Foreign Relations of the United States, 1969–1976, Volume III, Foreign Economic Policy; International Monetary Policy, 1969–1972

86. Telegram From Secretary of State Rogers to the Department of State¹

Brussels, December 10, 1971, 1310Z.

5168. Secto 17. Subject: Offset Negotiations—Agreed Minute.

Following is text of US-FRG offset agreement for FY 1972-73 signed in Brussels December 10 by Deputy Under Secretary of State Nathaniel Samuels and Ministerial Director Dr. Axel Herbst.

Begin Text:

Minute

The Governments of the Federal Republic of Germany and the United States of America agree as follows:

1. Military Procurement

A) Between July 1, 1971 and June 30, 1973, the Government of the Federal Republic of Germany will make payments for procurement of US defense goods and services in the field of defense in the amount of DM 3950 million.

B) Part of such procurement in the amount of DM 1650 million shall be financed through utilization of funds now on deposit in the name of the Federal Republic of Germany with the United States Treasury in accounts entitled “Account No. 20X6409—Secretary of the Treasury, Department of Defense, Military Purchases by Federal Republic of Germany” and “Account No. 20X6415-Secretary of the Treasury, Special Transfer Account, Military Expenditures by the Federal Republic of Germany”.

C) The balance of such procurement, which is DM 2300 million shall be financed by June 30, 1973, by the utilization of German funds not on deposit with the United States Treasury on June 30, 1971, which the Government of the Federal Republic of Germany will transfer directly to suppliers of defense goods and services in the United States or which it will deposit with the United States Treasury in Account No. 20X6409. Of this amount DM 81 million was paid before July 1, 1971.

D) All military procurement by the Federal Republic of Germany will be made in the light of German military requirements and budget capabilities, given the availability and economic advantage of procurement in the United States of America.

2. Investments for Troop Facilities

A) Between July 1, 1971 and June 30, 1973 the Government of the Federal Republic of Germany will make available an amount of DM 600 million for services and deliveries for the modernization, construction and improvement of barracks, accommodations, housing and troop facilities of the forces of the United States of America stationed in the Federal Republic of Germany. Specific projects will be agreed between the two sides. The disbursement of the funds will be made in portions subject to the progress of the building projects, similarly to existing procedural arrangements. Amounts not utilized prior to 30 June 1973 shall remain available for measures as envisaged under this paragraph of this agreement.

B) Structures, improvements and other alterations including built-in equipment financed in this manner will be treated as property owned by the Federal Republic of Germany used by the U.S. forces within the framework of the NATO Status of Forces Agreement and the supplementary agreement thereto.

3. Bundesbank Credits

A) Arrangements will be concluded between the United States Treasury (in cooperation with the United States Federal Reserve Board) and the Deutsche Bundesbank concerning investment by the Deutsche Bundesbank during the period July 1, 1971-June 30, 1973, in special, 4-1/2 years, 2-1/2 percent, dollar denominated United States Government securities. The objective should be the investment by the Deutsche Bundesbank of DM 2 million during the above mentioned period.

B) The Federal Republic of Germany will pay to the United States of America prior to the date when interest falls due under paragraph 3A above an amount of DM 100 million in settlement of the United States interest obligation. Such sum may be paid out of funds on deposit in the name of Federal Republic of Germany with the United States Treasury in Account No. 20X6415.

4. Detailed Arrangements

Detailed arrangements implementing this agreement shall be made by the responsible agencies or ministries of the Governments of the United States of America and the Federal Republic of Germany.

For the Government of the Federal Republic of Germany

For the Government of the United States of America

Brussels

December 10, 1971. End Text.

Rogers

1. Source: National Archives, RG 59, Central Files 1970-73, FN 12 GER W. Confidential. Repeated to Bonn.