Was Ngo Dinh Diem really that hated or is he just a scapegoat?
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Yes. Although it's a little more nuanced than commonly recognized, given the ever ignored dynamics of the South Vietnamese government in American discourse, there were celebrations on the streets of Saigon after his death. That says it all. Ngo Dinh Diem was a member of the Catholic minority in Cochin(the southernmost third of Vietnam), a minority that had disproportionate access to power in Saigon, a legacy of French colonialism. (The Catholic-Buddhist conflict was one of the critical reasons behind the overall anarchy in South Vietnam that would last until 1967.) He enacted policies that alienated the Buddhist majority, egged on by his pernicious brother and sister-in-law, the Nhus. These religious conflicts helped alienate the Kennedy Administration from Diem. And many of his worst instincts were also indulged by Communist moles like Pham Ngoc Thao, who infiltrated the Strategic Hamlet Program-the end result was that the peasantry was more under VC influence, not less. And in spite of his repeated efforts to force assimilation into Vietnamese culture, particularly compared to Thieu, the ethnic Chinese would always be associated with the RVN government: as is the case everywhere else in Southeast Asia, not a popular minority.
Diem's government was reasonably stable in the late 50s, in part thanks to real if corrupt economic growth, but in the early 60s, things fell apart due to two combined decisions: the decision to focus all efforts on supporting the Viet Cong for armed struggle in Hanoi and Diem's decision to implement increasingly draconian policies in Saigon. The Buddhist majority in South Vietnam was highly alienation from Diem's increasing repression of Buddhists. Diem's refusal to enact land reform was another sore point. This was not helped by the lack of ability of the ARVN to defend the country from the Viet Cong in spite of increasing levels of American funding and men, as seen by debacles such as that of Ap Bac.
So combine the alienation of the ARVN, the Buddhists, the peasants, and the Americans, and you had a situation that was bound to boil over in 1963. The coup that eventually took Diem down was not the only one formed in that year-it was just the one that succeeded. Unfortunately though, as history has proved, Diem's overthrow caused far more problems than it solved(Ho Chi Minh himself couldn't believe the Americans would be so stupid as to tolerate/help the coup), and also gave the North Vietnamese propaganda material beyond their wildest dreams when the Americans became the sole force holding the country up.