AND FROM WHOM?
IT is time to make a fundamental review of our NATO policy. For regardless of what we might prefer and despite assurances to the contrary, several factors are going to force some important changes in our relation to NATO over the next few years. The basic choice is whether we are going to recognize these facts of life early enough to plan and implement effective solutions, or whether we are going to try to hold onto the status quo in all respects. If we choose the latter, we choose an inevitable deterioration in the Alliance and in European security in general.
One of the most important pressures is the growing contribution to our balance-of-payments deficit caused by the presence of some 300,000 U.S. military personnel in Europe. There are two underlying trends that will continue to make this problem get worse, not better. One is the increase resulting from normal military and civilian pay increases; our military expenditures in Europe go up almost directly with pay increases. If the recent rate of pay increases continues and if the United States maintains its current force levels in Europe, our overall military expenditures will go up about 50 percent in the next ten years. At the same time, European purchases of U.S. military equipment, the traditional means of offsetting the effects of our military expenditures abroad on our balance of payments, have leveled off as the German armed forces have completed their initial equipping, and as European production of military equipment has begun to supply a greater proportion of needs. Taken together, these two trends have already created a net military deficit in Europe of over $1 billion per year (if the temporary expedient of bond purchases is excluded). Even allowing for indirect effects, this is no longer a minor element in the overall U.S. balance of payments.
Severe budgetary pressures provide a second major force for change in the present U.S.-NATO relationship. Even if the Viet Nam
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