Foreign Relations of the United States, 1955–1957, Central and Southeastern Europe, Volume XXVI

84. Report Prepared by the Operations Coordinating Board¹

Washington, December 5, 1956.

PROGRESS REPORT ON “UNITED STATES POLICY TOWARD THE FEDERAL REPUBLIC OF GERMANY” (NSC 160/1)²

(Policy Approved by the President August 13, 1953)

(Period Covered: May 18, 1956 through December 5, 1956)

A. Summary of Operating Progress in Relation to Major NSC Objectives³

1. OCB Recommendation Regarding Policy Review. The U.S. policy toward Germany as set forth in NSC 160/1 has been reviewed from the standpoint of operating considerations and in the light of operating experience to date and of anticipated future developments. No review of policy is recommended. The five basic objectives are considered fundamentally valid. Most of the ten courses of action are now out of date, but barring unforeseen events, sufficient guidance is provided by the remaining valid courses of action for the immediate future, at least until the 1957 elections in the Federal Republic. No modifications are required in NSC 160/1 as a result of approval of NSC 5602/1.⁴

2. Summary Evaluation. With assistance and encouragement from the United States, the Federal Republic has continued to progress toward the major objectives of close association with the West and collective defense. However, internal support for the Government appears to have diminished, primarily because of dissatisfaction with the general course of developments in the fields of rearmament and reunification. Influenced by the approach of the next Federal elections, tentatively scheduled for September 1957, the Government has made decisions which may adversely affect the speed and effectiveness of the German military build-up.

a. German Contribution to Western Defense. The German build-up continues to develop at a deliberate pace, with numerous storm signals pointing to mounting troubles ahead. The recruitment of volunteers has been proceeding on schedule, although lack of accommodations will result in failure to reach the force level of 96,000 originally planned by the end of this year. With regard to equipment, deliveries of American grant-aid material amply cover current requirements and permit the recruiting program to proceed without delay. The Federal Government concluded procedural arrangements with the United States and with European countries which will allow for the purchase of additional military equipment, materials and services, as may be required, and has discussed placing orders in the United States for military equipment in the neighborhood of $1.3 billion. It has also agreed to carry its share of the cost of the current NATO infrastructure program, which includes important installations in Germany. After a long and difficult negotiation the Germans agreed to contribute to the support of Allied forces in amounts totalling $347 million (U.S. share—$154 million) for the year ending May 5, 1957, as compared with $760 million (U.S. share—$350 million) for the year ending May 5, 1956. During the period, U.S. established that deliveries of military end-items for the German build-up beyond the Nash Commitment would be made on a reimbursable aid basis.

The basic legislation of the Federal Government in the field of defense was substantially completed with the enactment in July of a conscription law. While an eighteen-month period of service had been urged upon the German Government by NATO as required to assure adequate training for the new German forces, the Federal Government nevertheless decided to seek legislation for a twelvemonth period of service. The North Atlantic Council promptly expressed grave concern at this development.

b. Prevention of Soviet domination over all Germany; reduction of Soviet power in East Germany and communist influence throughout Germany. See Progress Report on East Germany.

c. Restoration by peaceful means of a free united Germany. The unaltered Soviet position, as evidenced by a negative Soviet reply to a German diplomatic initiative which was supported by the United States, has continued to block progress toward this goal.

d. Promotion of a healthy German economy. The economy of the Federal Republic has continued to progress to new record production levels. It has thus been unnecessary for the United States to take any direct action to support the economy.

e. Maintenance of the Western position in Berlin. The Western position in Berlin has been fully maintained. (See Progress Report on Berlin.)

3. Progress in Meeting Commitments or Program Schedules. Good progress has been made toward meeting our commitment to furnish major items of equipment for the first six German divisions and the first 24 air squadrons and 18 naval vessels (the Nash Commitment). Generally speaking, the equipment has been available before it could be used and the problem has been more to store and maintain it in good condition than to deliver it on time, though this difficulty is now near solution. Difficulty continues in the procurement of ships for the German navy; Congress failed to pass the necessary legislation in the last session to provide for the lease of two American destroyers and two destroyer escorts to the Germans for training purposes.

4. New Commitments. An agreement on procedures for the sale by the United States to the Federal Republic of military equipment, materials, and services was signed in Washington on October 8, 1956.⁵

B. Major Operating Problems and Difficulties Facing the U.S.

5. Defense Contribution. During the past six months the Federal Government, in endeavoring to implement the German defense contribution, has been confronted with an increasingly adverse public reaction and the impact of a national election campaign already under way. Doubts already existing within Germany as to whether the German military contribution was being properly organized or adapted to the requirements of the actual situation were strengthened by press reports during the summer of alleged American plans to reduce the size of American armed forces in conjunction with greater emphasis on atomic weapons. The probability of a basic re-examination by the Germans of the character of the agreed German defense contribution to NATO was indicated by the replacement of Defense Minister Blank by former Atomic Minister Franz Josef Strauss, a persistent critic of German rearmament plans and an advocate of a relatively small but highly trained armed force equipped with atomic weapons. In consequence it now appears doubtful whether the force goal of 12 divisions previously contemplated under German commitments to NATO will be fully met. It is in any case unlikely that the original build-up schedule will be adhered to. There is even some doubt as to whether measures for conscription, without which it will be impossible to create a 12-division army, will be implemented before the 1957 German elections. The renewed threat of Soviet aggression as evidenced by developments in Hungary and Poland may help, however, to overcome public resistance to the measures necessary to accomplish the German build-up.

The fact that the Federal Government for domestic political reasons did not adopt the recommendations of NATO with regard to the period of service under the conscription law represents a setback in the development of German relations with NATO and points to other possible problems in the future in this area. It is clear that the Government itself has not yet solved the problem of developing a convincing method of presenting to the German public the benefits and responsibilities of NATO membership and the military value to Germany of the German defense contribution. Faced with internal opposition to its military build-up plans, the Germans are likely to tend to shift the blame for delays in the build-up to developments outside Germany.

6. German Reunification. The campaign for 1957 elections will highlight increasingly the issue of German reunification, and there will be continuing pressure in the Federal Republic for further activity in this field. Opposition party leaders are increasingly insistent in calling for a solution of the unity question on the basis of non-participation of a united Germany in NATO. Some danger arises from the tendency of West German political leaders to vie with each other in making concessions on the unity issue in the hope of persuading the German electorate that they have a better reunification formula than the Government. Moreover, dissatisfaction with the government’s unity formula may grow even within the CDU (Christian Democratic Party).

7. The Coming German Elections. A number of factors have contributed to diminishing the popularity of the Adenauer government, including the unpopularity of conscription, the lack of progress towards reunification, a spreading feeling that the Chancellor has outlived his usefulness and the erosion of popularity often affecting a party long in power. It now appears fairly certain that the Christian Democratic Party will not retain an absolute majority of Bundestag seats in the 1957 elections. The most likely government coalitions after the elections are either Christian Democratic-Free Democratic or Christian Democratic-Social Democratic. Either of these groupings, although strongly pro-Western, would tend to be less cooperative with the U.S. than the present government on such questions as German rearmament, relations with the Soviet bloc, and the terms which should be offered the Soviets on German reunification. In the event of the formation of a Social Democratic-Free Democratic coalition, with Adenauer’s party completely outside the government, our difficulties would be magnified.

8. East-West Trade. Although the Federal Republic has cooperated with U.S. policy with respect to strategic trade control, there are serious pressures in Germany to join with other West European countries in urging the elimination of the China control differential. The United States is urging the German Government to resist these pressures but in the interest of ensuring full German support is at the same time re-examining its own position. A further problem is posed by continuing political pressure from the opposition parties and the Soviet bloc for the conclusion of trade treaties with the bloc and Red China.

During the first half of 1956 German exports to the Soviet bloc amounted to about 5 percent of her total exports. German imports from the Soviet bloc during the same period amounted to about 6 percent of her total imports. Trade with the Soviet bloc, including Communist China, is tending to increase both absolutely and relatively.

C. Listing of Other Major Developments in the Period

9. The Saar. The recent agreement reached between the French and German Governments providing for the re-attachment of the Saar territory to Germany eliminates a major obstacle to closer French-German relations and to the development of European integration.

10. European Integration. In a speech at Brussels on September 25, Chancellor Adenauer called for a new and more flexible approach toward European integration. Following the Saar settlement and the Chancellor’s speech, prospects for EURATOM and the common market brightened, although progress toward these objectives still faces serious obstacles.

11. East-West Contacts. The Bundestag has accepted a Soviet invitation to send a Parliamentary delegation to the Soviet Union although the visit will not take place until next year. Considerable controversy in Germany was caused by the initiative taken by the FDP (Free Democratic Party) to work out with the LDP (Liberal Democratic Party (the East German counterpart of the FDP which has collaborated with the Communist regime)) arrangements for the exchange of speakers at each other’s political meetings. This is the most significant West German initiative since 1949 for increased contacts with East German politicians.

12. Communist Party Ban. The Federal Constitutional Court declared the German Communist Party illegal. The ban is not expected to have any significant effect, given the weakness of the Communist Party in Germany, apart from the fact that the majority of the 600,000 votes previously given to the Communists could go to the Social Democrats in the coming elections.

13. EPU Trade Imbalance. The continued heavy German surpluses in EPU have led to considerable sentiment in other countries for corrective measures by Germany, particularly measures which would permit some degree of inflation in Germany, and some provision of credit to other European countries.

1. Source: Department of State, OCB Files: Lot 62 D 430, Germany. Top Secret. A cover sheet; a two-page memorandum by the Executive Secretary of the OCB indicating that the report would be considered by the NSC Planning Board; progress reports on the Federal Republic of Germany, East Germany, and Berlin; and a consolidated financial annex are not printed. The December 5 Progress Reports on Berlin and East Germany are printed as Documents 182 and 231.
2. For text of NSC 160/1, see Foreign Relations, 1952–1954, vol. VII, Part 1, pp. 510–520.
3. Latest NIE on West Germany is 23–56, dated April 17, 1956. [Footnote in the source text. NIE 23–56 is printed as Document 48.]
4. For text of NSC 5602/1, dated March 15, 1956, “Basic National Security Policy,” see vol. XIX, pp. 242–268.
5. For text, see 7 TIAS (pt. 3) 2787–2802.