291. Telegram From Prime Minister Wilson to President Johnson/1/
London, January 15, 1968, 2300Z.
/1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, POL UK-US. Top Secret; Eyes Only.
I laid both your messages before my Cabinet colleagues today and they were carefully read before our final deliberations and decisions on the range and extent of the swingeing cuts in public expenditure, at home and overseas, that I shall be announcing to Parliament tomorrow. I should like to say at the outset how grateful I am to you for setting out with such restraint and understanding what I know to be your powerfully-held views on the measures we are having to take.
I need hardly tell you how profoundly my colleagues and I regret the necessity for our decisions. As you will see when you receive a copy of my statement--and I will do my best to get this to you as early as possible--some of the decisions we have taken on the home front strike at the very root of principles to which many of us have been dedicated since we first went into politics. They are bitter decisions for us to have to make; and only our conviction that they are vital in the long-term interests of Britain, and that the British people will accept them as such, has made it possible for us to stomach them.
The heavy sacrifices at home would have been pointless without drastic retrenchment abroad. I ask you to believe that this is not, as some journalists and even some Commonwealth statesmen have been saying, simply a matter of party politics--of keeping some kind of "balance" to force the unpleasant home medicine down the throats of our party supporters. Of course politics is involved here--what is politics all about anyway? But this is much wider than party politics--the politics of the nation and the sense of purpose of the British people as a whole are deeply involved.
At the time of devaluation, I told you that the British people were sick and tired of being thought willing to eke out a comfortable existence on borrowed money. As your people may have told you, there has been over the past weeks an astonishing assertion of this kind of spirit throughout the nation and irrespective of party. At the root of this is a still rather confused groping for the real role that Britain ought to be playing in the world; and it has been striking to observe, in polls and other tests of public opinion, not only the extent to which people are prepared to accept drastic sacrifice at home but also their demand that we must no longer continue to overstrain our real resources and capabilities in the military field abroad.
This does not mean, as you suggest, a British withdrawal from world affairs. Of course there are always, in any country, those who in moments of storm prefer to bury their heads in the sand. But the spirit that has been running through this nation in recent weeks is not that of "Little England." I believe it to be a blend of exasperation at our inability to weather the successive economic storms of the past twenty years and determination, once and for all, to hew out a new role for Britain in the world at once commensurate with her real resources yet worthy of her past. There is at last a nation-wide realisation that this can not be done on borrowed time and borrowed money.
I shall not attempt to list here all the measures which will be set out in my statement tomorrow. But just as you were able to give me brief forewarning of the dramatic steps you felt it necessary to take on New Year's Day to protect even the vast economic strength of the United States, so I wish you to know now the two decisions that are most directly relevant to this country's international posture and thus to our own working relationship; and those to which your two messages were addressed.
First, the Far East and the Gulf. As I shall be explaining tomorrow, it is absolutely clear to us that our present political commitments are too great for the military capability of the forces that we can reasonably afford, if the economy is to be restored quickly and decisively; but without economic strength, we can have no real military credibility. If there is any lesson to be learned from the [illegible] way we have found ourselves obliged to lurch from one defence review to another in recent years, it is that we must now take certain major foreign policy decisions as the prerequisite of economies in our defence expenditure. Put simply, this only amounts to saying that we have to come to terms with our role in the world. And we are confident that if we fully assert our economic strength, we can, by realistic priorities, strengthen this country's real influence and power for peace in the world.
This was what underlay the intention, conveyed to Dean Rusk by George Brown, to withdraw our forces from the Far East and the Middle East by the end of the financial year 1970/71. But, as George explained, we fixed this deadline subject to reconsideration in the light of the account he brought back of your government's views and what George Thomson returned to tell us of the views of the Commonwealth governments in the area. We also, as you may have seen, sent the Minister of State in the Foreign Office to discuss our intentions with the heads of government and others concerned in the Middle East. In the light of your message to me, of the reports from our other colleagues and of our deep and searching discussion with Harry Lee, who flew to London this weekend, we have decided to defer our withdrawal for a further nine months, i.e. to the end of 1971. I know that this will still seem too soon to yourself and to many others. But, in the face of the appallingly difficult decisions we are having to take over home expenditure, I believe that it is a significant contribution to the time needed to help those in the areas concerned prepare for the day when we shall no longer have a military presence there--for, believe me, it is only of our military presence that we are speaking. We know that its withdrawal involves risks. We believe that there is no option but to run them. But we intended to continue our aid programmes to the best of our ability, and of course to maintain our political, trading and economic interests there.
Secondly, the F111. Again, I ask you to believe that my colleagues and I have spent many hours of discussion and heart-searching on this problem at three separate meetings and gave the fullest weight to the considerations advanced in your message. But we have come to the reluctant conclusion that the only way we can achieve the really decisive economies that are essential in the hardware budget of the Royal Air Force, while still keeping effective and sophisticated capabilities in all three services, is to cancel the order for the 50 F111 aircraft. I hope you are wrong in assessing that this decision will be interpreted abroad as a disengagement from any commitments to the security of areas outside Europe or indeed largely in Europe as well. And you are certainly wrong if you take the view you mentioned that it is "a strong indication of British isolation." In fact, I believe both these views to be wrong. As I shall be explaining tomorrow, we intend to make to the alliances of which we are members, a contribution related to our economic capability; we shall not be withdrawing from our three major alliances; and the general capability that we shall retain in this country and on the continent can also be deployed overseas and will still thus enable us to continue to give assistance to our international partners and other allies concerned, if the circumstances so demand.
Against this background and having regard to what you yourself said in the second of your two messages, I nevertheless hope that Denis Healey and Bob McNamara, for whose helpful efforts in these matters we are all most grateful, can reach an early agreement in broad terms about continued credit facilities for the unchanged Phantom and Hercules programmes and for appropriate adaptation of the offset arrangements.
Believe me, Lyndon, the decisions we are having to take now have been the most difficult and the heaviest of any that I, and I think all my colleagues, can remember in our public life. We are not taking them in a narrow or partisan spirit. We are taking them because we are convinced that, in the longer term, only thus can Britain find the new place on the world stage that I firmly believe the British people ardently desire. And when I say "the world stage" I mean just that.
Warm regards,
Harold Wilson/2/
/2/Printed from a copy that bears this typed signature.
292. Editorial Note
Assistant Secretary of State for East Asian and Pacific Affairs William P. Bundy met privately with Prime Minister Wilson in London January 20, 1968, prior to Wilson's visit to the Soviet Union January 22-24. The purpose of Bundy's visit was to assure coordination between the two nations over Vietnam policy. A portion of a briefing paper prepared for the President summarizing these talks reads: "Following instructions cleared by Secretary Rusk and Walt Rostow, Bundy stressed to Wilson that he must make it absolutely clear that he was not authorized by the US to do any exploring on the San Antonio formula." (Note for President's Evening Reading, January 22, 1968; Johnson Library, National Security File, Memos to President, W.W. Rostow, Vol. 57) A summary of the Bundy-Wilson meeting is in the January 20 entry of the Bruce Diaries. (Department of State, Bruce Diaries: Lot 64 D 327) During his discussions with Kosygin, Wilson maintained a telegraphic communication with the White House. Copies of the messages exchanged by the President and Prime Minister are in the Johnson Library, National Security File, Head of State Correspondence, United Kingdom. Wilson described the negotiations in The Labour Government, 1964-1970, pages 489-493.
293. Diary Entry by the Ambassador to the United Kingdom (Bruce)/1/
Washington, February 8, 1968.
/1/Source: Department of State, Bruce Diaries: Lot 63 D 327. Secret.
The Prime Minister and his train arrived from London last night. He brought with him Mrs. Wilson, Burke Trend, Denis Greenhill, Michael Halls, Michael Palliser, Gerald Kaufman (Public Relations Adviser), T.D. Lloyd-Hughes (Press Secretary), and Donald Murray (Head of South East Asia Department, Foreign Office).
John Leddy, Bob Bowie, Harry Shullaw, and I went over to meet this group, to which was attached Pat Dean and Ed Tompkins from the British Embassy, at 11:30 this morning. The road from the White House Northwest Gate to the Diplomatic entrance was lined with Army, Navy, and Air Force men, standing at attention with fixed bayonets. I trailed along behind the President as he met his guests in front of a battery of cameramen.
The President and Prime Minister disappeared into the Oval Office, unattended, from which they emerged two and a half hours later (2 o'clock). The rest of us cooled our heels in the Cabinet Room, but this was pleasant enough since every one there had known the others for a long time. We were joined by Walt Rostow, who was hawkishly gratified by how things are going in Vietnam.
Our unpredictable President announced we must all be hungry and should follow him upstairs in the White House to drink and eat. Poor Pat Dean was thoroughly discomfited, for he had arranged a large lunch at home for the Prime Minister. However, there was no choice; exactly the same thing happened when Harold Wilson was last here. Pat was initially angry, but yielded with good spirit.
The newspapers last night made merry over the selections chosen by the orchestra for this evening's State Dinner. Amongst the titles was On the Road to Mandalay, and one or two others that seemed especially inapposite in Mr. Wilson's case. When, however, he heard of Protocol's embarrassment over this, he insisted the program stand.
While we were drinking before lunch, the PM remarked on how satisfactory had been his conversation with the President. To my surprise, he told us there had been a reflow of gold to London in excess of two-hundred-million dollars during the past two weeks. This does not accord at all with our Embassy figures reported by the Treasury Attaché. Also, he said exports were increasing substantially, unemployment was manageable, and all in all the economy was ready to respond to the new measures.
Lunch was cheerful; the President recounted some good Texas stories. Incidentally, he spoke warmly of how helpful President Eisenhower had always been to him, and of his deep affection for the General.
When they left, I stayed behind for a few minutes with the President. He said his talk with Wilson had been satisfactory, and without rancor, although he had spoken sternly about British plans for withdrawal from the Far East and Middle East. Wilson gave him glowingly optimistic predictions of how Britain would pull itself up by its bootstraps.
[Here follow 9 paragraphs dealing with social and personal matters.]
The toasts to the Queen and the President were not out of the ordinary. Each had been carefully prepared. L.B.J. was laudatory of Britain, but did not single out Wilson for individual praise. The PM was cagey, but satisfactory on Vietnam. There were no fireworks in either production.
[Here follow 3 paragraphs of unrelated personal observations.]
294. Telegram From Prime Minister Wilson to President Johnson/1/
London, March 18, 1968.
/1/Source: Johnson Library, National Security File, Head of State Correspondence, UK. Top Secret.
As you will guess, I have been personally following every move in the discussion in Washington this weekend and I share what I know will be your satisfaction that we have all been able to reach an agreed solution./2/ As you know, from the outset the British delegation joined with yours in rejecting any solution based on a change in the price of gold. We support you completely in this matter, and this has never been in doubt.
/2/Reference is to the March 16-17 meeting of governors of the central banks of the seven "gold pool" nations. For text of communiqu&#eacute;issued at the conclusion of their meeting, see Department of State Bulletin, April 8, 1968, p. 464.
I believe that the agreement announced tonight is the best that could be achieved in present circumstances. We must hope that it will carry sufficient conviction in the world financial arena to stop the nonsense which has been going on in these past weeks. It is impossible to be certain, because we are dealing with a degree of irrationality which I have today described as Gadarene Dementia. In addition there have been the signs of a hidden hand in operation against the dollar and the pound--and not all that hidden either./3/
/3/Reference is to President de Gaulle.
In a rational world this clear evidence of determination should be decisive. But we must, even at this stage, reckon with the possibility that the irrational elements with which we have to deal may take charge. If this is so, the attack will switch more directly from the gold markets to the foreign exchange markets and will be directed against the two reserve currencies. Our continental colleagues have responded well to the dangers which we all face and I welcome the special consideration given to the position of sterling. Sterling has been, and still is, in the front line, but in a very real sense we all stand together. This stood out from the message you sent me on Thursday night./4/
/4/A copy of Johnson's March 15 message is in the Johnson Library, National Security File, Head of State Correspondence, UK, Vol. 7.
That was in response to the message in which I said that, if we had to protect ourselves, we should be forced to take action which could have a grave effect on all other currencies./5/ Since I sent you my Thursday message, this has been reiterated by my colleagues and our determination is absolute.
/5/A copy of Wilson's March 14 message is ibid.
Let us hope that what is happening in Washington means that the attack will now spend itself. But if it does not, we must urgently consult together to agree what further collective action can be taken in order to avert the danger that we may be driven apart. Should we reach this point, we shall not propose a change in the gold price, but there are other policies that might have to be urgently considered between us. It is too early to canvass the various arguments, though we should prefer an arrangement providing for an embargo on the buying and selling of gold to anything which gave the enemy the prize for which they are contending, namely an increase in the gold price. We must keep in close touch if necessary on a day-to-day basis this week, though again, I hope that what has been achieved in response to your lead on Thursday night may exorcise once and for all the danger we have been facing together.
295. Paper Prepared in the Department of State/1/
Washington, undated.
/1/Source: National Archives and Records Administration, RG 59, Central Files 1967-69, POL 1 UK. Secret. An attached memorandum from John P. Walsh, Acting Executive Secretary of the Department of State, to Bromley Smith, June 1, stated that the paper was prepared for submission at the June 5 meeting of the National Security Council. On June 3 the Department forwarded to the NSC a supplementary memorandum for inclusion, entitled "UK and France." It is printed as section H at the end of this memorandum.
I. DIRECTIONS OF UK POLICY
Britain's severe economic problems have shaken the international monetary system and sealed a historic transformation of British foreign policy.
The financial pressures of last November forced the UK to devalue the pound (from $2.80 to $2.40). That decision marked the failure of Labour's previous policy of demi-austerity and necessitated severe budget cuts. Devaluation was followed by another rejection by de Gaulle of the UK's Common Market bid. These setbacks led to a widespread public loss of confidence in Labour and in Wilson. A change in Labour leadership in the coming months, though remote, is no longer out of the question.
The British Government's vital objective is to make a success of last November's devaluation. Britain is seeking to achieve a 1,000 million pounds ($2.4 billion) turnaround in its balance of payments, i.e. to move from a deficit of over 500 million pounds in 1967 to a sustained surplus at the rate of 500 pounds million beginning in 1969.
The necessity of success has produced new policies far from Labour's socialist ideology: curtailed public spending, even in the welfare sector; a mandatory prices and incomes policy closely correlated to productivity; and rigorous measures to reduce domestic demand in order to shift resources into exports and private investment. Cooperation from the domestic sector and the patience of the international financial community are vital to Britain's success, but these factors are not assured and the outcome therefore is in doubt.
Since November, the direction of Britain's defense and foreign policy has become clearer and firmer. The Government has accelerated curtailment of world-wide commitments and clarification of its policy toward Europe. Still, the process is far from complete. Continued frustration of Britain's new European vocation nourishes traditional British parochialism, resentment toward France, and suspicion of Germany. Conservative Party leaders have attacked the Government's "retreat from East of Suez," but before they can come to power, the cutbacks will probably have gone so far as to be irreparable. Thus, we can see the Britain of the future as, at best, a middle-sized, European power, albeit one with a nuclear capability, a residual sense of extra-European responsibility, and a continuing, if diminished, status as a favored partner of the US.
II. US-UK RELATIONS AND US OBJECTIVES
We can expect British governments gradually to attenuate the "special relationship" as the prospect of achieving their aims in Europe becomes more credible, but they will not repudiate it entirely as long as it has advantages for them.
The UK continues to have economic and political assets which can provide valuable support for our own foreign policy objectives; for example, the British desire to play a constructive role in Western European political affairs and to provide substantial amounts of foreign aid in the less developed world. In addition they still have extensive Commonwealth contacts. These assets would probably be strengthened by a victory in the next General Election of the Conservative Party, which is currently running far ahead of Labour in by-elections, local elections, and public opinion polls.
III. MAJOR PROBLEM AREAS
A. The Problem of Sterling
No one can be certain that the post-devaluation economic program will succeed in producing the necessary, enduring balance of payments surplus. The basic positive factors are: the competitive edge provided by devaluation, the buoyancy in Britain's main export markets, and bold fiscal and monetary restraints on the domestic economy.
The negative factors are: a history of repeated crises; organized labor's reluctance, if not unwillingness, to accept wage restraint; archaic labor and management practices; a stubbornly high level of import demand; high interest rates in the US and in Europe; Britain's precarious liquidity position; continuing nervousness about sterling; and the generally precarious international monetary situation.
The financial world so far has patiently awaited evidence that the UK is gradually moving toward surplus. Such patience is not unlimited and could be cut short by widespread strikes this summer or the collapse of the wage restraint policy. Then the financial world may well conclude that Britain's economic program is not going to succeed. This could lead to speculative selling of sterling, including further switching out of pounds by sterling area central banks.
Britain has substantial resources in standby credits and swaps to help meet such an eventuality. In a severe crisis they would need augmentation.
US Position: It is important to us that the British economic program succeed. The consequences of failure were portrayed last November, when the fall of one reserve currency, sterling, led to severe pressure on the dollar, to the gold crisis, to the forced termination of the "Gold Pool" arrangements, and to a large decline in US gold reserves. If Britain fails to achieve its balance of payments objective, there could be another deep sterling crisis which would put renewed pressure of the most serious kind on the dollar.
B. Britain and European Defense
On February 19 HMG announced that its defense will in the future be concentrated mainly in Europe and the North Atlantic area. On May 10 Defense Minister Healey announced that withdrawals from the Far East and the Persian Gulf have enabled HMG to make an immediate contribution to strengthening NATO's forces in Europe and the Mediterranean along the following lines: (1) a mobile task force (some 20,000 men) will be stationed in Britain but available for NATO defense; (2) an amphibious task force will be stationed in European waters; (3) two frigates will be kept in the Mediterranean; (4) a squadron of reconnaissance aircraft will remain in Malta until 1970; (5) in 1969, the UK is prepared to send a commando carrier with troops embarked to participate in NATO exercises in the Mediterranean.
The UK is also exploring the possibility of some modest first steps that might evolve into a kind of European defense organization in the NATO framework. The British have in mind initially talking with the European Community members (less the French), and perhaps the Danes and Norwegians, about the possibility of cooperation in the defense production and procurement field. Subsequently, they would hope to see a kind of European caucus in NATO under which the nations concerned could concert their positions on force levels, strategy, and other questions in advance of discussions with us.
Thus, by working quietly within the established NATO framework, the UK hopes to be able to avoid another head-on collision with the French which would in turn frighten off the Germans and other European Community members. This approach also assures a close institutional link between any future European defense organization and the United States, as well as with the other allies.
US Position: We have been quietly encouraging the British in these efforts as they are consistent with our long-standing attitude favoring Western European cooperation and unification. If the British succeed, the result would be an improved political balance in the Alliance. It would also improve prospects that the European members together could pick up more of the burden of their own defense. Care must be exercised to avoid the appearance of an Anglo-American initiative.
C. The UK and the European Communities (EC)
The United Kingdom is maintaining its application for full EC membership. It has not endorsed recent proposals from among the Six for interim commercial arrangements. Foreign Secretary Stewart said recently that the UK would only be interested in "proposals coming from the Six as a whole which are clearly and unmistakably connected with our full membership in the European Economic Community." The British see little prospect that the Six will be able to agree on acceptable interim proposals.
The French veto on British membership has not diminished support within Britain for full membership. The British Government and, in general, the public seem to realize that there is no viable alternative to entry into the Communities. Proponents of a North Atlantic Free Trade Area (NAFTA) have generated little British interest, in or outside the government.
The British are expected to make some new move to maintain forward movement on membership, perhaps this summer. Britain is most likely to propose collaborations on military-political matters and technology which are outside the clear responsibility of the Rome Treaty and which it would be easier for the Five to act upon without openly provoking de Gaulle.
US Position: The United States has long opposed EC preferential trading arrangements with other European states unless these lead to full membership within a reasonable period. Thus we welcome the British stand against interim arrangements with the Community. We do not believe that NAFTA is a practical or desirable alternative to British membership in EC.
D. Middle East
Britain no longer has the will, or can afford, to play a major security role in the Middle East.
In continuing the pursuit of its economic interests, however, HMG can be expected to rely increasingly on its diplomatic resources, mutual economic interest, and placating the Arabs on the Arab-Israeli issue.
US Position: We can constructively use Britain's residual political and economic influence in the Middle East, particularly with the Arab states, as part of our common desire to seek an equitable and enduring settlement of the Arab-Israeli conflict and to resist rising Soviet influence. In the Persian Gulf, we specifically wish to (a) encourage the British to maintain as much of their present special role as long as possible; (b) encourage the Saudis and Iranians in particular to settle outstanding differences; (c) encourage greater regional economic and political cooperation among the Gulf states; and (d) avoid an undue military buildup by littoral states while recognizing that some increase in indigenous forces is no doubt inevitable.
E. UK Withdrawal from Malaysia/Singapore
Last January 16, Wilson announced the withdrawal of all British military forces from the Malaysia/Singapore area by the end of 1971.
The British declared that they would continue to meet their SEATO obligations after 1971 within the limits of their resources and would retain a "general capability for deployment overseas" if HMG judged such deployment necessary. However, they have declined to be drawn out on the nature of this capability or how it will be brought to bear in Southeast Asia.
The phase-down is calculated to minimize adverse effects on the economies of Malaysia and Singapore, and give them time to build up their own forces. A working group of the UK, Malaysia, and Singapore has begun discussing a proposed air defense system. A five-nation Defense Ministers' conference will be held in Kuala Lumpur in early June.
Australia and New Zealand are unlikely alone to fill the vacuum which will be created by the UK's departure. They look forward to a Commonwealth effort in this area.
US Position: We regret this removal of an important element of military and economic stability from Southeast Asia at a critical time. We have no intention of expanding our commitments or responsibilities as a result of the British decision, but we maintain a keen interest in the efforts of the Commonwealth partners to work out security arrangements necessary to assure continued stability in the area.
F. Southern Rhodesia
The UK, rejecting the use of force, has been unable to bring an end to the illegal regime of Ian Smith in spite of discussions, the UN voluntary sanctions program (November 1965), or the limited UN mandatory sanctions program (December 1966). The sanctions program suffers from the refusal of South Africa and Portugal to participate and from lax or incomplete compliance by Japan, West Germany, France, and other industrialized countries. The British insist that the best method of bringing pressure on Smith is through UN sanctions, and the Security Council is considering making selected mandatory sanctions more comprehensive.
US Position: We are continuing to cooperate with the British and the UN on sanctions and will support a UN decision to make selected mandatory sanctions more comprehensive. Any lessening of US support for such a UN resolution would have serious consequences for US relations with the UK, other countries of Africa, and in the United Nations generally.
G. US-UK Nuclear Cooperation
Various termination provisions in the 1958 US-UK Agreement for cooperation on the uses of atomic energy for defense purposes will soon come into play. The intent of either the US or the UK to terminate the exchange of information on nuclear weapons and/or military reactors must be accompanied by notice to this effect to the other party by December 31, 1968. Lacking such notice, that part of the Agreement dealing with cooperation on information will continue in force for at least five more years. Continuation of cooperation on the exchange of matériel beyond the end of 1969 will require a new agreement.
In spite of their parlous financial-economic condition, the British intend for political reasons to retain membership in the nuclear club. They are currently considering alternative improvements which will enable their Polaris missile force to penetrate Soviet missile defense systems. We expect that this summer they will ask us for additional and continuing assistance in these endeavors.
US Position: The question of future US policy in this field is now under review in the IRG/SIG mechanism. Some of the long-term factors which we must evaluate in reaching a decision include (1) future US-UK bilateral relations; (2) UK's future relations with the EC; and (3) the prospects of a future European defense organization and European nuclear cooperation.
H. UK and France
HMG probably has a mixed reaction to the current French crisis. The British may be expected privately to consider that de Gaulle's difficulties should serve as a salutary shock to his reputation. On the other hand, they would be apprehensive about the uncertain effects of political and economic instability in France.
Current troubles in France are not likely to help the near-term British economic position since (1) any tremors in the international monetary system seem to reverberate against sterling; (2) a reduction in French economic activity will hurt British exports to France; and (3) weakness of French exports in third markets will offer Britain new opportunities only over the longer term.
If, as seems likely, the French response to recent internal developments produces an expansionary, inflationary situation in the country, over the longer term the balance of payments impact would be adverse to France and presumably help to reduce the US and UK balance of payments deficits. Though we can visualize some weakening in the French balance of payments, it is too early to judge whether recent events will force the eventual devaluation of the franc. We should note that France has large reserves of gold and dollars with which the franc can be defended.
296. Summary Notes of the 587th Meeting of the National Security Council/1/
Washington, June 5, 1968, 12:15-12:45 p.m.
/1/Source: Johnson Library, National Security File, NSC Meetings File, Vol. 5. Secret; Sensitive; For the President Only.
SUBJECT
Current Issues Affecting US-UK Relations
Secretary Rusk summarized the current situation in Europe, making the following points:
1. We are in an interim period in our relations with NATO.
A. A watchful waiting attitude is customary during our election year.
B. Both Canada and France are also in an election period.
C. Belgium and Italy are in the process of forming new governments.
D. A difficult and uncertain situation exists in Greece.
2. At the NATO meeting scheduled later this month in Iceland, our objectives will be to prevent disarray in NATO.
3. The uncertainty in Europe has the effect of increasing the importance to Europeans of the level of U.S. forces in Europe.
Secretary Rusk then turned to the current situation in the UK. He made the following points in addition to summarizing a recent cable from Ambassador Bruce (copy attached)./2/
/2/Not attached; it was apparently telegram 9529 from London, June 4, which analyzed the current situation in the United Kingdom. (Department of State, Bruce Diaries: Lot 64 D 327)
1. The Wilson Government is in difficulty with all Britishers and confronts divisions within the Labor Party.
2. Despite Wilson's troubles, the UK is more stable than France.
3. Many Britishers have not adjusted to their new role in the world.
A. The UK is steadily withdrawing from its security commitments in distant areas but at the same time is giving more support to NATO. The size of the UK contribution to NATO depends on whether the Labor government succeeds in improving the economic situation in the UK.
B. The special relationship the UK has with us is less important to them now because the British have less interest in maintaining a world role. Operationally, the U.S. and UK are working on fewer real problems. The concept of Atlantic cooperation could replace the special relationship. Close bilateral relations with the British, however, will certainly continue.
Secretary Fowler, describing the State paper/3/ as excellent, stated that sterling is the major U.S.-UK problem. Aspects of the sterling crisis involve:
/3/Document 295.
1. Short-term funding. We have assisted the British, particularly in supporting their requests for international bank withdrawals.
2. Bilateral credits.
3. The role of sterling in an international monetary system.
The UK financial situation is precarious and, in Secretary Fowler's view, British resources to apply to this problem may be less than indicated in the State Department's paper. Essentially, he added, continental countries have confidence in London and have welcomed British actions reflected in the last UK budget. However, the London financial community has less confidence in the Wilson Government. This is because the British Government and the London business community are out of step.
Secretary Fowler does not share the view of some that the return to power of the Conservative Party would be an improvement. He doubts that the Conservatives could handle the economic situation, especially a wage-price policy, as well as the Labor Party has done.
With respect to the current situation in London, Secretary Fowler said the British were losing large amounts of reserves not only because of widespread lack of confidence in sterling but also because several countries are diversifying their reserves. This diversification puts pressure on the pound because those countries in the pound bloc move out of sterling into other currencies. Thus, events are forcing Britain to recognize that the pound will not much longer be used as a reserve currency. The immediate problem is how to deal with the sterling balances held in those countries which are diversifying their reserves.
As to France, Secretary Fowler predicted that DeGaulle would seek to maintain the franc at its present rate. In the future, France might have to devalue--possibly as early as this fall--in order to meet wage increases which the government will be forced to grant French workmen. If the French do devalue, heavy pressure will fall on the British just at the time they may well be getting their financial situation in balance.
Secretary Fowler called attention to the loss of U.S. reserves in the last six months. He said work was going forward on how to deal multilaterally with the problem of sterling balances in other countries. Contingency plans are being drawn to insure that the sterling problem does not have a major unfavorable impact on the dollar. In addition, initiatives are being worked out to deal with the impact in Europe of instability of the pound and franc which undoubtedly will affect the dollar. These initiatives can be taken only after the tax bill is passed.
Secretary Clifford said that the British do not have the resources, the backup, or the hardware to deal with any big world problem. He said they are no longer a powerful ally of ours because they cannot afford the cost of an adequate defense effort. He made these points:
1. Earlier we had the closest working relations with the British. They looked after one part of the world and we looked after another part.
2. The British are continuing their contribution to NATO but are retrenching elsewhere.
3. It is not certain that the British can keep even their present level of forces in NATO. Although the UK is earmarking for NATO those troops being withdrawn from other areas, no real increase in NATO power results because the earmarked forces merely help to bring the British NATO contribution up to the level they have previously maintained.
Secretary Clifford acknowledged that the British withdrawal creates real problems for us in Southeast Asia, in other parts of Asia, and particularly in the Mediterranean where the Soviets recently have become more active.
In response to a request by the President, Mr. Rostow said one question he would like to have Secretary Rusk answer was whether the chance of the British getting into the Common Market was greater now that DeGaulle is in trouble.
Secretary Rusk asked Assistant Secretary Leddy to reply. Mr. Leddy said DeGaulle will not change his opposition to British entry even though he is in difficulty in France. DeGaulle will, however, have greater difficulty in carrying out his effort to prevent British entry.
Secretary Rusk reported that Ambassador Bohlen believes DeGaulle may win a large majority in the forthcoming French election. If this happens, DeGaulle will be able to exert considerable pressure on other Common Market members to continue to hold out against British entry. If DeGaulle loses the election, however, his power to oppose British entry may be considerably reduced. A second factor affecting British entry is that the new Italian government may not be as strong for British entry as past Italian governments have been.
Mr. Rostow pointed out that the only operational matter was the suggestion that State-Treasury recommendations for actions to deal with the current monetary situation be sent to the President promptly.
The President asked that such recommendations be prepared for him./4/
/4/Not found.
(Attached is the briefing memorandum for the President which he referred to at the meeting.)/5/
Bromley Smith
/5/Not attached.
297. Memorandum of Conversation/1/
Washington, October 11, 1968.
/1/Source: Johnson Library, National Security File, Country File, UK, Vol. 14. Secret; Sensitive. Drafted by Fried.
PARTICIPANTS
The President, British Foreign Secretary Michael Stewart, Ambassador Dean, Walt Rostow, Ed Fried
The President welcomed Stewart and expressed satisfaction with his close relations with Prime Minister Wilson. He asked Stewart whether there was any news from Gibraltar./2/
/2/Reference is to October 9-13 talks between Wilson and Prime Minister Ian Smith on the H.M.S. Fearless anchored at Gibraltar.
Stewart said that the Prime Minister believed that the only way to see whether there was any basis for agreement was to see Smith. He would keep us fully informed.
Stewart went on to say that the debate in the UN was dominated by the Czechoslovakia and Middle East discussions. On the Middle East there had been a great deal of private talk to see what could be done to advance the Jarring Mission./3/
/3/Between January and May 1968, Gunnar Jarring, UN Special Representative in the Middle East, met with Arab and Israeli officials in Cyprus. After his return to New York, Jarring continued secret discussions relating to a Middle East peace settlement.
The President said he had tried to encourage both sides to support Jarring. He believed the Eban speech suggested some progress.
Stewart said that Eban had complained to him that the rest of the world too easily accepted the proposition that there should not be direct negotiation. Stewart had tried to impress on Eban the need for the Israelis to declare themselves on the Security Council resolution. Eban said he would consider this with the objective of laying the base for talks with Jordan--first through Jarring and then directly.
The President said Jarring would fail unless the two sides began to move. Jarring had been patient but he couldn't continue indefinitely without movement.
Rostow suggested that Jarring might be somewhat more optimistic than he sounds. He may be using his pessimism as a lever to push for negotiations.
The President turned to Czechoslovakia and said it was essential that the world wake up to the danger before it was too late.
Stewart said some talk was a necessary part of the response. That was why the British had wanted to move quickly to the Security Council--to show that not only NATO but the interests of the world were involved in the Czech invasion. The Afro-Asian countries automatically gravitated to the Soviet pole on this kind of issue: how would they act on this one?
The President asked Stewart's views on the Gromyko speech to the UN./4/
/4/For text of the October 3 speech, see UN doc. A/PV. 1679.
Stewart said it was cautious and made clear that the Russians faced a difficult problem. Their objective was to act as though nothing had happened, and they particularly wanted to create this impression as far as their relations with the U.S. were concerned. We, on the other hand, cannot say we will have no further dealings with them. We do have problems we must solve together, and we should get on with disarmament matters. It is a difficult line to draw but we must continually remind them and the world of what they have done. Even more serious, we must think very hard about what we would do if there are any further adventures.
The President said he was very concerned about the possibility of isolationism in the U.S. and the effects on keeping our troops in Europe. He said the British withdrawals hadn't helped. Czechoslovakia provided some time. It was necessary now to use that time well. Our people have gotten the impression that others are not pulling their share of the load. He was confident that we could stay in Europe indefinitely if others showed they were helping.
Stewart said he understood this and the British were acting to strengthen NATO. He said he wanted to raise another question--the concern that smaller European countries had over U.S. negotiations with the Russians. He said some matters clearly affected primarily the U.S. and the Soviet Union. Some, on the other hand, affected NATO as a whole. There was a feeling among smaller NATO countries that these latter issues would be settled over their heads. Would it be possible to draw a dividing line between those issues we settle bilaterally and those on which we would consult fully?
The President said he had tried very hard over five years to make some progress with the USSR and to see what could be done to narrow our differences in defensive arrangements, in offensive and defensive weapons, in the NPT. He said that there had been meetings at the Ambassadorial and Ministerial levels and at the Summit and there had been a lot of personal correspondence. He did not see very strong promise of our getting anywhere with this during the balance of the year. The next President would have to explore this again and make careful preparations. This would take time. On all these issues we had and would continue to get the advice of the UK and all NATO countries and to keep them informed.
He went on to say that there had been progress on some issues in Glassboro and up through the day before the Czechoslovakian invasion; but he was not optimistic now. He repeated that we would not see anybody or take any action without full consultation and exchange with our Allies. Talks had been long overdue in the ABM field but this issue was now on the back burner. He had no desire to travel but he was eager to move forward on U.S. business and on the world's business; but progress was not likely now until after the election and probably not until six months after the new President came into office.
Stewart asked whether he believed there would be significant change in the defense and foreign policy positions in the U.S. after the election. The President thought there would be some rethinking. For example, a Republican President and a Democratic Senate could have awkward consequences. A Democratic President with Republican gains in the Congress could cause problems. He read Stewart a portion of the NPT statement he was about to make, which mentioned the possibility that he would call the Congress back into session./5/
/5/For text, see Public Papers of the Presidents of the United States: Lyndon B. Johnson, 1968-69, Book II, pp. 1029-1030.
Stewart asked whether the President thought that ratification of the Treaty would come eventually. The President said he could not predict but he was concerned. It was important that we move. The longer we waited the more the issue would be in doubt.
Stewart asked whether the President saw any change in our Vietnam policy after a new Administration came into office. The President said that any new Administration would take a new look. As far as he was concerned he was convinced that whatever concessions we would make would never be enough unless we got some indication that they were prepared to do something. It didn't have to be reciprocal. We would be willing to stop if they understood that if they started shelling cities or increasing activity in the DMZ we would resume bombing and if they accepted the GVN as a negotiating partner--a condition essential for serious and productive discussions of a settlement.
Stewart said that the British fully supported the President's position, but they would have difficulty if the Americans abandoned it without warning. In that context, he asked whether Vice President Humphrey's most recent statement represented a change./6/ The President said that he believed that Humphrey tried to say that he would stop the bombing if they restored the DMZ. His emphasis created some doubt. In the end, however, he did not believe that the position was different. In any event, there would be no change until January 20.
/6/Reference is to a September 30 statement by the Vice President that if elected he would stop the bombing of North Vietnam if its government gave signs it was ready to negotiate seriously for an end to the conflict.
Stewart said it was their impression that the Soviet leaders visiting Cambodia intended to put some pressure on the North Vietnamese./7/ The President said that he was not much of an authority on North Vietnam. He had thought for a long time that, faced with their prospects, they would make some move. Sometimes he had thought they were moving, only to be disappointed. He believed and continued to believe that it is in their interest to make a move. They will not gain anything until January 20, and what they might gain after that will not be worth what they will be losing until then.
/7/Not further identified.
Stewart said that when he saw Gromyko following the President's March 31 statement/8/ he had urged him to tell the North Vietnamese that they would be wrong if they thought they could alter public opinion in their favor by holding out. He told Gromyko that he thought the effects would be the other way. And he believed that this, in fact, had been the case. But he asked whether the Russians had talked to the North Vietnamese on this and how much influence they had. The President said he did not know. He had thought that Glassboro and other talks might have some results; but this did not prove to be the case.
/8/For text, see Public Papers of the Presidents of the United States: Lyndon B. Johnson, 1968-69, Book I, pp. 469-476.
Stewart again went back to the question of contingency planning regarding further Soviet moves. He said he believed the Russians fully understood what would happen if they moved against any NATO countries. They probably also were pretty confident that if they moved against Warsaw Pact countries they probably would not get a strong NATO response. But what happened in the intermediate cases? What would we really do and what tactics should we employ to tell the Russians? The President agreed that it was important that we work hard on this kind of contingency planning and move along with it.
298. Memorandum From the Under Secretary of State (Katzenbach) to President Johnson/1/
Washington, November 22, 1968.
/1/Source: Johnson Library, National Security File, Country File, UK, Vol. 14. Secret.
SUBJECT
Military Nuclear Cooperation with the United Kingdom
Before year-end, we must decide whether we want to exercise our option to terminate certain information exchanges under our 1958 Agreement with the United Kingdom on Military Nuclear Cooperation. We will not again have this option for another five years.
We have agreements for very limited cooperation in the nuclear weapons field with NATO and ten countries. The arrangement with the United Kingdom is unique, however, because it provides for exchanges of information relating to weapons design and manufacture and supply of nuclear materials for weapons.
The SIG, with the participation of the AEC, has reviewed our policy in order to determine whether changes in the 1958 arrangement would be in the United States interest at this time./2/ It has concluded that:
/2/A copy of the SIG decision paper is in the National Archives and Records Administration, RG 59, SIG Files: Lot 74 D 344.
--We should maintain the existing arrangement;
--We should, however, limit exchanges of weapons information and materials to what the British need to carry forward their program in nuclear weapons research and to maintain the effectiveness of their existing nuclear forces;
--We should not, in the absence of advance Presidential approval, encourage, or commit ourselves to support, any significant modification to existing British programs or any major new British programs.
Secretaries Rusk and Clifford and the AEC concur in the conclusions and recommendations set forth more fully below for your approval.
Issues
There is one issue which must be decided now, and a related question which should be considered but does not require a decision at this time.
First--Under the Agreement, we have the option, until December 31, 1968, to terminate Article II, which provides for the exchange of information on nuclear weapons and military reactors--in addition to the more limited information which we also exchange with most of our other NATO allies. If we exercise the option, these exchanges will terminate at the end of 1969. If we do not, we will not again have the option to terminate Article II for another five years. There is every reason to think the British want to continue exchanges in the nuclear weapons field. Congress does not need to act. A subsidiary issue is the extent to which we would continue the flow of information to the British assuming Article II is not terminated. The Agreement leaves that to our discretion.
Second--The related question is whether, if the British ask us, we should extend the 1959 Amendment on weapons materials and equipment exchanges to the 1958 Agreement. Under that Amendment, which does not expire until the end of 1969, we have been supplying the British with weapons-grade uranium, tritium, and other materials, and with non-nuclear parts of weapons. No decision is needed now. Undoubtedly, however, the British will propose a new Amendment that would keep open the option of continuing such exchanges. They will probably wait until early next year to approach us. In the unlikely event that they approach us this year, we could begin preliminary staff work but would tell them that a decision would have to be made by the next Administration. A new Amendment would have to be submitted to Congress for the statutory sixty-day waiting period before it enters into force.
Discussion
The United Kingdom's nuclear forces only marginally supplement our own. But the fact of the matter is the British consider a small nuclear deterrent to be better than none. They will require some further weapons information and materials merely to maintain its effectiveness. They are unwilling to give up their nuclear deterrent except in return for an effective European nuclear arrangement which would substitute for both the British and French national nuclear programs. As of now, no such arrangement is in sight.
Under these circumstances, unilateral termination by us would cause serious disaffection between our two countries, both major British parties being firmly committed to the retention of an independent British nuclear deterrent. It could also appear to be indirectly promoting France as the principal Western European country in the nuclear business.
On the other hand, it is true that the nuclear weapons arrangement is a symbol of our "special relationship" and therefore a factor of major significance in French attitudes toward British membership in the EEC. However, the British, rather than we, need to judge when this aspect of our relationship should be limited or terminated to meet their political objectives in Western Europe.
Continuation of some cooperation in the nuclear weapons field will also permit us to monitor closely the work being carried out by the British and will help to assure that we receive the benefits of their technical advances.
We do not expect, however, that such benefits from British technical advances in the nuclear weapons field will be of more than limited value to us. For this, as well as for security reasons, we would not furnish information which reveals the vulnerability levels of United States missile systems.
Continuation of our cooperation with the United Kingdom in this field would not compromise our objectives of promoting the Non-Proliferation Treaty. The various U.S./U.K. Agreements do not provide for the transfer of manufactured warheads or their nuclear cores, but are confined to assistance in the manufacture of warheads. Such assistance among nuclear weapons states is not prohibited by the NPT.
The 1958 Agreement for Cooperation also provided for limited assistance to the United Kingdom in naval nuclear propulsion technology. Our obligations in this field will have been completely fulfilled by mid-1969, excepting reactor safety information, to be provided unilaterally by the United States, for the propulsion plant furnished earlier under the Agreement.
We do not anticipate that the British will request additional naval nuclear propulsion information, and there are no plans to provide them with additional assistance in this field. In any event, further information would not be provided without specific approval of the President. We have, however, signed a revision to the Agreement under which the United States will supply specific quantities of enriched uranium and other specified reactor materials for the British nuclear-powered submarine program, prior to December 31, 1979.
Conclusions
The SIG, with participation of the AEC, has concluded:
--The United States should not take steps to alter current arrangements on exchanges of weapons information. More specifically, the United States should not act to terminate Article II of the Agreement. However, it also should make no overtures concerning major new British programs or significant modification (e.g., the installation of MIRVs) to existing British programs.
--Accordingly, in response to British requests, we would, selectively, release that nuclear weapons information which the British need to maintain the effectiveness of their existing nuclear forces and to evaluate fully the alternatives available to them for improvement of these forces. (This could include selective information on hardening techniques, and information related to Poseidon technology.) We would also continue to exchange information in certain areas of research on weapons technology which offer a reasonable prospect of mutual benefit.
--If the British ask us, before January 20, to renew the 1959 Amendment on materials and equipment exchanges, we would tell them that a decision will have to be made by the next Administration. (Since this Amendment does not expire until the end of 1969, a decision is not needed now.) We would begin the preliminary staffing of a ten-year renewal of the Amendment--although, here too, we would limit our weapons assistance strictly to what the British need to maintain the effectiveness of their existing nuclear forces. We would also continue to exchange source, by-product, and special nuclear materials and non-nuclear parts or materials for research on atomic weapons.
--We would make clear to the British that the extension of present arrangements is intended to deal only with the framework for cooperation on weapons information and materials assistance; and that we reserve the right to evaluate any specific request in this area in light of all the factors and considerations at the time.
--We would be willing to limit or terminate our cooperation if the British decide their special relationship with us in the nuclear field prejudices their chances for entry into the European Economic Community.
--Any requests the British might make for information or materials or equipment for major new programs or significant modification to existing programs would be submitted to the President. This would include the question of whether to assist the British in the development and deployment of MIRVs for their Polaris missiles or to provide additional naval nuclear propulsion information.
Recommendations
That we not exercise our option, by December 31, 1968, to terminate Article II of the 1958 Agreement for Cooperation on Uses of Atomic Energy for Mutual Defense and continue that cooperation in accordance with the conclusions stated above.
If you approve, we will inform the Joint Committee on Atomic Energy of your decisions set forth above./3/
/3/An undated memorandum for the files by Bromley Smith, attached to the memorandum, reads: "S/S Ben Read informed that by not acting, the President understood he was deciding not to exercise our option to terminate our exchange of information with the British. BKS"
Nicholas deB. Katzenbach
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