Office of the Historian

149. Memorandum of Conversation1

Bonn, June 9, 1966, 10:25 a.m.

SUBJECT

  • Offset

PARTICIPANTS

  • U.S.
    • The Secretary
    • Ambassador McGhee
  • FRG
    • President Luebke
    • Karl Carstens, First State Secretary, Foreign Office
    • State Secretary Berger

President Luebke opened by stating that in his judgment no great differences existed between Germany and the U.S. Germany had no issue to raise with respect to U.S. actions. He was, however, concerned about the offset payments. Was there some way this could be cut down? He had raised one question concerning the offset with Amb. McGhee (i.e. on June 7 concerning the overall U.S. favorable trade balance with Germany which he had been told was $800–900,000,000 a year. Embtel 4040).2 This had been answered the previous day in a letter from Ambassador3 showing a trade balance on the order of $200,000,000 in the U.S. favor.

Secretary Rusk said that he would be discussing the question of the offset later with the Chancellor. He did want the President to know, however, that our efforts in Viet-Nam had resulted in an important worsening of our balance of payments. It was for the general good that the stability of the dollar be maintained, and this required us to improve our balance of payments. President Luebke replied that Germany would continue to have “trade problems” which limit its overall foreign exchange earnings. Perhaps part of the offset could go to financing assist-ance to developing countries in which the U.S. has an interest. (Luebke is believed to have been confused on this point. His proposal would not protect Germany’s balance since we would expect payment for any assistance rendered.) Otherwise Germany must earn an additional 7 billion DM [Page 367] a year. (It is assumed that Luebke was referring to the approximate DM 4.0 billion estimated as the German current account deficit, plus the DM 2.6 billion offset, which would have to be compensated for by increased trade earnings if an overall balance is to be achieved.) The Secretary said in response that he hoped to be able to talk about how we could both deal with this problem in longer terms. The U.S. appreciates the prepayments which Germany has made on the offset. Both of our countries have balance of payments problems. We must roll up our sleeves and see what we can do about it.

President Luebke assured the Secretary that the Germans would seek for all possible solutions. He had one idea, for example, in the form of a new anti-tank weapon—which could perhaps be developed in the U.S. on a cheap, mass produced basis for the defense of Germany. Since the Soviets have 40,000 tanks, the alliance would have a very considerable problem in stopping them in the event of attack. At the moment there is little to counter them. The President suggested a new type of mine might be developed which could be sown to stop tanks. The Secretary replied that as a former infantryman he had an equal interest in stopping tanks. He would talk with Secretary McNamara about the possibilities that might be afforded. He referred to the light-weight rockets and missiles which had been developed in connection with our Vietnamese operations. This may open up new developments which could be applicable in Germany. Perhaps helicopters could be used for spotting tanks.

  1. Source: Department of State, Central Files, POL GER W–US. Secret; Exdis. Drafted by McGhee and approved in S on August 12. The source text is marked “Part I of II.” Secretary Rusk visited Germany June 8–9 at the conclusion of the North Atlantic Council Ministerial Meeting in Brussels.↩
  2. Telegram 4040 from Bonn, June 7, outlined discussions during the Ambassador’s meeting with President Luebke. (Ibid.)↩
  3. Not found.↩