285. Letter From President Ford to West German Chancellor Schmidt1

Dear Mr. Chancellor:

The current balance of payments offset agreement between the Federal Republic of Germany and the United States of America will expire on June 30th of this year.

Recent years have brought major developments in the international economic arena, some of which have significance for our arrangements to offset the balance-of-payments cost the United States incurs through the deployment of American forces in the Federal Republic. However, while much has changed since our two countries concluded the first bilateral offset agreement in 1961, the most important considerations have remained constant:

—Like my predecessors I remain committed to the maintenance of U.S. forces in Europe at present levels, subject only to such mutual and balanced reductions as may result from negotiations now underway between members of the Atlantic Alliance and the Warsaw Pact. Given the continuing buildup of Warsaw Pact forces and the grave uncertainties now confronting NATO throughout the Mediterranean region, I believe that the U.S. military presence in Europe is as vital today for the security of the Alliance as at any previous time. As you know, we are taking steps to render our commitment more effective through the substitution of additional combat forces for a certain number of supporting troops.

—Through the years we have found burdensharing arrangements such as balance of payments offset effective and in fact essential to ensure sufficient political support in the United States for our policy to continue the American military presence in NATO Europe. The cost of [Typeset Page 879] maintaining this presence is substantial both in absolute terms and relative to the size of the U.S. economy.

An extensive and thoughtful review of all factors bearing on this subject has led me to conclude that a continuation of our bilateral offset arrangement serves the vital interest of both our countries and that such arrangements remain warranted by economic and political considerations. Hence I would like to propose to you that we appoint and instruct negotiators to meet as soon as practicable to discuss the parameters, time span and composition of a realistic new offset agreement which would take effect on July 1, 1975. It is my hope that negotiations leading to conclusion of such a new agreement could be completed prior to that date, but in any case well before the end of this year. I look forward to receiving your response to this proposal.

With best personal regards,

Gerald R. Ford
  1. Summary: Ford urged the conclusion of a new U.S.–FRG bilateral offset agreement.

    Source: Ford Library, NSC Institutional Files (H-Files), Box 59, NSDM 293—U.S. Approach Toward Enhancing the Allied Contribution to the Defense of NATO (1). No classification marking. On Ford’s decision to send this letter to Schmidt, see Documents 68 and 69. On May 21, Schmidt told Kissinger: “Some time ago I received a letter from your President concerning another of these horrible offset agreements. My idea, frankly, is not to answer the letter. We already have piles of money in your treasury, in bonds and so on and I will not buy anything that I do not need. If you insist, I could transfer some of the money I already have over there into some other account but I simply will not go through buying things that are not needed.” (Memorandum of conversation, May 21; National Archives, RG 59, Records of Secretary of State Henry Kissinger, Entry 5403, Box 23, Classified External Memcons, May–December 1975, Folder 1)