288. Memorandum of Conversation1

SUBJECT

  • British Budget and Defense Cuts

PARTICIPANTS

  • UK
    • Foreign Secretary George Brown
    • Sir Paul Gore-Booth, Permanent Under Secretary, Foreign Office
    • Sir Patrick Dean, British Ambassador
  • US
    • The Secretary
    • John M. Leddy, Assistant Secretary, EUR
    • Irving Cheslaw, EUR/BMI

Foreign Secretary Brown said that Britain had lost the battle to avoid devaluation—a matter on which USG was so understanding—because they had been trying to do too much at home and abroad with too slender resources. Since devaluation the Government had been obliged to consider what could be done to free a considerable part of its resources for greater exports as well as to consider what cuts in spending must be made to assure confidence and to avoid further devaluation. The conclusion of HMG was that this required a switch of 1 billion pounds, including substantial cuts in spending at home. This was all particularly unpalatable because it involved an attack on some cherished social programs, such as health and educational services. It would also involve a mammoth rise in taxation as well as a reduction in overseas spending. HMG did not want to attack the aid program; this would be counter productive. Therefore, Brown said, they were forced again to look at defense expenditures overseas. The Ministry of Defence had taken the view that they had made all the possible hardware and manpower cuts as long as the present commitments remained.2 Therefore they have had to look again at the commitments implied in the July 1967 decisions.

[Page 604]

Brown said that they had come to the following conclusions: first, they must accelerate the rundown in the Far East. This meant there would be no bases on mainland Asia by March 31, 1971, instead of by the mid-1970’s. They must drop the idea of maintaining (after withdrawal) special capabilities in that area such as an amphibious force. They would however have a general capability in Europe from which troops would be available for use anywhere. Second, they must also leave the Persian Gulf by the same time. This was dictated by (a) savings, although admittedly they would not be very great, and (b) the decision about the Far East which meant there would be no carriers or bases available to support or relieve the Persian Gulf after that date.

Brown went on to say that it was their intention to “renegotiate” the Anglo-Malaysian Agreement, but not to renounce it. They would remain in CENTO and SEATO, but obviously when the troops ran down the force declarations under SEATO would have no content. Hong Kong would be the only exception to this general policy: they propose to maintain and retain their position there. Mr. Brown concluded these were the firm views of his colleagues subject to the reports presented to the Cabinet this coming weekend by George Thomson, Goronwy Roberts and Brown following their visits to the Far East, Middle East and the U.S. respectively.

The Secretary said he had several observations to make. At the outset he wanted to remind the Foreign Secretary that, as he had a reputation for being soft spoken, he wished Brown would add several decibels when he conveyed these views to the Cabinet. The Secretary was profoundly dismayed by the proposed withdrawal from Southeast Asia and the Persian Gulf, and he was particularly disturbed by the intention to announce these decisions. Both areas were in a high state of turmoil and free world interests were in jeopardy. The Secretary said his advice, more succinctly, was “be Britain.” This step would have profound and detrimental implications for the US and the UK. The Secretary said he would dismiss as of “no consequence” the idea that forces at home could support CENTO and SEATO. The pressures behind these moves would make it impossible for British soldiers to leave British shores.

The Secretary said that if, pending its entry in Europe, the UK dropped back to a Little England he could not help but feel that this would generate a descending spiral across the board. It would have a profound effect on the economic and financial relations with these countries in the Middle East and Southeast Asia. By consulting their fears rather than their confidence, the British would bring about the very thing they were struggling against. This was an alarming development. The Secretary thought that HMG needed to be concerned with developments elsewhere, such as what would the Malaysians think the [Page 605] UK would do if their remote islands came under attack. When HMG announced last July that they would leave the Far East by the mid-1970’s, the U.S. Government had understood this would be subject to peace in the area, that the situation would be under review and that there would be no pull-out until there was stability in the area. There is no stability in the area yet although there has been some progress, for example, in HMG’s role vis-á-vis Indonesia. He said that many Americans were essentially isolationists, but since 1945 the US has had 300,000 casualties in the effort to maintain peace around the world. The British had set the example and had helped us make decisions of will in World War II and in the post-war period. The Secretary said he was disturbed when the teacher abandoned the field. Americans would ask if no one else was interested, why should they be. Authentic isolation was growing in the US because of the growing feeling that Americans were carrying the problem alone. General de Gaulle had contributed to this, but if the UK went down the trail of deliberate withdrawal the effects would be profound.

The Secretary said that as he looked at the foreign exchange costs of British presence in the Persian Gulf, i.e. approximately 12 million pounds per year, he thought these costs would be multiplied if the governments there decided there was no point in staying with the UK. In the Far East, Malaysia and Singapore, Australia and New Zealand would look elsewhere, and the direct economic impact would be greater than the cuts.

Foreign Secretary Brown said that he had hoped to make clear that the Persian Gulf decision was not based on the minor saving that might result, but that it was a logical outcome of the major decision to withdraw from the Far East. He said it was not true to say the Persian Gulf was in a state of unrest. At the moment, it was more stable than it had been for a long time and relations between major parties were as good as ever. The likelihood of unrest seemed minimal at this moment. As regards the Far East, Brown said that the July 1967 decision had never been intended to mean that they would review the basic decision to leave. They had always considered, even if it had remained unstated, that the reference to stability in the area was itself confined to a 1973-77 time frame.

The Foreign Secretary said that he wished to note also that this did not represent a choice between defense cuts or cuts in social services, but rather that there would also be very substantial cuts in their home programs. In fact, they would derive very little short-term benefit from the cuts in their external programs. HMG could not keep forces overseas in face of a sick economy at home which was unable to sustain these forces. The inescapable facts were that their economy must be strong if they were to play any part in world affairs. This did not reflect a desire to withdraw to a Little England.

The Secretary said he did not feel as comfortable about the Middle East as did Foreign Secretary Brown. Iran and Saudi Arabia were [Page 606]worried; and both Israel and the Arabs were concerned about Soviet penetration of the Middle East. At NATO it had been agreed that there would be further talks about Soviet penetration in the Middle East. The Secretary thought that some discussion in NATO on these British intentions would have been appropriate if not obligatory. The Secretary asked if they had considered whether the prospects of improved trade figures were relevant to these decisions.

Mr. Brown said the economic ministers thought the adverse consequences of devaluation would be felt first, such as in the increased cost of imports; the improvement in exports would not show until around 1969-70. This would depend on the availability of resources at home, the development of substitutes for imports, on establishing confidence in the pound and in the UK’s internal policies, as well as British determination to carry these out. Brown said it was hard to fault these assumptions and recommendations. In reply to the Secretary’s question as to whether there had been an authentic national debate on these questions, Brown said he thought the majority view was that they were trying to do too much, that they were carrying more than their share of the peacekeeping burden, and in favor of cutting their overseas commitments. There would be a debate in Parliament next week but there was no doubt that support for ending their Far East commitments ran through the left, center, and right wings of the Labor Party. He added that it was generally felt that HMG was struggling with a burden which their economic competitors did not share.

The Secretary asked Mr. Brown if the pullout from the Persian Gulf was wiser than an equivalent reduction in foreign aid. Mr. Brown said he opposed a reduction in foreign aid. In fact, one of the results of these decisions was that the aid program would go up. For example, there would be the need to provide compensatory assistance to Singapore and Malaysia. As for the Persian Gulf, Brown said HMG’s continuing presence was more divisive than unitary; withdrawal was important for its own sake and this was the right moment for it. The Foreign Secretary reiterated that they could not stay in the Persian Gulf once they were rid of the Far East bases. They believed they could only get hardware savings out of such decisions as cutting the carrier force. For example, they will not refit a third carrier; this will save 30 million pounds. If there is no carrier force beyond ′72 which is capable of returning people and equipment everyone could conclude that they must come out of the area. He thought they would provide support via aircraft and, if necessary, they could make arrangements to obtain the necessary transport planes. Brown said they did not want to maintain ships against theoretical possibilities.

Assistant Secretary Leddy asked if it was necessary to be so explicit about the withdrawals. Brown said that his colleagues believed [Page 607]that it was necessary to be clear cut as there would be leaks. Furthermore, if they followed this timetable, they must stop the buildup in Bahrain and Sharjah. The moment that buildup stopped the basic decision would become self-evident. They would also be accused of vacillation if they did not make a clear cut decision, and this reduced the risk of an Aden type situation. A reduction not accompanied by an announcement would help the extremist forces. Brown said there had been varied reactions out of the Middle East, but the most serious governments have known what was coming. They would settle down to consider other arrangements. This was also an argument for being precise. The time would come when HMG would not be the policeman; it should help these governments concentrate on what they must do for themselves in the security field.

Secretary Rusk said that HMG’s departure would eliminate any contribution it could make to deterrents such as in Malaysia vis-á-vis Indonesia. The U.S. could not pick up these responsibilities; the resulting gap would be contrary to free world interests. Brown said there was no good reason why Malaysia, Singapore, Australia, New Zealand and even the U.S. should not get together to discuss how to fill that gap; there was no reason why it should be filled by HMG. The Secretary said USG was not in a position to advise as it could not take on any more in Southeast Asia; our current costs were too high. He asked what would be said at the CENTO meeting in April. Mr. Brown replied that HMG’s main contribution to CENTO was the equipment on Cyprus and no changes were contemplated there. As for SEATO, he reiterated that the declaration covers the forces in the area but that when there were no forces nothing could be declared. HMG would remain a member of SEATO; any forces would come out of their general capability. This obligation was not the same as that under NATO.

Secretary Rusk asked if they contemplated a demobilization of forces. Brown replied affirmatively, saying they intended a rundown in their army, navy and airforce. While the troops stationed in Europe would be available to go anywhere, they would need to make a choice of flareups occurred in a number of places simultaneously. He assumed USG intended some demobilization of its own after Viet-Nam. The Secretary said the latter assumption was correct, but the U.S. would be able to move back quickly from various bases.

The Secretary said that he deduced from Mr. Brown’s remarks the acrid aroma of a fait-accompli; and presumably what he said would not make much difference. He hoped that HMG would look hard at the implications of these decisions, adding also that any announcements the British make would elicit strong Congressional reaction. He hoped no action would be taken that would diminish the accomplishments for peace in the post-war period. An announcement such as the [Page 608]British propose would throw a long shadow far greater than the magnitude of the actions themselves.

Mr. Brown reiterated that these were intentions which had been firmed up before there were meaningful consultations. He had been given the charge to explain the intentions and to report back the Secretary’s reactions. In that sense this was not a fait-accompli, but he wished not to leave the Secretary with any doubt of the intention of his colleagues to make final decisions tomorrow and announce them next Tuesday. The Secretary said that what was really important was that this represented a major withdrawal of the UK from world affairs, and it was a catastrophic loss to human society. These decisions involved the highest level of judgment and of instinct about where the human family was going. We were facing a difficult period in world affairs and Britain was saying it would not be there.

The Secretary noted that, as a government, we were not making choices or indicating preferences between the Far East and the Middle East. We believed our interests were in trouble in both areas if the British took these measures. He also said he had the impression that the need for making an advance announcement was not really related to their operational requirements. Rather, he thought this was relevant to the other cuts they were making. Perhaps they were underestimating their people. Mr. Brown said all governments have this problem; each must assess its own political difficulties. However, these decisions were based on the belief that these were the right things to do, not on political reasons.

  1. Source: Johnson Library, National Security File, Country File, UK, Vol. 13. Secret; Exdis. Drafted by Cheslaw and approved in S on January 23. The memorandum is marked Part III of V. The meeting was held in the Secretary’s office.
  2. During a subsequent part of the discussion, Brown, in reply to a question from Assistant Secretary Leddy, stated: “They had not decided in the same firm was as they had made other decisions what to do about the F-111’s.” A memorandum of this portion of the conversation is in the National Archives and Records Administration, RG 59, Central Files 1967-69, DEF 12-5 UK.