Foreign Relations of the United States, 1961–1963, Volume XIII, Western Europe and Canada

87. Memorandum of Conversation⁰

Washington, November 26, 1963, 2:30 p.m.

SUBJECT

• European Economic and Political Developments

PARTICIPANTS

• Americans
  • The Under Secretary
  • Mr. William R. Tyler, Assistant Secretary, EUR
  • Mr. J. Robert Schaetzel, Deputy Assistant Secretary, EUR
  • Mr. George S. Springsteen, Jr., Special Assistant, U
  • Mr. Richard B. Finn, Deputy Director, GER
  • Mr. Joseph E. O’Mahony, Economic Advisor, GER
  • Mr. Arnold Lissance, Interpreter
• Germans
  • The Chancellor¹
  • The Foreign Minister
  • Mr. Georg von Lilienfeld, Minister, German Embassy
  • Baron Herbert von Stackelberg, Minister, German Embassy
  • Mr. Dankmar Seibt, Personal Aide to the Chancellor
  • Mr. Heinz Weber, Interpreter

EEC and Trade Negotiations

The Under Secretary referred to the Chancellor’s earlier conversation with President Johnson² during which the Chancellor indicated that he had had an interesting conversation with de Gaulle before coming to Washington, The Chancellor was asked about the impressions he derived from this exchange with the French President.

The Chancellor replied that de Gaulle had placed his main emphasis on the need for reaching agreement on the agricultural regulations before the end of this year. For de Gaulle, this appears to be just about the most urgent item of business facing the European states.

The Chancellor stated that he has no objection to moving forward on this matter as long as assurances can be obtained covering third country trade. Germany wants to avoid any discrimination against outside trading partners; it considers it important to maintain an unimpaired flow of trade with all countries. The present regulations as written and proposed are in the Chancellor’s opinion not very good—they leave much room for improvement, but we can start with them. At the moment, the Six need to settle on a common grains price level.

Europe, the Chancellor went on, must not seek self-sufficiency in agriculture. De Gaulle apparently does not agree with him on this point. French policy is definitely much more protectively inclined than is Germany’s. This is true for industry as well as for agriculture.

Germany, for example, favors full 50 percent cuts in tariffs on a linear basis. The French care more about solving the disparities issue. The Chancellor said he hopes that item-by-item negotiations can be kept to a minimum—he certainly does not want to discuss 1,200 tariff items one at a time.

The Under Secretary remarked that since he had talked with the Chancellor in Germany, we have had an opportunity to analyze the Mansholt proposal more carefully, both from the standpoint of price and procedure. It is, of course, difficult to predict exactly what effect price changes would have on production, but it is our estimate that the Mansholt-proposed price level for grains would induce a sufficient increase in European grain production to cause a substantial decrease in the volume of EEC imports of grain.

This conclusion, the Under Secretary continued, leads to two questions; (1) can some form of assurance be included in the agreement on grains covering the trade of third countries, and (2) would it not be better to move toward the common grains price level over a period of time, rather than taking a single jump.

The Chancellor spoke about the delicate problems involved in the grains price issue. He said that in Paris he and de Gaulle agreed they could probably see their way toward the adoption of regulations governing dairy products and other items, but he was not sure the same could be said about the grains problem.

The Chancellor acknowledged that the Federal Republic is “not in a good position when it comes to settling this price question.” He referred to the difficult internal political problems that are involved in Germany, but maintained that in his opinion the German farmers are gradually coming to realize that the Federal Republic cannot remain immobile on this issue.

Unfortunately, the Chancellor stated, he would be less than honest if he did not say that he cannot give any indication of how long it will take for the German Government to come to a decision on grain prices. As for himself, the sooner he could dispose of the problem the better he would like it. He does not want to tell the German people during the election campaign of 1965 that he doesn’t know what he is going to do about this matter.

As for phasing the movement toward a common grains price, he again cannot give an answer now. His initial thinking however, is that it would be preferable to make the transition by means of a one-step operation. Perhaps the step should be accompanied by a world-wide commodity agreement.

The Chancellor said that he had told de Gaulle that if they could somehow guarantee the US its share of the European market for agricultural commodities, the grains price issue would no longer be so important for the United States. The Chancellor then indicated that demand for grains will increase steadily in Europe and so there should not be too much difficulty in giving the US the assurances it wants. De Gaulle, the Chancellor concluded, is not entirely negative regarding commodity agreements, though he does do his best to avoid the issue whenever he can.

The Under Secretary said that while matters such as the Common Market wheat price must be solved by the EEC members, third countries will be affected in an important way by whatever decisions are reached. It is our hope, therefore, that before any decisions are reached, we will have further opportunities to discuss the subject with the appropriate European officials.

The Chancellor then asked the Under Secretary whether he expects continued increases in grain acreage and yields in the United States. The Under Secretary referred to the rejection of wheat production controls by the American farmers, but said he would expect that we will continue our efforts to put limitations on production. He, therefore, does not anticipate an expansion of acreage.

Productivity, the Under Secretary pointed out, is more difficult to make predictions about. Grain yields have been increasing at a regular pace here, but there are some indications that a point of diminishing returns may have been reached. There has been a progressive reduction of the number of persons engaged in agriculture in the United States, and as this takes place larger production units come into existence and productivity tends to increase.

The Chancellor said that this describes the situation in the Federal Republic exactly, except that the dimension is different. The same process has been going on in Germany during the past twelve years. If only he had another decade in which to deal with the grains situation, these trends would solve the problem by themselves.

The Under Secretary then indicated that the price of feed grains was even a greater problem than the wheat price. They are a major component of US exports to the EEC. As more and more grains are consumed as meat, the relative importance of feed grains increases. Under the Mansholt proposal the disparity between wheat and feed grains prices would be increased to the great disadvantage of US producers.

The Chancellor said that meat production is becoming increasingly important in Germany, and for that reason he had an interest in seeing that feed grains prices are kept low. A rational approach to problems is not always possible, though, because of the political factors involved.

The Under Secretary then listed the wide range of problems that have to be dealt with in this field—the CAP, global solutions, disparities, tariff reductions, etc. A major question is how do all these matters tie together. It is apparent that we need to discuss the subject more fully, especially at the technical level. The Chancellor agreed. Such talks, he said, would presumably be with the Ministries of Economics and Agriculture.

European Political Integration

The Chancellor said that the Under Secretary is, of course, fully aware of de Gaulle’s objections to political integration at this time. The Chancellor can only add that while he would not say that de Gaulle is determined to block political integration, his (de Gaulle’s) thinking on the subject is different from ours.

The Chancellor said that he told de Gaulle that it is disturbing to him that so many sovereign rights are being transferred by the European countries to non-political institutions. The EEC Commission is not an elected body, but the European states are giving it wide-ranging powers. Elected representatives are losing control over matters of great importance to the people. It is necessary that progress be made more rapidly in the political integration field. The Six should make a start along this line, but should plan to bring others in when possible.

The Franco-German Treaty, the Chancellor said he reminded de Gaulle, has been a source of worry to the US and to the other European states. One major reason why the other European countries have ceased participating in the drive for integration is their fear of Franco-German supremacy.

The Italians, however, appear to be ready to “come back into things”, the Chancellor added. He therefore intends to make an early visit to Italy. De Gaulle indicated to him that he might also go to Italy in the near future.

The Under Secretary then inquired about the possibility of moving ahead in the establishment of an Assembly selected through direct elections. He pointed out that this would give the Commission the kind of legitimacy of power he was concerned about. The Chancellor said, however, that the chances of moving ahead will remain very slight for a long time to come.

The problem, the Chancellor said, is that while he recognizes that government cannot be fragmentized—the economic sector cannot be integrated by itself—how can a political body be formed that would exercise authority in Germany when we do not know where countries like Italy are headed?

The only thing the Chancellor can suggest for now is that we do what we can to strengthen tendencies toward political integration, but we should not expect rapid progress.

Atlantic Policy

De Gaulle’s attitude with regard to Atlantic policy is much different from ours, the Chancellor stated. De Gaulle thinks in nationalistic terms first.

When de Gaulle speaks of Europe, he has in mind a power bloc that would be independent of the United States. His order of priorities is (1) a strong France, (2) a solid French-German relationship, (3) a powerful Europe, and lastly (4) trans-Atlantic ties. De Gaulle does not reject Atlantic partnership, but he wants it to be “a partnership of equals.”

Mr. Tyler said that he has been struck by what de Gaulle says are elements of an Atlantic relationship. To de Gaulle, the Anglo-Saxon presence in Europe poses a threat to the development of Europe and to an independent European identity. It seems that de Gaulle looks upon the new world as something immature, highly active, powerful, wealthy, and too unsophisticated to understand the soul of Europe.

We need to understand what de Gaulle means, Mr. Tyler added, besides what he says. Was de Gaulle at all specific with the Chancellor regarding the interrelationship of the United States and Europe in either the commercial or strategic spheres?

Basically, said the Chancellor, de Gaulle does not want Europe to be dependent in any way on the United States. De Gaulle looks upon the Kennedy Round, American investments, etc., as elements of an attempt by the United States to increase its involvement in Europe. In de Gaulle’s opinion, Europe runs the risk of becoming a satellite of the United States.

At present, the Chancellor believes, de Gaulle considers Europe to be too weak to resist the US. Europe must reduce the gap in this power relationship as far as de Gaulle is concerned. Minister von Lilienfeld quipped that in all this de Gaulle sees the UK as the American Trojan Horse.

Defense

De Gaulle, said the Chancellor, took his most negative position during their recent talk when the subject of NATO was discussed. De Gaulle stoutly maintains that he is a loyal ally, a fact he claims to have proved during the Cuban and Berlin crises. But the French President argues that the organizational structure of NATO must be changed.

France, de Gaulle also made clear, will not be argued out of its nuclear weapons. There are, in de Gaulle’s view, two big military powers: the US and the USSR. They have the means to destroy themselves. Can the United States be counted on to risk its own destruction if the USSR seeks a purely European objective?

The Chancellor said he told de Gaulle that he is certain the US can be counted on to make full use of its military potential in order to live up to its European commitments. De Gaulle replied, “But can you be absolutely certain of this?” The Chancellor said, “Yes, we must, it is our only hope.”

The Chancellor said he then pointed out to de Gaulle that the United States came to France’s aid in two world wars. The United States, he said, is not going to degrade itself and become a second-rate power by avoiding the use of its military force. The Seventh Army, what is more, is evidence of US intentions. The French President is said to have told the Chancellor that he can understand why Germany feels it must depend on the United States, but France cannot do so. France must have its own deterrent.

Mr. Tyler said he thought there had been some inconsistency in General de Gaulle’s ideas on defense matters over the past 18 months. The General at one time talked of the necessity for a defense in depth of Western Europe, but more recently he seems to be talking about a nuclear trigger, which would mean the very early use of nuclear weapons in the event of attack. Mr. Tyler asked whether the Chancellor had any comment on this apparent inconsistency.

The Chancellor replied that de Gaulle had told him that France would use nuclear weapons immediately for the defense of Germany. The Chancellor said he answered that the Soviets would immediately retaliate with nuclear weapons and in this kind of situation the Germans and the French would only be choosing which way they died.

The Chancellor went on to say that he had told de Gaulle that the best method of defense would be to use the full 23 divisions available to NATO at the German eastern frontier. He also told de Gaulle that he could not understand why the battle for Germany necessarily would be lost with 23 divisions, and yet, as the French seem to argue, the battle of France could be won with a smaller number of the remaining forces. De Gaulle replied, according to the Chancellor, that he had been misunderstood; that France agreed that the line of defense should be at Germany’s eastern frontier.

The Chancellor added that he had stressed to de Gaulle the need for integration of military forces in NATO. This part of the conversation, however, had not been conclusive, the Chancellor indicated, but he thought the discussion had been useful. De Gaulle, the Chancellor offered, had found a partner who put questions to him requiring careful answers.

Erhard Visit

The Under Secretary said he had talked briefly with the President after the Chancellor’s meeting at the White House that morning about possible dates for an official visit to Washington by the Chancellor. The Under Secretary mentioned January 10 and 11, explaining that this would place the visit just after the President’s State of the Union Message. The Under Secretary said he could not be definite about any dates but agreed to determine whether January 10 and 11 would be suitable dates for the President, and said he would try to let the Chancellor know about this before the Chancellor left for Germany on the evening of November 26. The Chancellor emphasized that he would like, if possible, to come to Washington before his visit to London on January 15 and 16.

0. Source: Department of State, Central Files, Pol Eur. Secret, Eyes Only. Drafted by O’Mahony and approved in U on November 29. The meeting was held in the Under Secretary’s Conference Room.
1. Chancellor Erhard was in Washington for President Kennedy’s funeral.
2. A memorandum of this conversation is in vol. XV, pp. 634–639. President Kennedy was assassinated in Dallas on November 22.