Memorandum of Conversation with Secretary of State Dean Acheson, Ambassador of Great Britain Sir Oliver Franks, James Bonbright, and Jacques Reinstein

SHOURITY INFURMATION 500 5/5 5407 DEPARTMENT OF STATE Memorandum of Conversation conflict DATE: May 9, 1952 SUBJECT: Financial Support of British Troops in Germany PARTICIPANTS: Sir Oliver Franks, British Ambassador to the United States. The Secretary Mr. James C. H. Bonbright, Deputy Assistant Secretary, EUR. Mr. Jacques J. Reinstein, GER. COPIES TO: American Embassy, Paris American Embassy, London EUR HICOG, Bonn DMS Department of Defense GEA Department of the Treasury GER - Mr. Reinstein Mutual Security Agency GER Files u. S. GOVERNMENT PRINTING OFFICE 16-61120-1 Sir Oliver read to the Secretary instructions which he had received from Mr. Eden on the subject of the German contribution to defense and its effect on the British position. He said that these instructions had been conveyed to him after the problem had been considered by the Cabinet. In the first place, the British Government was anxious that the United States Government should be fully cognizant of the longer-term implications of conclusion of the contractual arrangements with respect to the British position. It was clear from the studies which have been made at Paris that the cost of building up the German contingents would rise very rapidly in the NATO Fiscal Year 1953-1954. In consequence, there is little prospect that all or a substantial part of the cost of support of the British Forces in Germany after June 30, 1953, can be met from the German contribu- tion. The British Government is most anxious to carry out the commitments which it made at Lisbon with respect to the stationing of British Forces in Germany, to which it attaches great strategic importance. At the same time, in the light of the hard realities of the British economic position, a very serious problem will be posed. An increase in the United Kingdom's defénse budget would involve very serious strains. Beyond this, the situa- tion involves the most serious implications from the viewpoint of the British balance of payments situation. The Ambassador indicated that the British DECLASSIFIED STATE DEAT. LTR. 5.5-t3 - SECURITY INFORMATION Project NLT d2-4 By NLT- HLU NARS, Date 6-15-13