Office of the Historian

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

Washington, September 21, 1966, 9:30 p.m.

SUBJECT

  • Your 10:00 AM Meeting on the Erhard Visit

At Tab A is a one-page agenda2 suggesting how you might structure the meeting. (I will have a copy on your blotter in the Cabinet Room.) At Tab B is an intensively negotiated position paper on the major issues. It was produced by the Bowie-Leddy/McNaughton/Deming/Bator working group, after a lengthy discussion with Ball, McNamara, and Fowler. I think that the principals will approve the paper as an accurate reflection of their views, but, because it wasn’t finished until late this afternoon, they have not had a chance personally to review it. Nor has Walt. At Tab C is George Ball’s vivid analysis of the German politics of this group of issues. At Tab D is a copy of Bob McNamara’s memorandum of a few days ago.3

Strictly speaking, there are only two points of disagreement among your advisors. They are marked in the margin of the Tab B paper, which you should read first. Very briefly:

1.
On the current offset (the agreement ending last June), your advis-ors agree that we must try to hold the Germans to the original payments schedule, but that we should let them meet that schedule in part through purchases of long-term bonds. McNamara and Fowler believe that we should also offer to stretch out by 6–12 months the present requirement that the Germans place weapons orders in the full amount ($1.4 billion) by the end of this calendar year. However, they would insist that the FRG [Page 421] come through with all of these weapons orders by the end of the stretch-out period. Ball believes that we should agree to reduce the commitment to place weapons orders by the amount of the bond purchases. (My vote is with Ball, for reasons spelled out in his paper at Tab C.)
2.
On dealing with the British, it is agreed that we should try to get them to delay announcement of BAOR cuts until the end of the trilateral talks (mid-January). McNamara and Fowler believe that we should try to do this by diplomatic pressure alone, and that, if that fails, we should grin and bear it. Ball believes that, if diplomatic pressure fails, we should offer to divert enough of our own defense orders to Britain to offset the foreign exchange cost of delaying the troop cuts (about $18 million for a three-month delay). (Again, my vote is with Ball. British troop cuts announced in mid-October and justified in balance-of-payments terms could undermine the entire trilateral exercise.)

FB
  1. Source: Johnson Library, Bator Papers, Erhard 1966. Secret.↩
  2. Tabs A–C are not printed.↩
  3. Attachment to Document 170.↩