CAB148-30-Defence and Oversea Policy Committee Meetings Relating to 1967 Disturbances-1967 — Page 33

SECRET

Page 33

In further discussion it was noted that, following the series

of failures of United States-nade Starfighter aircraft, there was

evidence that the Germans might seek not to rely upon the United States

as their financing source of defence equipment and would prefer to obtain future equipment from the French and curselves for example,

we were seeking to interest them in purchasing the Anglo-French Jaguar

and variable geometry aircraft. Such a development however, though

welcome in the long term, would be helpful to our immediate problem

only if the Germans were prepared to pay money on account for the

supply of such equipment some way in the future; and this they showed

no sign of being prepared to do.

Summing up the discussion, THE PRIME MINISTER said the Government's policy remained as decided in July, to find the full foreign exchange

cost of forces maintained in Germany either through German offset

payments or by withdrawing those troops whose foreign exchange cost

was not met. In the light of the latest developments described by the Foreign Secretary the contingency planning which had been amended in the light of our acceptance of the United States offer of $35 million defence purchases should now be carried out on the lines indicated in

discussion. Officials should prepare an urgent report for the

Committee, for consideration before the resumption of the tripartite

discussions, under the heads outlined in the Foreign Secretary's statement, on the basis that withdrawals would begin on 1st July 1967.

This should concentrate initially on the withdrawal of two brigade

groups. When this study had indicated firm figures of troops and

families to be withdrawn, the Ministerial Committee on the Provision

of Accommodation for Service Families should consider them and make

recommendations to the Committee. Additionally the Foreign Secretary

should consider whether the NATO/WEU procedures for securing agreement

to reduction of forces should now be set in motion.

The Committee

J

(1) Took note of the Foreign Secretary's statement about the

present German attitude towards offset payments.

(2) Instructed the Secretary to arrange for officials to carry out an urgent study of the matters indicated in the Foreign Secretary's statement and to report to the Committee before the resumption of the tripartite discussions on or about 21st February.

(3) Invited the Joint Parliamentary Secretary, Ministry of

Housing and Local Government to arrange, in the light of the studies at (2) above, for the Ministerial Committee on the Provision of Accommodation for Service Families to consider the accommodation requirements of forces withdrawn from Germany and make recommendations to the Committee. (4) Invited the Foreign Secretary to consider whether the

NATO/WEU procedures for seeking agreement to force reductions should be set in motion, and to report back to the Committee.

Cabinet Office, S.W.1.

30th January 1967.

Page 33

-11- SECRET

Page 33