Saigon, January 26, 1965, 10 p.m.

2302. Following is our year-end political appraisal and outlook for North Vietnam on eve of lunar new year.

DRV probably looks back on 1964 with some measure of satisfaction. Its most important single enterprise, armed insurgency in South Vietnam, developed favorably. Viet Cong expanded area and scope of operations and enjoyed number of military successes despite increasing US assistance to GVN. Towards end of year they were able to challenge GVN forces boldly if briefly in several relatively major engagements, and scored several spectacular and well-publicized successes. With exception of Tonkin Gulf incidents (2) Hanoi's direction and growing support of insurgency went virtually unpunished outside borders of South Vietnam.

Several strokes of good fortune helped DRV and Viet Cong. Political instability in South, manifested in series of govt upheavals and in recurrent unrest, furthered their cause, not only in its adverse effect on GVN military operations and pacification but also by encouraging or rationalizing Vietnamese feelings of lassitude and doubt about chances of putting down insurgency. It also combined with Viet Cong military successes, with which it vied for attention in US and world press, in furthering general pessimism in Western world about war in Vietnam, and it was a principal factor in US public debate about Vietnam policy towards end of year. Having seen and realized possible benefits of this instability, DRV and National Liberation Front attempted to support and even foment it, and their propaganda exploited it to maximum advantage.

Good luck also helped DRV when Khrushchev was removed from power in USSR. His fall offered DRV some hope for reduction in acerbity of Sino-Soviet polemics and also offered good opportunity to improve relations with USSR without giving excessive offense to Chinese. Hanoi moved rapidly and skillfully to exploit opportunity and at this writing appears to have been at least in part successful. New Soviet leadership's apparent determination to reassert Soviet influence in Southeast Asia is also auspicious development from DRV viewpoint. It is not yet clear from here whether Soviets are planning to pursue this course over long run or whether they are merely following it as part of their post-Khrushchev policy review pending final selection and assignment of worldwide priorities and commitments, but Hanoi very probably welcomes development. Hanoi would hope that Soviet influence will offer powerful additional deterrent to any contemplated US action, as well as some counterbalance to Chinese dominance of the area.

Situation in Laos developed in manner less to Hanoi's liking. Though Pathet Lao with heavy DRV military support won Plain of Jars, this was counter balanced at least in part by Operation Triangle. Cooperation between neutralists and right wing developed favorably, if in fits and starts, and neutralist Premier Souvanna Phouma appears to be taking increasingly tough anti-Communist line.

DRV domestic political scene remained relatively stable during 1964, with no change apparent in top-level leadership or in major policies. Possibly significant development was decline in public manifestations of internal struggle resulting from Sino-Soviet split. Editorials denouncing modern revisionists and listing their shortcomings fell off during spring and dropped further after Khrushchev ouster. Political personalities who had been principal spokesmen of emerging pro-Chinese line during 1963 (e.g., Nguyen Chi Thanh, Le Duan) receded into background, to be replaced gradually on center of stage by traditional national personalities such as Pham Van Dong, Vo Nguyen Giap, and Ho Chi Minh himself.

Despite its successes during 1964, year was not all favorable to DRV, and Hanoi still faces host of problems in coming year. GVN military establishment performed better than might reasonably have been expected in view of political unrest, and was able to deal Viet Cong number of damaging blows. Moreover, increasing number of countries committed themselves behind GVN struggle. In 1965 Viet Cong victory by military means is still not in sight, unless political fabric in South tears completely or unless GVN Army is split and rendered ineffectual by internecine political struggle. Outlook is still for protracted struggle of indeterminate duration, with war becoming more expensive for North (increased pace of infiltration and accelerated supply of new and larger weapons). While there has so far been nothing to suggest that this has placed any significant strain on North Vietnam's economy, it might ultimately do so. DRV has also been forced into greater public involvement with Viet Cong by dispatch of Northern-born draftees to Viet Cong forces.

We estimate that Hanoi is more concerned about what might be termed "international political escalation" of conflict. Basic DRV goal, which appears increasingly difficult to realize, is to win wars in Laos and South Vietnam and to repay full and exclusive benefits of victory without bringing on excessive international attention or involvement. Large scale US presence and commitment represents clear and serious potential danger, of which Tonkin Gulf incidents served as powerful and painful testimony. Soviets and particularly Chinese, while offering welcome expressions of support, may well demand increasing voice as their own commitment and/or assistance grows. Indeed, if major powers become heavily committed, danger arises that they may ultimately reach accord among themselves which will not sufficiently take DRV interests into account. Ho Chi Minh's international political position is stronger than it had been in 1954, when he was forced to accept less than ideal settlement. He is therefore relatively well insulated against danger that this might happen again, but possibility cannot be excluded if major powers continue to increase pressure. Entire operation will become increasingly difficult and delicate for DRV, and will require extremely adroit and sophisticated political maneuvering.

Hanoi's ability to continue to walk ideological fence during coming year as successfully as during last months of 1964 will depend largely on events beyond its control. If Soviets and Chinese can arrive at arrangement which will permit worldwide Communist attendance at March 1 gathering and at subsequent conference, or if other means are found to reduce polemics, Hanoi's situation will be eased considerably. If, however, gap widens further and altercations become increasingly bitter, DRV may find it impossible to pursue relatively neutral course. In latter case, despite grave Vietnamese reservations about Chinese, it appears likely that Hanoi will choose to or be compelled to support CPR. DRV will nonetheless still do everything possible to maintain at least some ties to USSR as counterweight to Chinese predominance.

No major changes in policy appear to be imminent or even contemplated on domestic scene during coming year. New 5-year plan is not due to start until end of 1965. As in past, big question mark remains possibility that Ho Chi Minh, now 75, may pass away. No possible successor now in view has his personal prestige and authority, or could steer DRV through upcoming difficulties with same finesse as Ho.

We believe that problems outlined above will be of considerable concern to DRV leadership during coming year, but there is as yet no evidence that existence of these problems has led DRV to relax its militancy or to restrain its aggressive instincts. Instead, as new year begins, DRV gives every indication that it intends to maintain and even accelerate pace of insurgency throughout Southeast Asia, to accept negotiations only on its own terms, and to persist in its risky but possibly very profitable policy.

Johnson