762A.0221/1–1452: Telegram

No. 3
The United States High Commissioner for Germany (McCloy) to the Department of State1

secret

1107. Subject: Allied costs in Germany—“second year”. Inform Def in accordance with FonMin Rome decision2 convention on fin contribution will provide for FedRep continuing obligation beyond first year in respect of EDC and support Allied forces. Both UK and EUCOM skeptical as to availability local currency from Ger for support Allied forces in second year and beyond in spite of most recent TCC and Paris conf costing date for Ger forces. Data calls for costs inside Ger for Ger forces considerably less than envisaged total contribution in coming years.

We must now formulate language for the convention to cover Allied cost not only for first year but beyond. US policy must be clarified in order to be properly reflected in language adopted. We are assuming no problem with the Fr since their troop costs in Ger will presumably be satisfied through EDC and common budget, although at this stage their attitude resembles Br as described below.

Convention (protocol) can contain fixed amts for first year only, GFY 1952–53. Therefore nothing more than gen obligation obtainable for second year.

Brit attitude of concern to us. We believe US on balance shld await developments, say 6–9 months from now, before reaching judgment on desirability German support US UK forces in second year. Brit apparently plan to pad their share of fixed amt in first year and stretch expenditure of this sum well into second year. This wld prejudice if not defeat objective of getting full resource contribution in first year from Gers of amt finally agreed for total contribution. For this and other reasons believe portion Ger contribution devoted support Allied forces shld be on cash or expenditure basis with no provision at least initially for carry-over into second year. Even more compelling reason for expenditure rather than obligation basis is budgetary mechanics and resultant polit repercussions. [Page 5]In order for provisions for carry-over to be made FedRep budget wld have to contain much larger amt for Allied support than amt agreed to meet obligations actually falling due during initial twelve months. No amt of Allied public relations cld explain this one away. Same problem failed in negots with Germans on 1950–51 occupation cost budget.

Although US and UK military people wld prefer firm understanding on this question now, EUCOM already making nec preparation 50 budget for its troop costs in full in second year from US funds. This action precautionary only but implies EUCOM ready if necessary commence pay-as-you-go after first year if demonstrated to be in US interest, pursuant to policy enunciated in NSC 115.3 This planning action does not abandon principle of continuing support from FedRep for nominal “out of pocket” costs such as former Reich properties (Kassenes, etc). Our main reason for recommending wait and see is desire maximize progress creation 12 Ger divisions. Much too early to judge optimum composition Ger contribution in second year with such issues as recruitment, security controls relaxation, enduse military aid, etc, in such state as to defy realistic appraisal of ultimate outcome regarding timing and degree or amount.

In absence compelling argument from Brit or instructions to contrary from Dept we will take wait and see line proposed in this cable in discussions and will formulate appropriate language therefor in convention.

McCloy
  1. Repeated to London for Spofford and to Paris and EUCOM.
  2. During conversations at Rome, Nov. 27–28, 1951, the Foreign Ministers of the United States, the United Kingdom, and France agreed to a German financial contribution to Western defense of DM 13 billion for the fiscal year 1952–1953. This amount was further discussed before the Temporary Council Committee of NATO (TCC) and at the Paris Conference of the Foreign Ministers of those countries involved in the negotiations for a European Defense Community (EDC) at the end of December.
  3. For NSC 115, see the memorandum to the President, Foreign Relations, 1951, vol. iii, Part 1, p. 849.