283. Memorandum of Conversation1
MEMORANDUM OF CONVERSATION BETWEEN MESSRS. WALT W. ROSTOW AND FRANZ J. STRAUSS, MINISTER OF FINANCE, FEDERAL REPUBLIC OF GERMANY
OTHER PARTICIPANTS
- Ambassador Knappstein
- Dr. Walter Rieger (Asst. to Minister)
- Mr. Edward Fried
- Mr. Harry Obst (Interpreter)
Mr. Rostow, in referring to the meeting Minister Strauss had had with Secretary Fowler earlier in the day,2 said that, according to an old Chinese proverb, there were two sides to any crisis: danger and opportunity. Thus all of the recent financial crises had contributed to move the international monetary system forward on to a new basis. He emphasized the importance of holding on to the present two-tier gold system and making it work; and called attention to the need for U.S.-German collaboration in avoiding a devaluation of the franc. He endorsed the Minister’s proposal for directly exporting German capital to the US. He recalled Strauss’ argument, on the occasion of the Adenauer funeral, for U.K. entry into the Common Market and asked: What were the Minister’s views on Europe now?
Mr. Strauss replied he had had no reason so far to change his views of the past. Some of the past arguments for European unity, however, were not considered as credible by many as they used to be. For instance, the argument that Europe would have to stand united because of the threat from the Soviet Union. This was drowning in the détente euphoria.
He had discovered that people were more inclined to accept an argument as convincing if they saw the maintenance of their living stand-ard endangered. Saying, “You will suffer the fate of Spain or Portugal if you do not unite,” was at present much more effective.
Mr. Rostow inquired if the Minister was in agreement with the views of Servan-Schreiber.
[Page 729]Mr. Strauss stated that in principle he was in agreement and he had even written the foreword to the German translation of “The American Challenge.” He said, in order to help Europe wake up, it might be a good idea if the US confronted Europe with the prospect of a substantial withdrawal of US troops from Europe in the foreseeable future. However, a credible presence should remain.
Mr. Rostow asked what Mr. Strauss considered to be a credible presence.
Mr. Strauss replied that two divisions with the necessary support troops and air support might be considered a credible presence. A US contingent of that magnitude would considerably facilitate the working out of a permanent financial offset agreement. The financial aspect, however, was not his main concern. Europe was in danger of degenerating and getting weak. The mentality prevailed to enjoy the current prosperity to the fullest, to cultivate one’s garden in the quiet corner of world politics, and let the US worry about the rest. This did not just over-burden the US militarily and financially but was also beginning to fray the nerves of the American people, while the moral fibre of the Europeans was beginning to weaken.
Mr. Rostow remarked that, once France had been brought back to a policy of European integration, one should try to shape a policy that would put the US somewhere halfway between total responsibility and isolation. President Johnson was trying in many parts of the world to pursue a policy of building “regionalism.” He cited examples in Latin America, Southeast Asia, and Africa.
The President was anxious to leave to his successor a strong NATO. But it was necessary, in order to ensure continued presence of the US in Europe in the face of strong Congressional opposition and the Southeast Asia conflict, to work out a reasonable financial formula for the long run. Once the big planes would become available, it may be appropriate to think of a different pattern of US troop deployment. Meanwhile it was necessary to neutralize fully the US balance of payments cost of keeping those troops in Europe and thus to buy time for a rational solution.
In the face of the developments in the East, it was of paramount importance for the West to present to the East a picture of maximum poise, power, and unity rather than the picture of a disintegrating West.
Mr. Strauss declared himself in full agreement with those views.
He said that Chancellor Kiesinger was ready to try a new approach to General de Gaulle, in order to move him in the direction of integration.
Mr. Rostow remarked it would be a grand thing for de Gaulle to say now, after the recovery of the Pound and the stabilization of sterling balances, that Britain could be considered fit to enter the Common Market.
[Page 730]Mr. Strauss said there were mainly two obstacles: the first, because of its currency problems, Britain would not be in a position to abandon all tariffs.
Mr. Fried interjected that he believed Britain was capable of doing so.
Mr. Strauss said Britain may not be prepared to enter into full competition. France certainly would not.
Mr. Fried remarked Britain should prove fully the equal of France in a battle of competition.
Mr. Strauss continued: the second, more difficult problem was in the field of agriculture. In addition to having to drop preferential arrangements with Canada, etc., Britain would have to pay substantial sums into the Brussels fund as an agricultural importer. Germany, being in a similar position, was paying one billion Deutschmark more into the fund annually than it was getting back, while France was pocketing a profit of about the same amount.
Mr. Rostow asked the Minister’s opinion on the Czech situation and on Mr. Ulbricht’s intentions.
Mr. Strauss replied he considered the Czech development very exciting. Most indicators were pointing against a Soviet intervention by force. He and Defense Minister Schroeder, by the way, were being accused by the Soviets of having come to the US to hatch a plot for Czechoslovakia.
On the occasion of Ulbricht’s 75th birthday, comments in East and West German newspapers had upgraded Ulbricht considerably. However, Ulbricht seemed to realize instinctively that a Czech-type development was in store for him, or at least for his successor. He could brake it down somewhat but not bring it to a full stop.
Mr. Rostow asked how things were looking in German relations with Rumania and Yugoslavia.
Mr. Strauss described the relations as good. One problem was the scarcity of goods that these countries were able to sell to the FRG. The German Ambassador to Rumania had come up with the interesting proposal to finance a chain of tourist hotels throughout Rumania as a means of letting Rumania earn some foreign exchange. A “silent infiltration” of the country with Western and Yugoslav tourists could be a powerful instrument and dangerous to the Soviet position.
It had been interesting to note that during a dinner speech in Italy the Rumanian Prime Minister had stated that he did not share the view that the FRG presented a military threat to the Eastern countries. Even Radio Prague, in the past notorious for strong anti-German propaganda, had now refrained from such attacks and was instead criticizing East Germany. It was also interesting to note that the Organisation Gehlen [Page 731] had filed reports of anti-Russian feelings and predicted explosive developments a year ago. It had sounded like an incredible fairy tale by an agent at that time. Things must have been cooking for quite a while.
Mr. Rostow remarked that a turning point seemed to have been reached in Eastern Europe following the Cuban missile crisis. Between Sputnik and Cuba there had been a trend to turn towards the Soviet Union. After Cuba there had been a gradual, slow reorientation to the West.
Mr. Strauss stated the Germans would have to learn to be patient. One of their cardinal mistakes had always been to look for short-term solutions. Matters like the reunification of the country demanded a long-range perspective. It could only come at the end of a long process of change.
- Source: Johnson Library, National Security File, Country File, Germany, vol. 15. Confidential. Drafted by Obst. The meeting was held at the White House. A memorandum of Rostow’s conversation with Defense Minister Schroeder, July 22, is ibid.↩
- A memorandum of their conversation is in Department of State, Central Files, POL GER W–US.↩