335. Memorandum from Kitchen to Rusk, July 241
SUBJECT
- Status Report on Balance of Payments and Troop Withdrawals
1. We dispatched cables to Tokyo, Madrid and Reykjavik setting forth the proposed force adjustments and have replies. These, in part, formed the basis of a meeting with Bill Bundy on Tuesday morning where we discussed the following:
a. Iceland. In light of Ambassador Penfield’s position, Defense is prepared to withdraw from current consideration its proposal to remove the squadron.
b. Spain. The preliminary judgment is that the proposal should be politically manageable. The first approach will be through military channels in Madrid; with the Spanish Ambassador here informed as a matter of courtesy. Defense and State are drafting instructions.
c. Japan. Ambassador Reischauer expressed the view that the problem is manageable, if there is sufficient advance consultation with the Japanese. There remains the special problem of the Itazuke airfield, but there may be a solution which will meet the Ambassador’s persuasive political arguments for closing Itazuke, while at the same time limiting the operational disabilities which are of understandable concern to DOD. (This may involve developing alternate facilities which are available and [Facsimile Page 2] which the Ambassador believes the Japanese may prefer to do, despite the expense involved, if phasing out Itazuke is thereby facilitated.) We have, accordingly, agreed to draft guidance to permit Ambassador Reischauer to open negotiations with the Japanese and DOD is securing additional detailed military information from the field.
2. Additional Problems. Three additional problems warrant notation:
[Typeset Page 1473]a. In connection with Japan, General Smart, head of the USAF in Japan, has come in with a very strongly worded message for Ambassador Reischauer categorically labeling as untrue the DOD contention that planned redeployments would not lessen US ability to fulfill treaty commitments. We are pursuing the matter with Defense and Ambassador Reischauer.
b. Defense has provided an informal indication of the list of phase two adjustments which are being developed in response to the President’s request to Secretary McNamara for additional balance of payments reductions. The list, while not as far reaching as we might have expected, does contain some significant force reduction proposals, including removal of the two US divisions from Korea, all B–47’s from Europe and the entire complement of 252 fighter and reconnaissance aircraft currently stationed in the UK. In total, Mr. McNamara is shooting for an additional $300 million in FY 1965 and $450 million in FY 1966. It is not clear that the list of phase two adjustments will reach these magnitudes so that even more far reaching adjustments may be required in order to make the significant dent on the balance of payments which is desired. While we are taking this into account in our current considerations, the basic confrontation on the issues raised by the phase two proposals must await a more definitive identification by DOD.
c. Defense does not yet have a detailed proposal on the European LOC problem. Accordingly, we have not been able to dispatch anyone to brief Chip Bohlen, as you suggested. In the meantime, however, DOD is thinking of [Facsimile Page 3] raising the general problem of European LOC (at least as it affects the FRG) during the imminent McNamara-von Hassel discussions. We are hopeful that this matter can be examined further in the meeting we previously recommended that you have with Mr. McNamara before his departure for Germany. (He leaves Tuesday morning, July 30.)
3. For your information, I am attaching the cables sent to the field and the replies received (Attachment A) and the minutes of our Interdepartmental Committee Meeting (Attachment B).
- “Status Report on Balance of Payments and Troop Withdrawals.” Secret. 3 pp. Department of State, Central Files, FN 12 US.↩