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274. Memorandum From the Director of the Bureau of the Budget (Mayo) to President Nixon 1

SUBJECT

  • Quid pro quo for Spanish Bases

In the attached memorandum,2 the State and Defense Departments conclude that it is necessary to offer up to $175 million in military grants—plus post-Vietnam surplus equipment, plus $100 million in credit to retain our Spanish base rights for the fourth five-year period. Your approval will constitute an Executive Determination to seek future year funds to fulfill the proposed commitment.

In your consideration of the proposal, several points deserve your careful attention:

1. This is the first base negotiation by this Administration. It will be taken as an indication of our willingness to pay countries like the Philippines, Turkey, Greece, Ethiopia, Portugal and Iran which also provide base, overflight, and intelligence rights. The proposed 75 percent increase over the 1963–69 grants for Spain could increase the quid pro quo for other countries by $200 million or more over current planning levels over the next five years.

2. These bases are very valuable to Spain. Their existence is integral to Spain’s political relationship with the United States. Spain could not refuse to extend our base rights without effectively destroying the basis of our involvement in her security and detracting from the political respectability she derives from the defense relationship with the United States. Spain also derives $50 million annually in foreign exchange from the bases.

3. This proposal requires careful Congressional checks. Spain is a sensitive country on the Hill, especially in light of the current “state of exceptions” restricting civil liberties.3 The 75 percent increase in cost for no apparent increase in military capability will probably raise questions. The proposal to shift funding for the quid pro quo from the Mili[Page 844]tary Assistance Program to the budget of the Department of Defense would require legislation as well as appropriations and would raise old and sensitive jurisdictional issues between the Foreign Affairs and Armed Services Committees and could appear to be an “end run” around the former.

4. Although the State-Defense memorandum requests approval of up to $175 million, it appears to me that $175 million will be our initial offering. This increases the possibility that we will end up paying more.

5. We should bear in mind that the Spanish refusal to accept our offer last fall reflected, in part, a desire to see whether they could get more from a new administration.

Recommendation

I believe, therefore, that we should consider a bona fide initial offer of $125 million or at most $150 million in grant funds, especially since the fair value of equipment delivered will probably be somewhat higher and augmented by Vietnam surplus. I also believe that we should continue to fund the Spanish base quid pro quo in the Military Assistance Program to avoid congressional problems and a precedent for shift of other country base costs into the larger Defense budget.

Robert S Mayo
  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 706, Country Files—Europe, U.S.-Spanish Base Negotiations. Secret.
  2. Not printed. See Document 275 for a summary.
  3. Following the August 3, 1968, assassination by Basque terrorists of a senior police official, the Franco government proclaimed a state of emergency (August 15) and reintroduced laws that effectively placed the Basque provinces under martial law. Large numbers of suspected separatists were arrested under these laws. Trials of those arrested continued after the state of exception was lifted.