298. Memorandum From Secretary of Defense Brown to the President’s Assistant for National Security Affairs (Brzezinski)1
SUBJECT
- Philippine Base Negotiations (PRM–14) (S)
(S) Decision minutes of the April 1977 PRC meeting on the Philippine Base negotiations2 directed an interagency Task Force to develop possible compensation packages and the Department of Defense to undertake an assessment of reductions at Clark Air Base and the Subic Bay naval complex.
(S) US Compensation for use of Bases. Attached is the Philippine Base Compensation Study which was undertaken in an Interagency Task Force chaired by the Department of Defense with participation by representatives from State, Treasury, AID, and OMB.3 In preparing its recommendations, the Task Force considers the following factors as being the most important:
—President Marcos has rejected our offer of $500 million in military assistance (grants and FMS credits) over five years and there is no indication that he would now reverse his position on a similar offer of grant MAP and FMS financing. Since a lower offer would seriously diminish prospects for a new agreement and the USG is not prepared to substantially increase its offer, new elements are necessary to develop a mutually acceptable compensation package.
—“Filipinization” shows promise as a major new element in any compensation package and should be included. This seeks to exploit concessions which we may be prepared to make in connection with the bases themselves, i.e., the value of returned facilities, defense cooperation, direct-hire, contractual services, and transfer of excess property. The precise dimensions of this new element will require further study should this approach be deemed feasible.
—Rent. The Philippines prefer this form of compensation (any direct US monetary payment to them without US conditions or controls on resulting GOP expenditures). Rent, however, is fraught with uncer [Page 985] tainties and should be considered only as a fallback if our position on the bases becomes more precarious than seems likely. Major obstacles associated with the payment of rent are:
—Establishment of a precedent which can work against us in any other base negotiations worldwide;
—Diminution of the concept of mutuality in our relationship with the Philippines and vulnerability to exorbitant demands;
—Introduction of an element without major precedent for congressional consideration with implications for congressional responsibilities and legislated restrictions such as the Foreign Assistance Act.
—Security Supporting Assistance has the advantage of satisfying a key Philippine demand and of facilitating the elimination of MAP while avoiding the dangers of rent. Its use in the Philippines is consistent with its established purpose of supporting national security objectives, has precedent in other negotiations (Spain), retains the concept of mutuality in our relations with the Philippines, and is a familiar concept in the US Congress. As a substitute for MAP, Security Supporting Assistance would eliminate direct grant support to the Philippine Armed Forces. This may gain additional support for the agreement in the US but could hamper its acceptability to the influential Philippine military establishment.
—As noted in Tab B of the Interagency Study, AID does not concur with the use of Security Supporting Assistance in the base negotiations on the grounds that such use would conflict with other AID priorities, place them in a position of having to justify military objectives to the US Congress, and undermine their leverage in a development assistance strategy which is directed at the poor majority of Philippine society.
—General Economic Assistance (AID, EXIM, PL–480) will continue to be a key underpinning of a satisfactory relationship with the Philippines. We should seek to exploit this valuable contribution to Philippine development, but an explicit link to the base negotiations already has been rejected by Marcos. Such a direct link would not gain the US additional leverage but might complicate a highly successful AID program.
(S) Notwithstanding AID’s nonconcurrence, the Task Force recommends that at such time as negotiations may resume;
—The US negotiator be authorized to utilize a five-year Compensation Package “C” (pp. 18–19 of the study) which embodies the following security-related elements:
| Filipinization | $ 50–120 million |
| FMS Financing | 250–300 million |
| Security Supporting Assistance | 190–200 million |
| Total: | $490–620 million |
—The US negotiator be instructed to remain as close as possible to the base figures totalling $490 million over five years (of which $215 million would be grants). In this regard, the FMS financing and security supporting elements of Package “C” total $60 million lower than corresponding elements of the previous offer.
—The US negotiator be authorized to use selectively additional amounts in each category of compensation only as necessary to secure final agreement and in no case to exceed the ceiling for any given category.
—The US negotiator avoid any offer to include $65 million for the phaseout of MAP unless we run into serious obstacles with the Philippine military establishment.
(S) The Department of State should coordinate an effort to consult early with appropriate committees of the US Congress on the general outlines of Package “C” and prior to any discussions with the Philippines.
(S) US Reductions at Clark and Subic. With respect to the US presence at Clark Air Base and the Subic Bay, we have identified reductions sufficient to reduce our profile and support the “Filipinization” aspects of our compensation package. These reductions do not jeopardize combat readiness and should not signal a withdrawal of US military power from the Western Pacific. The political circumstances in Asia, however, necessitate caution in managing this program to prevent it from signifying what is clearly not indicated or intended.
(S) Within these parameters, we plan to implement a three-year (FY 78–80) plan to reduce the Air Force presence at Clark by 25–30% and the Navy presence at Subic Bay by 5–7%. The F–4’s will remain at Clark and relocation of the 13th Air Force Headquarters will be deferred and reexamined in 1978, but the hospital will be reduced to a base facility and the aeromedical evacuation and C–130 engine maintenance functions will be shifted to Yokota, Japan. This plan may be reduced if we are not able to find adequate housing for these units at Yokota or nearby Tachikawa. There will be no significant change in functions or services provided by the naval shore establishment at Subic Bay. Because of the political and other factors involved we will not implement this plan without further guidance from the White House.
(S) US Negotiating Posture. As the next step, I suggest that the Secretary of State proceed to integrate all elements of our approach to the Philippine base negotiations for early consideration by the Policy Review Committee.
- Source: Carter Library, National Security Affairs, Staff Material, Far East, Armacost Chron File, Box 4, 8/26–31/77. Secret.↩
- See Document 296.↩
- Not attached. The interagency study on the compensation package, August 22, is in Carter Library, National Security Affairs, Staff Material, Far East, Armacost Chron File, Box 4, 8/26–31/77.↩