Foreign Relations of the United States, 1955–1957, Western European Security and Integration, Volume IV

44. Memorandum of a Conversation, Paris, December 11, 1956, 5:45 p.m.¹

USDel/MC/4

Paris, December 11, 1956, 5:45 p.m.

PARTICIPANTS

• United States
  • Secretary Dulles
  • Secretary Humphrey
  • Secretary Wilson
  • Ambassador Perkins
  • Ambassador Aldrich
  • Admiral Radford
  • Mr. Elbrick
  • Mr. Gordon Gray
  • Mr. Bowie
  • Mr. Overby
  • Mr. Barbour
  • Mr. Wolf
• United Kingdom
  • Mr. Selwyn Lloyd
  • Mr. Head
  • Sir Harold Macmillan
  • Sir Christopher Steel
  • Sir Richard Powell
  • Lord Hood
  • Mr. Beeley
  • Mr. Dean
  • Sir Leslie Rowan
  • Mr. Stephenson
  • Air Marshal Dickson

SUBJECT

• Defense Expenditures and Forces in Germany

The meeting started at the Residency, Embassy Paris, at 5:45 p.m., December 11, 1956. Mr. Selwyn Lloyd said that he understood this talk would deal with our position with respect to Germany, in line with what he had indicated on leaving Secretary Dulles yesterday.² There were two aspects of the problem: (1) military organization and manpower and (2) financial questions. The Chancellor would speak to the latter point.

Mr. Macmillan said that the NATO problem had to be approached from two points of view: (1) what was right to do from the European point of view and (2) how to finance it. On the second point, it was paradoxical that we, who had come to Germany as occupying power, and are now there as allies, have to bear a great burden, while the Germans have a good economy, are the greatest commercial rivals to the UK, are without internal or external debt, have no armed forces and no defense budget burdens. The UK, after February, will have a critical foreign exchange problem with respect to their troops in Germany. Because of the strategic and tactical requirement for troops in Germany, the situation is that there is a large foreign exchange cost if the Commander in Chief requires forces abroad, while there would be none if he said they could be stationed at home.

Without discussing the military factors, Mr. Macmillan said, the question was how to find the wherewithal by some sort of pool or monetary arrangement. The location of forces should not put a foreign exchange burden on the UK or the whole thing could break down, and very quickly too, he added. We are therefore faced with two questions: (1) what is the best approach to the military question and (2) what is the best approach as to how to make the Germans contribute. Secretary Wilson said the US had the same problem and in addition had the problem of dependents, amounting to some 250,000 people who required schools and so forth. Mr. Head said that the UK had a similar problem together with the need for schools and other facilities.

Secretary Dulles asked whether the UK had discussed this problem at the WEU meeting yesterday.³ Mr. Selwyn Lloyd said they had discussed it generally. Secretary Dulles said that the UK had in a way a different sort of commitment than the US. The UK had said that it would not withdraw forces against the wishes of the Brussels Treaty Council.⁴ The Secretary considered this a wise international pledge. The Secretary thought the problem was primarily with Germany. He did not think the Germans were playing a game because he has great faith in Adenauer; but the Germans do suggest that if the UK and the US can run out on their obligations, the Germans can also run out on their obligations which are very moderate by comparison. He again inquired what had happened in the WEU meeting. Mr. Selwyn Lloyd said that there had not been a discussion of specifics. He had told the WEU Council that the balance of payments situation for the UK was very bad and could not go on. He had received no reaction.

Mr. Selwyn Lloyd then said that on the military side the UK was committed to have four divisions and a tactical air force, The size of these elements was not specified in the UK commitment. The UK Divisions of 18,500 men is the largest in the world. The German Division is about 10,500 men. If the fire power of the UK Division were improved, SACEUR might reconcile himself to a strength reduction. The air force already has greater fire power. The problem is with the soldiers. Mr. Selwyn Lloyd said that the US is now arming its forces with atomic weapons and asked if the US had any plans along those lines for the Germans.

Secretary Dulles referred the question to Admiral Radford who said we did not have any such plans. Secretary Wilson remarked that the Germans could not have atomic weapons under the Treaty. Secretary Dulles said that the Germans were forbidden from making atomic weapons but were not forbidden by the Treaty from buying them from the US.

Mr. Selwyn Lloyd said that the strategic concept contemplated that everyone should have an atomic capability. Secretary Dulles responded that that was the implication of MC 48—that we should plan on the assumption that atomic weapons would be used. This subject might come up under the agenda of the Ministerial Meeting in connection with the Political Directive. Present US legislation does not permit us to give atomic warheads to others in peacetime. We can, in peacetime, give weapons which can deliver atomic warheads. Mr. Head remarked that the UK was already buying the Corporal. But, added Secretary Dulles, the giving of warheads in peacetime is restricted. We are studying the problem of increasing the capability to use such weapons. We are prepared to make samples of weapons that can deliver atomic warheads available for research and production. We are studying what can be done under the present legislation with respect to training and use of atomic weapons. In addition, the Secretary said, there are policy questions of cost, strategy and so forth as to what is to be done.

Secretary Dulles said that we do not wish our capability to be so exclusively dependent on atomic weapons that there is no measure of flexibility. We must have a measure of flexibility although our main reliance must be on atomic weapons in the event of major attack.

Secretary Dulles then asked to what strength the US was cutting its divisional organization. Admiral Radford replied that we were cutting to about 12,000 for the infantry division from the old figure of about 17–18,000. He said the process was slow.

Mr. Head said that there was a time lag for the UK with respect to availability of atomic warheads. The UK has lagged behind on having atomic warheads available. It does not have this increased fire power available to it now. The UK must reduce manpower in order to balance costs if its forces are to be armed with the best weapons available.

Secretary Dulles said that there were two problems, as Mr. Macmillan had noted. First there was the question of what is a sound strategic concept. The US felt that no unsound strategic concept should be forced on NATO to meet financial problems. The US could not support the view that he believed the UK had once suggested that NATO should go entirely on a “trip-wire” basis, nor could the US accept the idea that there was no need for substantial manpower because any attack would set off massive retaliation and in that provide a sufficient deterrent. While in about 90% of the possible situations nuclear retaliation would cover the situation, there are, he said, particularly with respect to the partitioning of Germany and perhaps with respect to Berlin, certain types of risks requiring the presence of German troops. Secretary said the trip-wire theory would, he feared, perhaps mean that there would be no German troops at all. The idea of a defense build-up is unpopular in Germany as it is in Japan. In addition, from an economic standpoint, the Germans are thriving. This is particularly true because they have no defense budget and are receiving foreign exchange from the presence of foreign forces there. The Germans should consider these factors seriously.

Secretary Dulles noted that the US commitment was for a “fair share”. In view of what the Germans are doing, he said he was not at all sure that the large effort that the US is making was justified under that formula. The US is doing more in percentage of gross national production, manpower, length of service, and in many ways are contributing more than the Germans as, he supposed, was the UK.

Secretary Wilson said that in relation to manpower, and assuming a 500,000 man German contribution, the US was contributing almost twice as much as the Germans. In addition, our defense effort was very expensive in light of new developments, SAC, bases and other aspects.

Mr. Selwyn Lloyd said that Mr. Dulles was correct: there should be no rigging of the strategic directive to excuse a reduction in forces.

Secretary Dulles said we must face up to the British financial problem. Secretary Humphrey said the US was in the same boat. We had a 1.5 billion dollar balance of payments deficit for the last year and a half. This cannot continue. Our largest single item is troop maintenance abroad.

Mr. Macmillan said that he wondered whether we cannot work out some sensible plan between the trip-wire and the World War II type of organization. After we found that this took a certain number of thousand men, we would then have to figure how long it would take to develop plans on that basis, and see what the Germans could contribute until they could make their proper contribution. Thirdly, we must try to see how to meet the foreign exchange problem to avoid inequality for nations whose troops were stationed abroad.

Secretary Dulles said the fact seemed to be that the UK and the US provide the only real effective manpower strength on the continent, and asked Admiral Radford if that was not right. Admiral Radford said that that was substantially right. Secretary Dulles noted that the French forces were in North Africa and there was little contributed by the others. The largest strength was contributed by the two non-continental countries.

Secretary Dulles added that the Germans have a manpower shortage, are in an economic boom, do not like the draft, and are looking toward the election. Secretary Wilson said the defense effort is about the right to have elections. Secretary Dulles said that the problem was that electioneering for the Germans starts a year ahead of the election. We must consider the possible consequences of this election; it would not be good if the Socialists came into power.

Secretary Wilson said that we think the German build-up plans are sensible. They are taking in careerists and technicians first and will have a good force. Mr. Head remarked that their term of service was for only one year. Admiral Radford said it was graduated, with eighteen month terms for technicians. Secretary Wilson said our experience was that one needed two year service for technicians and that careerists were required for that work.

Secretary Dulles asked what the Germans were paying for British troops. Secretary Wilson remarked that it was politically difficult for them to admit supporting UK troops and that the payments must be concealed somehow. Mr. Selwyn Lloyd agreed that payments could not be called “support”. But unless some fund of some kind was established, the UK could not leave its people in Germany.

Secretary Wilson asked if the Germans could buy equipment from the UK. Mr. Macmillan said the Germans were in a strong economic position that was growing stronger. He said the EPU might come to an end as the Germans grew still stronger. He felt that Adenauer was fully honorable in his statements, but he feared the German army would not exceed 150,000 men. The Germans will not halt their economic boom and favorable financial position. The British people, who after all won the war, cannot accept that the Germans are treating the UK like dirt while they have things their own way. They will not agree to keeping British soldiers in Germany if the Germans do not play the game. It may take a little longer for the US, but ultimately the US may feel that way, too. Mr. Humphrey said he had felt that way for a long time, but that some of his colleagues did not agree with him.

Secretary Dulles said that we all recognized the problem that faced the UK. Mr. Wilson said that because the EDC had been too long delayed, we had had to step into the breach for five years or so, we thought, but now it seems we cannot take a single man out without creating a large problem.

Mr. Selwyn Lloyd said the answer, from his point of view, might lie in four divisions of about 10,000 men each together with the flotation of some sort of fund to help the financial situation. These divisions should also be supported by atomic weapons or have US atomic forces brigaded in their support.

Secretary Dulles said he thought that the latter was already being done. Admiral Radford said it was not being done yet but he has been considering this. He referred to the example of SETAF which backs up the Italian forces with atomic power. Mr. Wilson said we might need other light units which would be similiar to corps artillery. Admiral Radford said that it might be a 5–6,000 man unit or perhaps it could be a little smaller. Mr. Macmillan said he liked the idea of “atomic corps artillery.”

Mr. Selwyn Lloyd said that the atomic support might be supplied in that way or by some system that would supply atomic warheads in case of a crisis. Mr. Head said that the British were already trained with regard to Corporal, and the Foreign Minister’s idea would fit in in that respect.

Mr. Wilson said he thought that smaller divisions backed up by special corps would be the military answer. We should get away from talking about numbers of divisions just as we had to get away from talking about numbers of wings.

Secretary Dulles asked if the UK and the US were in agreement on the political directive. Mr. Selwyn Lloyd turned to Sir Christopher Steel who said yes, we were very close. Mr. Wilson said that Admiral Radford had a comment, and the Admiral remarked that he felt the political directive went a little too far in stating that the NATO force must have an atomic capability. He agreed fully that it was desirable that they have this capability and assured all that he was suggesting no qualification or shift in present policy. After much discussion by all the principals, it appeared to be the consensus that the idea might be expressed that the NATO force “should have” or “would have” or “might have” an atomic corps and that this would be better.

Mr. Macmillan said suppose we have the directive, then what? Mr. Selwyn Lloyd said that we might then ask the Standing Group what the procedure would be and what forces would be required. Secretary Dulles asked Ambassador Perkins to comment. He said that there was no decision on what the steps would be after the directive was accepted. The US thinks the process should be undertaken by the Military Authorities. This might take considerable time under normal procedures. MC 14⁵ and MC 48 would be considered, and only after that would Commanders’ plans be turned to. He suggested that SHAPE already has force plans, and that perhaps the procedure could be shortcut in light thereof.

Admiral Radford said, and Air Marshal Dickson agreed, that we must recognize in all frankness that the political directive will not reduce requirements.

Sir Christopher Steel said that the Standing Group might ask governments to suggest what forces they would be able to provide over a long period of time. Secretary Dulles responded that this would mean that the answer would be zero. Mr. Selwyn Lloyd appreciated the Secretary’s fear that there might be a general exodus.

Mr. Wilson remarked that NATO was based on the principle of an internationally balanced force. Some nations could better provide certain things than others. He noted that the French forces were all in North Africa and none were in NATO. He asked what the Germans were going to do if, between the US and UK, we were to make a move. Admiral Radford asked if the Germans were not the key. Mr. Selwyn Lloyd said they probably were and that we should face them on a common basis.

Mr. Macmillan said we might start from a budgetary point of view. Suppose there were 250,000 men and no foreign exchange problem. Secretary Humphrey asked if the Germans should pay for all forces in Germany. Mr. Macmillan said he thought so as far as local expenses were concerned.

Mr. Selwyn Lloyd said that the British now have a cost of 70 million pounds a year for local expenses in Germany. Mr. Macmillan said that if they cut their strength in half, they would not reduce their local cost by 50%, but rather would cut to something in the nature of 40 million pounds a year. Mr. Selwyn Lloyd said that counting carry-over the Germans were supplying between 35 and 40 million pounds for support costs this year.

Mr. Selwyn Lloyd said that a large force would cost the Germans a lot and they might have to buy some equipment overseas. Mr. Macmillan said he was not anxious for the UK to be the source of military production for Germany while Germany got all the commercial contracts. Mr. Wilson remarked that the UK has full employment, so military production would affect commercial production.

Mr. Selwyn Lloyd raised the question of research and development. The UK is now budgeting 210 million pounds a year in this area; the Germans are budgeting nothing. A possibility would be to bring the Germans in on the British research and development program as some sort of shareholders. But, he understood, this raised questions with respect to US security regulations. Some Germans, he said, particularly Adenauer and Brentano, are anxious to find some way to come up with the money the UK needs. This idea might be appealing in view thereof. Mr. Wilson said that if the Germans were dealt in on UK research and development and not on US research and development, we would have no problem. But, said Mr. Head, it is very important that the US and the UK should get much closer in this field.

Secretary Dulles asked what defense people Germany had with them here in Paris. Admiral Radford said that they had Minister Strauss and General Speidel. Mr. Selwyn Lloyd said that the British were having a working lunch with the Germans tomorrow.

Mr. Macmillan said suppose the US, the UK and Canada sat down and worked out the proper forces that they should contribute to NATO. This could be followed by talks with the French and maybe others and then with the Germans.

Mr. Selwyn Lloyd said that the effect of the UK breaking the WEU Treaty⁶ would be very serious indeed for the US; but judging from the state of the UK cash situation, it might come to that. He referred to two escape clauses in the British assurances, the one having to do with “equivalent fighting capacity” and the other with the financial ability of the UK.⁷ With respect to the former, he said four reduced divisions might be equivalent fighting capacity if they had an atomic fighting capacity behind them. He then read the pertinent part of the text of the British assurances. He said that if SACEUR would certify equivalent fighting capacity after a cut in British strength, he thought that in all probability WEU approval could be obtained.

Mr. Wilson noted that even with the full German contribution and an atomic capacity for NATO forces, we would merely meet the present NATO military requirement, and it would be very hard to get the Military Authorities to say they could do with less. Mr. Macmillan said they need not say that. They should merely adopt the “equivalent” line. Then we should make the Germans contribute for the cost of forces in Germany.

Mr. Selwyn Lloyd said that the UK could this week invite the North Atlantic Council to review the financial aspect. However, it was probably better not to start that off before all fifteen nations. Secretary Humphrey asked if he were not afraid it might start off a pattern of action. Mr. Selwyn Lloyd denied this, saying that he did not think this would apply to most of the European countries but rather to the overseas nations. Mr. Wilson said that expenses overseas were not popular with us either. Mr. Macmillan said that he sought a balance and a compromise rather than any extreme position.

Secretary Dulles agreed but asked how this could be obtained. Mr. Selwyn Lloyd said that atomic deployment was the key. Secretary Dulles said he understood the UK believed they needed some atomic capacity from the US in order to make their reduced forces the equivalent of their present force. Mr. Selwyn Lloyd said they needed some arrangement for atomic capability, either by way of corps support or, as Mr. Head interjected, some arrangement to provide atomics in case of emergency.

Mr. Wilson said he thought some exploratory review with the Germans would be helpful, and maybe with the French as well. Mr. Macmillan thought it might be done between the US, UK and Canada.

Mr. Selwyn Lloyd said that if you were to suppose a figure of X hundred thousand men between us, the question would be how to make it an atomic force.

Secretary Dulles said that the US is committed by the fact that we have told the Germans on pretty high authority that we have no intention of withdrawing forces. The President is impressed by the fact that the political presence of troops in Europe is very important. So he has given, indirectly, if not directly, assurances against any present program for withdrawal.⁸ This assurance, however, does not apply to streamlining. He asked Admiral Radford how rapid the process of streamlining would be. Admiral Radford said it could be speeded up. Mr. Wilson said he thought it might take about two years and Admiral Radford agreed. Secretary Dulles said that we are committed against any abrupt alteration. Admiral Radford said that we do intend over a period of time to reduce in strength.

Mr. Macmillan said that these matters presented both advantages and disadvantages. He asked if there could not be some sort of phased plan for both of us and the Canadians. Mr. Wilson pointed out the danger of public speculation based on staff studies, as had happened last July.

Admiral Radford remarked that the army believed the streamlining would not result in total savings in manpower, as corps units might be heavily increased. Mr. Wilson said that [the] Admiral and he knew better, and Air Marshal Dickson said that this had a familiar ring.

Mr. Selwyn Lloyd said that if there was no understanding with the Germans, the UK might have to raise this matter in NATO. This would not be good as a shot in the arm for NATO at a time when we are all trying to strengthen NATO.

Secretary Dulles said that it appeared that the next move lies with the Germans. The question is how much of a political shock would the idea of reduction be to them and how much would they be willing to pay to avoid it. He said the US is willing to use its political influence to support the UK position, and to take the same position, although over a longer period of time. He said he was not complacent with the present arrangement. Mr. Humphrey said that he hoped the US action would not be too much later.

Mr. Wilson said he thought Admiral Radford had some comments on the German build-up. The Admiral said he believed the Germans would have a very efficient small army. They would have five divisions at 80% strength by June, and two more by the end of the year. They have many problems but are overcoming them. On the other hand, it is true that they are getting a free ride for the period while they have no forces. Air Marshal Dickson said that Speidel put emphasis on the effectiveness of their build-up, and Admiral Radford said that his conversation with Strauss yesterday had provided further details on the seven divisions. Then Admiral Radford drew attention to Mr. Wilson’s point that the German build-up would, however, merely meet present NATO requirements. Mr. Wilson remarked that the requirement was based on planning of five years ago. Admiral Radford said that the planning had resulted in cuts from the Lisbon force goals.⁹ He noted that the German figure of twelve divisions is set by a WEU limitation which could be extended. Secretary Dulles added that it could be extended with the consent of all of the Brussels Treaty Powers. Mr. Wilson and Admiral Radford agreed that the German plans for the draft were sensible and clever, considering the position in which the Germans found themselves. The Germans would have a pretty good army by the end of next year and the question is what can be done in the meantime.

Secretary Dulles asked whether, if the UK divisions were cut from 18,000 to 10,000, this would meet the problem from the military side. Mr. Macmillan said it would meet the UK budget and manpower problems, but not the foreign exchange problem. Secretary Dulles said that we could probably work out some scheme to do that. Mr. Macmillan laughingly suggested that we have German forces stationed in Scotland in order to put the shoe on the other foot.

Secretary Dulles said that we were planning to reduce the number of men in our divisions for our own purposes and saw no reason why the UK should not do the same, and perhaps do it faster. The UK should work with SACEUR, perhaps with US help, to get him to accept that reduced UK forces would provide equivalent fighting ability. Perhaps some pressure on SACEUR might have to be exerted. SACEUR must of course be alive to the realistic facts involved. And, in so far as the cut in forces would reduce the foreign exchange problems, this should help.

Mr. Selwyn Lloyd said the UK would try the Germans out at lunch tomorrow. Mr. Macmillan cautioned that things should not be left to drift into February or the UK would have to do something about the situation. Mr. Head said that a preliminary talk with SACEUR might be very desirable. Admiral Radford suggested that the UK consider giving full publicity to the increased capacity of their streamlined units.

In conclusion, Secretary Dulles said that the US would give very full consideration to the thoughts expressed.

1. Source: Department of State, Conference Files: Lot 62 D 181, CF 825. Top Secret. Drafted by Wolf and approved by Elbrick.
2. At the conclusion of a conversation with Dulles at 9:45 a.m. on December 10, Lloyd had said that while the British intended to keep four divisions in NATO, they could not keep troops in Germany unless a way was found to reimburse the British for this expense. To Dulles’ question “Unless the Germans pay for it?” Lloyd replied, “Unless someone pays for it.” (Memorandum of conversation, USDel/MC/1/3, December 10; ibid., CF 824)
3. The WEU Council met in Paris on December 10, 1956.
4. Reference is to the consultative council established by the Brussels Treaty signed on March 17, 1948, to coordinate the policies of the five signatories (United Kingdom, France, Belgium, the Netherlands, and Luxembourg) of this 50-year alliance.
5. Not found in Department of State files.
6. The Brussels Pact, March 17, 1948, signed by the United Kingdom, Belgium, France, Luxembourg, and the Netherlands, created the Western European Union.
7. For text of these two clauses, see Articles 1 and 6 of Protocol II to the Brussels Treaty signed on October 23, 1954, Foreign Relations, 1952–1954, vol. v, Part 2, pp. 1444 and 1445.
8. See Document 37.
9. For documentation on the North Atlantic Council meeting in Lisbon, February 20–25, 1952, see Foreign Relations, 1952–1954, vol. v, Part 1, pp. 107 ff.