276. Memorandum From the President’s Deputy Assistant for National Security Affairs (Scowcroft) to President Nixon1

SUBJECT

  • Letter to Chancellor Brandt on Offset

The negotiations with the Germans on the bilateral offset agreement for fiscal years 1974–1975 are stalled. So far, the Germans have of[Typeset Page 857]fered to offset only about 40 percent of our estimated expenditures of $3.3 billion for the two fiscal years.

Time is working against us. U.S. balance-of-payments (BOP) figures are strengthening while the FRG is heading toward an economic downturn, largely due to the energy crisis. The worsening situation will increasingly reduce our leverage in getting a good agreement. Furthermore, the increasing appreciation of the dollar vs. the mark will lower the dollar offset for a given contribution in marks.

In parallel with the German offset, we are proceeding in NATO to reach a multilateral offset arrangement. This effort has taken on added significance in light of the Jackson-Nunn Amendment. The Amendment requires withdrawal of U.S. troops from Europe in the same percentage as the NATO allies fail to offset our NATO-Europe BOP deficit on military account in FY 74. The multilateral effort in NATO is marking time, however, pending conclusion of the German offset negotiations, which will create the target figure for the NATO effort.

In light of this situation, we face the risk of having to withdraw troops from Europe pursuant to the Jackson-Nunn Amendment unless we move quickly to get the German offset negotiations back on the track.

I am convinced it will take a letter from you to Chancellor Brandt to get the negotiations moving again quickly. I thus recommend that you sign the attached letter. This letter:

—stresses your interest in speedy conclusion of the offset agreement;

—assures Brandt that the Germans will not have to pay twice for offset—once bilaterally and once in the NATO multilateral effort—except for a slightly increased German share in NATO infrastructure costs, of which they are already aware;

—reiterates the importance of meeting the requirements of the Jackson-Nunn Amendment, to avoid mandatory, unilateral U.S. force reductions in Europe;

—requests that Brandt review the German position and renew negotiations so that the offset agreement can be concluded within the next several weeks.

Recommendation

That you sign the attached letter to Chancellor Brandt.

Secretaries Kissinger, Schlesinger and Shultz concur. The text has been cleared with Ray Price’s office.

  1. Summary: Scowcroft reported the state of the U.S.–FRG bilateral offset negotiations.

    Source: National Archives, Nixon Presidential Materials, NSC Files, Box 754, Presidential Correspondence, Germany, Willy Brandt 1972 (1 of 3). Confidential. A stamped notation on the memorandum indicates the President saw it. Attached but not published is the letter to Brandt, which Nixon signed. In his reply to Nixon, Brandt said that FRG negotiators, who would be ready to resume talks by mid-February, would “be guided by the view that the undiminished presence of United States forces in Europe is of overriding importance to the security of our two countries and the alliance.” He also suggested that “since the conditions of all our offset agreements as laid down by NATO in 1957, i.e. serious balance of payments difficulties on the party of a stationing country, no longer seem to exist, allowance should be made for this fact in the negotiations.” (Letter from Von Staden to Nixon, January 29; ibid., NSC Files, Kissinger Office Files, Box 61, Country Files, Europe, General, German Exchange (1 of 3))