242. Memorandum of Telephone Conversation Between the President’s Special Assistant (Rostow) and John J. McCloy1
Washington, March 15,
1967.
John McCloy called at 8:30 a.m. today with the following report.2
- 1.
- The British reversed their previous position and accepted ₤7 million additional being spent by the U.S. as a result of transfers from France.
- 2.
- They did not accept F–111 acceleration.
- 3.
- They accepted ₤6 million of the ₤12.5 from the old deal as a contribution to closing the gap.
- 4.
- They are prepared to settle for an additional ₤5–7 million as opposed to the old ₤14–15 million figure.
- 5.
- McCloy feels we should act quickly to meet this and to meet it on the high side; that is, at ₤7 million rather than ₤5 million. The balance the British are prepared to swallow via neutralization and slippage.
- 6.
-
McCloy agreed that, aside from
the Germans deciding today to go to ₤41 million, the critical issue is
to drive forward now:
- —To put the whole deal back into NATO context; and
- —To find a longer term basis for neutralization arrangements, including expanded German military and other purchases in the U.K.
- 7.
- In talking with Duckwitz
McCloy made it clear that the
deal involved:
- —German generosity to the British;
- —A British cut of not more than one brigade;
- —A U. S. rotation of not more than one division.
- 8.
- McCloy believes that we have come to a good moment because the Germans are realizing there is not much to be gotten from Paris and the process of opening up to the East will be slow. Therefore, they probably are more ready than even a few weeks ago to think of tightening up the West as a basis for their policy. The outcome of the French election may have helped marginally.
- 9.
- As for means of meeting the British gap of, say, ₤7 million, McCloy feels that whether it comes from additional U.S. military expenditures in Britain or from some of the German funds already committed here is a matter of indifference. He does believe, however, we should move promptly.
- 10.
- Finally, McCloy noted that the European press is beginning to talk intelligently for the first time about the problem; that is, saying what NATO needs is a foreign exchange neutralization plan rather than a military offset plan; and it needs this on a long term basis.
WR