CAB148-30-Defence and Oversea Policy Committee Meetings Relating to 1967 Disturbances-1967 — Page 109

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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to enable two brigades to be withdrawn in 1967-68.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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