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57. Reductions corresponding to the Second, Third or fourth Levels
woulû in our judgement be unacceptable to our allies, gravely wecken. NATO and create serious difficulties with other Governments (notably the United States and Germany) which would have consequences stretching. beyond MATO itself,
58. In consulting our N120 allies we would presumably not wish to orpress our intentions, at any rate initially, in terms of other our
Critical Level or our First Level. (In addition to tactical
considerations, we must recognise that although the content of our bilateral discussions with the Americans and Germans could be kept
confidential our discussions with NATO as a whole would almost
certainly become know.)
Discussion would show whether a solution
could be found, tolerably acceptable to MTO, enabling us to go down as far as the First Levol despite our own military judgement that this would in practice undermine MATC oredibility.
59. We recommend that we should as soon as possible have informal bilateral consultations first with the Americans and then with the
Gormans; and that we should then engage in formal Alliance
consultations. We would need to allow not less than two clear months for this process which would involve intensive discussion at official and Ministerial level. In view of the difficulty of conduoting such discussions in the month of August, the process would probably last until well into October; and the date would probably be further delayed if Ministers were to find themselves engaged in an election campaign. Nevertheless, provided we were able to reach a general basis of understanding with our allies it would still be possible for
Ministers to announce before the end of the year the main results of the defence review, including the future level of defence expenditure and the general shape and size of our armed forces in the late 70s and
early 80s. Further consulta don with NATO would have to continue thereafter, on the more detailed consequences of the basic decisions,
Commitments Outside NATO and in tho Mediterranean.
60. The extent of consultation necessary will of course depend on the decisions takken on particular areas, It would be important to consult the Americans over most of the field at an early stage, It would be particularly important to consult them about reductions which would affect those intelligence Facilities to which they attach importance, namely Cyprus, Hong Kong and Masirah,
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