50. Telegram From the Embassy in Germany to the Department of State 0

607. Paris pass USRO, Stoessel, McGuire and Riddleberger. For Under Secretary Ball. Reference: Deptel 662.1 I appreciate seriousness of problem in reftel concerning additional pressure on US balance of [Page 127] payment arising from increased US forces level in FRG and the overall magnitude of FRG aid for LDC’s in 1962.

In view of the uncertainties concerning the exact composition of the next Cabinet and even certain doubts that Adenauer will succeed himself as Chancellor, I believe that raising these two questions with Brentano at the Foreign Ministers meeting would not produce any immediate results. He is bound to give standard answer that nothing can be done until after the elections.

On the other hand I believe that question of pressures on US balance of payments in connection with augmentation of US forces should be brought forcefully to his attention, if for no other reason than to get this question “on the record.” FRG has had no formal notification re extent of increase and no conception what this may mean in terms of US financial resources. Level of magnitude of augmentation of US forces will be pre-sented formally to MOD on Friday Sept. 15. When question is raised with Brentano,2 I recommend that he be requested to transmit these views to his government and be informed that we will raise the questions contained in para 2 of reftel with the FedRep at an early date following the formation of new Cabinet, which will not be established until after new Bundestag convenes on Oct 17. Care should be taken in presentation to avoid assumption that we are reviving issue of troop support costs.

Re future FedRep development aid program, several important decisions are now being held in abeyance until formation next Cabinet (see Embtel 594).3 Most immediate issue is level of commitment authority to be sought in 1962 budget law. According our info, FonOff and EconMin staff level, with concurrence Brentano and Erhard, favor 1962 legal commitment authority for bilateral development loans (KFW fund) in neighborhood DM 2,000 to DM 3,000 million (over and above DM 3.9 billion bilateral loan portion present 1961-1962 program) in order continue forward momentum of program. Finance Ministry, on other hand, is holding out for considerable smaller commitment authority. This issue will have to be resolved fairly soon after formation new Cabinet in order permit 1962 budget planning go forward. Question of 1962 cash appropriations far less important since KFW already has more than enough funds assured to cover expected disbursement level for 1961 and 1962. FedRep bilateral loan commitments for 1961 already exceed DM 5 billion.

A second, more important but less immediate, issue is need for FedRep to develop long-term aid program for period beyond 1962 commensurate with its capabilities and responsibilities. I believe we should [Page 128] press for this too but we should allow new Cabinet time to settle down and attend to most urgent questions before doing so.

In addition discussing above with Brentano, I suggest it would be highly useful to raise both points with Etzel at Vienna meeting, particularly need for substantial commitment authority in 1962 (see A-304).4

  1. Source: Department of State, Central Files, 811.10/9-1361. Secret; Priority; Limit Distribution. Repeated to Paris.
  2. Document 49.
  3. Secretary Rusk discussed the foreign exchange and other implications of the NATO military buildup with Brentano on September 14. (Memorandum of conversation, September 14; Department of State, Conference Files: Lot 65 D 366, CF 1950)
  4. Dated September 13. (Ibid., Central Files, 862A.00/9-1361)
  5. Dated September 9. (Ibid., 398.14/9-961)