Foreign Relations of the United States, 1964–1968, Volume XV, Germany and Berlin

227. Memorandum of Conversation¹

Washington, August 15, 1967, 4:15 p.m.

SUBJECT

• NPT; Liquidity; France and NATO; Offset; Defense Plans; U.S.-FRG Relations

PARTICIPANTS

• Americans
  • Secretary of State Rusk
  • Secretary of the Treasury Fowler
  • Secretary of Defense McNamara
  • Ambassador McGhee
  • Assistant Secretary Leddy
  • Mr. Harry Obst, Interpreter
• Germans
  • Chancellor Kurt Georg Kiesinger
  • Foreign Minister Willy Brandt
  • Heinrich Knappstein, Ambassador of the Federal Republic of Germany
  • Karl-Guenther von Hase, State Secretary and Press Chief
  • Karl Theodor, Freiherr von und zu Guttenberg, Parliamentary State Secretary
  • Dr. Horst Osterheld, Assistant Secretary
  • Dr. Johannes Prass, Assistant Secretary
  • Ambassador Swidbert Schnippenkoetter, Foreign Office
  • Dr. Ulrich Sahm, Deputy Assistant Secretary
  • Minister Georg von Lilienfeld, German Embassy
  • Mr. Claus Soenksen, Personal Aide to Foreign Minister Brandt
  • Mr. Berndt von Staden, Counselor, German Embassy
  • Mr. Hartmut Schulze-Boysen, Counselor, German Embassy
  • Heinz Weber, Interpreter

Chancellor Kiesinger thanked the United States participants for coming and making their time available to this meeting. Responding to Secretary Rusk’s inquiry, he said that in his meeting with the President they did not get into details on any subject. They had had a general tour d’horizon. Perhaps they would discuss details tomorrow. He had learned some interesting things. He had reported to the President on his talks with General de Gaulle in July. They then talked about East-West problems and European problems. On the nonproliferation treaty they just mentioned the subject without any detailed discussion. Foreign Minister Brandt added that he and Secretary Rusk in their discussions had covered the NPT problem.

Secretary Rusk said that in his talks about the nonproliferation treaty with Gromyko he had expressed the opinion that a number of countries would feel that “forever” was a long time and that the duration of the treaty would no doubt be raised. Gromyko had not indicated that a duration clause would be entirely unacceptable, but the Secretary thought the shorter the duration period, the more difficult it would be with the Soviets. We should now see how things develop in Geneva. After all, tabling the draft treaty is not the end of the process, but really the beginning. One hundred countries will have their own views. In his last talks with Gromyko the Secretary had found him not so much concerned with the FRG as with India. He added that we still have no final word from the Soviets as to whether they would be prepared to table the draft treaty or on what day. Perhaps it would be the end of this week or next week. The Secretary then asked Secretary Fowler to present the United States views on the liquidity problem.

Secretary Fowler said that, as he had discussed with Foreign Minister Brandt, the United States and the Federal Republic were together embarked on an ambitious but necessary venture in the financial field—to create within the IMF new arrangements to add liquidity to the world monetary system, which would be needed when the United States deficits came to an end and annual additions of gold to the world monetary system were found to be inadequate. Neither national currencies nor gold could in the future be a reliable source for accretions to liquidity. If this joint venture ends in failure, it could usher in a period of restrictionist practices by Central Banks, the adoption of beggar-thy-neighbor policies and the posing of a constant threat of financial crises such as we had had in the 30’s. Dr. Otmar Emminger, Director of the German Bundesbank, had been the leader of a remarkable group of monetary technicians who after a period of two years of intensive work had completed the outline of a plan for establishing a new system to create additional liquidity which will be considered at the September meeting of the IMF in Rio de Janeiro. During the past spring and summer the momentum behind this work had been retarded by the unwillingness of the French to agree to the general framework for a new plan which all of the other major countries want to establish. At the meeting of Financial Ministers in London on July 17, at which Minister Schiller and Dr. Emminger represented Germany, agreement was very nearly reached on the two issues of: (1) voting and (2) providing for the new liquidity in a form which would make it acceptable as reserves to the Central Banks. In fact, with a little give and take, agreement would have been reached at the July 17 meeting if it had not been for the French. The French Finance Minister, M. Debre, who Secretary Fowler thought was personally inclined to go along, simply did not have the authority. Now there will be another meeting in London on August 26 to resolve these two issues but the French problem remained. The others were anxious to go ahead. He knew there was some reluctance on the part of the FRG to leave the French, but in his view if all the rest were determined to go ahead this would be the best way to bring the French along.

Secretary Rusk asked if Mr. Fowler had heard from M. Debre since their July 17 meeting in London.

Secretary Fowler replied he had not. M. Debre thought it would be in the interest of the world to get this matter resolved but he had no authority to do anything about it. He emphasized that the United States could agree to the compromise on the nature of the new reserve asset worked out by the Italians and the Germans but that the French wanted it all their own way. The United States had gone at least 60 per cent of the distance to meet European views.

Chancellor Kiesinger said he was not an expert on this matter but knew that President Johnson was anxious for a solution. He had had the impression from Minister Schiller’s reports that good progress was being made on the matter.

Secretary Fowler replied the good progress was among the other participants with France remaining aside. Now the problem was to close the gap between the others and France. The United States had gone as far as it could down the road of concessions. Either of the two compromise proposals made by Italy and by Emminger/Schiller could be acceptable to the United States. But if further concessions were made only a meaningless gesture would result. The United States had gone very far to give General de Gaulle and Debre a political “out”.

Chancellor Kiesinger said he believed progress had been made at the Munich Conference of the OEEC Ministers.

Minister Brandt suggested the matter be further explored through other contacts between the two governments before their departure on Saturday.

Secretary Rusk inquired if the IMF and the proposed plan provided for individual vetoes.

Secretary Fowler replied this was not the case. However, adoption of the 85 per cent voting qualification would provide the EEC countries, acting together, the possibility of a veto.

Chancellor Kiesinger said he believed de Gaulle had taken a softer stand on this matter during their second meeting. His government could prepare the climate perhaps by talking to Debre before the London meeting. He would discuss the matter with Minister Schiller upon his return to Germany and see what could be done.

Secretary Fowler added the technicians had exhausted their possibilities. The matter now called for a political decision.

Secretary Rusk then asked the Chancellor’s opinion on rumors that de Gaulle might withdraw from the Atlantic Alliance, i.e. the North Atlantic Treaty. His reference to “blocs” in his last press conference may have pointed in that direction. He was interested in two questions:

a) Was it likely that he would withdraw?

b) If he did, how could the others best prepare for it?

Preparation would soften the shock the news would bring to many. Nobody, for example, would be very shocked to learn today that de Gaulle may want to withdraw from SEATO. But if the news of a French withdrawal from the North Atlantic Treaty came at an inopportune time, and without preparation, it could have serious effects on the Alliance.

Chancellor Kiesinger replied he concluded from de Gaulle’s statement during their meeting in July that he wanted to preserve the Western Alliance at least until such time as the relationship with the East had “completely changed”, that he did not intend to pull out of the NAT in 1969, as it was not conceivable that a “complete change” could come about so soon. He would try, however, to find out more on the matter in future talks.

Secretary Rusk asked if the Chancellor thought it was all right then to proceed on the assumption that the French would remain? Maybe by raising the issue he would only be putting ideas in de Gaulle’s head.

Chancellor Kiesinger assured the Secretary nobody could put ideas in de Gaulle’s head. He, for his part, felt satisfied that the phrasing “complete change” pointed to France remaining after 1969.

Secretary Rusk inquired if the FRG had started to think about the June 1968 expiration of the trilateral agreement and if the Chancellor though it might be a good idea to have an arrangement of a more extended nature rather than the previous one-year agreement. Would he prefer to start bilateral talks first or would he like to go into trilateral talks again?

Chancellor Kiesinger replied the British Ambassador had taken up this subject with him about two weeks ago. He had spoken of a medium or long-term arrangement. He (Kiesinger) could not make a full statement on this at this time. He was happy this matter was not on the agenda during this visit (said jokingly).

Minister Brandt added that before leaving for the United States yesterday he had asked that one man from each side explore the possibility of a suggested (by the British) 5-year agreement. He thought it advisable to have bilateral discussions first. Also, the last trilateral approach had been criticized by other NATO partners.

Messrs. McNamara, Fowler, McGhee and Leddy seconded the idea of bilateral talks to be held first and cited other reasons for it.

Secretary Rusk asked the Chancellor how he saw the timing of future German decisions to implement recent adjustments in military budget in relationship to the December defense review to be conducted in NATO?

Chancellor Kiesinger answered that a NATO questionnaire on this matter had to be filled out by October 6. They couldn’t answer all the questions by that time but he felt certain that a clear picture could be presented by December.

Secretary McNamara suggested the Chancellor might want to explore a method similar to the United States rotational plan, namely, to offset cuts in his active forces by strengthening his reserves, which now were rather weak. In any adjustment it was important to not give the Soviets the impression that it would result in a weakening of the Allied strength, and it must, indeed, not be weakened in fighting power.

He was anxious to meet with Minister Schroeder to discuss this matter. He was at the Chancellor’s disposal to answer any questions he might have.

Chancellor Kiesinger replied he basically agreed with McNamara’s comment on the reserves and on maintaining fighting power. As a first-line power near the border the FRG was eager to have as strong a deterrent as possible. Some people were worried that in an emergency rotational forces could not be redeployed quickly enough. This matter should be reviewed again in more detail.

Minister Brandt added that some understanding would have to be found in SACEUR about the counting of reserves as a NATO contribution. SACEUR considers “forces in being” as the only acceptable contribution, but this was before the introduction of the new concept of political warning time which resulted from the trilateral talks. But even if there were only 3 to 6 days of warning, Germany could mobilize its reserves. The political-warning theory, which the Germans had been more reluctant to embrace than others (laughter) would have to be reviewed again also.

Secretary McNamara agreed with the German Foreign Minister. He said the opinions of the United States, the FRG and SACEUR on warning time should be compared in a study.

Secretary Rusk added that if the Soviets were to make proportionate troop redeployments, this would help in giving the West additional warning time.

Secretary McNamara said an inspection system also would result in additional warning time.

He was aware also of the FRG’s strong interest in sharing more fully in nuclear planning, in knowing more about the nuclear hardware on their soil, and in having a voice in the decision of triggering or not triggering an atomic strike. The United States was anxious to cooperate on these matters and would provide any and all information. The NPG had been created for this purpose, but if desired, bilateral talks could be held first.

Secretary Rusk suggested the Chancellor might want to visit Omaha at some time. Secretary McNamara offered to take him there personally.

The Chancellor said that might be a good idea but did not commit himself one way or the other.

Secretary Rusk added the Chancellor might find Omaha quite appalling. It was another world that he hoped would never be heard from in the future. Nevertheless, it would be quite interesting to come to know it in the context of the common alliance.

Chancellor Kiesinger said the important thing in American-German and in Atlantic relations was to create a climate of trust. The people wanted to know where they stood. It would be very beneficial if some of the groundless rumors could be kept out of the papers. The news media were spreading the impression that NATO was slowly but surely disintegrating. Many people were influenced by this in their judgments and willingness to support the alliance.

Secretary Rusk pointed to the need for NATO to take a greater interest and play a greater role in areas of the world beyond the immediate borders of the defensive alliance. He cited the Middle East as an example.

Chancellor Kiesinger interjected this was bringing up the question whether NATO should be a political institution or just a defensive military organization.

Secretary Rusk said he had been surprised to learn during a visit to SACLANT headquarters last year that the people there drew a line at a certain parallel as limiting their field of naval planning. They were not interested in anything below a certain latitude. He could not conceive how the area south of that line in the Atlantic could not be of interest to the security of the Atlantic Ocean. Similarly he could not see how one could really cope with the problem of European security without considering the Middle East, for example.

Chancellor Kiesinger said NATO should at least study those matters and have a position on them.

Secretary Rusk thanked the Chancellor for the generous amount of time he had allotted for this discussion.

The meeting then broke up at 5:27 p.m.

1. Source: Department of State, Central Files, POL GER W–US. Secret. Drafted by Leddy and Obst and approved in S on August 24, by Secretary Fowler, and by Secretary McNamara. The meeting was held at the Blair House.