214. Memorandum From the President’s Special Assistant (Rostow) to President Johnson1
SUBJECT
- U.S. Position on Spanish Base Negotiations
At Tab A2 is Nick Katzenbach’s memo recommending you approve a package offer we would make to the Spanish in negotiating a 5-year renewal of our base rights agreement. Secretary Rusk meets with the Spanish Foreign Minister on Monday, September 16, to discuss the renewal.
Paul Nitze, Joe Barr, Charlie Zwick, and Walter Sauer, acting head of the Ex-Im Bank concur in the recommendation.
Our agreement with Spain covers a naval base for Polaris-armed nuclear submarines and two air bases. Secretary Clifford believes that we will continue to need a base position in Spain over the next five years, but that we should be able to consolidate the two air bases and close down one of them.
Our first base agreement with Spain was made in 1953. The present agreement was renegotiated in 1963. It expires this September 27, but provides for a 6-month consultation period beyond that date. We have nothing to gain from deferring the negotiations, however, since we need the bases. Postponement would probably put Spain in a better position to press for a higher price.
The recommended package comes down to the following:
- —Grant aid, drawn largely from excess stocks, with a “fair value” of $100 million but requiring budget funds (for rehabilitating the equipment) of $40 to $60 million over the 5-year period. (In the last agreement we gave the Spanish $100 million in new military equipment, paid entirely from budget money.)
- —Ex-Im credits or guarantees, under normal terms, of $100 million for purchases of military equipment. (The Spanish bought about $180 million in military equipment from us during the past five years. They paid cash or financed commercially. Their financial position was [Page 425] stronger than it is now, so they did not take advantage of our offer to provide some Ex-Im credits.)
This package will be far below what the Spanish request. We would tell them, however, that we also propose to close down one of our bases. This will help them domestically to accept the lower price. It helps us by cutting our goals.
The Spanish also request:
- —A security treaty with us such as we have with Japan. We refused this in the last negotiations and will do so again. We would go no further than the existing Joint Declaration of our common interests that went with the 1963 agreement. (The Joint Declaration is shown at Annex in State’s memo.)
- —Exemption from the direct investment controls of our balance of payments program. We will say no.
Congressional consultations do not indicate any serious difficulties on the Hill:
- —Secretary Clifford and Paul Nitze were in touch with Senator Russell and Congressmen Mahon and Rivers. Russell had some question about the price but was sympathetic; Mahon approved; and Rivers gave his enthusiastic and unqualified endorsement of the package and said we should get on with the agreement.
- —Bill Macomber and his people spoke to Senator Hickenlooper (regretted we had to pay anything but recognized the need); Senator Sparkman (bases important, price not too high); Congressman Frelinghuysen (saw need, hoped we could negotiate it at the price). They also heard from the following:
Senator Mansfield—does not like a deal with Spain but goes along on security grounds and is pleased we may be able to close down one of the bases.
Senator Dirksen and Congressmen Albert and Edna Kelly saw no problems.
Ford was ill, but his staff did not see any trouble.
I believe the package makes sense and that we should go ahead with the negotiations.
Required authorization for negotiating offer to Spain:3
[Page 426]Grant aid: ($100 million fair value, subject to the availability of funds, requiring new appropriations of $40-$60 million over the 5-year period.)
ExIm credits or guarantees of $100 million for military purchases over the 5-year period.
Inform Spain we are considering closing down one of the two air bases and will consult with them before making final decision.