299. Memorandum From the Executive Secretary of the Department of State (Tarnoff) to the President’s Assistant for National Security Affairs (Brzezinski)1

SUBJECT

  • Philippine Base Negotiations: Interagency Task Force Recommendations on Compensation; Defense Plans for Force Reductions

State’s concurrence and comments on the Philippine Studies you included under cover of your August 29, 1977 memorandum2 follow.

COMPENSATION

State concurs in the Interagency Task Force recommendations and Study on Compensation in the Base Negotiations. With regard to the elements of the recommended compensation package we note the following:

Filipinization

A. The U.S. needs to know if President Marcos considers this important new concept worth pursuing. The September visit of Dick Holbrooke provides the first opportunity to explore the idea with the Philippine leadership.

B. If the Philippines is interested in the concept, it needs to be fleshed out considerably for both the short and long term:

—What facilities can be transferred?

—What functions (e.g. portions of air defense) can be turned over to Philippine operation?

FMS Financing and Arms Transfers

The Administration’s arms control policy may inhibit expansion of military assistance and FMS sales and financing to the Philippines. We will need to take account of U.S. objectives in limiting arms transfers before making any commitment to the Philippines. This will be a prob[Page 988]lem even without a new agreement, particularly given Philippine plans for military expansion.

Security Supporting Assistance

A. Public Law 95–88, Section 110, amends Section 115 (a) of the Foreign Assistance Act in order to relax the prior prohibition on Development Assistance and Security Supporting Assistance to the same country, cited by the Task Force as the major obstacle to use of SSA in the Philippines.

B. The AID position opposing the inclusion of SSA in the compensation package was largely based on the fact that a transfer from MAP (which previously was included under the National Defense Function) to SSA (which was included under the International Affairs Function) artificially inflated the International Affairs Function within the budget. However, effective September 1, 1977, MAP too was transferred to the International Affairs Function. Accordingly, the amount of the International Affairs Function will not reflect whether we chose to employ MAP or SSA funds.

C. We understand that the Development Coordination Committee under NSC-EPG auspices should soon complete a review of foreign assistance programs3 which may include recommendations on the use and administration of SSA. In the light of AID’s non-concurrence, any final decision regarding the use of SSA in military facilities negotiations should take into account the other studies going on concurrently.

D. In any event, we plan to explore this concept with Marcos during the Holbrooke visit and then with the Congress before taking a definite position on it.

FORCE REDUCTIONS

The Department generally concurs in the plans of the Defense Department for reductions in our air and naval presence which neither reduce our combat readiness nor signal a withdrawal of U.S. military power from the Western Pacific. We would emphasize the following considerations:

Timing of Decisions and Announcements

A. Force cuts will not per se gain us additional leverage in negotiations with the Philippines though a reduction of our profile helps our relationship. However, we have recently learned of Philippine Air Force plans to seek the use of portions of Clark. We should hold the announcement of force reductions for use as a bargaining chip in the [Page 989] event we are able to accommodate the Philippine request under a reduced presence.

B. We have reduced our forces by 50% in the Philippines in the last decade without making sweeping public announcements. There is no reason to lump these limited new consolidations into a major package for decisions which would make the reductions appear more dramatic than the facts warrant, particularly if it should become public. A means of avoiding this might be to decide now on certain immediate parts of the program, with decisions on other parts to be taken later.

C. We agree that the movement of the 13AF Headquarters should be deferred and re-examined in 1978.

LONGER-TERM BASES PRESENCE

We have time to take stock of our longer-term ability to increase the Philippine stake in our basing presence.

A. The Defense study addressed solely the question of short-term limited adjustments to our force posture.

B. State believes that, consistent with the decision of the Policy Review Committee meeting on the Philippines in April,4 it is important to examine the extent to which the U.S. could transfer to Philippine control other operations after sufficient training and preparation, for example participation in air defense, area air traffic control and operation of joint training facilities. Would it be possible to envisage a joint use arrangement such as that which we have with Spain or other countries?

C. We recommend that a special task group under Defense Department management undertake a thorough review of such possibilities if Holbrooke’s initial explorations with President Marcos indicate that the Philippines has an interest in this concept.

Peter Tarnoff5
Executive Secretary
  1. Source: Carter Library, National Security Council, Institutional Files, 1977–1980, Box 35, PRM–14 [1]. Secret.
  2. Two documents were sent under an August 29 covering memorandum from Dodson to Tarnoff and Saunders: Brown’s August 25 memorandum to Brzezinski on the Philippine base negotiations and the August 22 interagency study on compensation. The covering memorandum and the interagency study are in Carter Library, National Security Affairs, Staff Material, Far East, Armacost Chron File, Box 4, 8/26–31/77. Brown’s memorandum to Brzezinski is printed as Document 298.
  3. Regarding the Development Coordination Committee study, see Foreign Relations, 1977–1980, vol. III, Foreign Economic Policy, Document 277.
  4. See Document 296.
  5. Wisner signed for Tarnoff above Tarnoff’s typed signature.