78. Editorial Note
The G-10 Ministers met in London September 15-16, 1971. In his prepared remarks Secretary Connally recognized the difficulties in achieving the $13 billion turnaround in the U.S. current account, but took strong exception to those who thought the U.S. goal overly ambitious. He said it was “important,” it was “essential,” it was “absolutely essential, that a formula be developed in the very near future that would anticipate that the balance of payments would be corrected in a relatively short period of time.” Connally’s statement, along with those of other Ministers and Governors of the G-10, are in the Washington National Records Center, Department of the Treasury, Volcker Group Masters: FRC 56 86 30, 1971, VG/LIM/71-35.
Connally went on to say that he knew the G-10’s purpose was to consider problems “strictly monetary in character” and that he did not want to inject items into the discussion that were not soluble in the
G-10, but he thought the G-10 ought to concern itself with other problems that at least were soluble in the Councils of the nations that the
G-10 represented. Connally mentioned two: restrictive trade practices and the need to promote free trade and a fair and equitable trading system and defense burdensharing. Concerning the latter, Connally noted that the United States devoted 8.9 percent of its GNP and 36 percent of its budget to defense, and no other industrial nation came close to those magnitudes. Connally asserted this should be discussed and considered as part of the overall realignments that were coming.
Separately, but related to defense burdensharing, National Security Decision Memorandum 133 on “U.S. Strategy and Forces for NATO: Allied Force Improvements” was sent by Henry Kissinger to the Secretaries of State and Defense on September 21. Kissinger noted that the President had decided the NATO Allies should be asked to commit [Page 194]a minimum of $2 billion during the next 5 years, in addition to the commitments already planned under the European Defense Improvement Program (EDIP), to correct deficiencies in NATO’s immediate combat capability. (National Archives, Nixon Presidential Materials, NSC Files, Agency Files, Box 289, Treasury Volume II 1971)