Foreign Relations of the United States, 1964–1968, Volume XIII, Western Europe Region

218. Letter From John J. McCloy to President Johnson¹

Washington, November 21, 1966.

Dear Mr. President:

I have completed the review of our NATO policy which you asked me to undertake in your letter delivered to me on October 7.² I enclose my report herewith.

Within the time available, I have sought to obtain and analyze as much data and thinking in the Government bearing on the problem as I could. In doing so, I have had the full cooperation of the Secretaries of State, Defense and Treasury, the Joint Chiefs of Staff, the Director of the CIA, as well as many other officials of the Government who are charged with responsibilities related to the subject of my inquiry. They have made available many studies and reports bearing on my report, prepared in their Departments and Agencies. Members of their staffs have assisted in various ways, including preparing special studies for my benefit.

I have been much impressed with the dedication of the staffs and the quality of their work. Without this help it would have been quite impossible to carry out the assigned task. For all of this assistance, I am very grateful.

In the course of my studies, I have found unanimity among all the responsible officials that NATO is vital to the security of the United States, and I have proceeded on that assumption.

In conducting my review, I have confined myself essentially to the strength of the ground and air forces of NATO for the Central Front as the question of United States force levels is related to such forces. Accordingly, I have not dealt with naval forces or those which have been committed to the northern and southern flanks of NATO.

During my consideration of these matters, there occurred the collapse of the Government of the Federal Republic of Germany, an event which complicated an already complex task. Representatives of the German Government have continued to cooperate fully in an exchange of views and data, but the lack of a government in Bonn may delay our progress considerably. Insofar as any decisions by the Federal Republic bear on fiscal matters, it may, therefore, be some time before we can complete our tripartite review. Indeed, for the same reason, my own report to you on this aspect of our study cannot be as definite as it might otherwise have been.

To present my thoughts to you as simply and briefly as possible—and in a manner that I trust will assist decision-making—I have led off with:

Conclusions and Recommendations

This section is backed up by six analytical sections³ which explain how and why I reached my conclusions:

A. The Need for NATO

B. NATO Strategy and Forces

C. Military Effects of Force Changes

D. Political Effects of Force Changes

E. Balance of Payment Issues

F. The British Situation

From the many studies prepared for me by various agencies of the Executive Branch, I have selected six which I consider important enough to warrant your personal attention. They are separately bound as Annexes to this report:⁴

• Annex I: The Tripartite Report (Final) of Working Group I on Warsaw Pact Capabilities
• Annex II: The Tripartite Report (Draft) of Working Group II on NATO Capabilities
• Annex III: The Tripartite Report (Draft) of Working Group III on Balance of Payments Effects
• Annex IV: Special National Intelligence Estimate
• Annex V: Memorandum from Central Intelligence Agency
• Annex VI: Illustrative Concept for Brigade Rotation.

To facilitate early consideration of this report, I am sending copies to the Secretaries of State, Treasury and Defense, with an additional copy to the latter for the Chairman of the Joint Chiefs of Staff. I will be available, of course, to discuss the report whenever it suits your convenience.

I trust that you are feeling well after your operation.

Respectfully,

John J. McCloy

Enclosure⁵

CONCLUSIONS AND RECOMMENDATIONS

Conclusions:

1. NATO continues to be indispensable for European security and stability—interests vital to the US. (Section A)

2. The strategy of flexible response, backed by adequate conventional, as well as nuclear capabilities, is essential for balanced defense and effective deterrence under present conditions. (Section B)

3. Existing NATO conventional forces for the Central Region are adequate in size to support a flexible response strategy, though certain imbalances and deficiencies need correction. (Section B)

4. Any material reduction in US forces will probably trigger Allied force cuts. The cumulative effect could reduce substantially NATO conventional capability to support a flexible response strategy and lower the nuclear threshold. While the effect of such cuts on the deterrent cannot be assessed with precision, they could enhance to some degree the risk of Soviet pressures or actions at lower levels, especially in view of the growing Soviet strategic nuclear strength. (Section C)

5. With our existing capacity for deploying forces from CONUS to Europe, the time required to return any forces withdrawn to the US would make them much less effective than forces in place in Europe in terms of the flexible response strategy and the deterrent. The time required to deploy ground forces can be substantially reduced during the next several years by major expenditures for duplicate equipment, facilities, and necessary readiness. With such improvements, reinforcement would still take at least three weeks. (Section C)

6. Politically, any material withdrawal of US forces from Europe, in its present unsettled state, would seriously increase the risks of NATO disintegration and reduction of US influence in Europe. (Section D)

7. The extent to which Germany will be prepared to provide future offsets for US military expenditures in Germany will be uncertain until a new German Government gains a solid footing. The prospects for offsets should be improved by—(a) relating their amount to the net foreign exchange gain to the Federal Republic from the US military expenditures in Germany; (b) expanding the forms of offset to include non-military purchases, as well as neutralizing by financial means; and (c) relating the offset obligations to the state of the US and German balance of payments. (Section E)

8. The US has an interest in the continued maintenance of UK forces in Germany for their effect on the cohesion of NATO and the position of the UK in Europe. (Section F)

Recommendations:

1. I recommend, for the political and military reasons outlined, that the US should not withdraw any significant forces from the Central Region in Europe under current conditions.

2. I recommend that the US explore with the Government of the Federal Republic new arrangements to neutralize balance of payments effects of US expenditures in Germany:

(a) to the extent of net gains to the German balance of payments;

(b) by means of military purchases, other additive purchases, and appropriate financial devices; and

(c) subject to the general state of US and FRG balance of payments.

3. I recommend that the US explore with the UK and the Federal Republic of Germany how the UK can be enabled to retain on the Central Front its present level of forces.

4. I recommend that the US continue to encourage its NATO Allies to provide reasonable stocks, equipment, support and reserves for forces in conformity with a flexible response strategy.

1. Source: Johnson Library, National Security File, Agency File, NATO, U.S. Forces for the NATO Central Region, Box 39. Secret.
2. Not found.
3. None of the sections is printed.
4. None of the annexes is printed.
5. Secret.