PARTICIPANTS
The Prime Minister, the Chancellor of the Exchequer, Sir William Armstrong of H. M. Treasury, and the Prime Minister's Private Secretary; Secretary Fowler, Under Secretary Ball and Mr. Deming

Secretary Fowler said he was pleased with the results of the Hague meeting./2/ What we had attained was procedural rather than substantive, but it represented a real gain. The discussions and negotiations were now in the larger group, and there was hope of more progress on substance. He hoped there would be an IMF resolution supporting the procedure at this Fall's meeting, and his timetable for agreement in substance was the IMF meeting in September, 1967. The time for activation, of course, was open. It would depend on circumstances as they developed.

The Prime Minister said he hoped the U.S. and U.K. would continue to work together, and anything the U.K. could do to help get the 1966 IMF resolution approved, they would do.

Secretary Fowler said that he thought the U.K. measures had been well taken. He referred to the comments he had made about them and the comments made at the Hague by the other finance ministers.

The Prime Minister said that the measures had gone further than any others so far and that he believed the wages/prices measures would have to go further still. He doubted that they could rely solely on the voluntary program. They needed additional statutory powers and probably would seek them. Among such powers were those to literally break strikes. The problem was very tough--particularly so for a democracy.

He referred to the will of the U.K. Government to stand up and take a hard line. He noted that, by so doing in the seaman's strike, it had hurt sterling because the strike dragged on. He thought the general comment on the strike settlement had missed this point--the Government really had been tough and had insisted on less than the employers were willing to pay. Yet comment on the settlement seemed to indicate that the Government had been too easy.

He referred also to the problem of sterling balances and the apparently general feeling that these were the cause of the present weakness. He noted that this simply was not so. Selling of sterling had come from the private side, including selling from the U.K. itself.

He reiterated his belief that there was absolutely no point in devaluation. It would solve nothing. He wished the world--and some elements in the U.K.--would understand that.

Secretary Fowler noted a point that had been made at the afternoon meeting at the Treasury--that the wage/price pause could have an important long-run effect. If the spiral of wage increases at a rate well above productivity increases could be broken (as it had been in the U.S. in the late 1950's), it could lead to cost stability for some time. This was a very important factor.

He went on to say that the U.S. now faced a problem of preventing a breakout of wage and price increases. The U.S. problem was to orbit out of a 5-1/2-6 percent real growth rate that was no longer sustainable as our slack was being used up--to a rate of 4-1/2 percent, which would be consonant with a low level of unemployment and high degree of capital utilization. It was a difficult job.

The Prime Minister said he saw no real demand-pull inflation in the U.S. as yet, but undoubtedly the seeds of cost-push inflation were there.

The Prime Minister said that he had had 9 hours with Kosygin--5 hours alone, except for 2 interpreters. Kosygin had been very frank. The Prime Minister had asked if he wanted to be quoted to the President. Kosygin had said that he did not, but he thought it would be useful if the Prime Minister reported his own appraisal of Kosygin's statements to the President.

The Prime Minister said that he had stressed that the U.S. meant business and that Hanoi had no hope of a U.S. weariness which would produce withdrawal from Vietnam. He said he made this point a number of times. He would be reporting to the President in detail about the conversation.

The Prime Minister said he also wanted to discuss broadly U.S.-U.K. relationships. In a sense, the U.K. was at a crossroads and had to come to some conclusions about her future role.

George Ball said that he believed the U.K. had to define--perhaps redefine--its role in the world. For his part, he saw the U.K.'s major role as leadership in Europe.

The Prime Minister said that he did not want to be corralled into an inward-looking Europe.

Ball said that he visualized the U.K.'s leadership as taking Europe out of its inwardness.

The Prime Minister said he had asked Pompidou directly if the French price for entry into the E.E.C. were political and if it involved the U.K. turning its back on the U.S. He got no real answer.

Secretary Fowler said that he believed the U.K. should go into the E.E.C. from a position of strength rather than weakness.

The Prime Minister agreed with this view.

Ball said that he didn't know the strategy or the timing but that the U.K. and U.S. should begin to work out jointly the U.K.'s role in Europe.

The Prime Minister said he was skeptical. His own posture was Atlantic. He noted that the U.S. seemed to be shifting from an Atlantic to a Pacific posture.

Secretary Fowler said his only advice was "don't go in on French terms."

Ball said that everything could not be agreed in advance. Maybe it was better to get in and then negotiate.

The Prime Minister appeared unimpressed.

Washington, July 30, 1966, 4:12 p.m.

18817. Following cable based on uncleared memcons of Wilson talks is FYI, Noforn, and subject to revision upon review:/2/

During one day Washington visit Prime Minister Wilson had one hour private conversation with President followed by meeting in which Secretaries Rusk, McNamara, and Fowler, and Under Secretary Ball participated. President's toast at luncheon for Wilson emphasized in warm terms continuing close cooperation of US and UK in cause of peace./3/ President expressed confidence that UK would prevail in present difficulties which he compared with challenge of World War II. President noted Prime Minister was now asking of British people same fortitude which turned the tide in those days.

Private talk between President and Prime Minister covered Wilson's trip to Soviet Union, economic problems, Vietnam, the German situation and the British position East of Suez./4/

Prime Minister in discussing visit to Soviet Union in larger groups said Kosygin in course of nine hours of conversations had given no encouragement whatsoever concerning possibility of Geneva meeting on Vietnam. Kosygin had been strongly critical of President but at least as strong in criticizing Chinese. Wilson believes Kosygin sincerely fears escalation Chinese intervention and confrontation between US and China. Wilson said he thought we may have been too complacent in assumption Chinese would not come in. In response Secretary's query Wilson said he thought Kosygin in refusing to go to Geneva influenced more by Chinese aspect than by Hanoi's views. Prime Minister said he had pressed Kosygin hard on US POW's in North Vietnam.

In discussing UK balance of payments problem Prime Minister pointed to 9% increase in exports in first five months of 1966 including rise of 23% in exports to US but said economy had been "blown off course" by sharp increase in price imported materials, adverse capital account movements, and worst of all seamen's strike. He described Draconian measures adopted by his Government and stressed his determination in dealing with situation. Wilson said devaluation of sterling would not be good thing recalling worldwide repercussions which followed devaluation of the 30's. Prime Minister said UK financial problem had been exaggerated and some British financiers showed their political prejudices in voicing their views.

Wilson and Secretary Fowler exchanged views on problems of increasing international liquidity. Secretary Fowler said there had been enough agreement at Hague meeting of Group of Ten to enable us to move into IMF. We should press hard with idea of establishing machinery for handling liquidity problem in time for September 1967 IMF meeting. Prime Minister said it was important to reach US-UK agreement before this meeting.

With respect overseas military expenditures Prime Minister said there would be cuts. He would deal with confrontation situation in Malaysia when it was clear confrontation had ended not before. Troops in Germany presented difficult problem for both US and UK. President referred to prospect US ship purchases in UK to value of $23 million, $15 million from shifts of air units from France to UK and purchase of Rolls Royce engines as adding up to $100 million. Wilson expressed satisfaction with these arrangements. He suggested possibility of withdrawing presence while maintaining commitment to Libya, reduction of activities in Malta and hope US could help by increasing repair work US Sixth Fleet in Malta.

In separate discussion with members of Prime Minister's party Secretary McNamara said he did not think Germans would agree to meet full British offset request. Germans feel both US and UK forces overmanned and believe there must be cheaper way of maintaining these forces. Secretary McNamara said this could be studied. For example, UK air squadrons in Germany could just as well be maintained in UK. Also we should take greater account of air transport mobility and pay less attention to geography factor and concentrate more on "time readiness." Sir Burke Trend said UK had attempted to do this in Defense Review and thought NATO should make systematic study of problem. Secretary McNamara agreed but said study should proceed in way which would not weaken public confidence in NATO. Secretary Rusk noted that there are two parallel trends: one a feeling in Europe that threat has lessened and on other hand danger that there will be loss of confidence in NATO if military structure weakened. Europeans feel they can relax their efforts but expect US to continue its full contribution.

On question UK membership in Common Market Prime Minister said some people in his own party and most of press thought UK should cut world role and go in. He said UK anxious to join on good terms but not on French terms. French would insist UK break its ties with US or at very least abandon East of Suez position. Prime Minister thought time would come when UK could enter Common Market under satisfactory terms but that time not now. Sir Burke Trend said in separate conversation with Secretary that even if UK offered to sign on dotted line French would find some other reason to prevent UK entry.

In discussion of African problems with members of Prime Minister's party Sir Burke Trend said Soviets do not appear to place Africa at top of their priority list. Secretary noted prominent role of Cubans in Congo Brazzaville.

On Rhodesia Sir Burke said sanctions biting hard but this not so apparent to man in street and thus sanctions so far have had little political effect. Under Secretary Ball said sanctions had reduced economic activity in Rhodesia but political effect at best unclear.

Secretary in discussing South Africa problem said it was possible Africans would press issue hard in General Assembly in extremist form. Under Secretary Ball said it might be difficult for UK if it were faced with decision of vetoing mandatory sanctions against South Africa. When Ambassador Dean said there would first have to be finding of threat to peace Mr. Ball noted UK had already given way somewhat on this point in the resolution concerning tankers off Beira. Discussion of arms sales to South Africa covered septel./5/

Rusk

Washington, August 17, 1966, 9:45 a.m.

SUBJECT
British Plans for Military Cutbacks in Europe

PARTICIPANTS

The Acting Secretary
Deputy Under Secretary Johnson
Jacob Myerson, Special Assistant, U
Thomas M. Judd, EUR/BMI

Sir Patrick Dean, British Ambassador
David V. Bendall, Counselor, British Embassy

Following an exchange of greetings, the Acting Secretary told the British Ambassador we were now prepared to provide our comments on the British plans for cutbacks in their military spending in Europe as requested the previous day by the Ambassador./2/

As regards the proposal to save from 5 to 8 million pounds by a reduction in troop expenditures in Germany, this was obviously something solely within the province of the British Government. We did not feel that we should comment.

In regard to the proposal to save 15 million pounds in the logistics area, our main concern was with the British plan to get down to a ten-day supply situation. This would put the UK out of phase with our own arrangements. Even if HMG was thinking of resupply from the UK, in a time of emergency the system was likely to break down.

Our main concern was with the British plans for saving an additional 10 million pounds. We were particularly concerned with the discussion in the British statement of the probable necessity to withdraw some combat forces and with the implication in the statement that some action might be taken by the UK in this regard before the UK/FRG mixed commission had a chance to report in the latter part of September.

The injection of the possibility of a withdrawal of combat troops into the WEU and the NAC at this time would cause us great difficulties. This news was bound to leak. The resulting reaction in the U.S. would put pressure on us to unravel. We also feared, particularly in view of the problems that NATO is now having, that a whole series of adverse reactions would be triggered.

The Acting Secretary and Mr. Johnson asked if the British in drawing up their plans had taken into account the additional $20 million in foreign exchange which would accrue to them as a result of our moving of three reconnaissance and two troop transport squadrons from France to the UK. They also urged the British to give us some time to see what might be done.

Ambassador Dean replied that he did not know if the extra foreign exchange to be gained from the stationing of the U.S. squadrons in the UK had been taken into consideration or not. His instructions were that HMG was unable to postpone beyond Friday its statement to the NAC. The Ministers who had approved the statement had now left London on their holidays. It would be difficult to make any changes. In effect, the U.S. was asking that HMG eliminate entirely that part of its statement dealing with the 10 million pounds.

Mr. Johnson replied that this was not really what we had in mind. We merely wanted the British to indicate that they would not do anything until after the mixed commission had reported. We also were urging that there be no mention of withdrawals.

Ambassador Dean said he thought amendments of this nature might not be so difficult. He would report to London. He went on to say that if the U.S. wished to go over the situation with the UK, he thought it would be best to hold talks in London where the necessary facts were available.

The Acting Secretary agreed with this suggestion and Mr. Johnson added that it would probably not be possible for us to have the talks until the following week.

Mr. Johnson raised another matter of concern to us. He said that it was the understanding of General Wheeler, who had been briefed on British plans by Admiral Henderson, that the UK was unable to give any assurances that any troops returned from Germany would be put into the Strategic Reserve. Ambassador Dean agreed that such assurances could not be given./3/

London, April 4, 1967, 0901Z.

8004. Vipto 55. For: The President and the Secretary. From: The Vice President.

Subj: Meeting with Prime Minister Harold Wilson, Chequers, Sunday, April 2, 1967./2/

On arrival in London, Sunday evening, I went directly to Chequers for dinner and overnight. After dinner, there was a lengthy conversation in the study. Present on the British side, besides Prime Minister and Mrs. Wilson, were the Lord Chancellor, Lord Gardiner; Mr. Harold Davies, Parliamentary Secretary to the Prime Minister; and Michael Palliser, Private Secretary to the Prime Minister. On the American side, besides Mrs. Humphrey and myself, were Ambassador and Mrs. Bruce, Mr. and Mrs. Dwayne Andreas, and Ted Van Dyk of my staff.

Before dinner, Prime Minister asked me what reactions I had met on the continent to UK initiatives towards the Common Market. I told him that, in the Netherlands, Foreign Minister Luns favored an immediate British initiative without delay, with full acceptance of the Rome Treaty. In Germany, Willy Brandt had made clear German support for UK entry, but suggested that, after a declaration of intent now, he favored a series of bilateral contacts until sometime in the fall. In Italy, Moro, Saragat and Nenni had all indicated strong support for UK entry and for a united Europe.

Wilson indicated that he was now in the process of consideration of Britain's tactics towards EEC membership.

After dinner, we gathered in the study. After brief preliminaries, Wilson brought up Vietnam and asked for our assessment of the present situation there. I reviewed for him the Guam Conference; the new American diplomatic team; the social, political and economic programs underway there, and gave him a brief review once more of our peace efforts.

Wilson reviewed for me in detail his meeting with Kosygin./3/ He said Kosygin gave him an overwhelming impression of concern over Communist China. Contrary to most other reports, Kosygin believed that Red China wanted to intervene in North Vietnam--in fact he talked in terms of some three million Chinese troops. However, the leaders of North Vietnam were struggling to prevent this intervention. He said that Kosygin "spilled all the beans" concerning his fears about China, that it was an obsession. Wilson said Kosygin stated any company selling equipment to China would never get another Soviet order. He criticized UK computer and Italian scientific equipment sales to China. When Wilson said these sales were for peaceful purposes, Kosygin said they would be used for military purposes. Kosygin said U.S. did not take the Chinese threat seriously enough. Wilson feared that we had not continued the last bombing pause for a long enough period of time, that many people in UK believed the decision-making process in Hanoi could not move that quickly.

Harold Davies, who knows Ho Chi Minh well and who had been to North Vietnam and met with several of the leaders there, said that North Vietnam leadership was far less monolithic than we might believe. There were a number of factions. The men in Hanoi were experienced, cultured diplomats--"real French-trained Elysée men." They were not single minded, Neanderthal people who acted without reason. Yet, as one prominent physician had told him, they have been fighting for years and were prepared to continue to fight through their lifetimes and those of their children. The North Vietnamese were resolute.

Davies felt that any attempt toward negotiation should be given ample time for development. It was necessary not only for the people in North Vietnam to discuss such a matter fully, among themselves, but it was necessary to consult NLF representatives all the way down to the lowest cadres. This could not be done overnight.

Discussion then centered on how little was really known about the inside politics in Hanoi and about where and how decisions were really made in Hanoi.

Wilson said Kosygin had encouraged him to do everything he could to work for a negotiated settlement in Vietnam. Kosygin told Wilson not to jeopardize his (Wilson's) relationship with Washington. He had no doubt that Kosygin wanted a negotiated settlement. However, just as we did not understand decision-making processes in North Vietnam, the Soviets did not understand decision-making processes and forces at work in US. Kosygin still saw the possibility of "American workers and peasants" rising up in protest against the war. Wilson explained to Kosygin that President Johnson did have strong support for his Vietnam policies. The opposition was vocal and a minority.

In closing, Wilson indicated that he thought the key to peace lay through the Soviet Union and the key to the Soviet Union lay with Britain. He felt that he had a real opportunity to act as middleman between the US and USSR to reach a negotiated settlement. In fact, he had been considering the possibility of moving more toward the middle, between the two nations, on Vietnamese policy. If he did this, he wanted us to understand that he was doing so in the interests of peace and not because of any lack of friendship or loyalty to the US.

I replied that such a shift by Wilson would be misunderstood in the US and that in fact it might result in increased pressure from "hawks" for unilateral and strong US action to crush North Vietnam. It would be unfortunate if Americans believed Britain was moving away from US on this issue. The President appreciated Wilson's support and recognized the domestic political pressures upon him. I told Wilson he should thus consider very carefully any change in the UK position. I told him he would jeopardize his relationship with the President if he followed any such course. (I repeated this again to him today, urging that he keep in close contact with the President, being mindful of the close relationship between our countries and of the friendship of the President. I believe I made my point.)

There followed a long discussion about British public opinion and Vietnam. The Lord Chancellor, summing up, said that he believed most Britishers were simply appalled by the bloodshed and destruction and did not necessarily recognize the complicated issues involved. They saw the war as being dangerous to them if it expanded. Beyond that, most of the news carried by the media showed only American shooting and killing. It seemed to most people that we were a big country applying a great amount of force against a small country. Also, the Ky government was highly unpopular in Britain and that was harmful to public opinion. Our story has obviously not been effectively told in Europe. TV in particular has been damaging to our image.

I reviewed in detail the progress made under the Ky government and our assessment of that government, as well as the present development toward democratic institutions there.

I closed by suggesting that Wilson and others would do well to apply moral pressure on Hanoi as moral pressure was being applied against the US. He indicated that this would be useful and he would see what he could do in discussions with European leaders.

I shall be meeting with him, as well as other members of the British Government during the next two days, and will send in a detailed report of my London visit late Tuesday or early Wednesday./4/

Memoranda of conversation, individual meetings, follow./5/

Bruce

Washington, April 21, 1967.

1. We are well aware of the United Kingdom's economic, budgetary and foreign exchange difficulties which lie at the heart of the decision being considered to reduce your forces in Singapore-Malaysia by about one-half over the next four years. Nonetheless, we are deeply concerned at the idea of your making significant reductions in force unless and until there is a real change in the Vietnam situation.

2. What concerns us even more gravely are the indications you gave us that a further and more far-reaching decision is in contemplation to withdraw entirely from the Singapore-Malaysia bases by the mid-1970's, to have Minister Healey inform Singapore and Malaysia of this contemplated decision, and to announce it before Parliament rises in July in conjunction with new statement of your Defense policy.

3. As I understand it the case for taking that much more fundamental decision rests on several grounds:

A. A reduction in your presence will not produce large financial savings, only a complete withdrawal will accomplish that.

B. You are under great domestic pressures for this and other reasons to tell the country what your intentions are in the area.

C. Your Forces must know clearly and precisely what your policy is in order to plan their programs over the next ten years.

D. You believe that an indefinite continued presence in the area will prove unacceptable locally, and it will only complicate the problems of those in power. By announcing a timetable for withdrawal now, you believe the critics of your presence will be disarmed.

E. It is essential that Malaysia and Singapore know what is in store so that you can together plan for an orderly withdrawal with a minimum of dislocation.

4. While I appreciate the force of some of these arguments, I would argue against major reductions in the near future, more strongly against any decision now as to what you contemplate after 1971, and even more strongly against any announcement now of any intentions to withdraw from the area.

5. My concerns arise from the consequent reactions--the chain reactions--that would be set in motion in the US and elsewhere by such an action.

A. For the UK to announce that you will no longer carry this burden (even at a future date) at the very moment when we are deeply involved in Vietnam and when Thailand is under threat, would have the most serious effects here. Surely Britain shares our views that what we are doing in Vietnam is of vital strategic importance to us and to our Allies. But those articulate groups here who question our presence in Vietnam and our commitments to SEATO will argue even more forcefully that your withdrawal shows clearly that there are no vital national or international interests in this area for us to defend, that we should have never gone in, and that we too should withdraw.

B. There are those here in important positions in the Senate who want us to reduce our commitment to Europe. Should you announce that you are withdrawing from Singapore and Malaysia on the grounds you cannot carry that burden, I foresee an increase in the intensity of their criticism, arguing that we too have a limit to our capacity to carry these burdens and we should cut further and heavily in Europe.

C. The strength of our position in the US in assuming international commitments in these last twenty years is that we have always been able to say that we have Allies who share our views and share our burden, and not least the UK. The defection of De Gaulle has hurt us. If now there was a UK withdrawal from this area it would be regarded as a similar defection, encouraging the neoisolationists, and encouraging the critics of our policies both in Asia and in Europe.

D. I am also concerned as to how your withdrawal would be viewed in Hanoi and Peking, where it would be treated as a victory for them, as a repudiation of your support of our position in the area, and as a further weakening of SEATO.

E. I am particularly concerned as to the effect in the immediate area of an announcement of what you will do in the 1970's. With the great change in Indonesia,/2/ there is now the prospect that something might be built in the next decade in the way of regional associations for economic and eventually defense purposes. We do not share the view that the people in Malaysia and Singapore long to see you leave. Lee has said again and again that he values your presence, and sees no hostility in Malaysia. The free Asian countries would prefer a friendly white presence to a hostile Chinese. Your continued presence and your experienced hand could do much to keep the situation stable and to foster and encourage these promising developments, whereas the announcement of your withdrawal could set in motion strains and ambitions that could keep this area in turmoil. If there is any thought that we might be able to take on your commitments when you left, as we did in Greece,/3/ I must say at once that there is no sentiment in this country to take on additional commitments in any area.

5. In short, we understand your desire to reduce your forces and base structure in Malaysia and Singapore. We hope this can be done in a gradual and reasonable way without significant withdrawals before a Vietnam settlement, for we feel that your presence continues to play a major role in the security and stability of the area. But above all we hope you can avoid taking, or in any event making public in any way, basic decisions at this point on withdrawal by the mid-1970's./4/

London, May 6, 1967.

Dear Dean:

Last week George Brown telephoned me to say he wished urgently to talk to me privately and unofficially--I was to be alone and he would have Paul Gore-Booth with him.

We met on Friday night/2/ at the Embassy residence, and no notes were taken. He prefaced his conversation by saying his call was unofficial, and for the exchange of private views. Then he added that what he would discuss was British plans for reducing their military commitments East of Suez and eliminating them entirely in Singapore and Malaysia by 1975.

I told him I was particularly glad he would do so, since before he had phoned me, I had already decided, even in the absence of instructions from home, to ask him to see me as a friend, and allow me to state my strong misgivings over what was proposed, the manner in which the matter was being treated by HMG, and the intention to make a public announcement about it in July, 1967.

I said I had read various memcons on the subject, and wondered whether his people appreciated how dangerous and inflammatory this situation could become.

He answered that he realized this, and was deeply troubled over it. His own judgment differed somewhat from that of certain of his colleagues, and also, in a few particulars, from that of the Foreign Office; Gore-Booth would tell me about the latter.

George then made a lucid and comprehensive survey of the situation, stressing particularly (1) the financial considerations, and (2) the domestic political pressures for an early announcement by his Government of its intention to quit the Singapore region by 1975.

Everything he adduced has already been so amply argued by him in Washington that it is needless for me to repeat it here.

In fact, I am writing you solely because of his insistence that I do so, and that I ask you to communicate his reflections only to the President, and to no one on your and the White House staff!

Frankly, Dean, I am at a loss to know exactly what he thinks I might convey of which you are not already apprised. I can only guess that after his return from Washington he appreciated (especially in the light of your message to him of April 21,/3/ and of the adverse comments of the Australians, New Zealanders, Prime Minister Lee, etc.)/4/ the inherent explosiveness of this material.

The only areas in which he indicated any possible changes were: (1) Although all ground troops should be removed from Singapore and Malaysia by 1975, he might advocate in Cabinet the retention of a considerable Naval and Air Force capability in the area. (2) He thought he might advise the PM not to get frozen on a July announcement date before the Washington meeting on June 2.

Paul Gore-Booth then, at George Brown's instigation, exposed the Foreign Office case. The most important points were that the FO thought there should be further interchanges between the UK, US and other Governments most concerned before any final decision by HMG; and, secondly, that although the FO officials were without competence to assess the exigencies of British party politics, must a July announcement be made, and also could not any determination on ultimate and complete withdrawal be "fuzzed" in public statements?

In my reply, I hope I did not depart far, if at all, from what you and the President would have wished, and would have authorized me to say.

I was careful again to point out that my remarks were reflective of entirely private opinions.

I thought:

(1) The Cabinet should take no binding decision until the PM had seen the President in Washington on June 2.

(2) This affair (involving the way in which HMG seemed intent on making a unilateral determination, and, announcing it in July, eight years in advance of its being carried into effect) struck me as more likely to cause bitter controversy between the US and UK Governments than any other issue between us during the last few years.

(3) I was unimpressed by the alleged necessity of announcement in July, before the Parliament rose, and equally so by the supposed necessity of having this time table known before the Labour Party Conference in September. Even assuming, from the standpoint of domestic politics, such an action was deemed highly desirable, should not the vastly more important considerations of international relations have paramount place?

(4) I ventured to say that if the PM were to present his decision as a fait accompli to our President on June 2, and to try to justify it, and a July announcement, on the ground of his domestic political pressures, he would be inviting, and in my opinion recklessly, a possible rebuke of really titanic proportions.

We had our own domestic political difficulties in much more acute degree than those afflicting the Labour party. Moreover, the appearance of our being, by inference, deserted (for that is how the project would be analyzed) in the midst of our Vietnamese involvement, by a Government assumed to be our most reliable ally, headed by a Prime Minister who had repeatedly declared himself an "East of Suez Man", would seem to me unwise, provocative, and absolutely unacceptable to us, to our public opinion, or to our fighting allies, to say nothing of Singapore, Malaysia, and most of the rest of Asia.

I appreciated the fact we were conversing in secrecy, and on a basis of personal friendship. On that same basis, I would ask George to regard my reflex as one I felt sure would be generally shared at home. This was not merely a question of handling a British budget, or planning their future defense dispositions; it involved the whole structure of the Anglo-American relationship, and of stability in Asia.

If I were he, I would advise the PM not to get into a fixed position, to keep his options open, and if he has radically altered his policy about previous East of Suez commitments, to say so when he sees the President--meanwhile to leave the matter undecided.

I apologize for sending you this long and wearisome letter, but having told George I would make, at his insistence, some sort of report, here it is, though it consists so much of "I saids" and does nothing to illuminate this dark problem.

I believe Brown is seriously disturbed over the prospect of trouble on this issue. Fortunately, he has acquired respect for the opinion of Gore-Booth, who shares, within the limits of bureaucratic loyalty, my convinced opposition to the way in which the matter is currently being approached. Brown stated that the affair has no connection in his mind with Britain's attempt to get into the European complex. Also, he is, more than any other Cabinet member, except possibly the PM, anxious to preserve close comity with USG, and even more than the PM, is sensitive to the fragility of our current connexion.

I would suggest if you feel so inclined, you consider sending a message to him in some such terms as these:

"David Bruce has told me of his recent conversation with you, and I have spoken about it to the President. I hope you will arrive at no irretrievable decisions on this dangerous subject before it can be fully discussed when the Prime Minister comes to Washington."/5/

Sincerely yours,

David

London, May 30, 1967, 1010Z.

9929. For the Secretary from Bruce.

1. The Prime Minister will come to Washington Friday expecting US interest to focus on international affairs; his own approach to these problems may be largely governed by British domestic preoccupations. Important as the Far East and Middle East are, for the British they are less compelling than domestic economics and politics and the Common Market. Since the sterling crisis of July 1966 the Prime Minister has been progressively committing himself to a bold political gamble--a set of policy commitments that are, in the short run, economically painful and politically distasteful to the British people--trusting to long-term results for his political vindication. Deflation, tight control of wages and price, rising unemployment, defense at the expense of social welfare-these are shorthand reminders of the host of domestic issues that now beset him. Things will get worse before they get better. The latest (April) indicators show unemployment still rising, production sluggish, and a further rise in imports as against exports. Even public support for the Common Market bid, in the wake of DeGaulle's public opposition,/2/ is slipping according to the polls.

2. In the face of these problems, the Prime Minister has bet nearly all his political stack of chips on his Common Market application. Now, having done so, he finds himself in trouble because of DeGaulle's intransigence, even perhaps on the question of negotiations.

3. While Wilson has persevered in his long-range strategy through the winter and the spring, the political cost has mounted. Labor has slipped badly in Parliamentary by-elections and lost disastrously in the nationwide local elections. Labor's public support has been steadily declining in the polls; in the past two months, for the first time in over three years, the Conservatives hold a lead in public favor. Even the Prime Minister's personal popularity in the polls, always higher than his party's, is down.

4. Along with widespread public disaffection, there is trouble within the Labor Party. Large scale revolts in the Parliamentary Party on the defense budget and the Common Market application have posed a serious disciplinary problem. Wilson's tough and sensational lecture to a Parliamentary Party meeting in March had at best a temporary effect. While the trouble is mainly on the left, it spreads across the party. The defense budget, East of Suez, the Common Market, Vietnam, and domestic economic policies each have their special critics. While they may not all unite on one issue, their sum is a range of discontent that infects a large section of the party. Even the loyalists are unhappy over the Prime Minister's failure to punish leftist rebels.

5. Wilson has shown no signs of retreat on what he regards as the basic issues--the domestic economy and the Common Market--to placate his critics. On the contrary, he continues to take a position well ahead of his party (and apparently) of the general public, counting on the fact that, between now and 1971, he can pick his own most favorable moment for a general election.

6. Nevertheless, no leader can be indifferent to the pressures Wilson is under, and he must, so far as possible, do what he can to improve his present political position. He is putting a lot of personal effort into repairing his intra-party fences and trying to damp down the harmful and publicly visible squabble within the Labor Party. Most important, he is unquestionably looking for issues on which, without sacrifice of his basic purposes, he can make some concession to public and party disaffection.

7. There may be, for example, some minor improvements in social welfare programs in July mini-budget and as wage increases are reviewed on a case-by-case basis, there may be some politically useful concessions there (the government has conceded that it expects wages to rise six percent during this calendar year and some politically important wage claims are pending).

8. In this context, the proposed East of Suez reductions are particularly significant. An announcement in July of substantial saving in that area, looking ahead to what may otherwise be a stormy Labor Party conference in September, is probably the juiciest bone he can throw his critics. It commends itself in both budgetary and foreign exchange savings (at a time when no other sources for welfare spending and investment incentives are in view) and it appeals to the growing number who, for doctrinal and emotional reasons, want to reduce Britain's world role, furthermore, it is thought by some to strengthen the Common Market bid.

9. The Prime Minister is, thus, under heavy political fortune. There is no sign, however, that he is weakening in his long-term strategy. He is deeply committed on both domestic economic policy and the Common Market; it would probably be as costly to retreat as to see it through (though what to do if the Common Market bid fails must be now an uncomfortable question).

10. In this difficult situation, the Prime Minister shows every sign of keeping his nerve. He is visibly self confident, retains all his skill and aplomb in public performance, and apparently continues his mastery over his Cabinet and his party. He is helped, of course, by Tory weakness; the swing in public opinion seems more an expression of dissatisfaction with Labor than of support for the Tories. Heath's personal popularity remains at a low level.

11. Wilson will probably hold to his present course and he is giving an impressive exhibition of skillful and courageous leadership, but one should not underestimate his difficulties or the stresses on him. Even within his Cabinet, he is under real pressure to retreat on issues not central to Labor's political fortunes or to the UK economy but of great interest to the United States--issues like Vietnam, the basic East of Suez policy, and even, perhaps, the UK's role in the present Middle East crisis.

12. When I come to the Department on Thursday morning I hope for an opportunity to discuss UKG's attitude toward the Middle East problem./3/

Bruce

Prime Minister Wilson visited Washington June 2-3, 1967, for talks with U.S. officials. According to a note on the preparatory briefing books for this meeting, no formal memoranda of conversation of the President's discussions with the Prime Minister were prepared. The preparatory documents for the Wilson-Johnson discussions are in Department of State, Visits Files: Lot 68 D 475, V-33. Secretaries Rusk, McNamara, and Fowler met separately with Sir Burke Trend, Secretary of the Cabinet, and the other members of the British delegation while the President and Prime Minister met privately. The discussions were dominated by a rapidly escalating crisis in the Middle East, which erupted into war on June 4. Memoranda of conversation are in the Johnson Library, National Security File, Country File, UK, Vol. 11. Wilson discussed his meeting with the President in The Chariot of Israel, pages 346-347.

London, July 13, 1967, 1600Z.

Thank you for your message of July 6./2/

As you know, the General Assembly has been having a week's breathing space in which to see whether agreement can be reached on any form of words./3/ But all the signs so far bear out your doubts about the likelihood of any significant closing of the gap between the two positions taken in the Assembly on the main issue. I have found it reassuring that a substantial part of the membership--and notably the Latin Americans--insisted on a balanced resolution (providing for an end to the state of belligerency as well as Israel's withdrawal), or none. The Soviet Union and the less reasonable Arabs have certainly been given good cause for reconsidering, though I also agree with you that it may be a little time before any shift becomes discernible. But at least the atmosphere is now very different from what it was when the slanging match first began. It is also a good sign that the Security Council have now agreed to permit U Thant to arrange with the Israelis and Egyptians for United Nations troops to be stationed along the sides of the canal./4/ This agreement should be used as a first step towards establishing a U.N. presence elsewhere in the area. It is a hopeful sign too that U Thant has now appointed a Swede to pursue the refugee problem. A really determined and imaginative effort by the international community is now needed to solve this problem. We ought perhaps to examine what part a comprehensive development plan might play in all this. In general I think we should go on concentrating through the Security Council, on discussion of practical matters, pressing particularly for the appointment of a representative of the Secretary General, on developing the UN presence in the area and tackling the issues affecting freedom of passage through the water-ways.

As regards the Far East we have, as I am sure you know, been giving very earnest and deep consideration to this problem since I saw you last month. We have discussed it here with Harold Holt, Marshall from New Zealand, Harry Lee from Singapore and, most recently, with the Tunku. All have expressed their concern about our longer-term intentions and, while the considerations that you and they have in mind differ in many respects from country to country (as one would expect), we fully understand the fundamental concern that is shared in common by you all. And, as I explained to you we not only understand this but we sympathise with it and wish to do everything we can to mitigate it. We have planned to phase our withdrawal over a period of years so as to reduce the likelihood of any lasting setback to the economies of the countries in the area; and our mitigating aid coupled with their own determination to help themselves will contribute positively to the kind of self-reliant future at which the whole area should aim.

The British Government have had to reach their decisions, after the fullest consultation with their friends and allies and taking due account of their views, on the basis of their own best judgment of what is politically and economically right for this country. The decision we have now taken has been reached in the light of the best assessment we can make of the likely development of political relationships in the area in the second half of the next decade; and of the economic requirements if Britain is to play any continuing part there at that time. We in this country will be unable to play any such part--or indeed any effective part in world affairs as a whole--unless we get our economy straight now; and to do this we have no option but to bring our defence spending into line with our resources, while making full use of these resources to achieve our political objectives. If this is to be achieved, it requires long-term decisions about the overall shape of our forces and about weapon systems which we must take now. I repeat that the views that you and the heads of the Commonwealth governments concerned have expressed to us have been taken into the fullest account and we are grateful for the frankness, and also for the spirit of friendly understanding in which they have been expressed. My colleagues and I have decided that it is politically and economically right for us to reduce our forces in Singapore and Malaysia to about half the current levels by 1970-71 and to plan on leaving the mainland of Southeast Asia entirely by the middle seventies. But because we are equally resolved that Britain shall have a continuing part to play in the area, though one that must be commensurate with our resources, we shall also plan to retain a sophisticated military capability for use if required in the Far East after that time. For it really is nonsense for us to offer to provide independently ground troops to defend Asian countries who have it in their power to train and provide their own. What we can do and intend to do is to maintain a military capability for use in the area which provides the sophisticated sea-air support which they cannot afford to provide as an assurance against external aggression. In the further round of consultations just completed, the Commonwealth Prime Ministers have, I think, been impressed by the likely scale and character of this capability.

Now that we have taken this decision, the question arises--again in the light of what you and our Commonwealth colleagues have said--whether we can avoid announcing it publicly at this time. The fact is that so much has appeared publicly in various parts of the world about our long-term intentions (and this was certainly not something that we either wished or accept responsibility for) that it is simply impossible for us now to avoid giving some public indication of what they are. Otherwise there is a real risk that it may be believed that we are planning a more rapid rundown than is in fact the case. In any event, we must in all fairness give our armed forces some idea of their long term size, shape and equipment when the process is completed in the middle 1970s, particularly as the careers of many are involved. This is difficult unless we indicate the major premise on which our planning is based. In any case, as the process gets under way in the coming months our long term intentions are bound to become known. Even if we ourselves attempted to disguise them, other governments concerned might not be able to avoid some disclosures in order to kill rumours and speculation and to explain the consequential adjustments to their own policy. I believe a continuation of the present uncertainty would be damaging to us all. But we are anxious to do all we can to meet your concern by avoiding anything too specific.

Accordingly, in the Defence White Paper that we shall be presenting to Parliament shortly, we propose to say that, while we plan to withdraw altogether from our bases in Singapore and Malaysia in the middle 1970s, the precise timing of our eventual withdrawal will depend on progress made in achieving a new basis for stability in Southeast Asia and in resolving other problems in the Far East.

I know that this will be unwelcome news to you. But these decisions have been taken for reasons which seem right to us, and after the most prolonged consideration and consultation. I am convinced that, if this country is in the future to be the same kind of effective partner for her friends and allies in the world as she has, I hope, been in the past, the political and economic realities must be faced and not fudged; and, in particular, that our essential objective of building an unshakeable economic base for Britain is the right one not only for this country but for all our allies as well. I believe that, in deciding and announcing now our intention to maintain a military capability for use in the Far East after the mid 1970s, we are demonstrating our continued interest in the area.

The two Asian governments most directly concerned have demonstrated an impressive steadiness in this new situation, they have recognised the inevitability of change: they take the point I have made above about the need for them to make the contribution to their own defence that best accords with their own resources, while we help with a

more sophisticated capability: and they have shown a readiness to co-operate with us in effecting an orderly transition to the new basis for stability in Southeast Asia which is our aim. The fact that it is very much in their interest that they should do so does not detract from the value or significance of the wise way in which they have reacted to our new policy. I am sure that we can count on the same degree of understanding and positive co-operation from our other allies.

I have gone into all this at considerable length and detail because of the frankness and straightforward approach that has always characterised the exchanges between us. But you will realise how essential it is to hold this information very tight until our White Paper is published. I know I can rely on your total discretion here.

Washington, July 17, 1967, 2:30 p.m.

SUBJECT
British Defense White Paper

PARTICIPANTS

Under Secretary Katzenbach
T. M. Judd, UK Affairs

Sir Patrick Dean, British Ambassador
Mr. Edward Tomkins, British Minister

Ambassador Dean said he wished to give the Under Secretary a preview of the contents of the British Defense White Paper which was to be released on July 18, at 9:30 a.m. Washington time. He then read from the attached paper./2/

Upon conclusion of the Ambassador's presentation, Under Secretary Katzenbach said that the British decisions were most disappointing to us. Mr. Katzenbach said that, in all candor, he could not see political wisdom in announcing now the total withdrawal which would not take place until the mid-70's. Ambassador Dean replied that the British Government was certain that this decision would become known regardless of whether or not there was an announcement. HMG had concluded that it was better to come clean.

Washington, August 17, 1967, 3:30 p.m.

SUBJECT
Viet-Nam

PARTICIPANTS
The Secretary
Sir Patrick Dean, British Ambassador
Mr. Irving Cheslaw, EUR/BMI

Ambassador Dean said that the President yesterday had given him a full account of the bombing policy,/2/ had assured him nothing was new, and had indicated that this present program would probably end by mid-September. Sir Patrick noted that the call to come to the White House had coincided with instructions from London to try to see the President on this subject. Sir Patrick asked if the Secretary saw better prospects on the diplomatic front after mid-September.

The Secretary replied that hardly a week went by without an effort to test Hanoi, but the reactions continued to be negative.

Sir Patrick asked if we had any reason to think that increasing the military pressure would help. The Secretary replied that there was no reason to think decreasing the pressure would make a difference. As for the previous limits on our bombing program, we imposed these limits ourselves. Meanwhile, the North Vietnamese have been using the area in the far north as a safe haven for their logistical buildup. The Secretary said that the other governments with troops in South Viet-Nam attached great importance to our bombing in the North.

Washington, September 14, 1967, 0144Z.

37244. Pass to Under Secretary Rostow.

1. Senate today voted 49-29 to incorporate Byrnes Amendment/2/ into Defense Appropriations Bill. This confirmed House action yesterday and provided that none of these appropriated funds shall be used for construction of any naval vessel in foreign shipyards.

2. This threatens right of HMG to bid on 16 minesweepers which Navy had previously selected as appropriate for HMG competition under offset agreement. As funds for 9 of these 16 provided under FY 66 and 67 Defense Appropriations Acts, and thereby not affected by Byrnes Amendment, HMG may have some expectation that they eligible to bid and to win orders on these 9, even if ineligible to bid on 7 being funded under FY 68 Act. DOD is currently examining these and other prospects, but not yet prepared to encourage or discourage HMG expectations.

3. If as we expect HMG raises question of 8 minesweepers, believe HMG should not be encouraged in any optimistic expectations. We can say that DOD is currently searching every means to permit British to bid on as fair and equal terms as possible for 9. Further, we can convey assurance that nothing in Byrnes Amendment will prevent USG fulfilling the $325 million and supplementary offset targets.

Rusk