76. Telegram From the Department of State to the Embassy in Korea1

777. Joint State/Defense/AID Message. Ref: A—Deptel 703, rptd info Tokyo 1980, Saigon 1944, CINCPAC unn;2B—Seoul’s 758, rptd info Tokyo 267, Saigon 105,CINCPAC 252;3 C—Deptel 758, rptd info Tokyo 2131, Saigon 2120, CINCPAC unn;4 D—Seoul’s 779, rptd info Saigon 112, CINCPAC 265;5 E—Seoul’s 767, rptd info CINCPAC 260, COMUSMACV 7;6 F—Deptel 767, rptd info Tokyo 2155, Saigon 2145.7

Korean Troops for South Viet-Nam.

• 1. Following is approved draft letter based on refs a, b, c, and d which you are authorized forward to Foreign Minister ROKG at your discretion. This letter will be implemented when ROKG agrees to dispatch of one brigade and its support/service units in April 1966 and one division and its support/service units commencing in July 1966, except that the death gratuities and wounded-in-action benefits (outlined para 2 below) may be put into effect prior to this ROKG agreement if you so desire.
• 2. You are authorized in case of death gratuities, disability and wounded-in-action benefits for ROK military personnel in South Viet-Nam to make retroactive and future payments based on twice those rates, and no more, shown in the Fall 1965 U.S.-ROK Joint Study on Death Gratuities and Wounded-in-Action Benefits (ref E). The payments will be made in U.S. dollars using same procedures as for payment of overseas allowances for ROK military personnel in SVN, and utilizing MAP GVN or at some later date the appropriate U.S. DOD budget. (Retroactive payments estimated as of January 17, 1966 to be $164,000.) Prior to payment by COMUSKOREA, Minister of National Defense shall submit request which includes names of wounded-in-action beneficiaries or survivors and amount to be paid each. All records of payments and requests for payment will be kept as permanent records by COMUSKOREA.CINCPAC is requested to furnish ASAP dollar amount required now for retroactive payment and desired amount for February 1966 payments.
• 3. Text of approved letter follows:

“We have now had very useful discussions and exchanges of ideas on the question of the conditions under which additional ROK forces might be dispatched to RVN with yourself, the Deputy Prime Minister, and the Minister of National Defense. I think that we now understand more clearly your concerns in this matter and that the time has come to bring the threads of the matter together so that you will be able to make your decision.

The basic considerations were enunciated by President Park in his talks with Vice President Humphrey and myself.

These are that the integrity of Korea’s defense should not be impaired and that no new economic burden should be imposed upon Korea. It was also agreed that there should be some net benefit to Korea for the deployment of these extra forces.

Our proposals for dealing with these basic considerations are contained in my memorandum to the Foreign Minister of January 12 and General Beach’s letter to the Minister of National Defense of January 18.8 As a result of our further discussions we are now able to make these proposals somewhat more precise and to add somewhat to them. The proposals in these two memoranda are still valid. Rather than repeat them in detail I will sum up what the United States is prepared to do as follows:

• A.1. To equip as necessary and finance all additional won costs of the additional forces deployed to RVN.
• A.2. To pay overseas allowances to these forces at the scale now being paid the Tiger Division, which, as you know, is as much as thirty times that currently being paid ROK forces in Korea even after the recent pay raise and approximately four times the pay of RVN troops. It covers all their expenses and has allowed for substantial remittances.
• A.3. To provide death, wounded-in-action, and disability gratuities resulting from casualties in Viet-Nam at double the rates recently agreed by the Joint U.S.-ROK military committee as being fully appropriate.
• A.4. To equip, train, and finance complete replacement of the additional forces deployed to RVN.
• A.5. To provide communications facilities for exclusive ROK use, the character of which is to be agreed between U.S. and ROK officials in Seoul and Saigon. These facilities will meet requirements for communicating with your forces in RVN. In addition, to provide 4 C–54 aircraft to the ROKAF for support of your forces in RVN.
• A.6. To provide over the next few years substantial items of equipment for the modernization of ROK forces in Korea on the basis set forth in General Beach’s letter of January 18 to the Minister of National Defense.
• A.7. To provide for the improvement of military barracks and military sanitation facilities from proceeds of MAP excess sales as set forth in General Beach’s letter of January 18 to the Minister of National Defense.
• A.8. To contribute to filling the requirements determined by the two governments to be necessary, following completion of a joint U.S.-ROK study, for the improvement of the ROK anti-infiltration capability.
• A.9. To provide equipment to expand the ROK Arsenal for increased ammunition production in Korea. These undertakings, together with those already made in connection with dispatch of the Tiger Division to RVN and backup provided by the general U.S. commitment to Korea’s defense, will fully meet the need for maintaining the security of Korea.
• B. To avoid new economic burdens for Korea, the United States is prepared, in addition to paying all overseas expenses of the units to be deployed and the allowances referred to above, to release additional won to the Korean budget equal to all of the net costs of the deployment of these extra forces and of mobilizing and maintaining in Korea the activated reserve division and brigade and support elements. Thus, the deployment will involve no extra costs to the ROK budget and will involve large benefits in foreign exchange through troop remittances and payment of gratuities.
• C. To provide a substantial net benefit to the Korean economy the U.S. is prepared additionally:
• C.1. To suspend MAP Transfer Program for as long as there are substantial ROK forces, i.e. at least two divisions in RVN, with off-shore procurement in Korea in FY 67 of items suspended in FY 66 plus those on the FY 67 list. This will provide substantial budgetary relief and foreign exchange earnings for Korea. Regarding off-shore procurement, the United States Government will review this matter and make a further determination for FY 68 at an appropriate time.
• C.2.A. To procure in Korea insofar as practicable requirements for supplies, services and equipment for ROK forces in RVN and to direct to Korea selected types of procurement for U.S. and RVN forces in RVN in cases in which:

  I.

  Korea has production capability,

  II.

  Korea can meet specifications and delivery schedules,

  III.

  It may be reasonably determined that Korean prices are fully competitive with other possible sources in the Far East, and

  IV.

  The procurement conforms to DOD gold flow regulations. Supplies, services and equipment which meet this definition will be listed on a ‘natural source’ list from which procurement will be made exclusively from Korean sources without soliciting bids from non-Korean producers.

C.2.B. To procure in Korea, in competition only with U.S. suppliers, as much as Korea can provide in time and at a reasonable price, a substantial amount of goods being purchased by AID for use in its project program for rural construction, pacification, relief, logistics, and so forth, in RVN. Payment for such goods will be by special letters of credit which tie these earnings to purchases in the U.S. Special regulations have already been adopted to permit commercial importation into RVN of galvanized iron sheets processed in Korea with AID funds.

C.2.C. To the extent permitted by RVN, to provide Korean contractors expanded opportunities to participate in construction projects undertaken by USG and American contractors in RVN and to provide other services. Korean contractors have already demonstrated competitive ability in these fields. Additionally, parallel employment of skilled Korean civilians in RVN can provide sizeable foreign exchange earnings.

C.3. To increase its technical assistance to ROK in the general field of export promotion.

C.4. To provide AID loans over and above the $150 million figure agreed in May 1965 as suitable projects are developed subject to the same considerations which apply to the $150 million commitment.

C.5. If justified by performance under the 1966 stabilization program, and subject to further review in Washington, to provide [$]15 million of program loans in 1966, which can be used for the support of exports to RVN and for other development needs.

We believe, Mr. Minister, that these proposals and assurances are not only fair, but generous, and should provide the basis for an effective presentation to the Korean people. We hope that on this basis the ROKG will be prepared to dispatch an additional brigade to RVN in April and a division force commencing in July 1966. I need not stress that the matter is urgent and the stakes very high, for Korea as well as the Free World.”

4. FYI. Your concern with respect to the possibility that procurement to be placed in Korea might not be substantial is fully understood here. Apparently the volume of procurement presently coming from the U.S. Army Procurement Agency is not substantial. However, from present planning information available here, we are confident that the amount of procurement which can be placed in Korea in the future as a result of the proposed “natural source listing” will, in fact, be substantial. In any event it is not possible to make specific commitments as to dollar volume until the necessary “natural source” list has been developed and reviewed here. We strongly urge that list be submitted soonest. In compiling list, it is important to provide a “general order of magnitude” estimate of the quantity or dollar volume of production expected to be within the capability of Korean industry to produce for export to RVN. [End FYI.]

5. Regret we unable authorize twenty-five percent increase in per diem rates or additional $6 million modernization add-ons (ref D, paras 1a and 1d).

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