Statement Made by the Chairman of the Allied High Commission for Germany 1 to Chancellor Adenauer
(Refer Bonn cable to Department dated 15 December 1951.2)
1. You will recall that at your recent meeting in Paris with the three Foreign Ministers Mr. Acheson made a statement about the Federal Republic’s financial contribution to defense and said that the High Commission would soon be opening discussions with your Government on the subject.3 You replied that you and your Government were ready to work as quickly as possible to secure a rapid and satisfactory agreement. Since the Paris meeting, the Foreign Ministers have met and discussed the matter further in Rome and we are now in a position to inform you of the principles which they have instructed us to follow in negotiating a Convention on this aspect of the contractual arrangements.
2. You, yourself, have been prompt to recognize that the establishment of the new relationship on which we are now working, and under which the Federal Republic will be progressively associated with the West on a basis of equal partnership, must involve an equitable sharing of defense burdens. Thus, as Mr. Acheson said in Paris, the basic principle from which our negotiations for a defense contribution must start is that the Federal Government should undertake to make a total financial contribution to the cost of defense representing a use of German resources comparable to the use by the other principal Western countries of their resources for defense, including expenditure outside Europe. If this principle is to be properly applied, the Federal Government’s [Page 1689] financial contribution will have to be adapted to a steadily increasing effort which the other principal Western countries will make for the common defense. For the first period, up to 31 March 1953, it will be necessary to establish in the Convention the amount of that contribution.
You will be aware that, in years immediately ahead of us, economic and financial defense effort of West will build up to very high levels. According to the best estimates available to us, the global defense expenditures of all NATO governments combined are now rising to an annual sum of approximately $90 billion, or more than DM 360 billion, and a very large percentage of this is localized in Western Europe and in Western Germany in particular. The Allied share in this effort is particularly great. Thus, the United States costs budget amounts to $62 billion for the fiscal year 52–53 or DM 250 billion. The Government of the United Kingdom for its share envisages a total expense of 4,700 million pounds or DM 55 billion for its three year program, and the French Government intends to devote approximately 1200 billion francs or approximately DM 14.5 billion for the year as of 1 January 1952. Taking this fundamental order of magnitude as a guide and working from the principle of equitable sharing of defense burdens, it should be possible for our negotiators to establish a figure for a defense contribution by the Federal Government for the next financial year. To do so they will have to consider prospective gross national produce of the Federal area and take account of the economic, financial and social situation in Western Germany and of similar information which has been furnished by other governments of NATO countries. The High Commission has already received from government conclusions of comprehensive studies which have recently been made by them in order to arrive at an estimate of a fair defense contribution by the Federal Republic. (In best Allied judgment a reasonable figure for such a contribution for NATO fiscal year July 1952 to June 1953 is DM 13 milliard). Our representatives will be very glad to discuss these studies with your representatives during the course of the negotiations on this part of the proposed Convention.
3. The negotiations will also have to cover the form in which the Federal Republic’s contribution can best be made in order to bring the maximum advantage to the common defense purpose. In general, it should be spent during the first year partly on a contribution to the common budget of the EDC, partly on the support of Allied forces stationed in Germany and, in a lesser amount on certain expenditures borne by the Federal budget which may be considered to be defense costs under NATO criteria. Thus the contribution will be devoted partly to the so-called infrastructure requirements in Western Germany of German contingents in the EDF, of non-German contingents in that force and of the NATO forces; it will be devoted partly to [Page 1690] meeting current operating and procurement costs of the above categories of forces and partly to expenditure in the Federal area on such items as certain police forces and certain military pensions.
As regards the Federal Government’s contribution to the common budget of the EDC, the Foreign Ministers decided in Rome to ask the Paris Conference to prepare by the end of this month an approximate estimate of the expenditures and receipts of the budget for the first year. It will then be possible for our negotiators to determine what would be the amount of the Federal Republic’s contribution to the EDC for the first year. It is of course anticipated that, after entry into force of Treaty establishing EDC, costs for support in Western Germany of forces of countries belonging to Community will be paid through the common budget.
It is the desire of the three Governments to provide in the Convention with which we are now concerned for a continuing obligation on the part of the Federal Republic in respect of its contribution to the EDC and of the support of the Allied Forces in Germany. The Convention should also include, in the view of our Governments, a specific undertaking from the Federal Republic to cover the costs for the Federal financial year April, 1952 to March, 1953 of the support of Allied Forces stationed in Western Germany, it being understood that these costs will be confined to defense costs and reduced to the minimum compatible with military efficiency and at being further understood that the amount of these costs as thus established will not be subject to reduction. The representatives of the High Commission will be instructed to consider with your representatives how these matters can best be covered by the proposed Convention.
4. The High Commission has appointed Mr. Michael S. Harris, of the Office of the United States High Commissioner, as Rapporteur, and M. Paul LeRoy-Beaulieu and Mr. Eugene Melville, of the Offices of the French and United Kingdom High Commissioners respectively, as assessors, of an Allied Group to negotiate on the Convention on Economic and Financial Defense Participation. In view of the importance of the whole of our contractual arrangements of reaching early agreement on the terms of this Convention, it would be greatly appreciated if a chief German negotiator could be appointed immediately and the High Commission advised accordingly so that negotiations can begin without delay.