Happily, the Federal Republic of Germany, with the support of its NATO allies, insists on a reference in any such declaration to the possibility of peaceful change of borders.

One of the high hopes of the conference was an eventual agreement on confidence-building measures, that is, prior notification of military maneuvers and exchange of observers at those maneuvers. This hope has faded. The Soviets have agreed to notify only some of their East Europe satellites and then only of certain maneuvers. For some curious reason, this Soviet position brings to mind Prague in 1968.

My view is that the conference has been worthwhile only as an exercise in Atlantic Community consultation and coordination. It has little prospect of producing anything worthwhile, certainly nothing to justify a heads-of-government finale. I hope President Ford and other NATO heads of government will decide against a summit at Helsinki. Trying to gloss over failure with pageantry is demeaning to high office.

FORCE REDUCTION NEGOTIATIONS

Much the same can be said of the force-reduction negotiations at Vienna. NATO cohesion has been especially apparent there, where allied delegations negotiate from common instructions worked out by NATO in Brussels. Briefings I attended in Vienna in November convinced me that allied solidarity is firm and that the negotiators are fully aware of the high risks of the enterprise. These negotiations have entered their second year, with only modest shifts in position on either side. The western proposal aims at eliminating the disparity in ground force manpower and reducing the disparity in tanks. The first phase reduction proposed would include only Soviet and U.S. forces, while the second would involve other MBFR participants.

The Warsaw pact has proposed across-the-board percentage reduction of all forces thereby preserving existing disparities-but as a "separate independent agreement" late last year proposed reducing troops by 20,000 on each side. The West opposed this agreement, arguing that verification would be impossible and further that it would tend to establish disparate ceilings on the forces of each NATO ally.

I will later allude to risks in the MBFR exercise. At this point, suffice it to say that the Vienna negotiations have so far done little harm and, on the positive side, have proved to be an excellent demonstration of intra-NATO consultation and coordination.

Partly because of the new challenge posed by the oil crisis, coordination between the United States and the European Community advanced substantially in the last 6 months. In addition to bilateral talks, consultation has been established on a regular basis between the United States and the country occupying the presidency of the European Community. Currently, the presidency is held by Ireland.

RESPONSE TO THE OIL CRISIS

The primary consumer-nation response to the oil crisis has occurred outside the Atlantic alliance structure, formally through a new entity, the International Energy Agency. It has, so far, been a partly successful operation and one in which NATO nations naturally predominate.

In the military field some progress has been made in the so-called rationalization and standardization of defense resources-an exercise aimed at applying to military requirements the economic principle of comparative advantage.

The southern flank of NATO has been severely crippled by a series of events which need no elaboration-the leftist movement in Portugal, economic difficulty in Italy, torment over Cyprus in Turkey and Greece, and the strain on NATO relationships caused by the Mideast war.

New governments in Greece, Portugal, and Spain have demanded a reduced U.S. presence in their countries. Relations were, of course, strained within NATO during the Yom Kippur War when NATO allies declined to allow U.S. supply planes to use NATO bases or to overfly their airspace in resupplying Israel. Today with war clouds still dark over the Middle East, NATO harmony or policy in this region seems no closer than in 1973.

In the United States, the new administration is as firmly committed to NATO as its predecessor. From personal experience dating from 1965 when Gerald R.

Ford first became Republican Leader of the House, I can cite numerous instances showing his deep interest in NATO. In the House he consistenly opposed all measures to cut back NATO's strength and was an unwavering supporter of research and development of new weapons systems and force improvements.

The mood of the country, and the Congress, however, remains one of retrenchment in military outlays and overseas commitments. While no significant test votes have occurred in the House or Senate on NATO obligations, the November 5 election undoubtedly enhanced the position of those wishing to reduce U.S. troops in Europe.

Leadership changes in the House deposed Edward Hébert, a strong supporter of NATO and military strength, as chairman of the Armed Services Committee. It would be a mistake, however, to read this as a move from hawk to dove. The voting record in committee of his successor as chairman, Melvin Price, is not unlike that of Mr. Hébert. Beyond the committee membership, however, Mr. Price has far greater support among his House Democratic colleagues than Mr. Hébert. Mr. Price may be able to use that standing to influence votes in opposition to troop cuts. Time will tell.

Regardless, the November election results must be viewed as a net loss to those who wish to keep U.S. troop strength in Europe undiminished.

COST OF DEFENSE

Much of the sentiment for retrenchment is based on U.S. budget and balanceof-payments pressures. Some of the cost estimates are staggering. One I saw recently put the cost to U.S. taxpayers of defense measures in the European area at $30 billion a year. Another factor is the general tide of public opinion against military commitments beyond our borders, a tide which flowed powerfully as the result of our tragic experience in Indochina.

The U.S. economy and the European economies are in a period of depression beset by both high rates of inflation and unemployment. In a period of declining government revenues and large Federal budget deficits, the U.S. Government, and especially the U.S. Congress, will take a critical look at costly U.S. commitments abroad. The nearly 319,000 U.S. troops in Europe and their 235,000 dependents represent an enormous outlay of funds and an inevitable target for budget cutters.

Further, there is a belief, rightly or wrongly, the Europeans in NATO are not doing their share since the U.S. NATO cost equals two-thirds of the total defense outlay by the other 14 NATO governments. Since World War II, Western Europe has prospered. In 1951, the combined GNP of NATO Europe was $47 billion. By 1975 it jumped to $1,114.42 billion, over 100 percent higher than that of the Soviet Union. By almost any measure, the combined industrial might of NATO Europe surpasses that of the Soviet Union. The greater economic and manpower resources of NATO Europe provide a basis for a strong military potential as well. The United States spends 5.8 percent of its GNP on the military and the Soviets an estimated 8-10 percent, but NATO Europe spends only 3.6 percent on military forces. The United States spends 23 percent of its Federal budget, $82.7 billion in fiscal year 1975, on defense, while NATO Europe spends half of that in absolute dollar figures.

The defense of Europe bears a large share of responsibility for the fact that U.S. per capita spending on military affairs is now $380 per year, over a dollar a day. The European's per capita spending on their own defense is about $140 per year in the case of the three wealthiest European countries-West Germany, France, and the United Kingdom.

IMPACT OF DEFENSE SPENDING

Then there is the impact of defense spending on the U.S. balance of payments. President Nixon, in February 1974, told Congress that the deployment of U.S. troops in Europe results in a deficit of $2.1 billion in the U.S. balance of payments. The net deficit however is about $1 billion, as the Federal Republic of Germany covers more than $1 billion of the U.S. deficit through agreed "offset" purchases of U.S. arms and in other ways.

The U.S. Senate through the Jackson-Nunn amendment has given the NATO allies until May 1975 to eliminate the remainder of the U.S. deficit that arises from stationing U.S. troops in Europe. This amendment stipulates that U.S.

troops will then be withdrawn in proportion as the European "offset" payments fall short.

Another reason for changing attitudes on U.S. troop strength in Europe is the growing belief in the United States that the threat of a Soviet or Warsaw Pact attack in the West has declined. The increased number of accords signed between the United States and the Soviets on strategic arms limitations, the greater flow of East-West trade, Ostpolitik, the existence of the conferences in Vienna and Helsinki all contribute to a more relaxed atmosphere.

The Soviet Union, facing the Chinese who are armed with nuclear weapons and a regular armed force of 2,900,000, seems less likely to engage in provocative behavior or launch an attack on West Germany, France, or other NATO countries as long as it perceives a threatening Chinese presence on its eastern borders. Aside from these factors, a strong case can be made, in my view, for a new strategy through which the U.S. troop presence in Europe can be safely reduced. Frankly, in my opinion, NATO in general and the U.S. Government in particular has become hooked on the question of troop and tank levels. It's time to get unhooked.

We place such importance on these levels an observer might think we are still preparing for World War II, and that nothing has happened to change substantially military technology and doctrines in the intervening years.

The MBFR talks in Vienna revolve almost exclusively about numbers of tanks and troops and where they are placed. The NATO objective is to eliminate the disparity in troops and reduce the disparity in tanks.

The exercise at Vienna is filled with risk. For one, it creates the illusion in the minds of many people that NATO can wisely and safely base force-level decisions on pledges made by the Soviet Union. For another, it has already caused many citizens to assume that NATO itself can safely be phased out of existence as the result of negotiations with the Soviet Union.

EFFECTS OF MBFR

Another risk exists which should be recognized. The effect of the MBFR exercise may well be to set in concrete for years to come troop and tank levels for NATO nations. The existence of MBFR makes more difficult critical reexamination of our technology and doctrines. Under present circumstances, with the MBFR talks going on, can NATO nations review objectively just how many troops and tanks are actually required in central Europe? Are they locked in by the ongoing discussions in Vienna?

Frankly, I have contended from the start that NATO nations would be wise to negotiate among themselves periodically the levels of their own forces, and let the Warsaw Pact nations respond to changed NATO force levels as they see

fit.

Despite the difficulty of breaking out of the MBFR concrete, prudence dictates just that course of action.

For several reasons, I believe the time is ripe for a major restructuring of NATO military doctrines and technology as well as Atlantic political institutions. Brilliant developments have occurred in the technology of conventional weapons. These developments, in my opinion, have already made obsolete many of our military doctrines and existing technology.

"Smart" weapons can now send tremendous conventional destructive power in small packages over great distances with pinpoint accuracy. These weapons will enable almost any nation, at relatively low cost, to defend itself effectively against massed armies and massed tanks. Conventional wars as we have known them will soon become so expensive and difficult as to destroy the incentive of aggressors to start hostilities.

These technical trends favor defensive maneuvers. As a result, the Soviet advantage represented by masses of tanks and manpower counts much less. Mass can be made to seem not only less effective in hostilities, but also dangerous for the side that allows such concentration of its resources.

As was demonstrated in the Mideast war, a light weapon costing only a few thousand dollars can easily knock out a tank or a fighter plane costing $1 million

or more.

NATO could use this new technology to complicate the problems of aggressive planners to the point where the risks would outweigh any prospective gains.

This state of affairs could have important psychological effect for both sides. It could discourage aggression. It could improve confidence and political will on the part of defenders. Defense could be dispersed, involving smaller numbers of personnel and smaller investment. New combinations of less highly-trained reserves defending their home territories, together with more widely qualified standing forces, could be more effective and far less costly than present technology and doctrines.

NEW IDEAS FOR NATO

The need for modernization of NATO doctrines and technology alone dictates breaking out of the MBFR concrete. NATO needs to think anew and act anew, but not just in respect to military security measures.

The energy crisis, whose eventual impact on western civilization is still unknown-and the high-risk struggles over Cyprus and the Mideast, which brought the grave twin dangers of intra-NATO hostility and confrontation with the Soviet Union, illustrate more dramatically even than the Soviet threat to central Europe the vital importance of trans-Atlantic solidarity on external policy questions.

The threats to Atlantic community well-being represented by OPEC oil policy and OPEC oil money can be met far more effectively if the Atlantic nations find a way to speak and act as one. In fact, can they be met adequately in any other way? Can Israel survive unless Atlantic nations coordinate Mideast policy? Can Atlantic nations conquer that monster inflation except through a monetary system that is truly unified?

I propose that NATO break out of the MBFR concrete in this way: Let 1975 become Trans-Atlantic Year, in which the NATO nations negotiate among themselves a 5-year compact consisting of these essentials:

1. An agreement on minimum force levels which will be committed to alliance purposes.

2. An agreement on a modernization program in which each nation will begin to phase out obsolete doctrines and technology of the present and phase-in a defense based substantially on the new generation of "smart" conventional weapons. Part of the U.S. responsibility will be to modernize its nuclear commitment, a task long overdue.

3. An agreement on NATO financial arrangements for the entire 5-year terma step which will take out of annual contention the questions of offset-purchases and burden-sharing.

4. The organization of an Atlantic convention whose delegates will plan the next stage of alliance development, hopefully one that will formulate proposals on federal institutional forms through which unified policy on monetary, trade, and external questions can be achieved.

Once the details of the 5-year compact are settled, they could be announced at a NATO heads-of-government summit.

A Trans-Atlantic Year of this dimension could brighten an otherwise somber calendar and make 1975 memorable as the time when a giant stride was taken in our long quest for a society in while our cherished liberties are safe indeed.

OPENING PLENARY SESSION (CONTINUED): SUMMARY OF DISCUSSION

OF ECONOMIC EVENTS SINCE SEPTEMBER 1974

(Working documents: Mr. Gibbons and Mr. Springorum)1

Because of the short time available, Mr. Springorum dispensed with an oral introduction to his report, thanked Mr. Gibbons for his working document and referred first to the importance of forward research in the present planning policy of American undertakings. Except for steps taken to halt the inflation of the dollar, worldwide recession had not led to worldwide countermeasures. Attempts were, however, being made to combat unemployment.

INTERNATIONAL ENERGY AGENCY

He next gave a brief account of the formation of the OECD's International Energy Agency and its work to date. He referred to the current political situation in the Middle East and drew conclusions with regard to the continuation of the latent energy crisis. The introduction of reference prices for energy materials would be useful; all proposals liable to encourage disunited approach by the energy-consuming countries should be opposed.

A balance between energy-exporting and energy-importing countries could only be achieved by increasing energy production in the importing countries. This was, however, only possible at much higher prices than those of imported energy. If this policy were to be adopted, however, there would be a danger of the energy-exporting countries selling less than before because energy production in the consumer countries had increased.

FLOOR PRICES SUPPORTED

For this reason, floor prices for energy in the importing countries should be introduced and these would have a stimulating effect. An example was given by the United States in the first half of the 19th century, when it introduced special tariffs in support of its own infant industry. Floor prices would have a similar effect in stimulating home energy production.

Another cause for concern in Europe was the supply of enriched uranium. In this respect, the United States was at present failing to honor its agreements, although give and take was needed in such cases. In conclusion he referred to a recently published book by Robert J. Schaetzel "The Unhinged Alliance: America and the European Community" which called for a strong Europe in the interests of the United States.

PREVIOUS OVER-EXPANSION

Mr. Gibbons thanked Mr. Springorum for his report and gave a brief explanation of the content of his own working document. The American economy was expecting a new upward swing. The current economic crisis was a consequence of previous over-expansion. The situation had caused some consternation in the United States. It seemed that President Ford's energy program would be more in line with Mr. Springorum's demands as set out in his working document than appeared at first sight. The United States too would in future make more energy savings and carry out more research on energy than previously. He also felt the enriched uranium would continue to be delivered to Europe; the present problem was mainly a bureaucratic one.

The matter of trade relations was also important. He expected negotiations on this to be a success and to lead to mutual expansion of trade; there was also a rapprochement on the energy front.

World trade had moveover expanded by 5-6 percent in the last year; a greater effort still had to be made however to abolish tariffs and other obstacles to trade.

1 See pp. 17 and 24.