On January 1st, 1967, Nyugen Hao (last seen in Chapter 2), drives to the airport with Jimmy Storm, a man very close to the colonel, to receive Skip and take him to the Psy Ops house, Skip’s temporary stop before being assigned to his long-term destination in Vietnam.

Afterward, Hao walks home, which comprises quarters above and behind a defunct shop, and tells his wife Kim he has something urgent to discuss. Hao tells Kim that he has chosen a side in the ongoing war, and that is the Americans. Hao is helping the colonel map the famed Cu Chi tunnels used by the communists to get around secretly.

Kim protests that Hao is turning against his countrymen, reminding him that he has friends among the Vietminh, such as Trung, who can keep him safe. However, Hao says he doesn’t trust the outfit, now named the Vietcong. He fears that once the war ends and the country reunifies, the communists will place people in labor camps. Siding with the Americans may help Hao and Kim emigrate to another country, perhaps Singapore, where they can seek better medical treatment for Kim, whose chronic asthma has worsened since the death of her beloved nephew Thu. Kim finally relents and agrees to Hao’s plans.

That night, Trung pays Hao a secret visit. As they talk about a mysterious “him,” it becomes clear that Trung is disillusioned with the VC, and Hao is trying to get him to cross to the American side via the colonel. However, Trung tells Hao that he is not yet ready, since he still wants the idealistic truth to live in his heart.

The next day, Skip finally meets his uncle after a gap of 14 months. The colonel has flown in by chopper from Good Luck Mountain, and his combat boots are splattered with red mud. After exchanging pleasantries, Skip gets straight to the point and asks the colonel why he hid his liaison with Eddie and the German from Skip. The colonel evades the question, claiming it’s not him but the “political section” in Manila that runs everything. However, Skip presses on, ultimately using an angry expletive against the older man. The colonel visibly deflates, making Skip feel contrite. The colonel explains that deaths like Carignan’s are sometimes “collateral damage,” based on vague intelligence about a person being suspicious. In other words, Carignan’s murder was probably the result of a miscommunication.

The colonel compliments Skip for his discretion in Mindanao, since Skip did not once mention the colonel in his report. Skip is partly mollified and soon joined by Jimmy Storm. Jimmy reveals his full name is Billem (a corruption of William) Stafford Storm, making B.S. his initials. Therefore, he prefers to go by “Jimmy,” a name he claims gets the job done. As the trio continues to drink through the evening, Jimmy’s talk gets convoluted and bizarre.

The colonel explains to Skip that he is running a tight program mapping the tunnels called “the Labyrinth,” which requires a lot of recon work. Skip’s heart leaps, believing he may be assigned to the Labyrinth, but the colonel reveals he wants Skip stationed in a villa in the interiors, compiling data. Skip’s alias is to be William French Benet, a Canadian on a grant to translate the Bible. The colonel assures Skip that his assignment is extremely important.

As a lieutenant nicknamed “Screwy Louise” joins their group, Skip asks the colonel the significance of the phrase “Tree of Smoke,” which he has heard recently. The colonel says he can’t begin to explain the Tree of Smoke, as it is an “embarrassingly poetic […] grandiose” concept (193). The subject fizzles out, and Skip returns to the Psy Ops house. From the Psy Ops house, Minh and Hao drive Skip to the village of Cao Que or Forgotten Mountain, where his villa is located. Minh knows Skip is disappointed at being pushed into a corner, but believes this is the colonel’s way of keeping Skip out of danger, much as he did with Minh when he ensured Minh stopped flying jets. The villa turns out to be a two-storied concrete structure, which belonged to a deceased French physician called Dr. Bouquet. Its caretakers are Mr. Tho and Mrs. Diu. The village priest, Pere Patrice, lives nearby.

As Skip once again waits for more details on his assignment in Vietnam, he gets mail from Kathy and Eddie. Kathy’s letter indicates her outlook has grown even more bleak. Eddie’s letter contains an apology about the events at Mindanao, as well as an insinuation that a certain important American has shown undue interest in the colonel, which Eddie finds troubling.

It is only in August that Hao brings around some real work for Skip, a partial draft of the article the colonel submitted to Studies in Intelligence, and a famous piece called “Observations on the Double Agent” published in the same journal. The colonel wants the articles to act as a guiding light for his project with Skip and Jimmy, which is to take the initiative and “sift” or edit the intelligence being passed to America, rather than wait for the center to do the sifting, project a lie, and draft bad policies.

Hao gets another visit from Trung, in which Trung indicates that he is finally ready to cross over. The decision was hard for Trung since it was difficult to give up on a dream for which he has shed blood and gone to prison. However, Trung is now done with that life and wants to emigrate to the United States. In return, he will give the colonel all the intel he needs.

Trung reveals that the North Vietnamese Army plans to launch a major offensive in the south on Tet, the Vietnamese lunar New Year. Hao thanks Trung for his courage and promises him the colonel will value the information. However, the colonel may want Trung to return to the north as a double agent for a while before sending him to America. Trung says he is open to all possibilities.

Meanwhile, Kathy is in Sa Dec on the Mekong Delta, running a nursing station and acting as a liaison between international relief organizations and local orphanages. An old friend called Colin Rappaport visits Kathy, and they go to the Emperor Bao Dai orphanage, where Colin is appalled at the dire conditions. The food served to the children reminds Colin of dishwater, indicating the scarcity of resources in the war-torn area. Kathy calls the days they are experiencing “evil.” Afterward, Kathy attends to the sick child she’s been looking after in her own quarters. She boils rice for the boy, slung in her hammock, and tries feeding him, but he hardly responds. Kathy goes to sleep in a chair next to the boy. The following morning, the boy seems better. Kathy reflects that survival is largely a matter of chance and impossible to predict.

James is now a PFC (private first class) assigned to the Echo Recon Platoon in Cao Phuc, Vietnam. On his way to Cao Phuc, James’s group breaks for the night in Bien Hoa and goes to a place called the Floor Show, a barn-like space, where women perform paid sex shows. James watches a floor show in which a woman called “Virgin” strips, inserts her cigarette’s filter tip in her vagina, and makes as if she is blowing smoke out. James feels so happy at the sight that he feels disembodied.

James finally arrives at Cao Phuc, which is in the Cu Chi district, famous for its tunnels. The commanding officers of James’s platoon are Sergeant Harmon and the Screwy Loot (the colonel’s friend). Soon after James’s arrival, Echo gets a visit from the famed colonel, who tells them Echo must keep the hill secure for the colonel’s landing zone (LZ) on top of Good Luck Mountain, as well as help map the tunnels used by the VC. He assures the company that they will not have to go inside the tunnels, as the colonel has a special unit for that task. James reflects that the unit is colloquially known as the “Koochy Kooties” (after Cu Chi), and is famous for slithering face-first down tunnels with a knife between their teeth and a pistol in one hand.

Later, James goes to a sleazy joint called the Purple Bar. Soon, this becomes a ritual, with James drowning himself in beer and sex. At first, he sends Stevie anguished letters and trinkets from the Saigon market, but one day, he starts forgetting her. While the soldiers around him reminisce about women back home, crudely saying that they long for “white meat,” now all James wants is what he gets at the Purple Bar. He calls up his mother, May, to tell her that he has signed on for another year of duty.