Foreign Relations of the United States, 1958–1960, Foreign Economic Policy, Volume IV

267. Memorandum From Secretary of State Herter to President Eisenhower⁰

November 13, 1960.¹

SUBJECT

• Future Military Assistance for the Netherlands, Italy, Belgium and Japan

You will recall that the question of how to treat military assistance programs for the Netherlands, Italy, Belgium and Japan in FY 1962 and beyond was fully discussed at the National Security Council meeting of October 31.² This now requires a decision, since we must proceed very shortly to notify these countries regarding their previously approved fiscal year 1961 military assistance programs.

As indicated in the Council meeting, the Treasury Department and the Budget Bureau feel that military assistance for these countries should be sharply reduced in fiscal year 1962 and totally eliminated over the next two to three years. As you are aware we believe that the balance of payments problem is not affected by a decision on this question. The difference in budgetary terms between the cost of the military assistance we propose for fiscal year 1962 and that which might be provided under the Treasury-Budget Bureau theory would be less than 5% of the total fiscal year 1962 Military Assistance Program proposed.

For the reasons stated more fully in the NSC meeting, Secretary Gates and I feel strongly that the increased defense contributions from these countries which are so necessary to our security posture, can only be obtained if we continue an adequate measure of U. S. military assistance, making such assistance contingent upon appropriate increases in their defense budgets.

It is perfectly clear that reducing or eliminating the relatively low levels of military assistance in these four countries would lead them to infer that U.S. interest in NATO and the defense of the Far East was diminishing and that a “Fortress America” concept was being seriously considered. It would therefore lead to reductions in the defense expenditures of these countries, meaning in turn a substantial weakening of our entire defense posture. This would be particularly the case should the U. S. raise the possibility of reducing the level of its own forces in Europe during next year’s NATO review.

With this in mind, and since we feel convinced that despite their satisfactory gold reserves none of these countries is budgetarily able to accommodate the very substantial increases which would be necessary if military assistance programs were eliminated over the next two or three years, I feel that we should handle the problem of notifying them regarding our future intentions along the lines set forth in the attached draft telegrams.³ Secretary Gates concurs fully in this view.

Your approval for the despatch of these messages is recommended and requested.

Christian A. Herter⁴

0. Source: Eisenhower Library, Whitman File, Miscellaneous Material. Secret.
1. The source text is undated. A memorandum from Anderson to the President (Document 268), however, indicates it was dated November 13.
2. See Document 266.
3. None printed. The operative portions of the draft telegrams to Rome, The Hague, and Brussels stated future U.S. grant military assistance was contingent on increases in the Italian, Dutch, and Belgian defense budgets, respectively. The draft telegram to Tokyo noted future U.S. contributions would depend not only on U.S. appropriations, but on Japan’s ability to finance its share of contemplated force improvement projects.
4. Printed from a copy that bears this typed signature.