46. Memorandum From Secretary of the Treasury Kennedy to President Nixon 1

It is with considerable concern that I view the interpretations being placed upon your remarks concerning NATO made in your briefing aboard the Saratoga and press conferences in Ireland.2 Numerous classified cables and press reports suggest that we are dropping the broad “burden sharing” concept. Since a satisfactory “burden sharing” arrangement with our NATO Allies would help us and the Alliance politically, militarily, and financially, I believe we should continue to press for a satisfactory solution.

In my view the domestic political situation, particularly on the Hill, concerning reductions in our NATO forces is serious. This political problem is intimately tied to our critical budgetary and balance of payments condition. At the same time we must be careful that our relations with our European Allies are not upset by any precipitous action either by ourselves or by the Congress. With a proper “burden sharing” mix all of these problems can be met or at least blunted for a sufficient period of time to enable us to adjust to new conditions. There have been a number of discussions by myself personally and my staff with counterparts from our NATO Allies. It must be recognized [Page 114]that the current initiative in “burden sharing” being undertaken under the leadership of Germany is unprecedented.3 In addition to whatever benefits may accrue to us it has increased the unity and thereby the strength of our Alliance. This in itself has made the preliminary efforts worthwhile.

The “burden sharing” mix mentioned above in my opinion is important to consider, for no one element of “burden sharing” will provide the complete solution to our political, military, or financial problems. We have looked at this problem carefully and believe that an appropriate mix would consist of some direct budgetary contribution on a multilateral basis to the U.S.; an offset agreement between the U.S. and the Federal Republic of Germany; a transfer of certain military functions from the U.S. to our NATO Allies; and an improvement and modernization of our Allies’ national forces.

The U.S. should also consider for both tactical and substantive reasons a small reduction in our own forces committed to NATO. The Europeans have consistently stated that they are concerned that we do not make “substantial” reductions. A small reduction would be proof to our Allies that we are truly having problems and that their “burden sharing “ effort was warranted as the reduction would have been much greater if they had not been forthcoming. Further, I detect a continuing tendency on the part of some of our Allies not to believe that we are having serious difficulties and that we therefore will not take any action. A small reduction would reinforce our verbal statements that they must do more for themselves in addition to helping our budgetary and political problems with the Congress.

In some of the internal cables recently sent on this subject and discussions which have been held within the Executive Branch a particular fallacy has developed. There are those who argue that we urge the Europeans to come up with additional funds with which they either improve their own forces or contribute to the U.S. In my opinion these cannot be equated. The Europeans have consistently made it quite clear that if they come up with additional funds, particularly in the short term, it will be because of the help they can provide the U.S. There is no indication that they plan significantly to increase their own defense budgets in order materially to improve their own national forces. Aside from difference of opinion as to the military need, if the European governments were to increase spending on their own forces, that would tend to be inflationary for them to the extent that they spent the money in their own country. This is an important reason why they are unlikely to do it.

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Further, the argument being raised by some that we would be considered mercenaries has no validity. All we are asking in direct budgetary contributions is that the Europeans pay some share of the cost of local supplies and services. The U.S. forces would continue to be paid by us in their entirety.

We have an opportunity to improve the Alliance as well as helping to solve some of our problems. A well-planned negotiating effort with our Allies concerning “burden sharing” around the framework mentioned above will materially help. I must, however, say that the cables issued subsequent to your statements and discussed particularly with the Germans will make the task more difficult. An immediate clarification along the lines of the draft cable prepared by Mel Laird and discussed with you would immeasurably help to rectify the situation.4 I therefore urge that we take this step and start a dialogue as requested by the EURO group minute as soon as possible.

David M. Kennedy 5
  1. Source: Washington National Records Center, Department of the Treasury, Secretary’s Memos/Correspondence, 1966-1970: FRC 56 74 7, Memo to the President September-December 1970. Confidential. Copies were sent to Secretaries Laird and Rogers.
  2. See Public Papers of the Presidents of the United States: Richard M. Nixon, 1970, pp. 782-783 and 804-809.
  3. See Document 45.
  4. The draft cable was not found.
  5. Printed from a copy that indicates Kennedy signed the original.