'~rI~~"".'baitllditqlerl\>iI'\j!liltY"a~tl":\hl.,i(:Mi~ '(to.m.inM:ed ~p.r.ima,rJ!lY' by tMtl~netHnls:int6}tAng t'nti6r'na,ttf()t\'a1'(tl'lC~~!1,'\"fW\'l ';,.",'f Illi ", ",t" ~;8,1fr',t: A, ~ __ , It): m,OR,' t, bjlderd, ,eV,e,19,',)J~P, ,I e~o, ',n, 0, ',m, " i~s, t~e I flm,' ,QUi, n'r~n:e,t, tzeCl,!,ise, ,'IJt, ", q,~, :r~t tu:..Yje!1niitU01Ie '.~C)h'omp 'I. 'domlhnf#d by: ,t()i'el~rii ~li'd.ld[t '\ill ,ttil. '~Mto. 'wllioll prlmarUr t. ';.~rved by the bariklrig"cofum\inlty, 'As the 'economy deveiops; 'Hi·

stability. Recent-reforms have reduce'd~blaek:marketacUvities and'windfall prOfits through --n 'Dumber" of measllres, c includlng ')the- establishment of- R_. parallel nuuket rate for less' essehtlal commodities and the estabUshmentlof a'general- open"licens­i~_ system; The: sta'ge ls;betnglset 'for the ,gradual rattohal1zation o'f the' economy in order'to ftedllee artiftclal"administrative restrictions. The GVN,'wlth-Olll"Rsslst­Qlleer Is aII:Jolltftkin-g -steps "to introduce otber economic refOl'Dis-. essent1~J'''for developnieilti "", . ,. ' , ,

. Que8tion 66. 'It! Is sometimes' charged"thnt ,the U.S. is :the worse enemy of the South: -VIetnamese .. Aside from the death, dislocation ,and destruction ,already caused, has~not the U.S.'induced the' Vietnamese to become' addicted to a level ot 'ec'ononUc luxury which cannot'be maintained once the_ U.S. spigot is reduced or turned; ore? ' .' -',:A:n8wer.', A.ii noted earlier -(see question No.' ,40),' we do not believe there has been a: signUl'cantly large 'per capita' inc:reasQ,:ln'pr1vate.consumption-. However, becausc'of the decline in'domestic'producti'on, a':}arger"portion of private con~ stimption! has ,been _satisfied' by, imports than in prior" yearS. Eventually as domes'~ tic'production expands, this production· 'will replace Imports in-meeting Vietnam's consumption needs. '

QUC8UOn-' 6?,~ Under present security ,conditions, pre-sent economic expectations and' present budgetary requirementg..;...-not to-,mention' futUre needs---:.h,o-w -long is it estimated before the',South Vietnamese'could begin to develop self~suffiCfencl'?

A1t8Wer. As indicated 'in my opening, statement: and remarks durin'g 'the' hear~ lngs, we cRn anticipate a, gradual: reduction'lin 'U;S. assistance' 'after FY--1978. with the rate'dependent'upoD'the rate of Vietnamese economic development efforts and the level of assistance forthcoming from other nations and institutions.'

Quc8tion 68. Does'not the' maijor'portlloD'of;thel'GVN bUdgetigo into-the pay­m{int of ni1litary·'and cl'ViUan sfilfirtes?'HaB!h'6t!'in~r'eal1led'expenditure levels-been caused in large part by inflationary demands---:indeed .In part at, n~ast by the psychology of'mate:r'iaJluxury ·induced by the'U.S: :presence al1d programsj"such as PIP? If austerity were'practlced, 'could not budgetary' expendi'tures d,ecl1ne? , 'AU81cer. It is 'quite correct' that the major :portidn of the GVN national budget dOi:!s' go towa'rd the payment" of riliUtliry"and civilian salaries. It is estimated'that some 65 to' 70 percent of the total budget, comll_rises -payments,' for wages and 'salaries. " " , ..

As/Ide' from correcting, ~9r the ,effects Of. in'fla~~n;: i~c,r~ased. ,GYN exp~:n!1i.tures basically represent increaSing real domestic rt::!source.s '('pi1marily manpower) ,d~voted to the war effort., This per,mits, a p.igher leve1.. o~ QVN _domestic, resource .requiSition than otherWise ·possml~:··In ,!!bort, ·I.t. has been n~e ••• ry to .. ex)l~D<I GVN'¢lvU and millto..: .. pr?gra:ms.ild':t!,S;'.s~l.tal)~,e b.'~ lri~~e.l~po'slb(e, l". urther: GV~ secto.r pay, ..•... d. JU. atme". t.s. ha.ve. IlOt .. kep ... ·,.'t.p .• ·l):ce ."' .... ltl\ .lDa.t.lo. n.a.·.n. d GV ... !:' roVI~ :i~;ea~~~~a~e sciffe.red ).rg~·lo~fies ot"rel\ljJl~<!"le, p~),'h~p. bys~lne. 50, to . ~ue'tjO" 611; Why'is')1 that the)\'9rt4V~etli~mes\\aM: 't1~\<l\>I1", C>\np!idm:l~e ~:~\'ll'I$i~t::li::e ~:.f~o:rd .\'r)H~; ~Nl~~~l,." .~,';1i(. ~g~g~Jnratlot»ilg~bl'~1fe

(!, ' _, ~,,-! ",". 'Ii.'" ,- - ~\)',n ",.'

.4"s"'fr.,. W ~ po1t!lnue to ~ .• II.v~, .t\l •. tpt!fllt~"'~I). r~I.Pf . w"'i,~h l\les.:~ol1trol. arelmp<\sed b~ the Communist. OVer (hi', peoplellvlllg In.l'!.qtth VI~t~am i. not

. an e,qjniple which recollimends, iil'elf .as .. a ·deslrable one for· South VI.t/lam 'to fdllow;--'\ , " ,. - J.'-' -. - >--,:-~" ,,'.,- ,-- .

",,,,Pl~e~t price.,' c~ntwlS ,;bav~ _previ~ual:v, peen a~telJlP,te,d_.~n ,So.ut¥, Vietnam!,'but these ('~ntr()is have :hot been ,effective; they are difficult and costly ~O~~fflV~E;D).eJlt, an~ wo.rk.~()nt~'rno.a pr1ncmaIP.~. ,purpos.·ofenco,uraging\he .. ~1.tI)lime •• to open theirecQnolDY. tQt),le worklngs.of til. marketplace without thedetall.­bul'<\~uc .. tI~ co,\trols whiCh b~!'ed Inejl\clency, was,te and corruption.,., ,

Question. 70. S'i1nllarly, cal'not .\h.e"bpdgetarygap between r"".nue and e)<­pen<lltures I,l:e ,closed by increased, dQmestic revanuc- ,1latJ;\er ,,than;increased, ':U.S. eC9I1op.1ic assista~ce? What is the tax b:urden of, t1helSou,th_ ¥letnamese.ln:-rebttlon to National Income, Government Expenditures, and Grpss,Pom.estie Pr,oduct,?;Is thisj~R1i,~m9ng, the lowest, rates in the world? llow,\does it compaTe to the'bu1'4en of :g,.Si ,~p.yers ITo, those of ,other. develoM(! and: developing' countries I ..... :,. , "AmM961:'.,.,It, .woulll, b.ft"virtually ,Jmpos..eible,' 10;1: ;:Vietnam to· close, the 'revenue..­eXliena:ft\1r~, ',gfl'p"sQ\eIY':by ,lncreasing 'UOtnestic ifevenues and, still 'maintain-:ah' army of 1.1 million men.' However, the GVN has been expanding,Us domestic reVf!nu~ base·,~nd)'collectiQna. ~Dul'1l1g1tbe. coming 3I'ear tJ\e 'GV-N .e:x:peets'-to' intro-duce: addlt-tonal re~l'-m, ,measures, tQril).creaae collectlon$:.,.. :!' i-!: "

91

In 1969, domestic revenues, excluding customs and other taxes related to ,im­ports. represented only about 50/0 of GVP. 'I'his is below the levels of a number of less developed countries and the United States. This refiects,·ln part,_the present heavy GVN dependence upon taxes on imports. For example, in the same year, 1969, ·domes1l1e· revenue collections, including all import taxes, represented about 14% of GNP for Vietnam .. This level Ie above similar U.S. federal tax collections and comparable' to certai'i'l.· otber- East' Asian countries .(.Thailand and\-·fJaos). al-though sUghtlY'below'()ambo.dla'andKorea.· " -,,' .,"' ~ ,

Que8tion 71._ WbQ.t.):lt~P.S, :have,,:been taken to increase tax collections among farmers and businessmen? ' ,. ., '.

A.nawer. As security conditiop!3 improve ~nd f~,:.;mers return to the land, tax collections are taking place as heretofore. '

In the business community, taxpayers have been Pll~ op. a modUled eurre.nt tax payment system, based on estimated. tax.llabtlity. The Director <;Jeneral and his staff.confe:t:r~tl )ViVt repr~~~,~~t~"es of t)le, bus,iness "taxpayer c~~mun1ty tbr~\1gh­out Vietnam for the purpose of sUmulating compllttnce. Finally, 'the strengthened, audit force 'within the Directorate 'General of Taxation bas proceeded,. with examihlng'retilrtlS'and'asaesslng additional, ,ta.xeSJ ,.,' ',', ....

Question "1$; What steps have beell taken to ,overcome the dep~orable customs collections ·operations,? :a;o~: C9uld tbis,.,COJ.lditiol).,h.~ve.,;p~~n'z~,'J.'~itted, to ~~relop by the U.S. since.1t has long 'had advisors on the scene and must have been aWare ot th~ ~Ituatlon l' .. . .

A,.n8wer;··'l\:.I'':]:>;j provides a OUstoms Advisory Team,,-to assist 11I1e -Governm~t of Vietpam ;f&"set, UP a*(l operate' Us customs system. 'Initially, tpe greater',part of the 'te·am'~. e .. 'ftoit' was J.'n the,~ .. rort _o.f SaIg,on, w)iere ".' e beIfere. real progr.$SS 'h. a. been m~<Je: A'Yletname~e Fra)ldR<l\>ressl~n S.ci;lce ",~s eslnb/Ished at Tan:Son Nllut·.alrpo<tabou\ a Year ago,. and ... Ji;s m~mberffl .. are ~\'lll~:,fhe processot.b~~

tr~~e:~~uatY::,la7it, th;'; chiet~~ of th~ U.~.: CustQms ~~am.:*,ro~ a repo'~~' 'v~~y critlcal:,.oflconditions' ab,'the alrvorTh-;·iThe ,QVN ,~AS aC(!Qptea:ythe_'report and"has mo:ved!. ItOI tighten: :secu~lty and red-qce the .number of ,unauthorized. ,P,~~I?:p.~' lit the' 8:iJlportHarea,s. ",As evldenca .of 'correctt-ve a-ction, "the)al':ge volume of..l~~r~ chandlsei'lilblect : 'Iaceompanying ba,gage'_lj but"' actpally, ",d~{)YQted, to, be r,CQJ;ll~ m~"cla~!p.~r!'hll,,(jlse, which IIl1d btiOh moving through Tan Son Nhut has. very neaflydlsapP""'red'. . .. .' . .... ... , ..... ,..,

It.ls 'l9t1jble .t1latcuatbJ!ls G~'lectlo!1s h~v. ,nc~e.,sed:.each ·c~l<mdar y.ar' since th.ec,!!,tows adXlsory .e'IiIJrtw' •• lnltlMed In ~966: III tlfut year tile annual.coUec' tlo!\ was $8,5· bI.llionp)asters" and)n 197;1 It,jf,i1l reach aj> eslilmated' u,v.~ ·.of $_71.9,I,dlUon pla,stellSij ",.1 _ , ... , /', . '_', '. ':' ;-'1 ' ,,,,, c _,_ ;'

Quest/on 78. ,Please supply .any ~t)ldlesthat hilve been cQ/iducled bythetl.S., GVN,~'qr:,i~te,~~t~~nal 01'ganiZlt:tlonfif"on m(w.eul1$s:tl;le_G.VN',can ~r ~b.ould ~dopt to operate m,or_&"auS'tere19; espectally;as U.lkasslstanceidecl1nes. 1:, ,_ , ""',

Ans.we,., Ther~h~ve,b~.n.no.studll!" dlrected'st'lcjll!htoward,th\~.i)d':How.ver. weat~ workln~ cO!\stalltly with tile GVN to determine technl.9ues w)llch will decrease U,S. as.lstance ~.equlll1mentl!. Inc\\1dlng,voIlCY>)l1ea~wes and'\nBtlfllt1oiial ,develo.pme.,nt to. "i,ncrea.sQ .. ,'"w.x, ,<:Q.~ij,ect.IO. )la, ,impr.oVi~.,eXPIffl. ,4it1.lt~_fprOgr. aD;ls",.et,9~,', :"

QUe8HO!l 74-rresent a detailed breakdown ot the GVN. budget",xy. el!lltru!ltu»es . all.dt!l~·:tot~Il(Irl01iht ~tdlrect and: lIi<1lroet aa~JlIl1lti~e.~'111tJ;lbllte<\'»y thO u''S:; Incltt~ln:g tile exqhange rate subsidy, taxeS \laid on coriiliiodltl •• or serV'.!C •• ·'wh1eh would,not',be available it' 1)-.s. ftnanclal:aaslstance were not pl'e$en~

A!lswet:>:'AttM~1!d~ pJba$e lind a breakout of GYNbjldgetaJly .xpe'iiill~ure.: '1'he dlr"~I;~MJilq!t~cr:q,~.: contribution can be tound iii atta!'hn'i,el!t l\1jmWY4'W"'y Open nillittat~"'~iit ., . . ..,...,.." '- Hh ', •.. ,t; ~;: :;,q 'it' "'~"'~""-'''''''''' . ,~' i";'~',J":t"';.1,IH .

_P~lblie Finance' 213.

BANG ! 23:t~ ·~08n·'6ch .. qu6'C"'glts':_ 56 '·Ihy-t-chl;· flrlMkhQa" 19l4: 46~- ni'~kh6a, _1969

'''1',ABLE 238:""::' National blldg('t ',' ~-lctllal (lxptmdilllre'i FY 1962 to i;y 1949

lS82 UBS 1988, .' , .. ·1 ....

-------+---'----'------'----'---- ---'----'---'--~----'----'-,~­~.:I:OOO.ooo v N $

22.018 ,21.8'0 ~8.1I~1' ~.~.7eo' !';~"tO,I~ ".88.1.0 no e~oxx'lse.o •• Niu'o1' •• p.ridllu;el, T.ln!

,la.pIIl _.

. ··-\:.2.'008 'U!e:i5 14.2"i : :2'.~1~ 38.1120.

,ofdl\k~",:

, .... '''''- UoBh .Vlfltl H~~

. a=rS;;~TW .. • >

. 4 rhG :ral'll·1_l.IIo •. ,j 'Tb~.Tv6~i t""';·Cloo

: "

--"I'

,r ... PlJp, , I'¢(I-V, '''-'.''

;(1,-.1_ Ni..,:lki. lb60rTill

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Que,llon 76. Detail the U.S. military assistance to South Vle!J!am and U.S. mili­tary contributions to the GVN budget.

Answer, ,For FY about $1.8 billion is proposed by ,the Department of Defense for military assistance to- South Vietnam. 'l'his is for ammunition, and otheX' equipment. "

The' ns. military makes no di·rect 'contribution to_the' GVN_budget Indfrectly, GVN budgetary revenues ,are increased·by U.S. muttary,purchaf]es in the _follow· tng Dianner: the U.S. military 8JlDually pUll~bases, with dollars ,mRPY millions of piastres t6 meet -Its needs in Vietnam; these dollars are used by'the GVN to import goods'; the 'taxes and dutIeS: on these iihported goodS augment ,GVN budg· etary revenues. 'Over the past three years this source 'of revenue has-constituted about 25% of the G VN's budgetary receipts.

Que8tion "/6. It is stated O'n page 4 O'f Mr. NO'O'ter's statement that the GVN will have'tO' assume increasing military fPId. clvman budgetary requirements in years to' com'e-requir1ng,:increased U.S. 'econO'mic ,assistance. To the extent,that the GVN' budget is made up of, salary·.expenditures, is it noll ,a fact that the level of miUtary anq civilian ,persO'nnel has stabilized?

AnBwer. The level- ()f Civilian personnel' In Vietna'm.,has b~en stable for some time. ,~he l~vel ot m~ under arms, however, has not yet reached the -1.1 'milllon man .target-.' Also, as·ma. 'miUtar-y forces leave, 'the facilit'ies they used aTe 'being made,avallable to Vietnamese military forces-who assume the responsibility for theU·.' 9t>~ra~on." <!ons\derabl¢ 'o:pe~Atibn' and malntenaI1:ce costs are: l_n~olved, 'and must now be met 'l1i'-'st:mitr-fifshion('byi the GY-N; A!t:-the samEft1in~. 'it'ls::important that Vietnam proceed wit;p development for the future and' repair of ra1'ages'O'f war. 'This imposes addltlonal budgetary burdens, both civll'and military, on the GVN. ' ,,' ' .'. ,., ~~,:i.~~~~~,·t:7"1. detailed art'llysis O'f U.S. economic assistance

r, the

North: 'Vletbtun has beeo'-reQel'Vlng, 'eeonomlc"-Qssistance -at a ; ,rate "equtvalent:to roughlyl500'm1llIon dollars a year. ; '" "J,,-" if: ': :

-,:" ~uestUnt. BO.! l.g 'notJthe"U.S."ee01lomio ;assistance program, iiu,essenee, 8,.D, etrort to: (buy'" the-loyalty: and: tlupp'ort '-of the fSQutb Vietnamese- people?, Wbere else-in history has sucb a poUtlcal theory been·successful?- ' "'~ ,_ "','

'A-ft,81Cet'i. -The·'UiS:'·economlc assistance Pl'(>gJ'am1ig, ,Do11,-,a04 ,ha.fJ'-l),ot"beenr.f'an effo~t"to~ 'buy' 'the 'loyalty and support:'of,'the)'So\ltb-,Vletnaqlesei'~QnJ..er\ ,It_ i.-, lind, 'bas' been,"an' 'e/f(mtoo',belp .UIlPlw1!!outh,VI.tnam wltb,tb~, econp!Dlor.· sources required to"support the· armed for,cos, r,equll'ed to _meet ithQ"inV8,SJo;n "q't the' North , VletnllilDe •• "and' thelneurgen%, of tbe' ,VI.t, Cong, "U.S), ••• I.\Ilpce,l/lls alsoi-bMn:'given with· the -&im· ot ·belping ,the Government. of"V1etn81D Dleet'-~Q_Uae, of the urgent-needs. ot its people fn Buch,fJeld,s, as 'e,(lU(UltiOD,' h$llth,,!)Jld .. tl;Le- QQ,re, o~,·-retugees. ,",;; i,_ .,'-, '1' ,0,, ,,' '. ; , i . ":,:-: ',:'-, ,l, :'\ '''i ":; ,,: .,', _"',j -"c,;,

Q",e8tio" 8t. ,Supply a' lI~t.of 'major, cOIlIIDodltle •. iluPlllled ,tbrough ,the ,JIP, P~.' gpalll"a~d, in(llcate the Istep~1qhat ba vE:l:,h~1!n, Qr .are ,bein@'> ,m~«tn' ~9, .. Qtl y,~ sucn' ttern,s produ.ed ·local\y., What' stops' apo ,bell1l11 Jaken ,to .lnc~e' •. I\, Sou,tl>" ,V:I~Wame.e

. , ' " _ -"', : 'i :; ~.1 "~ " ", , '~.", , '-, .'''' i 'i ' : .' :', _ : ,-- ~ -;,;;, " ,i'

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',I,(~;~l: :C~ar~: '~~trqi~umr;: :dqm'~' ~~ :~~~~~';

essential,to the enti:re, Vletnamizati()n. process., ;Vietnam! cannot take'~on- alLof the present military .and. economic ,responslbUities"at. once~1 Any such attempt would not only doom the economic and social, progress made 'pver the _,past'·few years,but ,qQuld,easlly,'endanger tbeentlre nillliavy ejfo~t: '" '

Q,,~stw,. 85. Has,not,the U.S.:lfashloned,tbe &RVN Into an Image oflte own military, 'establlshment".-maklnglt not,/)n\yless etrectl~e, against guerilla' war. tare, but also jQ,(I8l<penslve fQt,SoutbN'letmlm,to support?, ,", C"" ' ','

: A,n~'Wer ·:A.'ED.: baa! not'lJ;>asis' for !ptofe$ElionaL Qss_essment of, ,South V1etnamese military forces. .., ."! ;' . ",/ 'I ", J • ,

,Que.tion 86. To, what extent are ,there',g/)'oste'on,tbe, payrolls of South Viet.' naDles. military torc •• ? ,Wllat steps are,b.lnll' tal;en,to cleall! up the IIsts1,' ,

,Answer. Tl1ls question shoUld 'bedtr.cted to, tbe))ep",rtmOl\t,':of,Defense.,,; " Question; 67. E;rr;pla/n 'tbe type".f ,~d-us~ audits or,otber'checks now, bel,ng

conducted by AID, In Soutl" Vletn~m ov.err,tmporl$, under"tbe"OU;' prograni, In o~<)er to Ptev~ntJo •• e., mlsll •• ,frau,d. ,and PorruptlQn,? Wb~t ,~~k.g ,are made of tlle countellPart used by,tlle GYN to,nnalJ,celmports?, TQ''Wi)l\t.elltent I. scaroe foreign exchange, peing ,l'e$erv;ed fQJ;'. esse~tlal development,pul1lhas~s?;; " , '

A:n8,¥,er,f~Pre~dlsbursE)ment measuf~s inc.1ud~ tbe':.8(!l'eenillg Of iq'lport- Ucell~·ap­plication. by USAlD per.onnel,anq,mea.u.".wl)lch seek todetern\I!I¢,tb~ legjtl, macy of demand for elP funds against requlreruen~ .. _J»nd .. use ail,41t,s'!-R11Q', l1l.o,de by. tbe ,Area ,A.udltor ~neral based ,on audit programs d •• lgnedto,prodt\4e.an eXballs~lve :.~ovef~ge of alP op,e.ratloDs -in~Judlng . end .. U,fte" , a,nc;l,Qn ~uests;;IXlad,~ by, USA!p "or AID/W, Otber, po.Mjsbursement ,ch.ck~' ,lnc1ude;dO,<\UDlenlarY and,physlcal Inepectlolls" of cpmmodlty arrlvaloby, U ,S; Oustqms .i1vlsors ,~s­signed to, USAID and ,Investlgatl0nll, Ily the Olllee, :of InsJl<!Ctlpl)s & Inves,tll\'Stions (IIS)'j'hen allegatlons'orevlMnce pftl,1lud are received .... ",' " . , "lIS conducte.ln, peptb jnv •• lIga\lo,~$ ,of,allegatlons, otJraudulent transactiOns consummated ul1der the OIP ,progl,1l",;"The~. Inve~tll\'Stlo'1s ,have resulted.ln d .. barment, of .. ~uppll,ers anI! .ID1J;wrte~~, ~lvl1 ~q<l ,l'l'lmlll~\actlo!l,., »Y" tbe' l)'P~tt:­ment of .Tustlce and tlghtimlng of controlsbolli In the tinlted, Stst~s And 'Viet­naw., to pr~y~nt or q,etef_ Sl,lcn ftctiOl)s .. The. I!'f3_ aJ~9 works;~~osely' -With au4~~ors ,alld llersonpeL In" 13114\0'" ,con!\'Wt.p.r\o~191I!spj!jltl~n. ,0tlnij,I~!dual OIP ~ran.­a~tlpn. f~r., PM ,purpose, ,Of ,,~ncoYm,;lJlg Po~,.\1J).e, ,~raUdul~nt ,~r~ilsactlo!ls, w!llch have not been otberwl •• r.port~4 Ql)i\'.,41,o to,d~teqt ,~nyprocedufes whICh :should be,revlsod Or strengtbened, to a,lWlIre,,'I\o,re"strtngent cOl1tr.QIs,;o~er' ,the, pr,Qgram,

, OO,untellPartgen,., ratiolls, !l;re \oe, ",I,~'l, r, r, .npy" a, n, d,',R" S" .UCh,', ,e,a1\no,.!,' 1?~")1~I'4,",,,b, y, tile GVN to ,fund IJ;Ilports, Whl1el\o,~eelJl,.I~!!lOunt,of tQr~liDe'l!'ch~l1gllcls •• t a~'de tor development purchases, the necessary forelgh ,ex~Ql'+nge-ls', it».p\1.cf~~r rel3e~v~,d through; )llgher ts~lIf., all\IA\ltl •• ,IIV'p\I.lI~o .l •• ~ •• ~.l1tlo\1, I!!lPorts which, re-.t)!ictsthelrconsumptlon, , "",' ,; ',"',,' '" ,',,' ':", 19~~ .. ti~8~: ~I~a.e 'C;!!l~eQt''lPOQ"G~~a~,,~\-I~~~t'on~~y m.~s\l~estalieD slDco

Art8wer,;tt'he ,pr.~~Rti" Pei:r!l" ,Q;(nrJ~~,.tablli!& 1&, ~vli'\e~ce,ot .• t1lf .uc(,~.ss, of QX1i!' ~~tl·ll!t1at!P!lll~\hl\\~~.P~~ij: i"If."!\' .lpOe l~91i,~, :Vliese m.Mur~.,arecoverecl

).n lilY, WC:;m~~t~~~~J;'M;3U~~~~q)~\?iliWW"'!11't,eat~, '",' ~h'~" 'I

':,'~,))jt#:'f"'i~ , ;fl~!e,~~1iMl~t<!~t,:t..'91 ~:r~~t~, ~m}W~~~jrtQ, :f~~r! '\:: II PO"ts'Wq~,t II'" ~ !)iIl,It~~nf.~ \!l1s"pUil aM,~ prf~", ,

Several upward adjlJstmen s of pereQnatt.Ql1JaJ rates. , Requirement of ~dvance deposits ag,alnst imports, and' ,

I" ,,:~.du"ID~' r.st,. .. "t. 'Oll 'hnportUu~n$lng., r' ol.', ", ' . "Q"~!{!I?l, 8~, H;o,w, dO¢$.w~~;,c.P(~~I\IlC9/11~ 11\,S()ut,~,YI.mliin; ~9"'!l1af., :W1!h thl\,'t,\11 utile, ", J 4~la,n,4p:jQ~n,\1.I!~. ~ld!IJ.~l!l~~t pQ1W, trleS!,,"', ',"" ,', ";"1;<

Th1W.::J1:·"0~:~~~:r~bl~e~~~fffr~~~r§.;;!~0 ~~l$~IrWJ;~t::d~*~~~,*ii~.: 'fg~ Opiumb!a. $300: for LiberIa. $225: for Turkey. $232.,' ,', '':' '" ,,', .'", . Que,UQII,9P, JlV4~t Ilstb •• cl)~t IA \1l)P'9r~~~.Il) SOlltll VI,')tpain::\Q:,an~~ce,' Im-P'Q~t~·lngllldl'lgQ,Qs.tQf,tore\gnex~lwn~~,W\i'\.t~~e~) './ " ,,',""','.' ';f"8ip~r, A.Is notedlutnl' 'ausWer'lQ'"lji\estloii.3: 'the''RVeflltee1feHlve ex­c~t\ng:e Ht'burr-e'ntly'rttnhthg' at 'ar~iii:ia':'29(l' PidiU~rs! pet- ;({dllar:" _:_:~,:,\1_~ - ,>",.> :,''''_ ~ pn '\ IIQue8tion.: 19rf i HaFl' 1\:J]) _l)een -aSked 1911 ,ls, JtI;<iontemp,lated ,tpat if:~U~: 'I?~ :~sked ,to a.~I~ti PQI), In ,I'l(, 197'2 ,In prQ",!d!qg: 'lI'~I\QIl!!p,;4s~!~\~l\ce i,tv t4ei,~P1.1.thV:!~\­n~~ri~tb"lg!tl\f~i91"tr,~qeh a~,/ll, ho,~I'}.q~ A~i~oo4, :~·qlll'l\0l! tl~Vs It!':~~ re-9»' ~':~'('- .. 'yj- ~f'~ -",,' ',,' '~" ')"! ,':1'" - ',' "''',''r, ,', ~' ,(1'" ':'1,,·,\1,'1>

purchnse o.:f"~iasteJ!s; at .tjls;dffioiru1 :e,,~halilge :rate h~8'had aU'iuhibii;ing and'undeslmhle effe:ct ;,?n.~xe1tav.~e :lIate, 'adju~tJmentsi U ndell: the new allrrungelnentS.:thes~'lDh"hltlon8jwlH be grel\tlyireduood.~ffi do;nbt.uni derstand that statement, ,""; . , ...• " ,: ""{,:,;. ;,;iL,,·, ",,;\.<.,; .. ' '.' Mri 'NO/)tER/fDhel1fact :thl\1t{th~re;h!Ls' heen·in ,thist~centnplI$t peniod i),n 1 ~te*,etlto.· fl1$tih~ia.' 'If ... I>in." ;th~se. :offl. 'e. i8iI' trl'lI,8'f.,er. "s'.' as. stated;. tt .. • n; ·.ea,rlie. r testImony, has ledth~. Vretllllme!leito. he.ve]uetllJntto, mllkeexchllnge adj I1stments,' and s6me,;o!fi •. the',adj.iisttaelilts .tliat :\la·v.e.heenmljde,hl\ v.e heen efforls to meetrthe,nequitements of,the'!il<chailge.system<'with()ut ha~nl!' :1:6, bhnn~e 'thtlt·"fficil\l :r!itti!!'Vhat. I am:'imggesting>' is'thaIYwe wKdleheollitMly,.a,gree with;",hli:f thecomlnittee's liue, @'fl: q\1~stioning has heen, that it IS desirahle,to mak:e:bhe,pi$isterJpurchase.\:ltte,re'llis. ·tic; ,Whewtbt l ,Happens this i w>llmo, lowger,be, ali' itt1tihi~iol1iito.other. lci.!1\.lIs 'oil 'changesiiii the ie,mhl\.nge system M'hich,might,he,del!i.,able' ' . i i iMvl,.~Ory:~HA:VER., ,Aga;ih ,lldq :not "fallow why ,going,j)tom ·military Wllcom)mio;wdu]d,lravelthtitefliecto'J ' ,,' ,. , .. ",:.,;,,: '.'.';, "·Mir. 'iN lilrnFERn ,Because "theiIl:1(h ;which· ,Mmes;. tlwollghi;the.,m1J,ij;,a~y 'iJh"nlllll~'~efieIl?s;\'lIlj .th". mUltipliclition, t~I>t.~ttk~$plac" usiingitnat ll'ate'nproMltli:p.g'lt. ............. of-_:··,··,\·!-; !",,':d ,': ::,-,1 :-~;iii llW: ';,","",lj) .;. ':,\';'; ,

Mr. COPENHAVER. The counterpart generation, you meMl,· """'" , Mr. NOOTER. No, I am referring totihe,doll,artll)iW.,If,we,make;tjlis

~ow' availahl~Jblised'iou'",citloulat\on·,thatthe.DO;o; transfW wiU;be at an equilibrium rrute,8indtliee(i\onomic,nidilev.el isbasedon>thllt,~i, mate, then the exchange system can he.l!ietat,eq;\iiilibdum.wii,llrllI!Hef. ,enehc~_~to;,pQDr''bt$lnsfel's~~;;)Hl;t _ ("(t',,: -}, ;~, ,,'-, ,j'l \1-:"': " ''_-'f : 1,- ,(~J' ~~. 'IW ii.' ;- < ' 't, 'f},

iJiiM:rl'ffil'lP:lilNHAMilRt .. One brjelf,quesl»()'Ii ,that;,l·,wpul<il.ilik!l,t\>l"hA)!'Il;,Y9)J inespnnd> tq'~i>mtht\record;ls iiJtj'IiOti't\li;tmct thtij);if,·yoww,e~El,~o.in~u~1]:Se tr1Uleil((»liw.nge)~!Ii~ it,w!i»ldii}m V(\,i\nj'o,hti, })).l:l.IttiC!>M1!YI~ffect,y' P<m,?j:.,l!!It off(t\la>dui:ijueru:on)l!f,:thil,r<iv.Ql).Qf!fllwnomic,Mf;iet~nc~,th!ll;·i\YIl;,Shou)d he £urnishing hut direct y<ll1I!self to thequestioll)m£,t1ie;IlJ;>Jbillt\l\tipn-

, ~ny;effe.ctilth.i hil\)!.iS]!l.:ne):o.,ii. )~O. e,,~~.).' '. poin .. ts;y. o.u.,O." '1),. ye cl, .... ' i~C.l1.SS .... ~ .. di'.!in::yo.,.~r . testimony. Would 1).ot a mllte, I\q:\lltlthJe: ell9Iial\gg,plI:t~ dJ~ ye"I\'I) I\ntl~ .,""a"... ....jh' Ii-" ., .'" . ., 'I ' . " , ~'~~y,LQnruJ:~': ene. lk":H'>: "Hi'!}' ',·'",'\-;r ·.~d: '~h- ,,;,),'HHI'!.-,:"lj"-: ·,(nn;'i;{):I~, • ;,1',

Mr:Nob'i'l'lR. Well, it certaillJ!y would have ata ~iA!l\'iW'J.\~;thlll'P!>lJliS m. &~I1i\~m .. '~m .. !\t;1~ .. · ... ·&<,)!1: .. 0:w .. , •. r~l¥Il;.p;.r a.,~. nt. ,alii .. Ch. 1!.n .. ~.!I:'!i1fr.'.~!9.~».rll'r .... 'ili!! .. 'I\".·In. ,,~.qUl­.iJtl;\lr~I!~'flj.tIltlJ,\1i,~h,\l,~e~~liVJl, ,~l\))li~'!lg~rllt~ "t.rq~~,!,~~i; ~~~!@111 t,llike >lhto,adlAlilil.'<;tIiil'PM)Qqf.li!>'l~l~,U~tPma,\t~qpth,~r:taJ!~~':,:;:J::il. "11(,' ,', ,I .. ,,,I> Mrr, ',CIJ@Plflill<l~ii\illl!l"hlt'ls·ft1!O .... nd'290, jSllttlt,i'"',,, :;1" "J M'l't'"'''''' ".,,' i' "

"ff"I::I~~r:~!"~~"ih~~:i;!;~~; .1!;f4i~i~~~f\;~dt~~lnW::;~lght, ·.PIlI "·d"" u_ U" ". , • .'. '{";U' , , . '. " ,

:hfMl~(j~;G~;~i1W11' .. ' ;J:lhgtHft\d~t:~j!j' ~ ',*m~' )~![s~'~~Il~g~t IJilriiOOit;lI!;~@ .l)'l~jQl()lIHeJ\tJ~Ii~,itltll~l!.If'IUHl'!'<t.mn~%1!ilw~'l1nPwts, :l:'iit~ll'd on 'the ip'P8sBlit'effecti'l'e' eXChfi)lge'~lItes;" ;", : Ij!: "',1,,,11 'f' ",'c, 1 .'

" 11ft;' !Jbl'EmtillVllitfH¥dif ~'11t\1\l'l}l>/\Vling:,jiMI~,,s()uth."'i~~n~_ h/.lJi a (1i41~whr;dollktrej!l£ f0l:e~ eXllliMlgll1ftw.fiiilwlllll irirXty,elll'ith~~Il~~di be ,;n,?fd'em~iI!aJJOWi!;li'l!,fl!719flofl'i~Ni0.t\"f~bjmpQ~t~l,) '; I('! "',':,'H;' ... ,. ,:,L, ,,·.\\·~tJ~tN~n(£l@riTeot.\,~i),:-r;' -,!'1H'"ildH' l.it~ ,"~HLY)~~;H'(')i~ -:-?~_:I.".'iIH'('),'!"· ;)~ L '-I li,';/ \;illMrl.·(J)0t!l#lJW,,·,1il1l1.iJitt,seemsl:il);·ime·,ith.!i,dmp<btJtJlli'ldd,usthto!,whtlji',i~ nMa1QabJit,'·!tl "1').,«1 ·fi>h !'t~:i~.+-11~W ''';t J '( '~·')'lr··\1 'l~!.':i-;l'!:~~·h'l·jiri '}l'.'¥~j 'u_:n'1:~"r',\' '~": 'Y~I~tif,~~~,~,Iil\1iq;';!IiIr'1<~ii (!tls!)1 clel'e~.i!ii'<b)iitl,1,ei~l,!lli,qj\ hlll hh()lIelY'flu~~y" " ~~e:e~~!W~~?0.I!~i~~ij)1f.eVa:em~~l '; >')";':j ::'.: II: .\,;,}.!/ ': ':!':':;" ""\I;·i :'" !1~"

,,' I Afr(J <VWE1ol1l1WliJ!llli If, youll\rnise:Y6Uw extihltngel r .. te\~t, iWould.haN:e"l!l anti· i!ltlrutiimai'y,Mfent'o~ ''SQakingnip:,!hoM: p,ill'St£ltsah.i:1 at,the :eli-me timel'ha v .. the' .~ll'ec'b",6f;.ti'y'ing :Mclolil "trlie'eacilI1i6inj'ahd get ,tl)sm.iOff the addictionthey .. re Qn with regard tQ Qurassistlll!l0sl, ,,' ,,";, ';,ii, '. :., ) "~fr., N o()'l1Em'lf";yo1l, i rnis(ll' th,,·· e~el\~hge, ratll,~hi~;would' ,ha veJih. e e'fte'ct ~ t 'l'<hv(\l'ingthecrmptlrt' leve~~ iTh'ls. ,w~!1lda!8blMfur. the,lave] ,of t'ilsott're~sthQ;t'~re:t~al!lsferred,tbVIetiiIaml':'! . "" y" ."""" '. ·'Mr:,COPEN'H'Nwm.·<Anil'\leriltlmd Hjdwii.,aeirianit:i" .. , Ii' I ' ",qdf, N00'l'En/A'lld""ouldl()werdllmllnd iqrimptlrt/j),,,,'" ":,',,,, . ';'MN'('Jt')~lll~:gJ\yinn!iTh~refore'Wbuld!t h~th~ 'wott~ic~m~!d~~~I\j,movc I~g to'w!1Jtd ili pOlnt ~ hM~ tlie1South. Vletn\,fu~iJa~get'off lti}ha.a\:l,dic· tlOfi'toU.,$:eaofiomlcnssIstance'i'.:",·, .. ": . ;1, I:", . ,i" ,; .'M'r,No6Tta(WeU, 'it dependsr oii'1iheel~i;tidtY~Qfl bliatJdillnandJ,las ,t@

wh~thelj!itl\lliot'1'ii~:fIa1iion(t1J"si.ttra.ti.l!~w'6Itld.Jj~h~tt?r.'@RWOI!s~;'IJ'h~,t tS",if1ihe irtldlictt01!J:'urthe. vahle' Mrtnport~. was ;tnore·tl\'l/ri\Pt'oj!>Ollt:i'Ol\, l\~e to the incr~asein the e.xchapge 'r~tei. th~nit:w,Odldiho;\i&'.llInihtfl~c fJ\)rln'ryresMt,.l1'tlm bppwute 'Wl!fer,trlie,' It "~ollldhe,(fullliti(}nM1. MIlO, \t~en"fl1re ,level'!,f:IDiports !is're<l1Jtie,ri(th~ t<ltltlr;ff~w: o~I"Ilsq4!1ce~ .~,,? V,etllRnl Is reduced, an\! th,S 11M 1\ dIrect effect on hv!ng.~ta"d",rdsIh physicliJ ter:m~ )1\; I':', ! ,_";;. \_~_-' 'C:", .~,./.: \- : H'<.,'·, _~' I"~ . ',_:'\" ",' -1"':- :/ L; 1 .

M'Ni(\)<'lP1l~ltA~~.'yiM lintleei'll ',.ii" , ,.., i" ":' . ",i NtH Nii/31'En,l'Ffils i iir,~ij\li;JmrteCiol'the .·1iliin~'iv~ ;"'litch, and1:>ellr, iin. mitrdwlienweOif:Ibl![,'tewfint,theaidlevers]{l)u.rlhb.~ii'..'; (i i i .. , ," . "

""Mt<:eb~~Nl!I!ArwmU'fhM1kyou;'" ",,', "q,;".,r"~' ",:', ."!;,, .. ,;>",. Mr. M00nHEA~. ,Mr. Nooter, are 'y'dufa,riJ,\Ii'9cT1ffltjr' a\lrieiil()~i!JI),(hlln

of i.tifid~tstlllldlhg; among I tile . Depa~tntents 0f'. ~tJi,tl!{./ri'e~sli'ry, \4nd :oef~p:s7 'q~tew.' ID~rtr)J~' 16; '1I~~.\);:~ptli(1b:: \U?~n, Inte~dl'!I\\~t!ReJLI:wl ~. 'ct\t)ft :r.ilA.k .... ~ 0:. '1'. Q. ilj!1.''t .. ·.Q.<I~.w/b, e. '~t~o .. ns.,;t .. <l .•. ,.d~)1.m ..... m.· ...• a.t .. \!, ... ' •. :dJ!!Jl!OIl\i .. 11,lM. 'tie.~ .. f0 .. t bltt6ItWii~~l!tinj{'l)1It.te.nqy.jnilr\\pltl>ilti.ln:ialid.So:I,<for~rrl:1I1i y. le~ .... n., aiIF) .• ,', ,1. J .. ' '·MfJNoo'P.ER'.y~st:Sll!l)'·~';'·.I'):" :,-: ':',;- " I ,'\ 'ii,· r,i'l ··"",I,\.P!'IJll ',II,

. .¥r,l\1!O'Ii.~rrI!JAib;i :Qp yonl.>!1O\Y ~4,Q.'hits »¥n'q~Bjg]l,«!ky! M'r,:ltaiW"h' from ilia itID to'W6\!k'<'l'li that Msk'g~!lUP~"" 'i '." ,,:')"'1 11 :, ,,' :;: i! ,:. , Mr. N<!9TER .. Mr. Gla\!Bon in,my offic~"partj~ip'ilt~E\'in:thei!l'!liitiags

i1r:tIHWc'o/'htJiittee'i""'/:r! i';ii" >'i'.,/ "~I .'1 <"', .. ,;, .. !, N!;rf'Yl:)oa),ti>fJ/b;: Me''voJ.~alW1iat ~itJil tllewpr k.i':fithi~: c@~tte~' rI

SiT6iild. ·' .. !we. K1>lt.' Mr. ' .. ;e: .. til-dao. in. : t. 66t)~.· f41r \vJl'~n,1~.'i.C? *.e:b. ,.~(j~.' 'illl:8!ti!WffiI ... 'Y ,Mr,·. NO\ffER., ~l" .. rr~lt .. B;'1'r,tIP1'o:,Ii£.tl?'~ 1£J,~p~tn~n.t·pf ~ ]i?e.flltJs., s

chairman of that cotnmItteeiandWe·'lirn"etli'rbptesento:ti).'e on.itfii!$ . .do th,e oth~r 4el/llrtmel)ts. But, yes, if you wan~ t~e~etl\v~sl Nf,~;,<il\~d~~!'I:or Mr. 1'la\'tl!\lo' Wotlld bethe dMs:tp ~ ilb(\utiI(":i: :(i ( C: ,',' "i. )/:'

M1\ O<ilItN;lSl'I. ,Mr.;. Qh.!,)rm'fn" M:u .. Bartullo "1it1is.14efp,~h~4"t'0';~h'e '811:11it~:;![Idr.; .. [ft .. , .. Wfft. ..~.tidll.'· .. :~1::m~Y' .. <}1.'~.' ..... l1'i. 'li.'.rl. t'r~i1. iiI. \tl1\iiD. ·.,~.p.a4;tm~ .. t ilf'. '$N{ .... j;e ... ' '. :Mit, , ~ (3iiij~~ ;:l/.ilW:l:Jie: '~r,!~ 'M,t'p<itllt~l\!1~i(",~W ',\n~ 11\$1<1>;. "'~1t, :,tW;<)'n! Wh~I~J ... CO. ·.,lll.,~ qp.~~ _ .' '" ;"~ ';~:.'::,l:)J_._/.:'! t.~;~_'.; I.::' 1" ~.-, .. 'f; :,'_/~ ~:\ .'.1 ' .. i.' .I.,.I/t,,<,,'!',:'f. I. _._,.-",,;. ' .. "!.'! \ (I_:!'./' .. n ;': :Mr. ,~,i<;t)'I!:,tHtt:%:1us~ oDe liist;41le1!.~I.,ni,¥r/Cli.a\T1Uaw· 'I'. ) \h " ,,!]iI.&I~ij~.1'rig"\ljl"6IiM~1fu,' ... Ss.\,'~UII!Irl. est .. I. on .... 'that .. ,t.lte r .. a .. te.;~~'iel!>p .. li\ ... :fl<.'J1g~ ShoUld. be. pe.g~.d a.t .7, 5' .. P.l!P.@1lR ... !!>.f.·'.:~. ·e.'i'M'. ~Jtrllla.1tlt.et:,p.a .. ~ .. ".41 .. .''1'1 .. ",.,.ti<\e. ll, vrouldn't the, .~Q~,l?f dpiJJg tllfspll th~ti thei?o.l}tJli:iVi~~nill!'~~!l'J'lQ¥~rn. Iileht,wo\l,ldh '¢1i!lao~:dl'libla&k 'mav'k:eh0twIt1i~s .~KiJertn:lhl:y: Itwbflld. be in their best interssttD lower the black'rilarket rate iftl\e r:<!>tln:er 1,(tiff(llJ 'ofexuh!1Jnll:~ ,,,,'hi!)!> :,govern irff:5,,'j:>1lrdha:Sesi';~ ,g<ilOdsland,seirvices and accommodation. of, 'our perSonneh~1l(AVietn'win\ li~ ,bheYililvere'':i5

lOS pe~cent of, the black-market rate . .It seems to me that thatwould,.eu-' c .... !!1l. t~g.~.th.e Vi,et.riamese. to. be. a jittJIl toug .. fih.' er . .in clo. sin .. g down as m~. h. ' as' p~l~le the, black-mllirket actIvity, ,W ouldu't that, be a IPglc,!-1 'assUIliptlQni ,," ,'" " ,. . ...' . : ' , .MJ;.No0Tl'l\' W~U"tlw,t mig)it give j;hem,an addItiou!'1 incentillQ to do i~l\I\.t",$iltho1;l!;h ther~ ,are a number,otj~genti~esl"\0w,in terms, of cO,h,c. tll)g,addItlOn~l, rev,enu.e,~,". ,.and':,k.eeP. ill, ,gmfl,' ,a. tlOn}n. : hne. ,.,th, .!'t\lre

, , even mor,e fundamental from.the,i,r.standpQlnt: My prlnC)pal.obJectlOn to that is t~at it wou14,set.l1nasbi~r,~ry,fe~t~!~tipn on theinanagem~nt of the foreIgn exchangeslt)la.t~O!HVlpchml~ht havesomennpredlct-able, effect in a way that,wQuld,be uiiqesirable.Ji'J''!-nkly.,..,...,. , " '

Mr. PHILLIPS. Isn't itpretty'arbitrary now.1. , ,', ' " : Mr. N"?TE~.Frankly puq~eople. an,;l,,~tlle, Yi~tna!ll"':~ hayeq.orie

",hat Ithll)k !s a !~ma,:lt~ple wli thm past year m f.orejgn eX9hange managem:~lit, JIIet abou~ one, ()£. the pest ,r. hay!; everseeli. r thglk, we h,a. v,e, .. g'i'~" ... ,j:6" .,',' give, t.h.e,m, " s,' 6m~ ile~,i,b, .ilit~ in c,a, rrxip, g,out"their,i.ob,'Yit,hin the hnpts"of, th~r~Qurces thl,tt,,'Y6 ,lire ,IDakll)g avalla91e, ,,!:hey are ~etti,1w"a. ~o<'ld re~ponsefr()mthe ,yletnamese;t~ey"are Illa)png se~, Slpl~" ).udgll)ent~l,ap.~Jhe il'jlsu\ts hl\ v~l>OO!llJ.!!topI~hmg .. as J p.o~ed 1U my paper. I WI I notpred:lCt that they WIll always bethat,gqo~J b~-oause the~ are factors that will ma~e th~t ~i!ficul,t; .•. ,.,' . ',." .. ~r, )':a,~t,LIPs.We m):{st ,be 19~kll\g.lJ,~ Cllj}'~re,nt$ets of Jigure~~~e-

<Jll;uselt does not lobl(tll.l\~~"'Yr to mf .... '" "., Mr. NOI!lTER. Over the last 12 months, the rate of.,mflatIOn hl,tS"b~en

heldtQ a~o):(~3 percel\t.;th,lI~is a remarl<able result~ ., ,", ..'ii ' Mr. PmtL~l's. How mlich! ' . Mr. N\.'~'. Threeperceht .. <"'" '. ..... '.' . '. ,Mr.~ -!"tl.:L1P~.',Ac'~d~~lngti> testiW~!ly. )~s\:~ll.d~;y,froin, t~~ G",-Q jt

"'lis ,t p~tc~n~ m"th~ l~st qua~tef,whlql\ J'q\lI~I),e,12I?e,rqeptit .ye~r, Mr. 'NOOTER. The perIod from last July tOthIg J,ulYils,qI)ly·~ 3.I/er-

c~~~~~£~rPs. f'doriot thihj{:*6\iips~~h# tiiul'~ h\;~~~~~Fm:Qry ~'~herl'£ImaYrsay,s9', " ' c,>', ... ,,' ','yo'; ,

Mr: 'NOO'l'ER. WeJ1; 1[ am sure these figures ~ah ber~c?l}Q\!ed. J;>J)nng 0.~,~ !!1t,erva1 • ti)e,re h'we 9001). ~?m,~,f1\1~t):(~tlon~, put thf?h~ng~}or

¥l~1!~,n~:~~~J'i'~}'~~~~.W~tc~~~~~~t:t'ld 3, ,p;~~el~~ f~rtl~e e~~lre' ""'. M':t:, .~l'hl'lt·r..t!',~. ;"I.,c, )~:cer.ta1n,h·be,· t,~er, ~!i;al\',~9pe~C\l1\t 111 tile. P~~YIP.US Year,' 'Wl .. 8&"',,", '',': :" 'n' ,n , ... , ,."",'., "'"

Nl'r>Nob'rEl' Yes~"'''''':: ,'i'''' " •... ' ' . ....' Mr.P;HILLlPs. Thank y,oti, l\ctf. Ohiirlilai'C' ;,.', ": ,;' "", :' ,'"

'Mt:,:j}fooilHEAD.Tha'rik'fY<iii' :MY/Nopt~i:f';i\d'Mr:'Silt'ef; We l\Ppre" chi~~(:YlI, 'ur'il'£ihlice' 'i ",stil'iri"Witll,,' ~;1E1W;"t.',hi;llt,'t~. hO, tir .. but I, tllOught i£!W~iil'({ be'bltef al\'f&~il'to tty li6ibretiItfo\:l~n<\Ji: ", "i, :;,: '

!hank YO~l£()ryour ~tl'te'l\~~ts, I\!,ld Y!,J,lr,COol)~rfltl()llia1ia:w~ ~r' t~mgri10 ~t°!:l~'Youl', di>t~!ilx~rlS ~~;~~ic~W~~, ,It~i)ut!;,\h~ ,s~ty.a{")n ,\~lll ;TheS\IBcohl'inittiie'ivi1I;stit'hil>fd'\ib{~a;': ,i'" :," i; ,f:'

;" (Wliereli:t>b~,tlt! :.29 ):;:f\l·;:~1j~~lf!h~i~~e,r~ ¥,~ipnhi~~.),', '",":", '!: '''d":' lIb};')-'-''! ,-i ;;"'!',;", II:: ",,;,~ ,.;.\ (:i Ii~

~:-";: I ',;;' -,'i->'_r ... ! :~.;, ,,;., i! _f,.;,;; ,,::'(;" ';; :') C'''~i'

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