Foreign Relations of the United States, 1964–1968, Volume XII, Western Europe

213. Record of the 42d Meeting of the Senior Interdepartmental Group¹

Washington, September 5, 1968.

CHAIRMAN’S SUMMARY OF DISCUSSION AND DECISIONS

PRESENT

• The Under Secretary of State, Chairman
• The Deputy Secretary of Defense
• The Chairman, Joint Chiefs of Staff
• The Director of Central Intelligence
• Mr. Poats for the Administrator, Agency for International Development
• The Director, United States Information Agency
• Mr. Fried for the Special Assistant to the President
• The Under Secretary of Treasury
• The Under Secretary of State for Political Affairs
• The Deputy Under Secretary of State for Political Affairs
• SIG Staff Director
• DOD—Mr. Hoopes
• DOD—Mr. Earle
• JCS—General Bayne
• Ex-Im—Mr. Sauer
• Ex-Im—Mr. Balderston
• BOB—Mr. Clark
• State—Mr. Leddy
• State—Mr. Furnas
• State—Mr. Landau
• State—Mr. Ruser

[Here follows discussion of future meetings and defense-related issues.]

III. Spanish Base Rights Negotiations

The Chairman congratulated Mr. Leddy on the contingency plan for Czechoslovakia.² The scenario and timing of the crisis had, of course, not been foreseen, and many of the contingency draft telegrams and papers had to be modified. But EUR’s preparatory work had been most helpful during the first few days of the crisis. It provided a checklist of what had to be done and first drafts for many of the messages and papers. It would have been impossible for the Department to gear up so quickly for the crisis without this earlier work.

Mr. Katzenbach then invited Mr. Leddy to review the points at issue in the forthcoming base rights negotiations.

Mr. Leddy said that the Spanish Foreign Minister was now definitely scheduled to meet with Secretary Rusk on September 16. It was essential that the United States Government have a clear position on the outstanding issues by that date.

A. Security Guarantees Toward Spain

Mr. Leddy said that the Spanish wished to strengthen the degree of assurance and commitment they felt was provided by the 1963 Joint Declaration.

A subcommittee of the IRG had thoroughly reviewed all the possibilities for strengthening the language of the Declaration. The IRG had reviewed these possible changes and had concluded that none of them would satisfy the Spanish.³ We would be better off to take the position that the wording of the 1963 Declaration was the best we could offer and try to avoid opening up this matter.

The SIG agreed that the 1963 Declaration represented the maximum we could offer. Mr. Katzenbach took the view that, if for public relation reasons, the Spanish should insist on minor wording changes, we should be willing to consider them provided these changes would not substantively strengthen the language of the Declaration. As a practical matter, if Castiella should put forward alternative language, we would have no choice but to consider his proposals.

B. Economic Relations

Mr. Leddy said the second issue between the Spanish and ourselves was their treatment under the United States direct investment control program and, more generally, under our balance of payments program.

The Spanish consider their classification in Schedule C discriminatory in view of their weak balance of payments position and relatively under-developed economy in relation to the rest of Europe. We have agreed to set up a Consultative Economic Committee but we have no intention to change Spain’s classification under the program or to provide further exemptions from the IET.

We will continue to take the position that there is no evidence our balance of payments program has significantly affected the level of United States investment in Spain. The recent drop in United States investment activity would have occurred even in the absence of tighter balance of payment controls. It reflects the fact that United States companies operating in Spain have completed their expansion programs for the time being.

The SIG agreed that:

• —We would have no proposals to make for dealing with the subject; and,
• —We cannot weaken the balance of payments program in order to smoothe the course of the base rights negotiations.

C. SOFA Negotiations

Mr. Leddy observed that a concurrent, related but separate, issue between ourselves and Spain was the renegotiation of the SOFA. A subcommittee of the IRG had prepared the United States position for these negotiations. The general conclusion was that we should go as far as we can to meet legitimate Spanish demands for better terms. The bench-mark for the United States negotiating position, generally speaking, was the SOFAs with NATO countries, including the supplemental agreement with the Federal Republic. We should not draw on the Far Eastern SOFAs as a model.

The SIG took note of some of the key issues including military tourism, unusual punishment, and reciprocal rights. There was agreement that we were unable to meet Spanish requests on this latter issue in view of the delicate problems this would raise in the area of State-Federal relations.

D. Military Assistance Package

Mr. Leddy reviewed the history of the negotiation to date, including Spanish demands for a $1 billion assistance package. He described the United States counter offer recommended by the IRG, including the breakdown of the package between grant and credit. He emphasized that the credits would be primarily for the purchase of new equipment not available on our excess list, whereas grant assistance would be drawn from second-hand excess stocks and required new appropriations in a range of $40 to $60 million. He noted the two qualifications to the United States offer of $100 million in credits—viz:

1) That commercial bank credits for military equipment purchases, inasmuch as they were discountable by the lending bank with Ex-Im, would be counted towards the $100 million ceiling; and,

2) That, if the Spanish should take up all or part of the $55 million available from Ex-Im until September 26, these amounts would also be chargeable against the ceiling.

Mr. Leddy then discussed the problem of funding. As regards FY 1969, he noted that there might be a need for up to $8 to $10 million in newly appropriated funds. There were several possibilities for dealing with this requirement:

• —To find money in the shrunken MAP appropriation;
• —To go for a supplemental after January;
• —To pick and choose items that require no rehabilitation or can be readily rehabilitated in Spain. On balance, the question of when we start the grant program would probably not be critical and the Spanish would appreciate our problem if we should find it necessary to defer new grant aid until FY 70.

The question was raised whether we would not do well to start out with a lower figure than our maximum position.

Mr. Katzenbach said that he felt this tactical question should be left to the judgment of the negotiators.

The Spanish would either take our package or delay in order to negotiate with the next Administration. We should adhere to a figure of about $100 million grant even if the Spanish should refuse to accept it. This was, however, not to foreclose the possibility of a figure somewhat lower or higher if, on this basis, we should be able to conclude the negotiations. He was convinced that the United States would for some such figure be able to negotiate an extension of the agreement. He was not sure, however, that the Spanish would be willing to conclude an extension on this basis with the present Administration. A quick negotiation was in our interest-but the Spanish, for their part, could, if they wished, delay to have another try with the next Administration.

The point was made that the arguments in favor of a quick negotiation should be covered in the Memorandum to the President.

On Congressional consultations, it was agreed that these consultations would have to be carried out immediately and that we would not be able to wait until completion of Congressional action on the military assistance legislation because the President would not approve a United States offer without Congressional soundings. It was also agreed that these consultations should focus on the package rather than the problem of funding. Funding, if mentioned at all, should be treated lightly at the end of the consultations.

E. Statement About United States Presence

Mr. Katzenbach observed that it would be helpful to Secretary Rusk to be able to say something about intentions in regard to a consolidation or reduction of our military presence.

Mr. Nitze said that this matter was under review. We were planning to stay at Torrejon but there was the possibility that we might wish to transfer our operations from Moron. Such a consolidation of our air force operations at Torrejon, if it should be decided on, would result in some reduction of personnel. We would do this without a reduction of our combat and combat support capabilities. Mr. Nitze indicated that the Secretary of Defense might wish to move toward a decision on this matter in the next 30 to 90 days.

Mr. Rostow raised the question of timing of a public announcement in light of the events in Czechoslovakia. There was agreement that even though the planned consolidations would not reduce our capabilities, we would have this factor in mind in working out a possible announcement on this matter.

Action Summary

The Chairman directs:

[Here follows discussion of foreign internal defense policy.]

Spanish Base Rights Negotiations

EUR and SIG Staff to prepare a Memorandum to the President setting forth the SIG’s conclusions and recommendations. (See SIG Memo #83, Sept. 11, 1968)⁴

The IRG/EUR recommendations to serve as guidelines on renegotiation of the SOFA.

A. A. Hartman
Staff Director

1. Source: National Archives and Records Administration, RG 59, SIG Files: Lot 74 D 344, 42nd Meeting. Secret.
2. See Foreign Relations, 1964–1968, vol. XVII, Document 23.
3. SIG Memo No. 82, August 31. (National Archives and Records Administration, RG 59, SIG Files: Lot 70 D 263, SIG Memo No. 82)
4. SIG Memo No. 83, September 11. (Ibid., SIG Memo No. 83)