THE OUTLOOK IN WEST GERMANY

Created: 3/22/1960

OCR scan of the original document, errors are possible

2 March'

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NATIONAL INTELLIGENCE v*

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IN WEST GERMANY

OF CENTRAL INTELLIGENCE

The following intelligence organizations participated fastimate: "Ac Central Intelligence Agencyi and the intelligence organizations ot the Departmentstate, the Army, the Navy, the Air Force, and The Joint Staff.

;* Concurred tn

. UNITED STATES INTELLIGENCE BOARD jv. -

on Concurring 'were the Director ofence and Research, Department'of State; the Assistantf Staff for InteUigence. Department of the Army; thent Chief of Naval Operations, for Intelligence, Department.

CENTRAL INTELLIGENCE AGENCY.

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. Assistant Chief of Naval Operations for Intelligence,he Department

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irector of Intelligence, AEC, for the Atomic Energyg. Assistant Director,or'.the Federal Bureau. Assistant to the Secretary of Defense, Special Operations, for theDefense" '

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other Departrnenl

or,

, r' i. Director of NSA for the National Security Agency

J. Assistant Director for Central Reference, CIA, for any ot

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THE OUTLOOK IN WEST GERMANY

THE PROBLEM

To estimate the outlook for West Germany, with special reference to political developments and the foreign and defense policies of its government, over the next few years.

CONCLUSIONS

domestic factors which over the past few years have produced economic prosperity and political moderation in West Germany persist. However,problems, especially thoseto Berlin and the security situation, pose serious dangers. Barring anrecession seriously affecting the West German export market, prosperity will probably continue, though labor shortages and other factors will slow the rate of economic growth. The Christian Democratic Union/Christian Socialist Union (CDU/CSU) will almost certainly be returned to power inLelections if Adenauer carries out his present plans to head the ticket again and will probably win even if the Chancellor, evidently still fitoes not run.the opposition Social Democratic Party (SPD) has moved toward theon both domestic and foreign policy issues, it is unlikely to unseat the present government.

Nevertheless, the present Westpolitical system and Adenauer's policies have yet to undergo the test of major adverse developments suchajor world recessioneriousin the Berlin situation. While the West Germans appear to have rejected extremism of the right or left, theof such tendencies cannot be ruled out.

West German policy will probablyto be based on the principle that the country's security can be maintained against the Soviet Bloc and itsstature re-established only within the context of close ties with the US and its other Western allies. Soviethas eroded-hopes that acceptable reunification could be negotiated with the USSR and has strengthened Adenauer's belief in the needtrong Western military and diplomatic postureis the Bloc. Barring real progress toward effective international disarmament, West Germany will proceed with the buildup of its own military establishment, which by1 or2 will constitute the largest continental contribution to NATO Shield forces.

West German policy is likely to be marked by greater assertiveness andin seeking to satisfy the country's

national desires. With the growth of West German economic and military strength, the West German Government and people are becoming more sensitive to implications that theyecond class status in NATO. Mutual suspicions between West Germany and its allies have arisen over such questions asand the West German basewith Spain. These tendencies could lead to serious strains between Westand its allies but we believe that the West Germans, particularlywill try to avoid real dissension at least so long as they depend on thefor security.'

oubts have begun to grow in the minds of Adenauer and other leaders as to whether US nuclear capabilities will continue to be aseterrent to Soviet aggressive action in Europe as heretofore. These doubts arc reinforced by what Adenauer and others regard as signs of weakening US determination totrong military position in Europe. The West Germans willto emphasize the maintenancetrong NATO to which the US is firmly bound. At the same time the Federal Republic will develop its own military capabilities and military productionand assist in developing those of

'-The Dtreetcc, of Intelligence and Research.of SUM. would add the- following to this paragraph'

rowing lack of confidence both In government circles and In public opiniontho ability of the West to protect the political and territorial Integrity of the Federal Republic, exploited by continued Soviet pressure, couldrend toward nationalisticIn acUon on the part of the West Germans. Thu could lead ultimately (but Dot within the period of this estimate] to theof the Federal Republic, thaillnaUon In which accorrunodaUon with the USSR might rotult other European NATO members. It may seek an increase in US missiles stationed in Europeoice in theirIt may also explore further the subjectontinental military system with its own nuclear capability. These tendencies would probably be intensified if West German misgivings about US and NATO determination were to grow. Should the West Germans becomethat the US was abandoning its European commitments some moves towards neutralism or accommodation with the USSR would probably ensue.

West German leaders, regardless of party, are convinced that Allied rights in Berlin and Berlin's economic and political ties with the Federal Republic cannot be reduced or changed in any essential particular without serious damage to West German interests. Any seriousof Western rights in Berlin wouldevere blow, and the West Germans would demand additionaland concrete manifestations of support from the West.

Any major unilateral withdrawal of US forces from West Germany wouldevere shock to the government and people. After West Germany's ownstrength has become substantial, the West Germans would probably pose no serious objection to some reduction of US forces if it were justified in theof NATO military planning and if international conditions were not unpro-pitious. Even so, the West Germans would almost certainly press for theof sufficient US forces to make it clear that the US was still committed to the NATO effort.

in the general prosperity. Spurred by the steady Increase In real wages and ugrowth in social welfare benefits to the populationhole, both consumerand savings are rising. West Germany's economic position is strengthened by high labor productivity and an industrial work week which, while beginning to dipthe Western European mean, still averages aboutours.

During the recent years of rapid economic growth and increasing prosperity, Westhasumber of specialThere hasompetent, hard working, and relatively undemanding labor force, whose natural growth has beenby refugees from East Germany, many of them young and active. The industrial plant is modern, having been rebuilt and greatly expanded since the war. Relatively few resources of manpower and production have been devoted to defense purposes,concentration on the civilian economy and production for export. Neither Industry nor government has had to carry large funded debts.

Some of these advantages are diminishing and West Germany is beginning to encounter difficulties In maintaining the present rate of economic momentum without riskingThe labor market has become extremely tight, despite the movement of surplus labor from coal mining to new Jobs. Naturalto the labor force are beginning to fall off sharplyesult of losses and the low birthrate during the war. The net refugee inflow will probably continue to decline. The number of men in the military establishment is increasing. Thus difficulties In meeting libor requirements will probably become even more serious. Pressures from labor for higher wages and shorter hours are also likely to

Although general prosperity and several revisions in the structure of business taxes have kept the governmenttrong financial position, it may resort to some deficitto cover Increased social benefits andexpenditures, thus creating Inflationary pressure. With the burden of taxes andalready heavy, and with federal elections next year, substantial tax increases are unlikely in the near future. In order to avoid serious inflation. West Germanwill probably feel compelled to applystringent fiscal and monetary brakes, even at the expense of some decline in investment and in overall rates of growth

Although there will be some priceinflationary pressures are not likely to get out of hand. Labor willreater share of national Income, but the vigor with which it will press its demands will probably continue to be restrained by awareness that the lot of the workers is reasonably good and steadily improving, and by union fear ofto, or being held responsible for. an Inflationary spiral The government, for its part, will continue active in promoting prompt and reasonable wage settlements. Moreover, the continuance of the present high rate of personal savings would mitigate thepressure of higher wages while alsoinvestment capital. West Germany's competitive position is such that worldfor West German products is also likely to remain strong.

Barring an international recessionmajor portions of the West Germanmarket, the prospects for economic growth over the next few years are generally favorable, though the growth rate willdecline. Trends will depend to someon future developments with respect to the European Economic Communitynd the European Free Trade Association (EFTA or Outerwing to theof its Industry, West Germany stands to benefit more than Its partners from the common market provided by the EEC. It has. however, extensive trade relations with the Outer Seven which would suffer if the two trade areas develop into rivals. Nevertheless, given the broad range of West German export markets and the strength of Its Internal economy, the success or failure of efforts to achieve an accommodation between the EEC and the Outer Seven is unlikely toritical effect on the West German economyhole.

SECRET

C. Theutlook

After moreecade of control of West Germany's destinies, Chancellorats still the dominant political figure and appears determined to remain so at least through1 parliamentary elections.the Chancellor's raaneuverings over the presidential succession9 arousedamong the leaders within the ruling Christian Democratic Union/ChristianUnion (CDU/CSU) there has been littleeffect on Adenauer's standing with the party rank-and-file or with the generalHe will almost certainly dominate the party so long as he is physically and mentally able to do so. So far there have been no signs of significant decline in his health, energy, or mental vigor.

The minor parties have been declining in Importance, and1 elections will turn on the contest between the government parties and opposition Social Democratic Party (SPD) .= The litter has generally held its own

See table below (or West German postwartrend* in the various state elections since the last parliamentary vote7 and is nowigorous effort to appeal to the middle-of-the-road voter. In Its new party program, the SPD explicitly holds traditional Marxist dogma to be obsolete and franklythe needonservatively pacedwithin the framework of existingTbe SPD has also moderated itsto the government's foreign andpolicies. The party's recognition of the need to broaden its popular supportore moderate approach to the voter Is further demonstratedrowing belief within the party leadership that Berlin Mayor Willy Brandt should head the ticket, although heelative newcomer to the inner SPD circle.

evertheless, the SPD has handicaps other than having to contend with the Imposing figure of Adenauer, who has demonstrated phenomenal vote-getting appeal. The SPD will probably be unable effectively to challenge the government on foreign and military Issues unless thereudden and sharp setback to German interests for which the government could be readily blamed. In domestic matters

the CDU/CSU continuestrong position to exploit the prosperity Issue. While the CDU/CSU probably lacks the high degree of organisational discipline of the SPD. ittoomewhat larger body ofreliable supporters-

As matters now stand, there appears to be little chance that the SPD canicket headed by Adenauer. The most it can accomplish will probably be to demonstrate that its popular support was increasing and that itorce to be reckoned with inS elections. It will probably be able to retain the ability to block constitutional changes which its present control of slightlyhird of the Bundestag membership provides.

Should Adenauer die or becomebefore the elections, the leadership of the CDU/CSU would probably fall to Deputy Chancellor and Economics Minister Ludwlg Erhard, who remains the party's most popular figure next to Adenauer. If Adenauer were to withdraw from office but remain In ato influence the result, the party would probably have to choose between Erhard and some Adenauer-backed candidate. Party Deputy Chairmen Hetnrich Krone and Uwe von Hasscl appear to be likely alternatives to Erhard, with Minister of Interior Gerhard Schroeder, Defense Minister Franz Josef Strauss, Finance Minister Franz Etzel and Minister President Franz Meyers of North Rhine-Westphalia among the dark horses Despite the divergency of views within the party over theecision could probably be reached without undue delay and without serious damage to party unity.

The contest between the two parties would be far more equal if Adenauer were notParticularly if the SPD's candidateopular figure like Brandt, it couldmany independent voters. Withno longer the authoritative voice of West German foreign policy, the SPD might also beetter position to criticize the government's handling of the Berlinand other foreign policy issues. Even so It Is unlikely that the SPD, which wonercent of the voteould improve

Its turnout sufficiently to unseat the present government. The CDU/CSU would still have the great advantage of the prosperity issue, would almost certainly do its best to rally support around the reputation of Adenauer, and thus would probably receive atlurality. Even if itajority in its own right it would probably be able to secure the support of the Free Democratic Partyhe only other party likely to have sufficient strength and Independence tothender thesea "grand coalition" between the CDU/ CSU and the SPD appears highly unlikely.

The present outlook is for continuedand stability in West German political life over the next few years, with populardivided between the right-centrist CDU/ CSUeft of center SPD with most of its Marxist trappings removed. The trend toward progressive elimination of the smaller parties, both at the national and Land levels, will probably continue.

Nevertheless, there are elements which might threaten stability and moderation in West Germany. The end of the Adenauer Bra wiU test the ability of the Germans to conduct their affairsaternal figuremajor lines of policy and generally setting the tone of West German government

The rDPercent ol the popular vote innd wm probably be able lo meet tha minimum retirements lor leprraentaUon in the parliament ne.ercent ol the total popular vote or the direct election at threeanc shift in Bonn policy on the Oder-Neisse line or the Eastern termorles. the All German Bloc, or Refugee party <BHE) which receivedercent of the popular voteill probably fail once again to qualify for representation In the parliament. The Oerman Party (DPIercent of HieInnd which only Qualified through sufferance of the CDU/CSU which permittedumber of uncontested direct mandates, may actually have to roeree with the CDU. The Oerman Reich Party <DRPl and other parties of the right are unlikely to obtain moreercent ol the total vote. The outlawed Communlit party, which would probably not receive moreercent of the vote even If it were permitted to participate. waH probably not exercise anyinfluence In the campaign.

and politics.inimum, Adenauer'sfrom the political scene is likely to lead to more open competition among the various political, economic, and other interests in West German society. Moreover, West Germjny's heavy economic dependence on foreign trade and the deep involvement of its securityin the diplomatic and military problems now confronting the NATO countries willto make It vulnerable to external shock. The West German people appear to haveradicalism of either the right or the left and to have turned their backs on old-style militarism despite their acceptance ofHowever, the possibility that West Germany might eventually revert toif confrontedevere threat to its economic well-being or national security cannot be ruled out. Given the progressive absorption of extremist and other elements by the two major parties, tendencies in thismight develop within these parties without being signaled by the emergence of separate extremist parties.

II. FOREIGN AND MILITARY POLICY A, General

The foreign policy of West Germany has been built on the principle that the country's security against the Soviet Bloc can beand its stature and influenceonly within the context of close ties with the US and its other Western allies. It is unlikely that there will be any drasticin the next few years in West Germany's special sense of dependence on the US. Nor is it likely that its participation in Westernmovements for closer association will undergo major change. However. In the last year or so there have arisen factors which will affecterman policy and actions.

Doubts have begun to grow in the minds of Adenauer and other German leaders as to whether us nuclear capabilities will continue to be aseterrent to Soviet aggressive action in Europe as heretofore. These doubts have been reinforced by what Adenauer and others regard as signseakening of US determination totrong military position in Europe. Adenauer sees insince Khrushchev reopened theissue signs that the UK and perhaps the US may be willing to compromise with the USSR at West German expense.

The inflexible determination or the USSR to maintain control over East Germany and its increased efforts to obtain internationalof the GDR have eroded the hopes of those in WesL Germany who believedolicy of accommodation with the Bloc could lead to reunification on acceptable terms. Theic factors have strengthened Adenauer's belief that the USSR must be faced with an equally inflexible determination on the part of the West. Hence, he is deeply disturbed by anything which he interpretsecrease in the relative power position of the USoftening of its will to defend the Westposition in Western Europe.

Moreover, West Germany has alreadya major factor in the continent'sstrength and will soon become anmilitary factor. Under theseWest Germany will seek toore important role in the economic, diplomatic, and military affairs of Western Europe. The desire to enhance its role comeseriod of readjustment in Europe arising from suchas the strains caused by theof the EEC and the EFTA. the advent of de Gaulle, and French progress towards, the acquisitionuclear capability.

Hence we believe that there will beassertiveness on the part of West German leaders. While we believe the West Germans will not, at least in the near future, undertake actions which they consider as inconsistent with commitments to their allies, they will be increasingly sensitive to any indications that they are considered toecond-class status and less careful than heretofore to avoid an appearance of going ahead on their own. For example, while the recenttoward obtaining facilities in Spain were almost certainly not considered by the West Germans as inconsistent with NATO, theymiscalculated the strength of Western

European objection or decided to proceedsuch objections. Similarly, the West German interest in the possibility ofa continental military system with its own nuclear capability is considered asto and not In conflict with NATO. In any event an effort toolewith its views of Its own power and strength is almost certain to characterize West German policy. While the pace and scope of these developments will depend In large measure on Adenauer's personalso long as he remains in effective power, his views are shared by many West German leaders, and the trends described above are likely to emerge and grow under any probable successor.

he possibilityradual deterioration of relations between West Germany and its Western allies, particularly after Adenauer, cannot be wholly dismissed. West German public opinion has already shown greatto the criticism and suspicion voiced in the UK and other NATO countries over the recent anti-Semitic Incidents and the military talks with Spain. There is developing among Westeeling that they are not being accorded the confidence and acceptance that their policies and behavior have earned. The more assertive and Independent-minded policies West Germany is likely to pursue will probably cause further difficulties. Wehowever, that the West Germans will attempt to avoid the development of serious dissension in the alliance so long as theyto depend on the alliance for security.'

Director of Intelligence and Research.of Slate, would aubsUlute the toUowini for

The growing lack of confidence in the abUliy and wiU of the West to protect the poliUcal and territorial integrity of the Federal Republic, now manifest in the elite groups of West Germany, has been accompaniedeneral reeling of Irritation on the part of the population inlo what has been considered unfair and unreasonable reaction In the West to Westdevelopments such aa the anU-Scmiucand the military talks with Spain. The de*elopraent of further disenchantment with

B. Berlin end Reunification

West German leaders, regardless of party, are convinced that Allied rights In Berlin and Berlin's economic and political ties with the Federal Republic cannot be reduced or changed in any essential particular without serious damage to West German interests. They are particularly insistent that nothing be dene to prejudice the Allied position that the Western presence in Berlin is based on the right of conquest. Any seriousof Western rights in Berlin would be regarded by many West Germans aseries of events leading toward the eventual loss of the city to the GDR and as making even more remote the possibility of reunification on terms acceptable to West Germany.

For the present, the West Germans will probably continue to employ delaying tactics and try to ward ofT major decisions as long as riossible. They will attempt toeto over Western concessions and encourage France to stiffen the Western position. They will continue to seek to link Berlin with the reunification question, insisting that any guarantees on Berlin continue until the latter is achieved.

However, the West Germans areabout their ability to hold their partners In line. They also doubt Western readiness to act with determination if the Communists harassed Berlin and its access routes.Adenauer will stand firm as long as possible, he would probably feel compelled to go along with some concessions if his allies insisted that he do so since he has no alterna-

and distrust of the alliance, exploited bypressure from the Soviet Union. coulduneiUiaUon which woold and widespread popular supportreater degree of independence tn action on allmilitary, political, and economic. Such naiioeattaUein action might tend increasingly to alienate West Qermany's allies and lead(but not within the period of thisto the Federal Republic becoming Isolated and unable unilaterally to defend itself. Under thesee beUeve the Federalmight be led toolicy of-ac-commocaucn with the Soviet Union

live Al the same time, he would ask forguarantees or concreteof support.

Even if the present position in Westis maintained without significant Western concessions. West Germany's opposition to the GDR's claims to equal status and Westhopes regarding reunification are likely tourther weakening in the next few years. The division of Germany remains an underlying source of discontent In the Federal Republic, andational goal which no politician can openly abandon. However, the West Germans have becomeresigned to the belief that thecan neither be compelled norto release their hold over the eastern territories. There is also recognition of the fact that the Federal Republic will have to live with the GDRong time lo come.

West Germany will have to cope with the practical problems involved in the steady growth of economic and other contacts with the GDR During the course of international negotiations it may also face increasingfrom Iti allies to demonstrate itsby falling ineneral pattern of East-West adjustments. Under theseit is likely that West Germany would progressively move in the direction of tacit acceptance of the "two Germanies"uccessor would probably beless rigid than Adenauer in this respect but not to the extent ofasic change In West German policy toward

C. Jhe Solelliles

Germany's limited economiccontacts1 with other Easternsatellites will probably Increase over

'One-sixth of the Sino-Sovlet Bloc's trade with the non-Communist world Is with West Germany, and demand for West German technological and industrial Hems will probably grow. However, this trade Is negligible from the West German viewpoint Bloc trade,hird ofith the GDR. now constitutes less than five percent of West Germany's total.

the next few years despite Adenauer's present opposition to move in this direction. There Is considerable feeling, within the CDU/CSU as well as In the SPD. that diplomatic recognition of Poland and Czechoslovakia might provide opportunities to mitigate anti-German feeling and develop West German influence andin Eastern Europe.harpof East-West relations, pressures to move in this direction will probably grow. However, the scope and Impact of any increase in contacts between West Germany and East-em Europe will probably be limited, atithin the period of this estimate. There will probably continue to be little West German demand for the goodsastern Europe. The establishment of federalrelations with Eastern Europe will be hampered by the problems of the boundaries between Germany, and those of Poland and Czechoslovakia.

D. NATO, the US. and Weil German Military Policy

ermany continues to regard the US strategic nuclear capability combinedtrong forward echelon force as necessary for the security of the Federal Republic. This Sword and Shield concept, as embodied In NATO planning, is considered essential to contain Soviet pressures and maintainconfidence within West Germany itself. Therefore the Bonn Government stronglyany reduction in the strength offorces in West Germany, and stronglythe concept of disengagement limited to Central Europe.

In line with these views the Federalhas committed itself to providecontributions toward the achievement of planned NATO force goals. Progress was initially stow, owing to the difficulties ofa military establishment from scratch. Military procurement has laggedthe West Germans have sought topurchase of weapons whenever possible so that they, would be sure of having the newest and most advanced equipment.

he West German militarynow numbersnd Is scheduled to grow tayr

ground forces nowincludenderstrength divisions ofcombatndfalready committed to NATO.call for an increase In the groundthe end1, includingdivisions all of which will beto NATO. The planned buildupbe completed as scheduled.

modest nasal force, which isto NATO, is primarily designedescort and antisubmarine dutiesand willmallarm. Considerable construction ofis under way but constructionshipsuided missilethe lifting of WEUelow.)

air force is primarily designed totactical force, committed to NATO.the West German Air Force (GAF)considerable number of modern aircraft,effectiveness is limited by thetrained Jet pilotscomparatively low state of combatPlans callonsiderablethe end1 in the quantity ofactivated squadrons. However, thereimposed by the inadequacy ofestablishment and of the baseWe estimateactical reconnaissanceS interceptor squadrons, and 5will be combat-ready4 NIKEAWK missileare planned to be activated by the endOf these, we estimaterKEHAWK battalions will be combat-readyend of the period. In their presentplans4 forcexecution of the plannedwill be contingent in large partdecisions regarding the roles andpriorities assigned missiles and manned

or more detail.

aircraft and the availability of the required base structure.

The West German public has generallythe needubstantial contribution to NATO. Even the SPD and itshave become less critical of NATO military concepts and less favorable to the idea of disengagement. Despite continuing reservations about conscription and theof West German forces with nuclear weapons, the SPD now recognizes the need for atoderate military buildup and goes along with the stationing of US nuclear-capable forces in West Germany. Since West Germany is presently scheduled to spend onlyercent of GNP on defense in the next few years, defense expenditures do nota heavy burden on the economy and could probably be substantially increased without serious economic strain.

Although West Germany will probably continue to procure much of its militaryfrom the US, it will lay increasing stress on further development of its own military production base. Aboutercent of West German military procurement is currently being placed in West Germany, but there has thus far been little production of heavyIn addition, the Defense Ministry is developing Joint procurement and financing arrangements with other European NATO members under which both West German and other European production facilities would be strengthened. West German industry shows increasing interest in the investmentinvolved. To these ends. Westwill probably continue to seekelimination of the remaining WEUon it; armament production.1

'The Western European Union, which came into being in IMS. Joined the two former Axis powers. West Germany and Italy, to the then already existing Brussels Pact group of France, the UK. Netherlands, Belgium, and Luxembourg. Under this agreement, the Federal Republic of Germany obligated Itself not to manufacture in Westterritory, atomic, biological, and chemical (ABC) weapons, and also certain other listed weapons, including guided missiles, warshipsons, submarinesons, and {Footnote continued on next page)

involved in production oftactical rr.issdes. West Germany

Untering the field of longer range missiles. It is currently seeking greater leeway with respect to the production of naval vessels snd equipment. The UK and perhaps others will probably continue reluctant toa wholesale elimination of WED curbs.

view of West German fears thateffect of US nuclear capabilitiesdecreased so far as the chance ofaction against Europe Isthe Federal Republic is castingadditional means of inhibiting Sovietin Western Europe. Although thehave not as yet reached anyon this problem. It is likelywill show increasing interest inUS 1KB Ms stationed on theperhaps in securing for themselvescontinental NATOn their employment. will probably lend political supporttechnical assistance to Frenchof nuclear armaments and thereexplorationsontinental poweron the French nuclear program. within the period of this estimate Itthat West Germanyuclear capability of its own.alone or in cooperation with theGermany has the scientific,material resources to undertake suchHowever, it would require notheavy investment but either the revisionof the WEu treaty. Furthermore,probably be considered byangerous provocation ofand to involve the risk of seriousdissension within West Germany

(Foolnola contlnuid /ram preceding pagci

strategic bombers. Whereas the ban on West Oerman production ot ABC weapons Is absolute, and could presumably be lifted onlye* agreement acceptable to aU parties, provision is made for lifting the other restricuons by two-thirds majority of the WEU members It arequest is supported by SACEUR Some of these restrictions have been Ufted including air-tc-alr and nrface-to-air missiles. anUUnk rockets,t.nl training ship.

Futureerman military policy will depend'.derable extent on thei of the CS. Despite its interest inthe Ar.ilo-American "domination" of NATO. West Germany continues to base its security policies en the concept of strong and iniNATO forces in which US power and leadership play the central role West Germany willertainly continue toto this concept even If It were to Involve some friction with its continental allies.

However.ermany will remainsensitive to any signs of weakening US will or ability to support NATO At least over the next year or two. while the Westmilitary buildup is incomplete,kely to be extremelyto assure the continued presence in Europe of substantial US forces, whichpecial psychological value to the Westpeople. The West Germans wouldaccept minor US force reductions which they did not consider asarge-scale withdrawal from Europe or asthe Western bargaining positionis the Bloc. However, any major withdrawal of US forces, especially ground combat milts, wouldevere shock to the West Oerman Government and people. As West German military strength grows, the West Germans would probably pose no serious objection to reductions of US iorces, if they were justified in the context of NATO military planning and if intemationa; conditions were not unpropi-tious- Even so the West Germans would almost certainly press for the retention of sufficient US forces to make it clear that the US was still committed to the NATO effort.

In view of the reliance of West Germany on NATO, particularly the US, for its security against the Bloc. West Germans will remain highly sensitive to any development which could be interpreted as constituting ora serious weakening of the USto West Germany. This Interpretation might be pi iced on such developmentsajor unilateral withdrawal of US forcrs from West Germanyerlin settlement on terms which theminserious setback. In this case, many Germans wculd

believe that basic German policy should beThe West Germans might explore the potentialitiesuropean "Thirdarticularly if other countries shared the view that the US was retiring from Europe. The West German military buildup would continue and might be accelerated, but there would almost certainlyeneralthat West Germany could not insure its security by building up its own military forces. If there were toidespread belief that the US was abandoning its Europeana polarization of West Germanopinion towards more extremeol both left and right would probably occur. Both left and right would probably tend towards trying to devise some modus Vivendi acceptable to the USSR. The left, representedeoriented SPD,osition of neutralism, while the right might seek to make anwith the USSR, offering economic,or military concessions in return fornonintervention.

E. Relofions wilh Western Europe

lthough the Federal Republic has quietly sought to develop economic ties and regain political acceptance throughout Western Europe and the Free World, it has placedemphasis on the development of close ties with its immediate Western neighbors, especially France. Adenauer is imbued with the idea that traditional French-Germanmust not re-emergc and that theand political life of the continent must be increasingly integrated if Western Europe is to retain its historic positionenter of political, economic, and cultural strength in the world. Franco-German rapprochement was strengthened after the advent of de Gaulle, whom Adenauer regardsigorous exponent of continental interests,trong supporter on the Berlin issue, and as the only Frenchman capable of lifting the limitations which the Algerian problem has placed on French ability to contribute to Western mill tary and economic strength. Adenauerto regard de Gaulle as one of the few Western leaders of real stature and

Barring the replacement of de Gaullehauvinistic rigntisteftist regime iii France, close ties with the Frenchentral element in West German policy. Although the relationship in itsfarm owes much to the personaldeveloped between de Gaulle andmost West Germans accept the basic concept of the close association of Western European countries. Even without Adenauer the West Germans would probably continue to see political and military advantages in working closely with France In Westernaffairs. Over time, the integration measures developing under the EEC should progressively strengthen the links between France and West Germany.

Nevertheless, there are importanton how far even Adenauer will go in his efforts to strengthen ties with France. Despite his willingness to follow de Gaulle's lead in some matters, he has no desire to subordinate West German foreign policy to that of France. He will also continue to strive ior closer ties with the other members of the EEC, Spain, and the Scandinavian countries, while at the same time avoiding seriously prejudicingwith the L'K. In addition, Adenauer may have to give some heed to the growing feeling among many elements In Westthat he is pushing the Frenchtoo hard and too fast.

Some critics of Adenauer's French policy feel that he is soft-pedaling reunification and other national goals toountry ofstability and trustworthiness. Thebetween Adenauer and his critics emerge most sharply over the problem of haw toWest Germany's commitments to France and the other members of the EEC with the fact that West Germany has substantialties with the UK and the other members of the Outer Seven. There wouldeakening of Franco-GermanIn the event of Adenauer'sfrom power, especially If Erhard, who is not so dedicated to cooperation with .the French, were to succeed him.

West Germany's relations with the UK will probably continue to be marked by some strain, despite continuing cflorts on both sides to palch over their differences. Over and above the differences of approach which have emerged over such issues as Berlin andstrong elements in both major British parties have continuing reservations about West German reliability andas an ally. The strong British reactions to the recent wave of anti-SemlUc incidents In West Germany and the military talk* between Spain and West Germany reflect this attitude. There is also concern in the UK over growing West German economicFor their part, the Westand particularlythat the UK has never accepted them as equals and that, playing its traditional balance of power game, it Is deliberately trying to hold them in check.

Both Adenauer and his critics feel that EEC external trade policies should be liberal and hope that the Outer Seven can befrom developingival trading area in which West Germany would operateisadvantage. However. Adenauer is not disposed to take any steps which would slow down the process of intra-EEC economicor offend France, whichroadening of the EEC. Inthe point of view represented by Erhard seeks to avoid being tied downelatively narrow continental trading bloc and places principal emphasis on broadening the base of European economic cooperation. These views are stronglv backed by business Interestsdependent uran export trade withand the UK and by others who fear the controls involved in economic Integration. Most of those who hold these views also feel that West Germany and Western Europehole cannot afford to have the UKand politically estranged from the continent

F. Rslolions with Non-Europoon Areas

Germany has made vigoroussuccessful efforts to developeconomic ties in Latin America, inmore recently in Africa. While In Latin

America this trend reflects primarily the energy with which West German industry has pressed the search for markets, in Asia and Africa the motivation has been mainlyIt has illustrated the desire of theRepublic totrong international position and to undercut similar efforts by the GDR. Particularly with regard to the Middle East and Africa, the pace of West Germanhasrowing conviction that the economic and cultural penetration drive of the Blocerious threat to the West, and that West Germany,ountry free of the colonialist tag, can play anrole in checking it.

est German public expenditures forcountries, including grant aid, technical assistance programs, government-to-government loans and various United Nation projects, have been relatively1 million88 millionowever, West German Government(as opposed to actual disbursements) for assistance to underdeveloped countries,commitments made under thefor guaranteeing private credits, arerunning0 million annually. Government commitments now total more thanillion of which the biggest single item is the largely0 million commitment to the EEC development fund. Direct private investment of German capital in the less developed countries, growing at an accelerated pace in recent years, has totaled0 million over the last eight years.

5fi. In carrying out its assistance programs, the Federal Republic has for the most part avoided direct governmental operations which might create fears cf political domination on the part of the recipients or complicatewith West Germany's European allies. Principal emphasis has been placed on the encouragement of commercial transactions through establishment of an export credit guarantee program and an investmentfund, and use of aid programs In which the IBRD or other international institutions arrange for andoan on the basts

of funds specifically provided by West

n order to increase its activities andwith minimal political complication. West Germany will probably favor theof multilateral Western aid programs. However, some friction will probably arisein relation to the evolving states of the French community, where West German participation must be reconciled with the French desire toominant economic role for themselves. Moreover, West German leaders will also probably remain essentially cautious in increasing their economic aidemphasizing the limits of theirresources and the threat of inflationary pressures.

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APPENDIX A

WEST GERMAN MILITARY STRENGTH AND PROBABLE BUILDUP BY SERVICES

FORCES

I West Germany Is now in process ofa field army of three corps andivisions, all of which, together with necessary support troops, will be committed to NATO. The West German Army now hasen. or about two-thirds ofan total planned for the endhe presently activatednd divisions already committed to NATO, are under strength and have only limited combat effectiveness. However, the West German Army has an excellent combat potential and the planned buildup probably will be completed as scheduled.

The buildup was deliberately slowed9 to permit reorganization of combat forces into smaller self-contained units more suitable for atomic battlefield operations. Under this reorganization, the brigadethe basic unit of combined armsand will be made capable of independent and sustained combat. Each division will be assigned two or more of these strengthened brigades, dependent on the combat mission. All army weapons with an atomic delivery capability will be attached to the division or higher echelons.

The reorganisation process is nowand0 the army shouldimprove its combat potential. How-ever, the development and maintenance of high combat effectiveness will continue to be handicapped, at least for another year or two, by the army's heavy reliance on conscripts who must serve onlyonths and by the system oi charging the tactical unitswith training the quarterly Increments of draftees. At present aboutercent of the army is made up of conscripts.

he Federal Republic is alsoerritorial Defense Force which currently comprises personnel assigned from the three major combat services (mostly armybut which can recruit directly from the civilian population. This force will ultimately provide the housekeeping services, training, logistics, rear area communication, and(static defense) support for the field army. It will also provide some support of the above types for Allied forces In Germany butorce it will remain under nationaland outside the NATO command and force structure. In its present formative state, the Territorial Defense Forcetrength of0 (of which somewhatre armyhe ultimate sise of this force has not been determined, but Indications are that it will probably consist of acadre ofmen. plusreservesobilization strength.

5 The Federal Republic also has militarized police units consistingorder Police0tate Alert Police

II. NAVAL FORCES

he West German Navy (FON) Is stillraining stage. Under present WEUWest Germany is prohibited fromwarships in excessons, or any nuclear-powered ships. The present FGN consists of

0 personnel and tbeships.

Destroyers IDD)

6

(SSt

2

Eicorti (PF)

12

Chaser (PC)

I

Torpedo Boats (PT)

8

Mlneia/eepers (MSF>

Minesweepers fSCSC)

17

Mirw.wecpers IMS1)

It

Craft

and Service Units

74

PON plans to reach its planned topstrength0t is also currently pursuing an active constructionand by the end3 the FGN will probably haveorce ofew destroyers built in Germanyf which could be missile-carrying types providing present WEU restrictions areletcher class destroyers on loan from theerman-built escortormer British patrol escorts.0 ton) German-built6 fleet minesweepers.oastalandnshoreleet ofootor torpedo boats is lo be based in the Baltic. Twelve amphibious cralt.arbor defense vessels, and an adequate auxiliary force capable of supporting theships in their operational areas are to be constructed. Training and operationalare likely to keep pace with the overall expansion.

Overall effectiveness of the FGN is difficult to evaluate until the shipbuilding program progresses further; however, the morale,and leadership of the fledgling navy are good, and the program appears to be leadingmall but highly efficient navy, designed to perform escort duties, and anti-submarine and minewarfare. As West German shipyards catch up with merchant ship orders and as new weapons are made available to the FGN. the shipbuildingis likely to gain momentum. Westnaval forces will probably continue to be divided between the Baltic and the North Sea, with roughly two-thirds in the Baltic.

9 The West Girman Naval Air Arm (GNAA) is in the early stages of activation and isdeveloping an operational capability to support its assigned mission. The GNAAurrent aircraft inventory off which aboutre assigned to two jet multipurpose squadrons, one turboprop ASW squadron, and one sea-rescue and service squadron. The present personnel strength of0nlisted)approximatelyrained pilots and SO trainees undergoing instruction. This strength is to be increasedfficers and men

plans call for an operating70 operational aircraft)aset reconnaissance(Seaultipurpose(SeaSW squadronsearch and rescuehe GNAAto receivereguet maritimeaircraft durings are also planned forby the GNAA duringest German production of thelicense.

III. AIR FORCES

The West German Air Force (GAF) is primarily des gned toactical force, com-mltted to NATO. Under present WEUWest Germany is prohibited from producing weapons which would givetrategic capability, and West Germanyhas no plans for procuring such weapons from outside sources. However.ommon European IRBMprogram, and is cooperating with the UK in the long range researchritish IRBM.

Although the size of the GAF isits effectiveness and capabilitynitedomparatively low state ofotal ofircraft, onlyrc in operational units. Present activated strength isighter-bomber6 interceptor squadrons, 4squadronsransport squadrons Of theseighter bomber and 2squadrons approximate full combat While current personnel strength is

here axe onlyrained jet pilots. Furthermore, although Westextensive airfield system meets present GAF and Allied requirements, it will notaccommodate both the unitsfor the GAF and the Allied units now in West Germany unless plannedis speeded up and programmedof Allied air bases to the OAF is expedited.

AF activation plans now being carried out call for an increase toquadrons at the end0 andtrength ofquadrons by the end1 force would include:ighter-bomber0actical reconnaissance4ransportndnterceptorn addition, one Matador surface-to-surface missileissiles) is planned. Equipment for this force is expected to includeL Italian subsonic ground supportandupersonic jet fighters.

with substantial numbers ofvailable from West Germany probably beginningctivation scheduleswill be met. However, there areimposed by the Inadequacy of the tran-ing establishment and of the base structure. We estimate thatighter-bomberactical reconnaissance squadrons, 8squadrons,ransport squadrons will be combat-readyour NIKEAWK missile battalions are also planned to be activated by the endf these, we estimateIKEAWKl be combat ready by the end of the period.

n their present form GAF plans4 force ofquadrons. Execution of the planneduildup will bein large part upon future decisions regarding the roles and relative priorities ass gned missiles and manned aircraft and the availability of the required base structure.

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