268. Memorandum From the Under Secretary of State for Security Assistance (Tarr) to the President’s Assistant for National Security Affairs (Kissinger) and the Director, Office of Management and Budget (Weinberger)1
- F–5 B/E Aircraft Proposal for the Republic of China
The GRC under project “Enhance Plus” provided 48 F–5A’s to South Vietnam. We agreed to return 20 of these aircraft and replace the other 28 F–5A’s with 28 F–5 E’s. We also agreed that: “The United States will give sympathetic consideration to the coproduction/coassembly of F–5 E aircraft in Taiwan, from which the F–5 E replacements mentioned above… may be manufactured.”2
Since a coproduction/coassembly aircraft capability is something President Chiang has long sought and since we stated we would give “sympathetic consideration” to the F–5 E project, we have examined a proposal for direct procurement of 15 F–5 B’s (trainers) and the coproduction/coassembly in Taiwan of 100 F–5 E’s (memorandum at Tab A).3 After taking into account our relations with the PRC, the costs of the proposal and its effects on US and ROC economies, likely Congressional reaction, and our understanding with the GRC under Enhance Plus, we have concluded that coproduction/coassembly of F–5 E [Page 1120]aircraft in Taiwan would be a reasonable and sound project and would fulfill our obligations to the GRC under Enhance Plus.
Accordingly, I propose to:
- —Approve the 100 F–5 E coproduction/coassembly project, limiting eventual fabrication/subassembly in Taiwan to the nose and tail sections, and the procurement of 15 F–5 B’s in the US.
- —Limit total financing of this project to no more than it would cost to purchase 15 F–5 B’s and 100 F–5 E’s direct from US production ($225.3 million).
- —Finance the F–5 E coproduction/coassembly project with $45.9 million in US grant funds (the flyaway cost of 28 F–5 E’s from US production) and the balance—$179.3 million—through FMS credits to be negotiated and disbursed over the production period.
- —Approve the obligation of grant funds of not less than $17.6 million this year from FY 1973 MAP funds as a temporary financing measure to be reimbursed from the $45.9 million to be sought in an overall supplemental request for funding the entire Enhance Plus program.
Unless you have objections, I intend to approve this project in time to meet our oral commitment to the GRC to provide a response to them by December 1, 1972. I would of course be grateful for your reactions and comment.
The Department of Defense concurs in this proposal. Ambassador McConaughy has been consulted and also concurs.4
- Source: National Archives, Nixon Presidential Materials, NSC Files, Box 523, Country Files, Far East, China, Vol. XI. Top Secret; Sensitive; Nodis.↩
- See Document 264.↩
- Attached but not printed is a 7-page review of ROC requests for F–5 aircraft, Congressional and economic issues, financing, and recommendations.↩
- Documentation on the Department Defense’s position is in Washington National Records Center, RG 330, ISA General Files: FRC 330 75 0155, China, Rep. of, 1972, 0001; and ibid., OSD Secret Files: FRC 330 77 0094, China (Nats), 400–137–800, 1972. In telegram 5684 from Taipei, November 22, McConaughy wrote: “[W]e had virtually committed ourselves to the program during our negotiations with the Premier and there is considerable urgency to achieve a preliminary understanding. I am also confident that the proposal you are about to send to Under Secretary Tarr is very fair and will prove acceptable to the GRC.” (Telegram 5684 from Taipei; National Archives, RG 59, Central Files 1970–73, DEF 12 CHINAT) In a December 15 memorandum to Kissinger, Holdridge and Kennedy suggested that Kissinger approve the recommendations in the Tarr memorandum. A December 15 memorandum signed by Kissinger to Tarr reads in its entirety: “The F–5 aircraft proposal contained in your memorandum of November 24 is approved. Our representatives should make clear to the GRC that this is not an initial step toward development of an independent jet aircraft production capability on Taiwan. Please arrange the necessary advance notification of Congress.” (Both memoranda are ibid., Nixon Presidential Materials, NSC Files, Box 523, Country Files, Far East, China, Vol. XI) Telegram 230192 to Taipei, December 21, informed McConaughy that he could notify ROC officials of this decision. (Ibid.)↩