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should achieve by the end of 1967-68. It was further pointed out that the
arrangements were highly satisfactory to us since it was not practicable to withdraw more than one brigade in 1967-68; the possibility of withdrawing a
second brigade could be considered in future negotiations for offset arrangements for 1968-69 and later years. Concern was, however, expressed
that, despite the early discussions in the Committee, it had not proved
possible to make satisfactory accommodation arrangements in the United Kingdom
to enable two brigades to be withdrawn in 1967-68. The problem was the
considerable amount of work involved in renovating barracks to accommodate
the infantry battalions.
If,
In discussion of the suggestion that the Germans should be asked to
purchase United Kingdom bonds linked with development aid, the point was made
that the Germans were unlikely to agree to this in addition to the proposals
they had already made. We had previously indicated our unwillingness to
accept a solution similar to that arranged between the Americans and the
Germans involving the purchase of bonds; if the Germans now thought we would
be willing to entertain the idea of a loan they might withdraw some of their
previous offers. On the other hand, this would be acceptable if the bonds
were in respect of development aid which would count towards our present total
aid expenditure and provided they covered the full extent of the gap that
would remain in respect of our foreign exchange costs in Germany.
however, the proposal were put forward for the first time at the next round of
the tripartite talks, the Germans would say that they needed time to consider
it and might use it as an excuse for postponing the talks. This would
certainly not be in our interests. Prior warning should therefore be given
to the Germans, and our Ambassador in Bonn should be asked to advise on the
issue. Subject to his views, the best arrangement might be for an approach
to be made to the Federal German Economics Minister, and for the Governor of
the Bank of England to approach at the same time the Federal German Central
Bank.
It was also suggested that the repayment of the bonds might be tied
not to the repayment of aid but to the achievement of satisfactory offset
arrangements in the future; but in view of the difficulties which the Germans had experienced over meeting their offset obligations in full, this course
was not likely to be satisfactory.
Summing up the discussion, THE PRIME MINISTER said that subject to the
outcome of the consultation on the proposal in respect of a German purchase
of United Kingdom bonds our representative at the tripartite discussions in
Washington on 20th March, the Minister of State for Foreign Affairs
(Mr. Thomson), should be instructed to accept the German and United States offers, and to say that we would withdraw not more than one brigade in
1967-68 and that the withdrawal would commence on 1st January 1968.
should however make it a condition that we reserved the right to make further
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