24. Editorial Note

In the Spring of 1969 the NSC Under Secretaries Committee, pursuant to NSDM 12, coordinated and monitored the Nixon administration’s preparations for negotiations with Germany on the offset question. Meetings of U.S. and German experts were held in Washington on May 13 and 14 and in Bonn on May 20 and 21. Concerning the earlier meetings, Helmut Sonnenfeldt sent Henry Kissinger a May 20 memorandum reporting on his luncheon meeting with German Ambassador Pauls that day. According to Sonnenfeldt, Pauls said “the Germans had been baffled” by some U.S. positions which seemed to be related to German performance on currency matters and a possible link between Mark revaluation and an offset settlement. (National Archives, Nixon Presidential Materials, NSC Files, Country Files—Europe, Box 681, Germany, Volume II, 4-6/69) In a May 22 memorandum, Kissinger asked Bergsten and Sonnenfeldt to look further into matter, saying “one thing we must avoid is any arm-twisting of the Germans.” (Ibid.)

In preparation for the next round of negotiations in Bonn on June 2 and 3, on May 23 Assistant Secretary of State for European Affairs Hillenbrand sent Deputy Under Secretary Samuels, chairman of the U.S. offset negotiating team, a memorandum for a May 26 meeting of the Under Secretaries Committee on the offset negotiations. Hillenbrand said the principal issue for the meeting was approval of a memorandum to the President and he attached a State draft and a Treasury counter-draft that “unfortunately differs in tone and negotiating content.” The State draft was silent on monetary linkage, but the Treasury draft said: “We see no advantage in explicitly bargaining with the Germans on Special Drawing Rights or other monetary cooperation questions in connection with the offset agreement. We do believe the discussions during the course of the offset would show the need for discussing broader monetary questions. Further, it is our opinion that a firm negotiation could be an inducement toward discussing these broader and longer range questions.” (Ibid., RG 59, S/S Files: Lot 83 D 305, NSDM 12)

A May 29 memorandum from Elliot Richardson to President Nixon summarized the negotiations thus far and presented the Under Secretaries’ recommendations for the upcoming talks. Regarding the question of linkage, the last paragraph of Richardson’s memorandum reads:

“We have not raised with the Germans the question of using the offset issue as part of the bargain on broad monetary compensation. There are no indications of fruitful possibilities along that line at the [Page 64]moment. However, we will remain alert to this possibility, if it at any time seems promising, in the course of the agreement period. Also in accordance with the NSDM 12, we would in our discussions avoid any commitment on U.S. force levels.” (Ibid., Nixon Presidential Materials, NSC Files, Country Files—Europe, Box 681, Germany, Volume II 4-6/69)

Attached to Richardson’s memorandum is an undated memorandum to the President, signed but probably not sent, in which Kissinger argued somewhat differently: “On the merits, the Germans should make every concession we ask. After their failure to revalue or take any alternative measures, they should do everything possible to offset their huge balance of payment surplus.” Crossed out language in the conclusion reads:

“The merits are all on our side. And I told the Germans that you would take into account on the offset their overall monetary performance, which has been completely unforthcoming on revaluation or any alternatives. The Under Secretaries’ Committee does not think that including the broader monetary issues in the offset talks would be fruitful at this time. There are major international monetary decisions to be made in the next few months, however, and the offset is one of our few levers with Germany. I therefore think we should leave the door open for awhile.”

At the June 2-3 discussions in Bonn, the U.S. side presented its positions, and the Germans made several comments. The status of the negotiations in June and July was summarized in a July 7 memorandum from Richardson to President Nixon (ibid., RG 59, S/S Files: Lot 83 D 305, NSDM 12) and a July 7 memorandum from Bergsten to Kissinger. (National Archives, Nixon Presidential Materials, NSC Files, Country Files-Europe, Box 682, Germany, Volume III 7-11/69) A 2-year agreement for $1.52 billion by categories of FRG expenditures was finally signed on July 9. The joint statement summarizing the terms is in Department of State Bulletin, August 4, 1969, page 92. Bergsten’s evaluation of the agreement is in a July 9 memorandum to Kissinger. (National Archives, Nixon Presidential Materials, NSC Files, Country Files-Europe, Box 682, Germany, Volume III 7-11/69)