ECA message files, lot 53 A 278, box 78, Frankfurt Ecato: Telegram

The Administrator for Economic Cooperation (Foster) to the Office of the United States High Commissioner for Germany, at Frankfurt1

secret   priority
Reference: (a) Frankfort Toeca 551, rptd Paris Torep 537.
(b) Frankfort Toeca 611, rptd Paris Torep 590.
(c) Washington Ecato 668, rptd Paris Torep 4358.
(d) Paris Repto 3133.
(e) Frankfort Toeca 650, rptd Paris 1070, London 948.
(f) Frankfort Toeca 668, rptd Paris 652, London 9.
(g) Frankfort Toeca 682, rptd Paris 669, London 18.2

Ecato 799. This is a joint ECA–State Cable.

1. Seriously concerned both immediate and long range implications reftels. Immediate problem of substantial deficit financing raised by difference between possibility DM 8–8.5 billion occupation costs reported Toeca 682 and DM 5 billion as maximum defense contribution from tax revenue reported Toeca 650. When occupation costs replaced by contractual arrangement and Germans join Western defense, situation greatly complicated by additional factors, i.e., military assistance and costs of German troops. Accordingly, believe necessary map out with precision our strategy and tactics in negotiating amount German defense contribution.

2. Our position on Ger contribution shld in our opinion contain fol principles:

(a)
Support of any Fed/Rep forces will be first charge against Ger contribution, as stated in next last para Deptel 5726 Feb 20.3
(b)
Agreement on defense contribution shld provide that amount will be determined by formula agreed among NATO countries, when and if such action is taken. In absence NATO-wide formula, will need special formula for contractual relations. Formula shld be sufficiently specific so that it covers not only the DM 9 billion contribution which we hope to obtain Ger agreement for during current fiscal year but also the higher contribution which we expect Ger to make in next fiscal year and similarly thereafter. If we give up right to obtain occupation costs under reserve power, it will be necessary to find formula which obligates Ger to contribute fairly specific amount. We will cable our views as to how formula shld be expressed after study here. In meantime wld appreciate your views.
(c)
To extent that contribution fails wholly to cover agreed costs of Fed/Rep forces and of Allied forces stationed in Ger, Allies will be [Page 1638] obliged to make other arrangements for covering difference between Ger contribution and total costs of their forces.

3. It is apparent from above principles that Allies will be committed to at least contingent liability for pay-as-you-go in Ger, to extent that Ger contribution fails to meet combined cost support of Ger and Allied troops. In our view this problem may at later stage become critical in contractual negotiations with Gers. Fr have made abundantly clear in talks in Wash and elsewhere their Bonn position reported para 3 Toeca 611 rptd Paris Torep 590, London 908 that they do not “remotely envisage possibility direct payment occupation costs by Allies”. We have similarly found no disposition in Exec Branch nor in Congress at present time for pay-as-you-go in Ger which wld result in undue accumulation dollar reserve.

3. [sic] Exec Branch has submitted no appropriation requests to Congress to cover any payments for pay-as-you-go during this fiscal year. Based on reaction of Congress to arrangement in Austria when US forces on pay-as-you-go basis, whereas Fr and Brit are still supported by occupation costs, believe it wld not be feasible obtain Congressional support for payments by US toward support US forces on different basis than UK and Fr. In order to work out solution this problem in Wash and with Brit and Fr we will need firmer figures and assumptions on cost of establishing Ger troops than we now have.

4. Same considerations appear to apply to discussions with Fed Govt. It wld in any event appear premature to expect Fed Govt to submit to Bundestag fiscal and econ program designed to support milit contribution which Fed Govt not as yet committed to make. We are primarily interested in obtaining Ger adherence to Western defense arrangements as rapidly as possible. Premature discussion by Bundestag of financial sacrifices involved therein might be prejudicial. Discussions with Exec Branch of Fed Govt however in anticipation successful completion polit and milit negots wld appear desirable at some appropriate stage. It wld seem necessary to have more definite terms of reference for econ financial exports than now exist before such talks cld be useful. In particular, wld appear desirable obtain relatively firm assumptions referred to in preceding para on size and form Ger milit contribution which cld then be translated into costs to be defrayed by Fed Govt or to be otherwise financed.

5. We agree Toeca 682 and Repto 3133 we shld continue to use DM 9 billion in Congressional presentation as target for Ger defense contribution.

6. We recognize that it may be unavailing to bring pressure on Fed Govt in present polit climate to secure adoption by Bundestag of desirable fiscal and econ measures. Whether we will be more successful after Ger joins defense apparatus is open to conjecture. We believe you shld nevertheless continue to impress upon Exec Branch Fed [Page 1639] Govt necessity for realistic program and to make clear that U.S. help will be dependent in large part on Ger action. Tenor hearings to date indicate acute Congressional concern with reluctance Europe bear full share defense burden.

7. Under circumstances reluctant extend econ aid to Germany on terms outright grant. Entire question econ assistance, mil assistance and Ger contribution must be looked upon as a whole. Might therefore be desirable to keep string on aid now being extended until strategy and tactics for handling defense contribution clearer.

8. Various alternatives for handling immediate aid problem: (a) Counterpart could be deposited 95 percent to GARIOA account and later used pay troop costs if necessary or transferred to Fed/Rep if not. Possibility also use counterpart as fund for financing in advance requirements for Ger armed forces when pol sit permits, in anticipation of appropriation later by Bundestag, (b) All current aid could take form of loan, to be converted to grant if defense contribution satisfactory, (c) Fed/Rep could be required repay dollar aid in direct ratio to dollar outlay for troop support made necessary by inadequate contribution.

9. Request your comments.

Foster
  1. This telegram, which was repeated to Paris, was transmitted in two parts: the first, Ecato 799, consisted of paragraphs 1–3; the second, Ecato 800, consisted of the remainder of the text.
  2. Telegrams Toeca 551, p. 1634 and Ecato 668, supra; the remaining telegrams are not printed.
  3. Not printed.