Economy of Vietnam
Until the French colonization in the mid-19th century, Vietnam's economy had been mostly agrarian, subsistence-based and village-oriented. French colonizers, however, deliberately developed the regions differently as the French needed raw materials and a market for French manufactured goods, designating the South for agricultural production as it was better suited for agriculture, and the North for manufacturing as it was naturally wealthy in mineral resources. Though the plan exaggerated regional divisions, the development of exports—coal from the North, rice from the South—and the importation of French manufactured goods stimulated domestic commerce.
Operation Passage to Freedom
At the end of World War II, the Viet Minh had proclaimed independence under the Democratic Republic of Vietnam (DRV) in September 1945. This occurred after the withdrawal of Imperial Japan, which had seized control of the French colony during World War II. The military struggle started in November 1946 when France attempted to reassert control over Indochina with an attack on the northern port city of Haiphong. The DRV was recognised by the Soviet Union and the People's Republic of China (PRC). On the other hand, the western powers recognised the French-backed State of Vietnam, nominally led by Emperor Bảo Đại, but with a French-trained Vietnamese National Army (VNA) which was loyal to the French Union forces. In May 1954, after eight years of fighting, the French were surrounded and defeated in a mountainous northern fortress at the Battle of Dien Bien Phu. France's withdrawal from Indochina was finalised in the Geneva Accords of July 1954, after two months of negotiations between Ho's DRV, France, the PRC and the Soviet Union. Under the terms of the agreement, Vietnam was temporarily divided at the 17th parallel north pending elections in 1956 to choose a national government that would administer a reunified country. The communist Viet Minh were left in control of North Vietnam, while the State of Vietnam controlled the south. French Union forces would gradually withdraw from Vietnam as the situation stabilised. Both Vietnamese sides were unsatisfied with the outcome at Geneva; Ngo Dinh Diem, Prime Minister of the State of Vietnam, denounced France's agreement and ordered his delegation not to sign. He stated "We cannot recognise the seizure by Soviet China . . . of over half of our national territory" and that "We can neither concur in the brutal enslavement of millions of compatriots". North Vietnamese Prime Minister Phạm Văn Đồng expressed bitterness after his Soviet and Chinese backers threatened to cut support if he did not agree to the peace terms; Dong had wanted to press home the Viet Minh's military advantage so they could lay claim to more territory at the negotiating table.