On December 7, 1955,⁶ the Cabinet approved in principle a further three-year NATO Common Infrastructure Programme to cover the requirements for the years 1957 to 1959, inclusively.

2. For the past few months the North Atlantic Council has had this programme under consideration. The Military Committee recommended a programme amounting to £325 millions; £265.8 millions for SACEUR and £57.2 millions for SACLANT. It was clear from the start that few countries, if any, would accept a programme of the magnitude proposed by the Military, due to:

(i) The backlog from previous programmes (£700 millions approved). Up to March 31, 1956, £300 millions had been spent and £430 millions authorized up to December 31, 1955;

(ii) The doubtful feasibility of adding further large commitments to already heavy backlog; and because

(iii) Large increases in national contributions to infrastructure could only be achieved at the expense of other military commitments of high priority.

3. After considerable discussion in the Council and a further review by the Military of their requirements, the Permanent Representatives, subject to the Reservations of the German, Italian and Norwegian Representatives, approved a four-year £225 million infrastructure programme to include £19 million for that part of the 1956 £38 million infrastructure programme in Germany not covered by that country's contribution and a contingency fund of 10%. The programme would be subject to annual review and revision as necessary in relation to its physical progress. It is expected that the German, Italian and Norwegian Representatives will withdraw their reservations and approve the programme. In telegram 1225 of August 3rd (a copy of which is enclosed) Mr. Wilgress has confirmed the size and details of the programme as approved by the Council and reports on the reservations held by Denmark, Germany and Italy.

4. The Panel on the Economic Aspects of Defence Questions had previously agreed that Mr. Wilgress could approve in principle, subject to Ministerial consideration, a three or four-year infrastructure programme of the magnitude of £225 million on the assumption that a satisfactory cost-sharing formula will be worked out.

5. The over-all programme as approved by the Council calls for a German contribution of 13.77% to the annual programmes. This would reduce Canada's share from the present 7.13% to 6.15% for each annual slice.

6. Mr. Wilgress has requested that he be informed of the Cabinet's decision on the programme approved by the Council before the Council meeting scheduled for August 14.

7. This Department is recommending to its Minister that he concur with Mr. Harris and Mr. Campney in the view that the Cabinet give favourable consideration to the four-year £225 million NATO Common Infrastructure Programme approved by the North Atlantic Council.

[PIÈCE JOINTE/ENCLOSURE]

Le représentant permanent auprès du Conseil de l'Atlantique Nord
au secrétaire d'État aux Affaires extérieures

Permanent Representative to North Atlantic Council
to Secretary of State for External Affairs

FUTURE INFRASTRUCTURE PROGRAMME

We confirm that the future infrastructure programme approved by Council (subject to German, Italian and Norwegian reservations) is of the magnitude of £225 million spread over four years subject to annual review and revisions as necessary in relation to its physical progress. The £225 million will include £19 million of the £38 million 1956 German infrastructure programme and 10 percent will be set aside as a contingency fund. The German contribution to each annual slice will be 13.77 percent.

2. On the question of cost sharing, as we reported in our telegram 1206 of July 31,? we made a statement in Council that we would not contribute more to the future infrastructure programme than our present percentage proportionately reduced by the German contribution, that is 6.15 percent. The USA and the UK took the same position. As you know, the Danish representative had earlier stated that his government could only agree to contribute £4 million to the future infrastructure programme. The Italian representative reiterated his statement made previously in Council that the Italian government would not contribute more than £6 million to the future programme. Other representatives indicated in agreeing to the programme outlined in paragraph 1 above that they did so on condition that their respective rates of contribution to the future programme would not be increased relative to their present rates.

3. Council took note of all these statements on the cost-sharing formula without commitment. However we consider the point has now been made that should the discussions on cost sharing not reach a satisfactory conclusion the overall size of the programme will have to be reexamined but the fact remains that aside from the German contribution the question of the cost-sharing formula has not been decided but has been left open for future discussion which presumably will proceed on the basis of the statements outlined in paragraph 2 above.

4. Concerning the positions of the delegations mentioned in paragraph 2 of your telegram under reference, these are as follows:

(a) Denmark: They have served notice that they will not be willing to contribute more than £4 million to the future programme for the reasons outlined in our telegram 1163 of July 23.? Our USA colleagues are of the opinion that when the cost sharing discussions start Denmark is likely to prove amenable to persuasion to change their position. However, whether this is correct or not is very difficult to say.

(b) Germany: The German reservation was placed, as you assumed, pending authority from Bonn to accept the UK proposal. The German Delegation tells us that they feel that Bonn will accept the UK proposal if all other members accept it.

(c) Italy: From conversations with the Italian Delegation we gather that the Italian position is not yet clear. They maintain they can only afford a contribution of £6 million and that they would have preferred an overall total for the programme which would have made this sum of £6 million a more reasonable percentage on the part of Italy. However, the Delegation realizes the difficulty of holding out against the majority opinion for a £225 million programme and they are awaiting instructions from Rome.

(d) Norway: The Norwegian Delegation tells us that they proposed a percentage of 16 percent for Germany to increase the German percentage as much as possible towards a more reasonable figure. However, they feel that their authorities will not insist on the 16 percent and are confident that they will be able to lift their reservation.