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1. FOREIGN EXCHANGE COST OF BRITISH FORCES IN GERMANY
(Previous Reference: OPD(67) 3rd Meeting, Iten 3)
The Committee had before then a note by the Secretary of the Cabinet (OPD(67) 9) covering a report by officials on the cost in foreign exchange of British forces in Germany, on the implications of reducing those forces,
on the line to be taken at the forthcoming tripartite talks and with the
United States and Germany, in advance with the United States, and on the
additional measures beyond those already in hand to ensure that any forces
withdrawn from Germany could be adequately accommodated.
THE MINISTER OF STATE FOR FOREIGN AFFAIRS (MR. THOMSON) said that in
the bilateral discussions the previous October the previous Federal German administration had made an offer of £311⁄2 million to offset the foreign
exchange costs of our forces in Germany in 1967-68. The United States
Government later undertook to make additional purchases in the United Kingdom of £121⁄2 nillion in 1967 provided that we made no changes (other than in concert with them) before 1st July 1967 in the troop or supply
dispositions of our forces in Germany which would affect their combat
capability. The new Federal German Government had now indicated that
budgetary difficulties would probably prevent any contribution from them during the forthcoming German budgetary year. In response to our strong
protests at this news, they had however agreed to resume the tripartite
discussions in London on 27th February and their representative,
Herr Duckwitz, had held prior talks with the United States and ourselves.
He would be discussing the situation with the United States Government in
Washington the following week. Herr Duckwitz had repeated in a more
official form the German warning that we could expect no defence offset
purchases for 1967, and had stated that in the German budgetary year 1968
only some £11 million would be available. He had further offered approximately £132 million for civil offset purchases during 1967.
In the light of this situation, the Prime Minister and the Foreign
Secretary might take an early opportunity during their forthcoming visit to
Bonn to emphasise the seriousness of the position to the Federal German
Chancellor. He proposed to stress to the United States administration the
grave difficulties with which the German action had faced us and to seek
their agreement to a joint approach to the Germans when the tripartite
talks resumed. He would also seek to persuade the Americans that our
problem had a degree of urgency which their own offset problem lacked and to obtain their support for the view that our problem should be given priority. Our aim should be to persuade the United States to support us
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