245. Memorandum From the Assistant Director of the Bureau of the Budget (Rowen) to the President’s Special Assistant for National Security Affairs (Bundy)1

SUBJECT

  • UK Visit

Here are my main impressions from the McNaughton, Neustadt, Rowen two-day visit.

Trend and Mitchell : Trend was told that you are relaxed about a meeting. Also that we see that everything—money, foreign commitments, economic plan—is connected to everything else. He said nothing of substance. Derek Mitchell, the PM’s private secretary, made it clear that the Trend-Bundy meeting had somehow been built up inside the government to such a big event that it raised “constitutional” problems (“the Cabinet’s hand can’t be revealed before the Cabinet takes the decision”). However, Mitchell told Dick that the PM regards Trend as a good go-between—but he shouldn’t come right now.

Dick conveyed appropriate points to Mitchell including David Bruce’s suitability as a trusted intermediary. Dick stressed that we didn’t expect to be told of a Cabinet “decision” before the Cabinet but that we valued outlines of the PM’s thinking. Also that the President can’t be expected to embrace the Pound until UK comes up with its overall economic and defense program. Mitchell said PM not thinking of unilateral troop reductions in FRG (cooperative reductions another matter), that PM thinks devaluation beyond bounds of possibility, and that maybe Mitchell or Oliver Wright could usefully visit Washington on occasion.

Foreign Office: The Foreign Office people we saw (Gore-Booth-Caccia’s successor—Chalfont, Palliser, John Thomson, Arthur) say, with varying degrees of firmness and specificity, that foreign commitments will be cut. They don’t believe that Healey can get close to the 2000 million pounds defense ceiling through efficiency gains. The most specific and drastic view (Thomson’s—partly prescriptive, partly predictive) was [Page 498]that Britain should/would over the next five years: 1) get out of Malta, 2) get out of Libya, 3) get out of the base in Cyprus supporting Libya, 4) out of Aden, 5) out of Persian Gulf (or perhaps support Gulf from Indian Ocean bases), 6) expect—and welcome—being invited out of Malaysia as part of an Indonesian-Malaysian “settlement,” 7) build up base in Northern Australia, 8) build Indian Ocean bases, 9) stay in Europe. I sense agreement by the FO types that Aden is first on the list and that European commitments should be kept.

It isn’t clear to what extent the Foreign Office believes these cuts inevitable because they think the Defense Review will force them, or because they think that the Cabinet will force these cuts anyway, or because they think that the Americans should be told cuts are coming for tactical reasons. In any case Healey’s line is different.

Healey : He says that 50% of the needed savings have already been found (aircraft and subs), that he expects to find 25% in efficiency gains and that 25% will come out of reducing commitments. The Cabinet will get a proposal on streamlining reserve forces next week, and a big decision on land versus sea-based air by September. (This one had to wait for the Earl of Burma to go. They also want to know if US has some carriers in reserve that can handle their Phantoms.)

Once these decisions are taken, further reductions will involve commitments. But not much. For example, “confrontation” with Indonesia would involve 1/2 Army, 3/4 Air Force, 90% Navy; therefore they can’t cut much unless “confrontation” can be ended. (Healey expressed unhappiness on present strategy versus Indonesia and ran through alternatives—escalate, negotiate out, turn over to Malaysia. He and a lot of his people would like out but clearly don’t see it happening in short run.)

Far East and South Asia: He is trying to figure out (ex-Indonesia) what role makes sense. He is thinking mainly about little problems and focuses on Australia. They are talking with the Aussies about a base in the North, see need to do joint planning including use of Australia F-111’s and its carrier, and want to concert with US and NZ as well.

Mid East: He had thought that UK would have to leave Aden by ′68 and move into Gulf. He now thinks that permanent basing in Gulf won’t work and that a post ′68 base in Aden may work.

On Malta, Libya, Gibraltar, Cyprus: Nothing new.

On Germany: Money offset still unsatisfactory despite new deal. Will go back after FRG election. Prefer: 1) German gold, 2) FRG pick up check for FRG people employed by UK forces, 3) buy hardware from UK. Healey did not suggest major reductions in Germany (by implication, even failing 1-3 above). On contrary, he said cheaper (in budget but not foreign exchange) to keep troops there, and they are usable strategic reserve for elsewhere.

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NATO : He wants McNamara to join him in attacking NATO’s naval strategy and likes the Select Nuclear Committee idea (but worries about our ability to follow-through).

Consultations with US: Healey emphasized that no UK decision will be taken on commitments without prior consultation with us. He personally would like to see US-UK talks in November-December.

In Sum: We don’t have all the pieces (notably the PM’s views are missing) and the ones we have don’t quite fit. Healey appears to be making useful progress (more than Bob McNamara has credited him with). Healey said he might have been holding his cards too closely—keeping them from both the FO and us. In any case, they have a clear commitment to consult and we should keep in touch with them. Dick will keep up the chase.

Henry
  1. Source: National Archives and Records Administration, RG 59, Central Files 1964-66, POL 7 UK. Secret. Bundy transmitted copies of the memorandum to the Secretaries of State and Defense. In a covering memorandum, he commented: “Rowen’s memorandum shows that the Trend visit was cancelled because of Cabinet worry over consultation with Americans before Cabinet decisions are taken. This has a Skybolt flavor to me, and I have suggested to Dick Neustadt that the Prime Minister ought to bare his soul to David Bruce, if he doesn’t trust anyone else to come and talk to us.” Trend subsequently came to the United States for talks with U.S. officials.