314. Memorandum of a Conversation, Department of State, Washington, October 22, 19571


  • UK Force Reductions and German Support Costs

[Here follows the same list of participants as Document 312.]

Mr. Lloyd recalled that Western European Union had been unanimous last winter in approving the withdrawal of 13,500 UK troops from Germany and at that time he had told the WEU Council that the UK would transfer out 13,500 more men next year.2 The Foreign Secretary stated that when objections developed to the plan for an additional withdrawal, he had said there was no possibility of changing the British decision on 8,500 men but he would take a fresh look at the remaining 5,000 in October. He mentioned General Norstad’s visit to London saying that the General had been willing to accept the transfer of 8,500 men but expressed the greatest anxiety not to lose the remaining 5,000 men. While stressing the fact that no Cabinet decision has yet been made, Mr. Lloyd predicted that he would succeed in obtaining his Cabinet colleagues’concurrence in leaving the 5,000 man strategic reserve in Germany.

He then pointed out that the other side of the matter from the British viewpoint is its financial aspect. He mentioned that Mr. Spaak had originally suggested invoking the escape clause in the Paris Agreements3 and the recently agreed NATO Procedure (Paragraph (6) of WEU Resolution)4 but said that from a UK viewpoint this process could incur a lengthy economic and financial discussion of indeterminate outcome. Now, he said, Mr. Spaak thinks that the financial aspect should be informally handled by agreement among the countries immediately concerned and that the matter should be put to the Germans on a foreign exchange basis. The Foreign Secretary suggested that perhaps Mr. Spaak is the man to conduct negotiations on this subject. He added that although the British do not want formally to [Page 805] link the question of leaving the 5,000 man strategic reserve in Germany to their foreign exchange problem, in practice, it is so linked. He stated that the UK cannot keep any of its forces in Germany unless the costs are met somehow. He said finally that General Norstad and Mr. Spaak have both been very helpful in trying to work out a solution to this problem.

The Secretary expressed his pleasure at the probability that the UK will leave the 5,000 man reserve in Germany. As far as the financial aspect is concerned, he said, we have reserved the right to ask the Germans to pay more. They agreed to pay this year one half of what they had paid the previous year and we are now going to ask for the other half, namely an additional $77 million. The Secretary explained that this formula was worked out in Bonn in February. Since we did not wish to embarrass Chancellor Adenauer during the German election campaign, we said that we would let the Germans consider their payment on the basis of one half of last year’s as full payment but that we reserved the right to reopen the question later in the year. The Secretary stated that Congress and the Defense Department feel strongly that we should obtain this additional money. He added that the Germans have always had a tendency to condition what they will do for the UK on what the US asks of them.

In answer to a question from the Secretary, Mr. Lloyd said that the drain on the Germans for the extra 5,000 men would really amount to an additional 1/11th in support costs since it would mean paying the local cost for 55,000 instead of 50,000 men.

The Secretary then suggested that as the UK problem is primarily one of foreign exchange they might consider establishing a blocked sterling account against German expenditures in Deutschemarks. This, he said, would make it easier for us to handle the Congressional feeling that the Germans should do as much for us as they do for the UK. The device of a blocked sterling account would enable the Germans to meet the UK foreign exchange problem by a formula which he believes would not be particularly appropriate for us. The Secretary added that we could say then that the Germans are not really paying the British but are only settling the foreign exchange element.

Sir Harold Caccia replied that the foreign exchange element is really only half the British problem. The other half is that the British do not believe the Germans are making their full contribution to collective defense. The Secretary answered that if this is the British argumentation we would have to say the same thing and make our bid for additional support costs. The Foreign Secretary said that he believed the British had considered arrangements such as a blocked account and he did not think it would work. He agreed to give thought [Page 806] to working out a formula on support costs which would afford a basis for differentation of the UK and US arrangements so that the US will not be obliged to request similar treatment.

In answer to a remark from Mr. Elbrick, Lord Hood said that there was a gap of about 10 million pounds between the German contribution this year and actual British expenditures in local costs. He added that fifty million pounds in 1958–9 would cover the local costs of the British force in Germany since there will be fewer UK forces there.5

Mr. Lloyd asked whether the Secretary thought that the US would get $77 million additional from the Germans to which the Secretary replied that he thought we would get some money.

Lord Hood then reviewed briefly the arrangements we both had with the Germans this year, pointing out that whereas we had each agreed to receive one half the amount of support costs we had obtained the previous year, the British obtained additional financial benefits which we did not, while we reserved the right to ask for the full amount later on during the year.

  1. Source: Department of State, Conference Files: Lot 62 D 181, CF 927. Secret. Drafted by Dale. See Document 312.
  2. The WEU Council met on December 10, 1956.
  3. On October 23, 1954, four protocols, designed to modify the Treaty of Economic, Social and Cultural Collaboration and Collective Self-Defense (Brussels Treaty) of March 17, 1948, were signed at Paris. Article 6 of Protocol II on Forces of Western European Union permitted Britain to reduce forces in Europe if their maintenance “throws at any time too great a strain on the external finances of the United Kingdom.”
  4. Paragraph 6 of the Report of the Committee of Three on Non-Military Cooperation in NATO, submitted to and approved by the Ministerial Session of the North Atlantic Council, December 11–14, 1956, recognized that the ways and means of discharging the obligation of NATO members for collective defense might change and stipulated that any changes that affected the coalition could be made only after consultation.
  5. A member of the UK delegation explained after the meeting that £50 million would cover the local costs of all 55,000 British troops. [Footnote in the source text.]