HC Deb 01 August 1966 vol 733 cc27-8W
Mr. William Hamilton

asked the Chancellor of the Exchequer if he will make a statement on his talks in Germany concerning support costs of the British Army of the Rhine.

Mr. Callaghan

At this stage I cannot add to the following communique which was issued after the talks:

Chancellor of the Exchequer's meeting with Federal German Minister of Finance on 21st July, 1966

COMMUNIQUE

The Federal Finance Minister, Dr. Dahlgrun, and the Chancellor of the Exchequer, Mr. James Callaghan, met near Bonn on 21st July to continue the discussions which they began in London on 30th June on the problem of the foreign exchange cost of the British forces in Germany which H.M. Government now estimate at £94 million per annum.

2. The Ministers reviewed the problem in the light of the financial and economic situations of the two countries. They agreed that a joint Ministerial Commission should be set up to consider ways and means of providing cover for these foreign exchange costs. The Commission would comprise the Ministers responsible for Finance, Foreign Affairs, Defence and Trade in the two countries, and the Governors of the Central Banks and should report by the end of September to their respective Governments.

3. The two Ministers noted that the amount which could be covered by the methods hitherto used would be less than £94 million.

4. The Chancellor of the Exchequer, referring to the statement made by the Prime Minister, Mr. Harold Wilson, in the House of Commons on 20th July, 1966 announcing the measures taken by H.M. Government to restore confidence in sterling and to strengthen the economy of the U.K., said that it was essential that the foreign exchange costs incurred by Britain in maintaining her forces in the Federal Republic of Germany should by one means or another be covered in full. Therefore, if the considered view of the Federal Government were to be that no other means of closing the gap were possible, H.M. Government would have no alternative but to propose, through the prescribed N.A.T.O. and W.E.U. procedures, reductions in the size of the British forces in Germany. These reductions would be proposed to the extent necessary to bring the foreign exchange cost down to the figure which the recommendations of the Joint Ministerial Commission showed could be covered by offset or other means. The Chancellor of the Exchequer explained that in putting forward their proposals to N.A.T.O. and W.E.U., H.M. Government would be compelled, because their needs are pressing, to insist that some withdrawals should take place in the near future. Dr. Dahlgrun emphasised the interest of the Federal Government of Germany in the United Kingdom maintaining her forces in the Federal Republic of Germany, and the great importance they attached to this because these forces are an integral part of N.A.T.O.

5. The two Ministers attached the greatest importance to the maintenance, by consultation, of the full understanding of each others problems which had been established by their personal discussions.