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

197. Briefing Memorandum From the President’s Deputy Special Assistant for National Security Affairs (Bator) to President Johnson¹

Washington, August 23, 1966, 4 p.m.

SUBJECT

• Your Meeting This Afternoon at 6:30 on German Offset and U.S. and UK Forces in Germany

We need your instructions on two related issues:

1. What should we do to dissuade the British from rushing ahead with sharp cuts in their forces in Germany (men and stocks) in a way which would probably start an unravelling process in NATO and increase domestic pressure on us to follow suit? (So far, our stance vis-a-vis the British has been: (i) you must not cut; (ii) we wish you luck with your offset with the Germans.)

2. What should we do about our own offset with the Germans? The present arrangement runs out in June 1967. We owe Erhard replies to his recent letter on his talk with deGaulle,² and also to his earlier letter which asks that we not connect troops and offset, and that payments for other than weapons be counted.³

(If we send Erhard a full reply, you will also need to decide how to respond to his implicit request for a new U.S. pledge that we will not exclude “establishing in the future a joint integrated nuclear force” in order to buy a non-proliferation treaty. A full-dress reply which does not explicitly give him that reassurance would almost certainly result in another inquiry within 48 hours.)

Issue No. 1: What do we do to slow down British troop cuts?

There is agreement among your advisers that it would be useful:

• —for George Ball and Cy Vance to go to London later this week to make the case against hasty cuts;
• —perhaps to offer marginally to increase our stationing expenditures and weapons purchases;
• —offer to join the UK–FRG “mixed commission” of foreign/defense/finance ministers which is supposed to prepare a report on UK troops and offset.

Hopefully, the above steps will delay a final decision on UK cutbacks at least for the next several weeks. And they could be used to rebut newspaper talk that an unravelling of NATO is certain and imminent. But they are a stopgap. If we are to stop the unravelling, the key lies in our management of our offset issue.

Issue No. 2: The U.S. Offset

Specifically, are we willing to change our “no weapons offset/no troops” tactics and offer to:

• —put our offset renewal on the agenda of the “mixed commission?” (An offer to join to discuss only the UK offset is likely to be regarded as patronizing rather than helpful.)
• —explore with the UK and the Germans a modified version of offset which would protect our payments but give the Germans some extra options (buying extra goods other than weapons, and, most important, buying long-term “offset-bonds”, perhaps in the context of some multilateral defense payments arrangement)?

The tactical issue hinges on our choice of objectives:

1. Do we want to use financial pressure to maneuver the Germans into asking us to cut troops? If this worked, it would permit us to shift to a more economical military posture (dual basing, airlifts, etc.), with minimum resistance from the Chiefs and their allies on the Hill.

2. Or, do we want to try for an arrangement which would (i) give us time to work out a US-UK–FRG bargain on cheaper deployments (and perhaps FRG increases) which make military sense; (ii) avoid large-scale U.S. troop cuts during the interim (perhaps 2–3 years), and minimize British troop cuts; (iii) still protect our balance of payments (though somewhat less so than would sharp troop cutbacks); (iv) set up a multilateral defense payments club where finance ministers will confront foreign and defense ministers on a regular basis. (This would partially bridge the unhealthy gap in Europe between people responsible for money and those responsible for defense and foreign relations.)

In general, staying with our present tactic of threatening to cut back troops if the Germans don’t come through with a new 100% weapons offset corresponds to the “get the Germans to invite us out” objective.

Putting our offset on the agenda of the mixed commission and offering to explore a multilateral offset arrangement, with more options for the Germans, corresponds to the second “trying to work it out” objective.

The Case for Staying with the Present Tactics:

The quickest way to cut unnecessary U.S. troops in Europe is to insist on 100% weapons offset, regardless of German politics. This would maximize pressure on the Germans to build up their forces, using weapons bought from the U.S. And if the heat gets too great, and Erhard refuses to renew the offset at the current level—as is now almost certain—we will have set the stage for a cutback. This would enable us to shift to a more sensible military posture, save us budget money, and protect the balance of payments.

The Case Against Present Tactics:

In achieving the above objectives, the current line will maximize the international political costs:

• —The Germans will not agree to another 100% weapons offset at the present levels. If we make the threat, we will have to carry it out or back down. (Erhard is in political trouble. The latest polls show his unqualified support down from 44% in April to 30% in July. He is not going to be able to pull apart his anti-inflation package in the middle of a tough parliamentary fight to increase his defense budget enough to cover a 100% weapons offset.)
• —U.S. troop cuts, explicitly for financial reasons—and on top of BAOR cuts—will be seen as evidence that NATO is falling apart and that deGaulle is right in saying that the British and Americans care more for their pocketbooks than for the safety of Europe.
• —We will have given away some of our assets for an eventual mutual withdrawal bargain with the Soviets.
• —Most important, there would be a serious unsettling effect on German politics, with unpredictable results. (It is not at all inconceivable that peremptory U.S. cutbacks could topple Erhard, perhaps leading to a Gaullist German Government.)
• —Over a couple of years, we could be faced with a disintegration of our postwar security arrangements in Europe, a hostile France, an alienated and deeply neurotic Germany, a bankrupt and isolated Britain, and a rising tide of Gaullist hostility to the U.S.

A Possible Way Out:

There is a reasonable chance that we could shift to more economical deployments and provide acceptable protection for our balance of payments without taking such large political risks. The key lies in taking the time needed to make the shift by consensus rather than fiat. To achieve this, we need to set in motion a process designed to produce U.S.-UK–FRG agreement on an allied defense posture in Europe which will provide deterrence and the insurance of a reasonable conventional option. Our joining the “mixed commission” would be a very good start.

At the same time, we will continue to need balance of payments protection. For the time being at least, that means no sharp cut in German offset money. The key to that—at least a necessary condition—is to give the Germans more options—enlarge the number of ways in which they can provide offset. This does not mean that we should reduce our pressure on them to buy weapons—for good military reasons. It does mean that, in addition, we must find ways to ease the political strain on Erhard of raising offset money (e.g., allow the Germans to purchase long-term offset bonds, perhaps financed outside their budget). In my judgment, the multilateral payments union proposal, which has been in staff preparation for some time, is the most promising possibility.

Procedure

Before making up your mind, you will wish to hear the views of all your advisers. (In the past, McNamara has been in favor of staying with our present hard line on offset. Ball has been for a shift. I do not know about Secretary Rusk.)

As is clear from the above, my own vote would be for a shift in tactics to the second, “trying to work it out” option. If you should decide that way, you might wish, at the end of the meeting this afternoon, to instruct us as follows:

1. Ball and Vance should go to London and tell the British that we are prepared:

• —to join the “Mixed Commission”;
• —to put our offset renewal on the agenda;
• —to try to work out with them and the Germans a scheme which will enlarge the ways in which the Germans can provide offset, yet protect both UK and US payments.

2. We prepare a letter from you to Erhard, thanking him for his report on deGaulle and, on offset, telling him the same things Ball-Vance will say to the British. (We could say nothing about nuclear sharing/nonproliferation, and say that you plan to discuss all other outstanding issues when he is here in September. Or, if you have so decided, we can give him the reassurance he wants. This would tend to lock us in on nonproliferation.)

3. A group consisting of Deming, Solomon/Leddy, McNaughton/Enthoven, and Bator should get to work on a multilateral payments plan which would both widen the Germans’ options and protect U.S. and UK payments. This group should initially report to Secretaries Rusk, Fowler and McNamara.

FB

1. Source: Johnson Library, Papers of Francis M. Bator, Meetings with LBJ, Box 17. Secret. Attached to an August 23 memorandum of transmittal to the President and to a memorandum suggesting how the meeting at 6:30 p.m. might be organized. The meeting was not held on August 23, but the following day at 6:30 p.m. A last minute memorandum from Bator to the President and his indecipherable notes on the meeting are ibid. No other record of the meeting has been found, but Document 198 indicates what happened.
2. See Document 190.
3. Dated July 5. (Department of State, Presidential Correspondence: Lot 67 D 272)