331. Memorandum from Meyers to Kitchen, July 81
SUBJECT
- Balance of Payments: McNamara’s Memorandum of July 3 to the Secretary
Following are some initial comments on the items pertinent to the general Balance of Payments considerations:
1. Item 1A(2)(b): Iceland:
I understand that the F–102 Squadron is a NATO-committed unit (to SACLANT). While the U.S. presumably can always withdraw a unit committed to NATO, this raises in addition the political problem of Icelandic attitudes towards the removal of air defense capabilities which protect them.
2. Item 1A(3)(b) and (c): Spain:
I think that, in replying to these proposals, we should note that these two items are obviously intimately related to our negotiations [Typeset Page 1459] with Spain with regard to renewal of base rights. It is quite possible that the Spaniards may insist that the U.S. provide air defense protection. If the U.S. retains interceptor aircraft in Spain, presumably the U.S. would also wish to operate the AC & W network. Moreover, it is pertinent to note that Henry Kuss, in his schedule for programmed military sales for FY 64, has included $175 million in potential sales to Spain, funded from Eximbank, of which a good part would be fighter aircraft, presumably the same F–102s that the McNamara paper proposes considering offering to Spain in return for base rights.
[Facsimile Page 2]3. Item 1B(1)(d): Japan:
Is it realistic to assume that we can transfer air defense to Japan, including the AC & W network, within the time scale assumed here?
4. Item 2(a): Army LOC in Europe:
This proposal assumes that we can close down LOC facilities in France, west of a line running north and south through Orleans, and induce the French to maintain these facilities on a standby basis. Thus, the successful implementation of the proposal requires French consent at a minimum. Moreover, we are presently engaged in trying to reach agreement with Germany on a joint combat logistics support system. Would the maintenance of these facilities in France be pertinent to achieving agreement with the Germans?
5. Item 5: CARIBOU Cancellation:
Mr. McNamara’s proposed memorandum to the President explains that the Canadians are on notice that CARIBOU must compete on its merits against alternative solutions to the Army’s air transport problem. However, since CARIBOU is the main item in the U.S.-Canadian co-production effort, the political aspects of this cancellation will have to be handled with some delicacy. I do not think we should protest the cancellation, particularly after General Williams’ remarks to you today, but ought to note the political and economic sensitivities involved.
6. Item 8: POL Procurement:
As phrased, and in the light of Mr. McNamara’s comment on pages 7 and 8 of the covering memorandum, this item seems to say DOD will not take steps to return Caribbean oil procurement to the U.S. However, it is so vague in its terminology that we should at least obtain a more, definitive explanation of what is contemplated.
[Facsimile Page 3]7. Item 10: Reorganized Army Depot Maintenance in Japan:
This, also, is so vague that some more explanation should be obtained.
[Typeset Page 1460]8. Item 11: Maximum Use of Lower-Ranking Personnel:
This sounds good, but is it practical? For example, how does one reorganize Army divisions or combat aircraft squadrons in such ways that they have more first-term personnel and junior grade officers than higher-ranking personnel, without substantially adversely affecting their combat efficiency?
9. Item 12: Revised Construction Procedures:
While we should not object to this in principle, I think it advisable to express our usual caveat that this may be restricted in application by the terms of the agreements with foreign governments on employment of local personnel and use of local material. In fact, this has proved to be the case in many instances in the actions taken under Project Eight.
- Item-by-item review of McNamara’s proposals outlined in his July 3 memorandum to Rusk. Secret. 3 pp. Department of State, Central Files, FN 12 US.↩