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FINANCIAL COST OF INDOCHINA WAR, FRANCE

If most studies of the Indochina War focus on its political, military, and diplomatic aspects, the increasing cost of the war was one of the main reasons explaining why the French government finally decided to end the war at a negotiating table in Geneva in 1954. Pierre Mendès France, the French prime minister who would force through a deal at Geneva, summed it up nicely: “While all problems may not be financial [at the outset], they become so one day. This [was] the case of the Indochinese affair: if it was badly run on the political, military, and moral levels, things were even worse in budgetary terms”. According to French specialist Hugues Tertrais, the overall cost of the war for the French was three billion francs[1] (3,000 milliards) between 1945 and 1955, of which the French paid around 70 percent of the total (2–2.4 billion francs), with the Americans picking up most of the rest of the tab.

Until the Cold War’s internationalization of the Indochina War in 1950, the financial weight of the war oscillated between 100 and 130 million francs annually. However, the arrival of Chinese aid allowed the Democratic Republic of Vietnam (DRV) to modernize their army and to take the battle to the French, increasing the intensity, size, and cost of the battles. Between 1950 and 1951, following the battle of Cao Bang, the French spending on military matters in Indochina grew by 47 percent. At the same time, the Berlin Crisis and the French commitment to the North Atlantic Treaty Organization (NATO) placed greater pressures on the French to allocate more of their budget to European defense and rearmament, something which President René Pleven himself proposed in the form of the European Defense Community. The French had to triple their military budget between 1948 and 1952 in order to keep pace with their expanding military commitments to both Europe and Indochina.

To lower the financial burden, the French stepped up the “indigenization” or jaunissement of the army in Indochina by creating national forces for the Associated States. The French also redoubled their requests to the United States to assume a greater cost of the Indochina War as an essential part of containing communism in Asia. Other measures were taken on the economic front. On 10 May 1953, for example, René Mayer unilaterally devalued the Indochinese piastre to 10 francs in order to improve the French financial position. In August 1953, the French government asked the Americans to help finance the Associated States of Indochina by increasing the American contribution to the war for 1954 to 80 percent.

It was thus in this context of severe financial pressure in 1953 that the government assigned General Henri Navarre the difficult task of strengthening France’s position on the battlefield in order to reach a negotiated, political solution to the war, but without increasing the costs of the war. In short, from 1953, the French could no longer afford the Indochina War. Nor could they afford to send more troops to Indochina to fight. See also CURRENCY, FRENCH INDOCHINA; ECONOMY OF WAR; ROYAL CRUSADE FOR INDEPENDENCE.



[1]. Calcuated at the French franc rate of 1953.