280. Telegram From the Embassy in the United Kingdom to the Department of Defense1

3989. Subj: Defense impacts of new economic measures.

Following letter from MOD Healey to Sec Def McNamara given to EmbOff at 10:00 P.M. 18 Nov. for urgent transmission.

“Dear Bob

You will just have heard of the new economic measures announced by the Prime Minister including cuts in public expenditure for the financial [Page 586] year 1968/69. Inevitably these cuts include a reduction in defence expenditure. In the summer we said we expected that defence expenditure in 1968/69 would be below a target of 2000 million pounds (at 1964 prices). We now plan that it will be below 1,900 million pounds. Some of this reduction will arise not from new programme cuts, but from processes of financial refinement and rephasing of production expenditure. For presentational reasons it may be necessary for us to lay particular stress on the programme cuts.

In searching for economies I have been most anxious not to make changes in the pattern of defence policy as we formulated it in July, particularly as regards our political commitments, the deployment of forces and the major elements in our military capabilities. While I have not yet decided finally on the make-up of the reduction, I am now hopeful that I can maintain these conditions.
Though of course, my colleagues in the Cabinet will have their say before final decisions are taken, I hope to prevent the economies affecting any of our major US purchasing programmes—the F.111, Phantom or C.130—though it may be necessary for us not to proceed with the Chinook deal. As you will appreciate, such an economy would have a presentational value greater than its military or financial significance.
You will be particularly interested in whether there is any major consequence for the Far East and the Gulf. Again, I hope to avoid this, though inevitably there may be one or two minor adjustments in the phasing of re-equipment. But, given the broader context and our desire to preserve other parts of our programme it is clear that we shall be unable to go ahead with the Aldabra project. This was, as you and I agreed in Ankara, a marginal option. In the pressure of priorities I can no longer see a space for it, particularly as its elimination will have a bigger public impact than its military cost or value might justify. It may therefore be necessary for us to announce the decision on Aldabra very early next week. I am sorry about this especially after all the hard preparatory work put in by both our staffs.
I hope to be able to discuss all this in greater detail with you at Brussels, when my detailed plans will be clearer, but I wanted you to know how my mind is working as soon as possible.

Denis Healey

  1. Source: Johnson Library, National Security File, Country File, UK, Vol. 12. Confidential; Immediate. Repeated to the Department of State. The telegram bears the notation: “Seen by Mr. Bator.”