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    "ocrText": "Copy No. 34 of 35 Copies.\nTOP SECRET\nU.S. EYES ONLY\nISAC D-4/7a\nJune 20, 1951\nINTERNATIONAL SECURITY AFFAIRS COMMITTEE\nScore, Duration and Feasibility of the North Atlantic\nTreaty Medium Term Defense Plan and Related\nUnited States Assistance\nThe attached document 1s an appreciation, essential\nto further planning and action, of the scope, duration\nand cost of achieving the agreed U.S. policy objective\nof creating military strength in Western Europe which\nwill deter Soviet aggression, or resist invasion if it\noccurs. The paper also states certain possible U.S.\ncourses of action in the light of this appreciation.\nThe original draft of this paper, ISAC D-4/7,\nwas discussed at the Tuesday, June 19 meeting of\nISAC, but the attached document, which embodies\nmodifications suggested in the discussion and a\n\"summary and recommendations section, has not been\nstudied by the member agencies. It was agreed by\nthe Committee, however, that the modified version\nshould serve as a basis for Cabinet level discussion\nof the problem by Thursday afternoon, June 21, or as\nsoon thereafter as practicable. This tight schedule\nis dictated by the necessity for securing decisions as\nsoon as possible on the recommendations of the paper in\norder to provide the U.S. Standing Group member with\na clear U.S. position, and to enable preparations for\nthe forthcoming MSP Congressional presentation to go\nforward.\nATTENTION is directed to the security considera-\ntions attaching to the contents of this document. It\nis to be seen and discussed only on a need-to-know\nbasis.\nDECLASSIFIED\nJohn F. Hickman\nE. O. 11652, Sec. 3(E) and 5(D) or (E)\nSecretary\n23,1976\nDept. of State letter, Aug.\nPR BSECT NCT76-6\nBy NLT- HC NARS 10-20-26\n2:10\nFOI\nSECRE\nTOP\nTOP SECRET\nU.S. EYES ONLY\nNORTH ATLANTIC TREATY MEDIUM TERM DEFENSE PLAN\nAND RELATED UNITED STATES ASSISTANCE\nSummary and Recommendations\n1. Costing of the Medium Term Defense Plan and estimates\nof European economic capacity indicate & short-fall be-\ntween (a) total defense of the European NAT countries plus\nGermany, and (b) maximum probable European defense efforts\nplus United States assistance programmed through FY 1952,\namounting to approximately $25 billion. U.S. assistance\nfor FY 1953 and 1954 if projected at the rate requested\nin the Mutual Security Program for 1952 would amount to\n$12 1/2 billion for the two years combined. The problem\nis to find ways and means of bringing the European portion\nof the North Atlantic defense program within politically\nand economically tolerable limits of European military\nefforts and U. S. (plus Canadian) assistance, without\nsacrificing the essential character of the military objec-\ntive.\n2. It is considered impossible to obtain a sufficiently\nlarge European effort to meet the full remaining deficiency,\nand undesirable to press upon the Europeans a probably\nunattainable additional defense effort over and above the\nvery large increases already projected. It is considered\nDECLASSIFIED\nimpracticable and undesirable for the U.S. to cover the\nE. O. 11652, See 3(E) and 5(D) or (E)\nfull\nDept. of State letter, Aug. 23,1976\nPROJECT NCT 76-6\nBy NLT. HC NARS Date 10-20-76\nTOP SELACITY\nTOP SECRET\nTOP SECRET\nU.S. EYES ONLY\n- 2 0\nfull deficiency through increased aid. The costing and\ncapacity estimates now available are not believed to\nwarrant the abandonment of the MTDP as a basic objective\nor fundamental alterations in strategic plans for\nEuropean defense. At the same time, it is not feasible,\nin relation to the requirements e ither of Congressional\npresentation or of further negotiation in the NATO, to\nevade or postpone the problem posed by these estimates.\n3. It is recommended that a solution to this problem be\ncomposed of the following elements:\na. Continued efforts to induce and enable the Europeans\nto make the maximum practicable contribution to\nWestern defense, but without expecting or seeking\nmilitary efforts so far beyond political and economic\ncapacities as to cause either their discouragement or\nthe acceptance of tasks inconsistent with political\nand economic stability. Negotiations may be directed\ntoward increased efforts somewhat in excess of those\nassumed in deriving the figures mentioned above, but\nplanning should not assume the realization of such in-\ncreases;\nb. Seeking adjustments in the timing, quality or quantity\nDECLASSIFIED\nof MTDP requirements in such fashion that total ex-\nE. O. 11652, Sec. 3(E) and 5(D) or (E)\nDept. of State letter, Aug. 23,1976\npenditures to July 1, 1954. may be reduced by perhaps\nBy NLT.\nHL\nNARS\nDate\n10-20-36\nTOP SECRET\n$8 to $9\nT\nU.S. EYES ONLY\nSECRET\nU.S. EYES ONLY\nTOP SECRET\na 3\n$8 to $9 billion (1/8 of total cost) without\nsacrificing the basic military objectives of\nthe Plan;\nc. Consideration of the possibility of U.S. assist-\nance during the remainder of MTDP on a scale\nperhaps 30% greater than the annual rate now\nprogrammed for FY 1952, 1.e., a sum through FY\n1954 totaling $15 to $17 billion beyond the amounts\nalready recommended to the Congress for FY 1952.\n4. It 1s recommended that a position paper for the\nCongressional presentation be prepared on the size and\nduration of U.S. assistance to NATO envisaging a possible\nsubstantial increase in the level of U.S. assistance in\nFY 1953 and 1954 and otherwise reflecting the general\nanalysis in the attached paper although not including\nthe specific quantitative estimates.\n5. It is recommended that the U.S. members of the\nStanding Group, the Council Deputies, the Defense\nProduction Board, and the Finance and Economic Board\nbe authorized to initiate negotiations in the NATO, and\nthat the appropriate agencies be authorized to initiate\nnegotiations bilaterally, working toward completion of\nthe Medium Term Defense Plan, if necessary with acceptable\nmodifications which do not jeopardize the central military\nDECLASSIFIED\nE. O. 11652, Sec. 3(E) and S(D) or (E)\nobjectives\nDept. of State letter, 8.23.76\nBy NLT. ; NARS Date 10.20.76\nTOP SECRET\nT\nU.S. EYES ONLY\nTOP SECRET\nRET\nU.S. EYES ONLY\n- 4 -\nobjectives. In so doing, the U.S. representatives should\nmake clear that the preliminary U.S. appraisal of total\ncosts indicates serious economic and production difficulties.\nwhich will require intensive collective efforts to over-\ncome and which may require adjustments in quality, quantity,\nor timing, though not basic objectives; and that the U.S.\ndesires to work out with its Allies an effective solution\nduring the summer and early autumn of 1951.\n6. It should also be made clear that, in view of the\nsubstantially larger probable total costs than previously\nanticipated, the U.S. Administration would consider\nrecommending to the Congress a significant increase in\nannual rates of military end-item and economic support\nassistance for the Fiscal Years 1953 and 1954, provided,\nand only provided, that the Plan multilaterally worked\nout and the expanded undertakings of the other members\ndemonstrates the possibility of obtaining the basic\nmilitary objectives of the MTDP, even if not the full\nPlan on the target dates in every respect.\n7. It is recommended that the appropriate military\nauthorities be requested to intensify and accelerate\ntheir efforts to find means of meeting the necessary\nDECLASSIFIED\nmilitary objectives of Western European defense but with\nE\ninc. 3(E) and 5(D) or (E)\nD.pc. of State letter, 5.23.76\na significant\nTOP SECRET\nBy NLT- HC NARS Date 10.20.76\nU.S. EYES ONLY\nTOP SECRET SEPDET\nSECRET\nU.S. EYES ONLY\n® 5 00\na significant reduction in the total defense expenditure\nrequirement through mid-1954.\n8. It is recommended that the agencies concerned be\ndirected to initiate immediately, making full use of\nregional and country as well as Washington representatives,\na refinement of the costing of the Plan and the estimates\nof European capacity, together with the development of\nspecific U.S. proposals for expanded production,\naccelerated force build up, and other steps to effect\nthe maximum practicable realization of the Plan within\nthe limits of realistically appraised political and\neconomic capacity.\nDECLASSIFIED\nE. O. 11652, Sec. 3(E) and 5(D) or (E)\nDept. of State letter, 0.23-76\nBy NLT- HL , NARS Date 10-20-36\nSECRET\nU.S. EYES ONLY\nTOP SECRET\nTOP SECRET\nSECRET\nU.S. EYES ONLY\n- 6 -\nSCOPE, DURATION AND FEASIBILITY OF THE\nNORTH ATLANTIC TREATY MEDIUM TERM DEFENSE PLAN\nAND RELATED UNITED STATES ASSISTANCE\n1. Assuming that the objective of the U.S. program for\nEurope 1s to assist in creating military strength in\nWestern Europe which will (a) deter Soviet aggression\nand (b) resist invasion if it occurs, an appreciation of\nthe scope, duration and cost of achieving this objective\nis essential to further planning and action.\n2. This paper provides such an appreciation and states\ncertain possible U.S. courses of action. It is designed\nfor use in connection with (a) Congressional presentation\nof the Mutual Security Program, (b) NATO planning and\nnegotiation and bilateral negotiation with our European\nAllies, (c) as general background for Cabinet level con-\nsideration of the major issues presented. It should also\nbe useful in connection with (d) U.S. budget planning for\nFY 1953, and (e) revision of NSC 68/4.\nBACKGROUND\nDECLASSIFIED\n10P P SECRET\nE. O. 11652, Sec. 3(E) and 5(D) or (E)\nU.S. EYES ONLY\nDips. of State letter, 8-23-26\nBy NLT HC NARS Date 10.20.76\nTOP SECRET\nTOP SECRET\nTOP\nSECRET\nDECLASSIFIED\nU.S. EYES ONLY\nE. O. 11652, Sec. 3(E) and 5(D) or (E)\nDept. of State letter, p.23.76\n2 0 0\nBy NLT- He NARS Date 10.20.76\nBACKGROUND\n3. In late 1950, the governments of the NAT nations\nagreed on the Medium Term Defense Plan (MTDP) and accepted\ncertain commitments to raise, maintain and equip combat-\nready ground, sea and air forces toward meeting its require-\nments. That plan was agreed, and those commitments ac-\ncepted, in the absence of any joint estimate of total\ncosts and, in all likelihood, in the absence of more than\na most rudimentary estimate on the part of each country of\nthe cost of its own force contribution, but with the ex-\npectation of substantial but unknown amounts of U.S. assist-\nance. The MTDP and the national force commitments have\nalways been assumed to be subject to a feasibility check.\n4. The national commitments to raise forces thus far\nundertaken fall 20 percent (ground forces) to 40 percent\n(air forces) short of the total forces required in support\nof the Plan by July 1954, the accepted planning date.\nThis difference between commitments and requirements is\nreferred to as the \"Gap\".\n5. The MTDP, which was approved as to military desirability\nby all the NATO Chiefs of Staffs and Defense Ministers on\nbehalf of\nSECRET\nTOP SECRET\nTOP SECRET\nm\nSECRET\nU.S. EYES ONLY\n- 8 -\nbehalf of all their governments, is of course under\ncontinuous review. However, the JCS in May 1951 re-\naffirmed their view that reduction in the force require-\nments could not be accepted from a military point of view.\nSHAPE is now preparing its official comments.\n6. Since November 1950, the process of approximating\nthe annual and total costs of meeting the MTDP require-\nments has been underway in NATO and in this Government.\nEach NAT nation in response to a Standing Group directive\nhas submitted its estimate of national military costs\ninvolved in meeting the MTDP commitments it had undertaken\nin NATO. The Standing Group has these submissions under\nstudy. Simultaneously the Joint American Military Advisory\nGroup and the U.S. Missions in Europe have been evaluating\ncountry estimates and the total estimate of cost. This\nprocess of successive approximations here and abroad will\ncontinue. For the present, it is believed that the costing\nprocess reflected herein is reasonably reliable within the\nlimitations of available data.\n7. There have been completed within the past three weeks\n(a) a preliminary Joint Chiefs of Staff position on the\ncountry-by-country distribution of forces desirable from\nDECLASSIFIED\na military\nE.O. 11612 Sea, 3(2) and 5(D) or (E)\n8.23.76\nD\nSECRET\nDept. of State letter,\nBy NLT- HC NARS Date 10.20.76\nTOP SECRET\nTOP SECRET\nU.S. EYES ONLY\nCO 9 0\na military viewpoint to meet the \"Gap\", this position\nsubject to checking from the economic and political\nviewpoints; (b) a cost estimate of the European portion\nof the full MTDP (and European non-NATO requirements),\nbased on U.S. screening of country submissions to the\nStanding Group, with requirements for the \"Gap\" distri-\nbuted as in (a); and (c) a preliminary ECA estimate of\nEuropean political and economic capacity to carry enlarged\nmilitary efforts. Each of these studies has assumed full\nGerman participation in western defense.\n8. The salient results of these studies, which cover\ntotal military costs for nine European NATO countries and\nGermany, are summarized in the table on the following page.\nSince they show substantially larger costs than the esti-\nmates developed last December for NSC-68/3 and since the\nsize and duration of this program have implications of\ngreat significance to the security programs and policies\nof the U.S. and the other NAT nations, it is believed that\nthis estimate should, together with certain conclusions\nand possible courses of action described below, be presented\nto the Cabinet level for urgent consideration.\n(N. B. TENTATIVE\nDECLASSIFIED\nE.O. 11652, Sec. 3(E) and 5(D) or (E)\n8.23.76\nDept. of State letter.\nU.S. EYES ONLY\nBy NLT- , NARS Date 10.20.76\nTOP SECRET SEORET\nSECRET\nU.S. EYES ONLY\n10\nTOD SECRET\n(N. B. TENTATIVE casin UNDER REVISION)\n(All data are for four-year period,\n(Billions of U.S. Dollars)\nFiscal Years 1951 through 1954,\nin late 1950 prices.1\nexcept where otherwise specifically\nindicated.)\n\"Probable\" \"Optinistic\"\n(a) Sereened Cost of European portion of\nMTDP, including \"Gap,\" plus Germany,\nplus European non-NATO military re-\nquiraments.\n72\n72\n(1) Major Material\n(39)\n(39)\n(2) All Other (Pay, Maintenance,\nFacilities, etc.)\n(33)\n(33)\n(b) Estimated European Military Expendi-\ntures 3\n37\n43\n(c) Cost Uncovered in Europe (a minus b)\n35\n29\n(d) Estimated Canadian Contribution to\nEuropean Requirements\n11\n1\n(e) MDAP Programmed thru FY 19524/\n10\n10\n(f) Major Materiel Deficiency not Provided\nfor (c minus d minus e)\n25\n18\n(g) U.S. Feonanic Aid Required to Make\nFeasible the Expenditures in (b)\n5\n5\n(1) Programmed thru FY 1952 W\n(2.5)\n(2.5)\n(2) Additional for FY 1953 and 1954\n(2.5)\n(2.5)\n(h) Total end-item and economic aid required\nif U.S. met full uncovered cost (e plus\nf plus g)\n40\n33\n(1) Programmed thru 1952\n(12.5)\n(12.5)\n(2) Residual not programmed 5/\n(27.5)\n(20.5)\nApproximate Deficiencies Discussed\nin Text\n25\n(SEE NEXT PAGE FOR NOTES)\nDECLASSIFIED\nSECRE\nE.O. 11652, Sec. 3(E) and 5(D) or (E)\nII S. EYES ONLY\nDept. of State letter, 8.23.76\nBy HC NARS Date 10.20.76\nNLT-\nTOP SECRET\nTOP SECRET\nN\nSECRET\nU.S. EYES ONLY\n11 6 0\nNOTES TO TABLE\nV\nPrice changes may substantially affect these figures.\n2/\nExcludes U.S. and Canadian direct force contributions and their\ncosts.\n3/\nThe two columns--\"Probable\"--\"Optimistio\"--result from the range\nof European financial capability currently estimated by ECA.\n\"Probable\" European expenditures is best present estimate on which\nU.S. planning night be based: \"Optimistic\" figure represents upper\nrange for U.S. perotiation under present European conditions. A\nstill higher figure is sonsidered possible only if there is sub-\nstantial improvement in European norale and political cohesion,\nN.B.S This pelitisc-secemonic judgment by ECA as to financial capa-\nbilities does not take into account the currently undetermined\nEuropean capability to mobilise necessary industry and manpower and\nto obtain and efficiently allocate critical raw materials. Economic\nanalysis is continuing in ECA.\n\"Prograsmed thru 1952\" means amounts already appropriated by Congress\nand requested for FY 1952.\n5/ Up to about $2 billion, additional economic aid could probably re-\nplace an squivalent amount of the major materiel deficiency shown\nin (f)\nN.B.8 In connection with possible extension of the completion date\nfor the MTDP beyond July 1, 1954, it should be noted that both larger\nEuropean expenditure capacity and larger total costs (principally non-\nmateriel costs) would be associated with the longer period. It is\nreasonable to expect that such extension would have the net effect of\nsomewhat reducing the deficiency, inasmuch as the additional costs\nover the longer period should be less than the additional European\ncapacity. It is not possible, on the basis of available data and in the\nabsence of a rephased plan, to estimate the amount by which the defi-\nciency might be reduced; present estimates of post-MIDP annual recurring\ncosts suggest that a one-year retardation might reduce the deficiency\nby something of the order of two or three billion dollars.\nDECLASSIFIED\nE. O. 11632, Sec. 3(E) and 5(D) or (E)\n8.23.76\nTOP SEGRET\nDept. of State letter,\nU.S. EYES ONLY\nBy NLT- HC NARS Date 10.20.76\nTOP SECRET\nTOP SECRET\nDECLASSIFIED\nTOP SE T\nE. O. 11652. Sec. 3(E) and 5(D) or (E)\nU.S. EYES ONLY\nDept. of State letter, 8-23-76\nBy NLT- HC , NARS 10-20-76\na 12 -\nDISCUSSION\n9. The above estimates indicate that if U.S. assistance\nwere to be provided to cover the entire difference between\nthe total cost of European MTDP requirements and the costs\nthat the Europeans themselves are considered capable of\nmeeting, and if those costs were to be met on the MTDP\nschedule, end-item and economic aid of something like 25\nbillion dollars would be required during the remainder of\nthe MTDP period over and above the amounts already requested\nof the Congress for the fiscal year 1952. The magnitude\nof this figure, about double the total assistance for\n1953 or 1954 suggested by a projection of currently pro-\ngrammed aid, raises serious questions on the desirable\ncourse of action to complete the MTDP and requires funda-\nmental decisions on U.S. policy. It should be noted that\nprovision of such assistance would probably require a\nsubstantial supplemental authorization request for FY\n1952 and a very high peak of authorization in FY 1953.\nGuidance is required on the presentation to be made to\nthe U.S. Congress and on the position the U.S. is to take\nin negotiations with the NATO countries.\n10. It is an objective of United States policy to fulfill\nthe terms of the Medium Term Defense Plan. We have been\nand are\nTOP SECRET,\nU.S. EYES ONLY\nTOP SECRET\nm TOP 0 SECRET\nDECLASSIFIED\nU.S. EYES ONLY\nE. O. 11652, Sec. 3(E) and 5(D) or (E)\n- 13 0\nDept. of State letter, 3\nBy NLT. HC . NARS Date 10-20-76\nand are continuing to seek the maximum contribution to\nthis force from our Allies. If 1t is not economically\nfeasible to complete the plan as scheduled in toto by\nJuly 1954, from NATO sources, the United States should\nseek alternative ways by which an effective European\nDefense Force could be completed. Such alternatives\nshould stem from deliberations within the NATO, including\nconsideration of the views of General Eisenhower and the\nMilitary Committee. Meanwhile, it would be disadvantageous\nin negotiation for the United States to indicate its accept\nance of a reduction in force goals or an easing of the problem\nby the assumption of a greater U.S. force contribution than\nnow proposed by the United States Joint Chiefs of Staff.\n11. Ways and means must therefore be devised to bring\nthe European portion of the program within politically\nand economically tolerable limits of European military\nefforts and U.S. (plus Canadian) assistance, without sacri-\nficing the essential character of the military objective.\nPossible Courses of Action Which Are Not Recommended\n12. The European expenditures shown in the table already\nreflect a doubling of defense outlay between 1951 and 1953\nand a further substantial increase in 1954. If the Europeans\nwere to\nTOP SECRET\nTOP SECRET\nTOP SECRET\nDECLASSIFIED\nTOP\nU.S. EYES ONLY\nE.O. 11652, Sec. 3(E) and 5(D) or (E)\nDept. of State letter, 8.23.76 1973\n- 14 -\nBy NLT. He NARS Date 10.20.76\nwere to undertake the total indicated costs of the build-\nup by present target dates, with U.S. aid projected into\nFiscal Years 1953 and 1954 at current rates, they would\nhave to provide an additional $10 to $15 billion over the\nnext three years. Such an additional effort would be far\nbeyond financial, economic, and political capacities even\nwith considerable improvement in morale from present con-\nditions. It is therefore considered undesirable to press\nthe Europeans to undertake a total effort in such magni-\ntudes. Pressure which will get more effort should be\napplied, but pressure for unattainable goals would re-\nsult only in impairing U.S. leadership and causing dis-\ncouragement in Europe.\n13. It is considered presently undesirable to recommend\nan expansion of U.S. aid to the level indicated to meet\nthe total residual costs (about $25 billion for FY 1953\nand 1954 combined). It should be noted that this large\nshare of the European portion of the North Atlantic de-\nfense costs would be in addition to our own direct force\ncontributions in Europe and very heavy non-NATO defense\nburdens.\n14. It is\nSECRET\nU.S. EYES ONLY\nTOP SECRET\nTOR SECRET\nC\nU.S. EYES ONLY\n15 0 0\n14. It is considered undesirable to abandon or funda-\nmentally to alter the objective of the MTDP.\n15. It is considered impossible to evade the issues\nposed by these estimates, or to postpone their solution.\nThe Congress called almost two years ago for the prepara-\ntion of an integrated North Atlantic Defense Plan as the\nbasis of end=item assistance to Europe, and will certainly\nexpect at this time a statement on probable costs and\nduration. To postpone the issue in the NATO would lose\ntime which cannot be afforded. The various parts of NATO\nare now being prepared to take up the related questions\nof forces to fill the \"Gap\", assessment of total costs\nand their equitable distribution, and planning of military\nproduction to meet the requirements for equipment; for the\nU.S. to abandon leadership in coming to grips with these\nissues would demoralize the NATO and jeopardize the entire\neffort at collective defense of the North Atlantic Area.\nCOURSES OF ACTION RECOMMENDED FOR CONSIDERATION\n16. It is recommended that a solution to the problem be\nsought that does not alter the basic structure of MTDP,\nthat recognizes and allows for the possibility of slippage\nin the\nSECRET\nDECLASSIFIED\nU.S. EYES ONLY\nE.O. 11632, Sec. 3(E) and 5(D) or (E)\nTOP SECRET\nDept. of State letter, 8.23.743\nBy\nNLT. HC NARS Date 10.20.76\nSECRE\nTOP SECRET\nU.S. EYES ONLY\nCD 16 -\nin the MTDP time schedule, that nevertheless does not\ntechnically preclude the possibility of full completion\nif conditions so change as to raise the limitations on\nEuropean capacity or increase the level of U.S. aid con-\nsidered appropriate, and that permits U.S. to negotiate\nin NATO and bilaterally, on the basis of a realistic\nappraisal.\n17. The overall deficiency in meeting Western European\nmilitary requirements is about $25 billion. There are\nseveral possible ways of dealing with this deficiency:\n(a) Greater increases in European defense efforts;\n(b) Reduction of costs of MTDP;\n(e) Modification in time, quality or quantity of\nEuropean defense requirements;\n(d) Additional U.S. contributions.\n18. With respect to 17(a) it is suggested that, although\nsomething like the \"optimistic\" estimate in the table of\nEuropean capabilities might be more appropriate as a basis\nfor negotiation with the European countries, the \"probable\"\nestimate is a more appropriate basis for realistic U.S.\nplanning at the present time. Every effort must be made\nand every device used to enable and induce the Europeans\nsafely to\nDECLASSIFIED\nTOP\nU.S. EYES ONLY\nE.O. 11652, Sec. 3(E) and 5(D) or (E)\nDip. of State letter,\nTOP SECRET SECRET\nBy NLT. HC NARS Date 10.20.76\nTOP SECRET\nSECRET\nU.S. EYES ONLY\n- 17 -\nsafely to contribute more. A changed international\nsituation might generate a greater political cohesion\npermitting greater sacrifice and the kinds of economic\ncontrols necessary for an effort several billion dollars\ngreater; but plans should not rely on such a possibility.\n19. With respect to 17(b) and (c), elements to be con-\nsidered in seeking a reduction of the total cost include,\namong others:\n(a) Reduction of overall defense costs, especially\nin materiel, through greater austerity in stand-\nards of organization, equipment, and war re-\nserves, through economies in production plans,\nand by vigorous application of the principle\nof balanced collective forces;\n(b) Possible adjustments in force levels for the\npresent European NATO members in light of\ncommitments from, or arrangements with, Germany,\nGreece, and Turkey, and perhaps Yugoslavia and\nSpain;\n(c) Extension of time-phasing of portions of the\nMTDP (e.g., perhaps of some portion of the\nthree-month operational war reserve of $9\nbillion) where financial, production, and\nother economic limitations prevent their\npracticable accomplishment on schedule;\n(d) Possible readjustments in non-NATO commit-\nments of European NATO members.\n20. With\nTOP SECRET\nOF CLASSIFIED\nU.S. EYES ONLY\nDept. of State letter, 8-23-76\n11652 See, 3(E) (E)\nBy NLT. NARS Date 10.20.76\nTOP SECRET\nTOP SECRET\nSECRET\nU.S. EYES ONLY\n8 18 9\n20. With respect to 17(d), if a substantial reduction\nin total expenditure through mid-1954--say $8 to $9\nbillion--could be achieved by a combination of the\nforegoing measures, there would still remain a deficiency\nof the order of $15 to $17 billion. It is recommended\nthat consideration be given to the possibility of U.S.\nend-item and economic assistance of that magnitude,\nbeyond the aid currently requested of the Congress for\nFY 1952, for the total period through the Fiscal Year 1954.\nThis would average at about 30% above the $6.2 billion\nauthorization request for FY 1952 for NATO countries\nplus Germany, although it probably would involve a higher\npeak in authorizations in FY 1953. Some part of this\namount should perhaps be available from a supplemental\nappropriation during FY 1952, to permit its timely obli-\ngation for end-item deliveries in FY 1953 or 1954. In\nthe event that the problem considered in this memorandum\nis partly resolved by some deferment of the MTDP build-up\nbeyond the 1954 planning date, U.S. assistance of reduced\nbut substantial size in FY 1955 should be considered.\n21. Solution of the problem along the lines outlined\nabove would rest on the premise that balanced adjustments\nof MTDP\nDECLASSIFIED\nTOP SECRET E\nE. O. 11652. Sec. 3(E) and 5(D) or (E)\nDept. of State letter, 8.23.76\nTOP SECRET\nBy NLT. HC NARS Date 10.20.76\nTOP SECRET\nSECRET\nU.S. EYES ONLY\nas 19 a\nof MTDP to effect a significant reduction in defense\nexpenditure between now and mid-1954 can be made without\naltering the basic strategic concepts and objectives\nthat underlie that Plan. The validity of this premise\ncan be firmly established only after extensive exploration\nby the appropriate military authorities.\n22. The choice among these alternatives, or some combi-\nnation of them, raises major considerations both of\npolitical and military strategy and of domestic politics\nand economics. Those considerations require guidance\nfrom the Cabinet level as a basis for further planning\nand action in NATO and in the Congressional presentation.\nDECLASSIFIED\nE.O. 11652, Sec. 3(E) and 5(D) or (E)\nSECRET\n8.23.76\nDept. of State letter, 9,\nU.S. EYES ONLY\nBy NLT. HC , NARS Date 10.20.76\nTOP SECRET\nTOP SECRET\n34\nU.S. EYES ONLY\nLane you 00 (0)\nDepr. of State land, 8.23.76\n- 20 a\nBy NLT. HC 10.20.76\nCourse of Action in NATO\n23. The United States should proceed forthwith to initiate\nnegotiations in the NATO, and bilaterally where appropriate,\nworking toward completion of the MTDP in its entirety or\nwith acceptable modifications which do not jeopardize the\ncentral military objectives. The initiative should begin\nin the Standing Group with a proposed country~by-country\ndistribution of forces to fill the \"Gap\". The proposed\ndirect contribution of U.S. forces should accord with the\nJCS recommendation of May 28. The initial proposal on\nEuropean force distribution may reflect ISAC recommendations\nbased on economic and political considerations.\n24. In taking this initiative the U.S. members of the\nNATO agencies should indicate: (a) that considerable pre-\nliminary consideration has been given to the problem of\ncompleting the MTDP from the military, economic, and\nproduction points of view; (b) that it is recognized that\ncompletion of the Plan on schedule and with the organization\nand equipment desired by the member countries creates\nserious economic and production difficulties which will\nrequire intensive collective efforts to overcome and may\nwell suggest adjustments in quality, quantity, or timing,\nthough not in basic objectives; and (c) that the U.S.\ndesires\nTOP SECRET\nTOP-SECRET\nU.S. EYES ONLY\n- 21 6\ndesires to work out with the other members an effective\nsolution during the summer and early autumn of 1951.\n25. It should also be made clear that, in view of the\nsubstantially larger probable total costs than previously\nanticipated, the U.S. Administration would consider recom-\nmending to the Congress a significant increase in annual\nrates of military end-item and economic support assistance\nfor the Fiscal Years 1953 and 1954, provided, and only\nprovided, that the Plan multilaterally worked out and\nthe expanded undertakings of the other members demonstrated\nthe possibility of obtaining the basic military objectives\nof the MTDP, even if not the full Plan on the target dates\nin every respect.\n26. The immediate initiative in the Standing Group should\nbe followed promptly by presentation of the overall problem\nin the Council Deputies, intensified work in the DPB on\nthe problems involved in expanding production of major\nmateriel, and especially by action in the FEB. This latter\naction should be designed to negotiate expanded economic\nand financial efforts, to obtain a multilaterally agreed\ncosting, and to point up for action in the military and\npolitical agencies of NATO respects in which adjustments\nin the\nDECLASSIFIED\nE. O. 11652 Sec. 3(E) and 5(D) or (E)\nDept. of State letter. 8.23.76\nTOD SECRETA\nORDER\nBy NLT- HC , NARS Date 10.20.76\nTOP- SECRET\nRET\nU.S. EYES ONLY\n- 22 -\nin the Plan may be required. Thenceforth, the military,\nproduction, and financial negotiations should be conducted\nboth: (a) on a parallel basis within NATO under the\ngeneral guidance of the Council Deputies with a view to\nformal governmental action on expanded commitments at a\nCouncil meeting during the autumn, and (b) by bilateral\nnegotiations with each NATO country in connection with\nspecific aid programs.\n27. Since political and psychological factors constitute\nmajor limitations on Western European defense efforts,\nthe United States must urgently seek in NATO and else-\nwhere solutions to the fundamental problems of improving\nEuropean morale, organization and determination to make\nsacrifices essential to meeting NATO requirements.\nDECLASSIFIED\nE.O. 11652, Sec. 3(E) and 5(D) or (E)\nDept. of State letter, 8.23.76\nBy NLT. HC 9 NARS Date 10.20.76\nSTATE 0\nU.S. EYES ONLY\nTOP SECRET"
}