CAB148-30-Defence and Oversea Policy Committee Meetings Relating to 1967 Disturbances-1967 — Page 107

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2.

FOREIGN EXCHANGE COSTS OF BRITISH FORCES IN GERMANY

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The Committee had before then a note by the Secretaries (OPD(67) 23)

covering a note by officials on the current tripartite talks and the foreign

exchange cost of our forces in Germany.

THE FOREIGN SECRETARY said that there was to be a meeting of the

Tripartite Group in Washington on 20th March at which we would have to

indicate our attitude to the latest proposals made by the United States and

Federal German Governments for offsetting the foreign exchange cost of our

forces in Germany. The German Government had offered to pay during the

financial year 1st April 1967 to 31st March 1968 £36 million, balf on defence

and half on civil purchases, and hoped to find an additional £4 million on

civil purchases. They had said that it was their assumption that we should

not withdraw more than one brigade and had expressed the hope that any withdrawal should not take place this year. It was possible also that the

Germans might use balances held in London to stimulate commercial purchases

which would not otherwise be made; this might result in additional civil

purchases of about £5 million. The United States had suggested that we

should count against the foreign exchange cost of our forces in Germany the

sum of £7 million spent in the United Kingdom by the American forces recently

moved here from France, the £12.5 million of additional purchases in 1967

which they undertook in December 1966, and certain advance payments and

accelerated purchases of about £5 million under the F111A arrangements.

addition the United States representative Mr. McCloy, had now offered, with

the full support of President Johnson, to make new purchases here of

£7 million. The American offers were conditional on our withdrawing not more than one brigade. We night reasonably accept that half of the

£12.5 million United States purchases be taken into account, since half related to the financial year 1967-8 which was in question. We should not

however take account of any acceleration of purchases under the F111A

agreement, since these were inapplicable to offset costs in respect of Germany.

But on this basis, and if the saving of £4 million from the withdrawal of one

brigade were added to these offers then we would reach a total sum of £69 million. Our total foreign exchange costs would amount to £82 million

after taking account of the £12 million saving from administrative and

logistic economies and we would then be left with a gap of £13 million.

In

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