Foreign Relations of the United States, 1952–1954, Western European Security, Volume V, Part 1

740.5/6–1952

The Secretary of State to the Secretary of Defense (Lovett)¹

top secret

Washington, June 19, 1952.

My Dear Mr. Secretary: In a letter from the Acting Secretary of Defense, dated May 23, 1952,² the Department of State was requested to take the necessary action to prepare a governmental position for submission to the North Atlantic Treaty Organization Standing Group regarding SGM 874—52—“Force Goals for 1953, 1954, and 1955”³—taking account of the views of the Joint Chiefs of Staff as stated in their memorandum attached to your letter.

Such a position has been reached and is conveyed in this letter with respect to the force goals for the European Lisbon Plan countries. It represents the agreed views of the Department of State, the Director for Mutual Security, the Deputy Director for Mutual Security, and has been discussed with the Department of the Treasury and the Bureau of the Budget, which are in general support of the position. This position has been worked out in consultation with the United States Special Representative in Europe, the Deputy United States Representative to the North Atlantic Treaty Organization Standing Group, and your Assistant for International Security Affairs.

The Standing Group force plan constitutes the initial step in the development of the 1952 Annual Review, agreed at Lisbon as the successor to the Temporary Committee of the Council. As such, it must be considered in the light of its effect on the success of that operation. The position taken by this Government on the North Atlantic Treaty Organization force plan inevitably involves certain assumptions and implications regarding the aid and military production intentions of this Government. The position upon which we have agreed takes full cognizance of these aspects of the problem.

An initial analysis has been made of the cost and aid requirements for meeting both the Standing Group force proposals and the plan as revised to take into account the views of the Joint Chiefs of Staff. Preliminary estimates of the cost of achieving the Joint Chiefs of Staff recommended force targets for the Western European North Atlantic Treaty Organization countries and Germany have been prepared in the Department of Defense. The Mutual Security Agency has made a preliminary study of the politico-economic capabilities of these countries for defense expenditures and defense production, in relation to the force goals for 1952 through 1955 recommended by the Joint Chiefs of Staff.

It should be emphasized that the estimates contained herein are necessarily tentative. Many of the economic and statistical data necessary for more accurate conclusions are not yet available. A number of assumptions favorable to accomplishment of the plan have been used, and it is probable that the deficit is under-estimated. For example in this initial analysis, the estimates of European defense expenditures in 1954 and 1955 optimistically assume continued United States dollar expenditures in Europe, including defense support, at levels approximating those used in the original Executive Branch request for Fiscal Year 1953. Prices assumed in the calculations are those of September 1951, and the effect of price increases since that date has undoubtedly been to raise costs relative to European expenditure capabilities by an unknown but perhaps significant amount. It has been assumed, but can hardly be fully realized, that European expenditures will be concentrated on highest priority essentials. It has also been assumed that the ability of European countries to continue increasing levels of military expenditure through 1955 will be unaffected by shortages of dollar exchange as defense support is reduced or withdrawn, or by the political and psychological effects of any tapering off that may occur in the United States domestic defense program.

On the other hand certain factors indicate that the deficit may be overestimated. The preliminary costing was based on 100% equipment and three months war reserves except for the Air Force where no war reserve was provided. Present North Atlantic Treaty Organization planning envisages a lower standard of readiness for equipment and reserves in 1953 which presumably would be improved in subsequent years. The costs are based on lower peace and war attrition rates than have been accepted by national authorities.

The results of these estimates, subject to the above qualifications, are shown in the table below. The deficit shown in meeting equipment requirements takes account of European production that may be expected during the entire period, and of United States end-item assistance provided for under all appropriations to date, including an assumed appropriation of the full amount authorized for Fiscal Year 1953, but not taking into account further United States end-item deliveries financed by appropriations which may be made for Fiscal Years 1954 and 1955.

Lisbon Plan European Countries

Total Costs

	1952	1953	1954	1955
Total Cost, Joint Chiefs of Staff Plan	12. 9	21. 3	27. 5	14. 7
Major Matériel	5. 4	11. 8	16. 5	5. 1
All Other Costs	7. 4	9. 5	10. 9	9. 7
Major Matériel Only
Cost, Joint Chiefs of Staff Plan	5. 4	11. 8	16. 5	5. 1
European Expenditures	1. 9	3. 2	4. 4	5. 2
External Financing*	2. 3	5. 0	3. 1	. 8
Deficit (plus is surplus)	-1. 2	-3. 8	-9. 0	+. 9
Cumulative Deficit	-1. 2	-4. 8	-13. 8	-12. 9

The Mutual Security Agency study mentioned above indicates that the estimated other than major matériel costs for 1953 and 1954 will be approximately covered in the aggregate by European defense expenditures which appear feasible on the basis of the relatively favorable economic assumptions used in that study. It may be assumed, therefore, that the deficit shown above for major matériel indicates the approximate order of magnitude of the overall gap that must be dealt with.

At the end of 1953 it appears that there will be a shortfall of nearly $5 billion in the equipment needed to meet the targets set by the Joint Chiefs of Staff for that year. By 1954 the situation would be considerably worse, with a cumulative deficit of nearly $14 billion. In 1955, during which the force increment would be smaller on the assumption that 1953 and 1954 targets had, in fact, been met, the cumulative deficit would be reduced to $12.9 billion. It should be pointed out that these calculations are based on full unit equipment at austere equipment standards. They provide for 90 days combat reserve and a year’s peacetime attrition, except for aircraft where no reserve has been included. It should also be pointed out that the costed Joint Chiefs of Staff force plan deleted 900 aircraft from the Standing Group plan for reasons of unavailability of aircraft, and the effects of this adjustment is a reduction in costs of over $1 billion.

Focusing attention on the two years immediately ahead, for which firm and provisional plans would be under consideration, it can safely be said that there is no possibility, within the framework of limited mobilization, of matching with equipment the forces called for under the proposed forces plan. It is estimated that the equipment deficit at the end of 1954 would be over $10 billion, even on the assumption of a 1954 appropriation equal to that for 1953 with the entire value delivered in the same year. Even to attain a level of equipment as much as, say, 20% below the 1952–1954 requirements would necessitate United States deliveries in 1954, even on the assumption that the deliveries postulated for 1952 and 1953 are supplied as scheduled, of over $10 billion of equipment of which more than $7 billion would still not be financed upon the passage of the 1953 appropriation.

A further problem, especially critical in considering the forces proposed for 1954 and 1955, is the growing level of maintenance costs of the forces being raised in Europe. The possible implications for United States aid after completion of the buildup have not yet been analyzed. The specific technical nature of much of the equipment being provided suggests extreme difficulty of. supply from European sources after the buildup; and the development of a European dollar earnings surplus with which to procure any substantial portion of such equipment from the United States is quite out of the question. It would be unwise for this country to press for force levels so high as to create an unmanageable maintenance problem after the buildup.

The basic issue which this analysis poses is whether the United States should endorse a force schedule of the magnitude proposed by SGM 874, knowing that it is not feasible unless the United States takes drastic steps it has no present intention of taking, or unless the European countries go into a state of virtually full mobilization immediately, and recognizing that the other North Atlantic Treaty Organization countries are aware that the plan would be accomplished only if the United States filled virtually the entire equipment gap.

Three considerations argue strongly against such endorsement. First, however, we may qualify the statement of our intentions, insistence on force goals clearly beyond the present capacity of the European North Atlantic Treaty Organization countries would be or could be construed as an implied United States commitment to fill most of the present equipment gap. It is not realistic to expect the European Governments to believe that we estimate their present financial and productive capabilities to be adequate to fill a matériel gap of the size indicated. Second, even if we should succeed in making clear our intention not to supply sufficient equipment for completion of the plan, the North Atlantic Treaty Organization countries would be confronted with a plan so beyond their reach on the schedule indicated as to discourage realistic negotiation and planning. Third, an initial force target from which very large adjustments would be necessary during the reconciliation process, does not provide sufficient guidance as to the composition of a reduced program to permit an orderly sequence of steps during the North Atlantic Treaty Organization Annual Review to reach a militarily sound action program before the end of this year. Further military guidance on such matters as the balance among ground, naval and air forces; the distribution of forces and equipment among regions and commands; and the balance between initial equipment and war reserves, would be necessary to provide a framework for the reconciliation process of the Annual Review. The more closely a militarily developed plan approximates the aggregate size and cost that can be actually achieved, the more certain it is that the reconciliation of military goals with political and economic feasibility will result in an action program that is sound in its military composition.

Under the circumstances, it appears essential that the United States make known its conclusion regarding the feasibility of the Standing Group force levels, and follow a course of action calculated to facilitate the development of a force plan within the capabilities of North Atlantic Treaty Organization nations, which is properly balanced from the military standpoint.

It is proposed that the United States follow two lines of action, one immediately in the Standing Group and Council, and the other during the next two months within the United States Government.

It is proposed that the United States comments on SGM 874, as transmitted through appropriate channels to the North Atlantic Treaty Organization Standing Group should be addressed in an appropriate degree to this question of feasibility. It should be made clear that, while from the purely military point of view the Standing Group plan is acceptable as modified by the military comments transmitted, and represents the best presently available military guidance to the North Atlantic Treaty Organization agencies, the United States has serious reservations on the feasibility of accomplishing the force levels proposed, especially for 1954 and 1955, and is unable to commit itself to a schedule of end-item assistance of the magnitude that might appear to be implied in those force levels for 1953, 1954 and 1955. The United States is vitally concerned in achieving the greatest improvement in the immediate defense buildup through a critical analysis of the 1953 proposal and of achieving the maximum firm agreement on armament programs within demonstrated national capabilities. However, the United States does not believe that the presently proposed force levels for 1954 and 1955 should be considered as a firm basis for the Annual Review, but should be given the countries only as guidance on the general direction and character of the North Atlantic Treaty Organization buildup. The United States does, of course, believe that the Annual Review itself must result in recommendations to the Council not only in firm goals for 1953, but also in provisional goals for 1954 and in planning goals for 1955. The United States endorses the force levels for 1953, as set forth in SGM 874, as militarily sound and desirable to achieve. The United States proposes that the recommended 1953 force plan be costed by the countries, including in the costing an analysis of the maintenance costs of such forces. The United States does not imply by this recommendation any certainty in the feasibility of fully achieving such forces within calendar year 1953, especially in regard to levels of equipment and war reserves. For the reasons indicated above, the United States also reserves its position on the pace and magnitude of the further buildup.

In the North Atlantic Treaty Organization Council, the United States should express the same position and should also press its view regarding the use of the Standing Group 1953 force levels in the costing and maintenance cost analyses. In addition, the United States should state that our preliminary analysis indicates a shortfall (mostly in major matériel), compared with our best present estimates of European defense capabilities and American military assistance, amounting to $4 or $5 billion a year in Fiscal Years 1953 and 1954 in total resources available for the part of the buildup assigned to the European countries included in the Lisbon Plan. It would appear that a similar problem exists in Greece and Turkey. This gap, though not of overwhelming proportions, undoubtedly will require changes in the force plans as previously considered. At the same time, the gap does not seem so serious as to impair the basic purposes of the European defense buildup.

The statement should also indicate the United States view that this situation makes the successful conduct of the 1952 Annual Review a matter of the utmost importance. It will be necessary during the review to analyze, both in the aggregate and country by country, the most effective way in which both physical and financial resources can be applied to attain the maximum of balanced collective strength. The problem of continuing maintenance costs, and how they can be met both production-wise and financially, must be explicitly dealt with. The objective of the Annual Review should be not only a firm plan for 1953, but a provisional force goal for 1954 and a planning goal for 1955, which are in the range of feasibility.

It is further proposed that the United States Government develop, over the next two months, a position with respect to the best size, balance, and degree of equipment of North Atlantic Treaty Organization forces that could be achieved on the hypothesis of an availability of resources close to what now seems likely to be available. It is our belief that successful negotiation, in the course of the Annual Review, of force levels and their supporting defense budget and defense production plans, will depend upon the availability to the United States negotiating team of such a unilaterally developed position, which should be available by the latter part of August. For this purpose it will be necessary to combine military analysis and guidance with politico-economic analysis and guidance. On the one hand this position should reflect the military judgment as to the most effective force and equipment levels, country by country, that should be sought within the financial and economic limits foreseen, and, at the same time, reflect the views of the responsible civilian agencies with respect to the politico-economic capabilities of the individual North Atlantic Treaty Organization countries to sustain the defense expenditures and defense production and provide the manpower. The indicated force levels should not only be feasible in terms of total resources but should be feasible country by country. It should furthermore reflect a reasonable assumption as to the amounts of assistance which might be provided for the North Atlantic Treaty Organization countries during the coming years, and a realistic estimate with respect to the volume and composition of end-items which the United States will deliver.

It is, therefore, proposed that the Department of Defense develop a proposed United States position as to the size, balance, and standards of equipment for Calendar Year 1953 and 1954 forces to be raised and maintained by the European North Atlantic Treaty Organization countries (excluding Greece and Turkey) and Germany. Such a proposed force plan should represent the best military use of available resources on the assumption that the limit of resources is $8 billion less in Fiscal Years 1953 and 1954 (taken together) than the presently estimated costs of the force levels contained in the Joint Chiefs of Staff memorandum of 20 May 1952. This assumed limit on the cost of the plan is consistent with a planning figure of approximately $4 billion of new obligational authority in Fiscal Year 1954 for Title I military assistance (other than Spain and Yugoslavia) which has been tentatively agreed to by the Bureau of the Budget as a planning figure. Fiscal Year 1954 and Fiscal Year 1955 deliveries resulting from this additional financing would approximately cover the equipment deficit through Fiscal Year 1955 shown in the table on page 3,⁴ after the $8.0 billion deduction. The study should also include any indicated revision in the force levels for Greece and Turkey based on the assumption of equipment supplies from the United States at a rate in 1954 no larger than that now expected during 1953, and also assuming flexibility in the distribution of United States equipment among all North Atlantic Treaty Organization countries including Greece and Turkey.

We believe that the most successful integration of military planning with the political and economic judgments necessary to assure feasibility of plan, particularly as regards individual country capabilities, would be accomplished by consultation at staff level between the military authorities and the other responsible agencies, who are prepared to designate individuals for this purpose.

Particular importance will attach to the question of the annual maintenance costs that can be borne by the European countries and the annual maintenance costs implicit in the force plan. An immediate United States analysis of this part of the problem must be initiated if its results—so important to the analysis of feasibility and implications for United States aid—are to be available in developing the United States position on forces to be negotiated during this Annual Review.

As indicated above, we consider it essential that the United States take the initiative in developing an initial position on a militarily sound forces plan capable of approximate achievement. In the absence of such a United States position which can be the basis for United States action in the North Atlantic Treaty Organization Annual Review, we do not believe that an effective framework will exist for ultimate reconciliation of the requirements for defense with the politico-economic limitations on the resources available for defense, or that the developed plan of action will be militarily sound, so that the Military Committee can recommend it to the Council as an important step towards our goal of an adequate deterrent force.

In view of the importance of a clear understanding in the United States Government of the issues involved in such a United States study, I should like to suggest the desirability, at an appropriate time, of meeting with you, General Bradley, and the Joint Chiefs of Staff, Mr. Snyder, Mr. Harriman, Mr. Lawton and Mr. Kenney to talk over the matters that have been only briefly touched on in this letter.⁵

Sincerely yours,

Dean Acheson

1. The message was drafted by Lawrence C. Vass of the Office of European Regional Affairs on June 18.
2. Not found in Department of State files.
3. Not printed; a copy of this three-page document with three enclosures and ten appendixes is in the NATO Registry at Brussels.
4. Includes appropriations through Fiscal Year 1952 and amount authorized for Fiscal Year 1953. [Footnote in the source text.]
4. Printed here on p. 303.
5. On June 25, Ambassador Draper presented the substance of this report to the North Atlantic Council. A copy of the verbatim text of Draper’s statement was transmitted in telegram Polto 1437 from Paris, June 25. (740.5/6–652) On June 28, the NATO Annual Review Committee discussed Draper’s statement and agreed to report to the Council that it supported the U.S. position. Based on this decision, the Council Secretariat would revise the questionnaires for the Annual Review accordingly. (Telegram Polto 1461 from Paris, June 28; 740.5/6–2852)