Foreign Relations of the United States, 1964–1968, Volume XV, Germany and Berlin

171. Text of Telegram From the Embassy in Germany to the Department of State¹

Washington, September 20, 1966.

TEXT OF CABLE FROM AMBASSADOR McGHEE (Bonn, 3361)

SUBJECT

• The Offset and American Troop Level in Germany

The German Position

As indicated previously, all indications are that Chancellor Erhard will, during his meeting with the President on September 26–27, seek a “stretch-out” of the existing offset agreement ending on June 30, 1967, and both a reduction and extension to other types of purchases in any future agreement. In effect, what he is seeking is a 50 percent scaledown from June 30, 1966 on. I previously analyzed Erhard’s situation both economically and politically and concluded that he will not be bluffing.² He has little choice. Erhard, will, I predict, throw himself on the President’s mercy on the basis of his and Germany’s past performances as a good ally—ie, for having met the offset up till now, for the large increases in the German military budget from 1961–1964, for the purchase of Roosa bonds and for support of U.S. policy in Vietnam.

U.S. Reaction

The U.S. reaction to Erhard’s appeal will, I believe, be one of the most important decisions the U.S. has faced in the post-war period. It can be made only at the highest level in our Government. If we are able to reach agreement with Erhard without significantly reducing U.S. combat forces in Europe, we have an opportunity to stabilize the NATO of the 14 and U.S. relations with Germany at a critical time. If, however, we fail to reach agreement and move to reduce our combat forces in Germany (a division or more) as a direct consequence of German failure to meet the offset, the following adverse consequences can ensue:

A. The Erhard Government will fall, or will in any event be irretrievably weakened. Neither he nor his successor, after such a U.S. turndown, would in the future be willing to base German policy on the U.S. with confidence. Germany and America will tend to drift apart.

B. The U.S. troop commitment is not to Germany but to NATO. It can be changed only after full discussion with NATO. If it is known that we have presented NATO with a fait accompli on U.S. troop levels as a result of German failure to meet the offset, our position in NATO will be greatly weakened as will the whole future of NATO itself.

C. If we reduce our forces under such circumstances the British will, as they even now indicate, certainly do so. There is no reason why others should not follow suit—the unraveling of NATO will begin.

D. It would be necessary to review the concept of flexible response which we have promoted, since the remaining NATO forces might have to resort immediately to the use of tactical nuclear weapons in the event of an all-out Soviet attack. Increased European pressure will result for the early use of our strategic forces—inviting Soviet retaliation on our cities.

E. The U.S. Seventh Army would be broken up as a fighting unit. The divisions sent home would probably be scattered and dissipated. A reduced 7th Army could not only not hope to stop a conventional Soviet attack but would, in all probability, not even be able to defend itself or retire in order.

F. The U.S. would have lost perhaps its only opportunity to bargain for the withdrawal of equivalent Soviet forces.

G. It would be clearly not just to Germans but demonstrated to Europeans that we put a low price tag on our military commitment to Europe. In the future Europeans would have little confidence in our assertions that American and European security are indivisible or that we, as we say, consider the Soviet threat to be undiminished.

H. Germany, which has until now depended almost entirely on the U. S. for its security, would be forced to reorient its basic security policy. This could take the form of increased dependence on Gaullist France, a “go-it-alone” nationalism or efforts to accommodate itself with the Soviets.

I. If Germany increases its forces to make up the gap created by our withdrawal, the status quo with the East would be altered and fears would be engendered in Europe as well as in the East.

J. The Soviets could be expected to assume a much stronger position vis-à-vis Germany and Europe. They would be in an increasingly better position to make exorbitant demands and engage in blackmail, particularly in Berlin where we, as principal recipients of such pressures, would have only a weakened 7th Army as backup.

K. America would no longer be able to play a decisive role in the great decisions affecting the future of Europe which still lie ahead. Western Europeans would increasingly tend to handle their own affairs independently, possibly including a rapprochement with the East.

L. Our ability to influence internal developments in Europe and to obtain support for U.S. efforts in other areas, such as Vietnam, would be greatly decreased.

M. Groups in America who are already clamoring for a reduction of U.S. troops in Germany will be encouraged by the example of their own Government. It would be difficult to arrest an increasingly isolationist trend.

Result: U.S. force reductions under present circumstances would, because of the cumulative effect of the foregoing, be considered generally as a major shift in U.S. policy. History would record it as the ebb point—the beginning of an American withdrawal from Europe.

Proposed Tactics in Dealing with Erhard

In order to avert the foregoing consequences, it is recommended that:

A. If, as I anticipate, Erhard presents a strong case for relief under the present offset, that we accept debt pre-payments of $214 million and the purchase of Roosa bonds for $136 million in substitution for $350 million in the present target (that amount not already budgeted or planned for including $170 million from the 1966 budget, a $250 million pre-payment in 1966 and $350 from the 1967 budget).

B. That for the future, we agree with the Germans:

1. In order to effect a saving to Germany under the offset we will reduce our offset costs, beginning July 1, 1967, to a maximum figure to be subsequently agreed, through attrition of backup and logistical personnel (perhaps to $600 million through loss of between 25 and 35,000); the timing of the announcement of this move would be left open for agreement with the Germans in the light of their domestic situation.

2. German public purchases in the field of space, foreign aid and other areas where additionality can be established will be counted toward the offset where specifically approved (the annual amount in these categories will probably not exceed $25–50 million); and that,

3. The remainder will be met through additional training and arms purchases to the maximum extent possible (even the Germans would agree to $350 million as a level of recurrent purchases), and where this is not possible by suitable financial arrangements (probably by the purchase of Roosa bonds).

C. That a joint U.S.-German Commission will be appointed to give effect to these recommendations which, in cooperation with the U. K. and NATO, would initiate studies as to:

1. German ability to meet the offset; and,

2. The optimum level of U.S. and other NATO forces in Europe. Mr. McCloy would be appointed as our representative to this commission heading a U.S. negotiating team composed of representatives of State, Defense and Treasury. The joint commission would meet as soon as possible and, as appropriate, with their U.K. opposite numbers, looking toward a final report, to be followed by review of their findings in NATO insofar as troop levels are concerned, before the end of the year.

1. Source: Johnson Library, National Security File, Memos to the President, Walt Rostow, vol. 13. According to Rostow’s September 19 memorandum (Document 170), the telegram was received that day. In a memorandum to the President, September 20, attached to the source text, Rostow summarized and endorsed McGhee’s conclusions.
2. Document 163.