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77. Editorial Note

U.S. negotiations with the Federal Republic of Germany for a new offset agreement took several months longer than expected. The first round of negotiations, which were held in Bonn March 10–11, 1971, revealed just how far apart the two sides stood on the issue even though negotiators remained optimistic. While the United States proposed that Germany cover 80 percent of the balance-of-payments expenditures (approximately $850 million annually), the FRG suggested $135 million in direct budgetary support (for the first time), $287 million for military procurement in the United States, and contributions to rehabilitation of U.S. military installations in Germany. (Memorandum from Kissinger to Nixon enclosing a Department of State report, April 5; National Archives, Nixon Presidential Materials, NSC Files, Box 685, Country Files—Europe, Germany, Vol. IX) At the second round of negotiations held in Washington April 15–16, the United States held to its position of $850 million while the FRG increased its total offer to $110 million per year in direct budgetary support and $445 million per year in military procurement. (Memorandum for the President—Evening Report, April 16; ibid., President’s Daily Brief, April 17–30, 1971) Despite a delay in the third round of negotiations, originally scheduled for May 18–19 but postponed until June 28–29 in Bonn to allow for additional informal discussions, the two sides remained at an impasse. (Department of State paper on Offset Negotiations—Current Status, July 28; ibid., NSC Files, Box 685, Country Files—Europe, Germany, Vol. IX) After a fourth round of negotiations held in Washington August 3–4, the two sides decreased the differential to $171 million over two years. (Memorandum from Rogers to Nixon, September 29; ibid., RG 59, Central Files 1970–73, FN 12 GER W)

In the months that followed, discussions between Secretary of Defense Melvin Laird and West German Defense Minister Helmut Schmidt (see Document 74) and between Secretary of State William Rogers and West German Foreign Minister Walter Scheel (Memorandum from Rogers to Nixon, November 16; National Archives, Nixon Presidential Materials, NSC Files, Box 685, Country Files—Europe, Germany, Vol. X) became the focus for working out remaining differences. On November 27, a joint State/Defense telegram transmitted a message to Schmidt that signaled an imminent agreement. The telegram stated that President Richard Nixon had approved the U.S. position on offset, which now included Schmidt’s suggestion: “Specifically, our negotiators are authorized to agree that DM 600 million from new monies be made available over the two year period for barracks rehabilitation. In addition, they are authorized to agree that DM 100 mil[Page 332]lion be transferred from Account No. 2 for interest payments on the offset loan.”

The telegram continued: “[W]e very much hope that you can agree to additional sums to be used for agreed defense purposes. The funds might be used for additional procurement, interest subsidy for the remaining 2½ years of the offset loan, or the funds might be deposited in an account in Germany to be used in support of joint U.S.–FRG projects. You might have some additional ideas as to how the resources might best be used for defense purposes. If so, we would be pleased to consider them.” (Telegram 214940 to Bonn, November 27; ibid., RG 59, Central Files 1970–73, FN 12 GER W)