The Invisible Enemy

Of all the dilemmas facing South Viet Nam, none is more ironic or frustrating than the threat of economic collapse. The more aid and troops the U.S. pours into South Viet Nam, the greater the danger of runaway inflation, an in visible enemy that could prove as disastrous to the country as military defeat. Last week, as the fighting reached a new peak (see THE NATION) and the economy neared its nadir, Washington dispatched its top economic trouble-shooter to Saigon: former World Bank Boss Eugene Black, now Lyndon Johnson's special envoy for Southeast Asian development. Black's mission is to expand and refine U.S. aid to South Viet Nam so that the economy will not go under.

Inflation, which had not previously been a problem for Saigon, got off to a roaring start this year with the influx of some 32,000 U.S. troops since February --and at least 40,000 more are expected there before summer's end. Free-spending G.I.s have pumped vast new purchasing power into the marketplace, but there has been no comparable increase in consumer goods to absorb the new money. At the same time, stepped-up military construction has drained labor and materials from the civilian economy, further widening the gap between supply and demand. Building workers' wages have doubled in the last six weeks, while everyone from bartender to B-girl demands and gets higher prices for his services. In the country's boom-and-bust mood, speculators, profiteers and black-market rings have battened greedily on the cities. While banks will give only 74 piasters to the U.S. dollar, the going black-market rate has soared from 125 piasters four months ago to as much as 170 today.

Phantoms & Diplomats. Though Premier Nguyen Cao Ky promises to execute profiteers, he has yet to make good his threat--and bullets alone can hardly reverse Saigon's rising tide of corruption. A huge, incalculable bite from Washington's $1 billion foreign-aid program is taken each year by government and military officials. U.S. refrigerators and air conditioners meant for hospitals end up in generals' homes; troop commanders collect the "phantom pay" of soldiers whose deaths in combat go unreported to Saigon. For $675, a well-to-do youth can buy an Interior Ministry "diploma" that certifies him as a government spy, thus exempting him from army service. A trick currently in favor with provincial chiefs is to blow up a provincial bridge, blame the Viet Cong, and win a fat construction contract from Saigon.

In bitter contrast, skyrocketing food costs leave the average citizen poorer than ever. Though the 1965 harvest well exceeds last year's, rice prices have risen by a third since January. Much of the profit is pocketed by Saigon's Chinese merchants, who callously corner the markets in scarce commodities. So rather than exporting rice this year, South Viet Nam has been forced to import fully 50,000 tons from the U.S.

Kill or Cure. Most ills in Viet Nam, of course, are the fault of the Viet Cong. Outside the capital, the Communists concentrate on cutting supply lines. The railroad to Hue, South Viet Nam's ancient Buddhist center far to the north, has not been used for a year. Route 4, over which most of the rich harvest of the Mekong Delta moves to Saigon, is mined with jolting frequency. The road from mountainous Dalat--source of the capital's vegetables and fruit--can be traversed only by army truck convoys. On back-country roads last week, the Viet Cong coolly halted traffic, confiscated bikes, cars and motor scooters even from those who were willing to pay the usual Red traffic toll.

Premier Ky has his own kill-or-cure answer. Wearing wrap-around sunglasses and a button-down choler, he flew through the country last week in his purple Aerocommander, counselling the crowds: "Blindfold all the rice merchants, attach them to a pole, and ask them whether or not they agree to lower their prices." The cocky little air force general had even tougher words for a U.S. correspondent on his plane. Said he: "I'll govern this country like a military command. If I say the price of rice should drop, what I want to see is a price drop. Even if I have to . . ." Cocking his thumb and forefinger like a pistol, he added grimly: "Twenty or thirty people."

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