The Cabinet will discuss at an early date, possibly this week, recommendations from the Department of National Defence on this subject. These have already been discussed by the Cabinet Defence Committee at meetings which took place during your absence in New York, but without any decision being reached. The documents in question are enclosed with this memorandum. They are as follows:

1. A memorandum from National Defence dated August 8 entitled "Air Defence Requirements." Recommendations are contained on pages 3 and 4 of this document.
2. A second memorandum from National Defence dated August 19 entitled "Report on the Development of the CF-105 Aircraft and Associated Weapons System 1952-1958."? Pages 10 and 11 of this document summarize the reasons for the recommendation to cancel the CF-105 programme.
3. A memorandum from the Department of Defence Production dated August 7 entitled "Sharing of Production Tasks in North American Air Defence."
4. A memorandum prepared by the Department of Finance dated August 13 entitled "Some Considerations relating to the Defence Programme."
5. Our own memorandum of August 14 entitled "Continental Air Defence - Foreign Policy Implications." This memorandum was sent to you in New York for approval. A summary of the memorandum, originally prepared for the Prime Minister, is also attached.

You will recall that Cabinet Defence Committee approved two projects related to continental air defence at its meeting on July 28. These were the extension of that part of the Pinetree Radar System which lies in Western Canada, to be financed by the United States, and the introduction of SAGE facilities in the Ottawa air defence sector. The reason these projects were submitted separately to Cabinet is that they are to some extent independent of other air defence requirements. They will be useful whatever decisions are made with regard to the CF-105 and BOMARC.

The projects now before Cabinet involve the CF-105 programme, the installation of two BOMARC missile bases in Eastern Canada, and installation of two additional Pinetree Radars in Eastern Canada. These are being considered together because whatever decision is made with regard to one will have some influence on the others. The two radars for example would be necessary to service either the BOMARC or the CF-105. It is generally agreed that the requirements concerning the radars and the BOMARC bases are acceptable, provided suitable cost-sharing and production arrangements can be worked out. They will form part of a Canada-United States line defence system which follows roughly the 49th Parallel. BOMARC bases just to the south of the border are being installed west and south of the Great Lakes. East of this area, however, it makes more sense to install bases in Canada if the defences are to have the required depth. The two radars to be installed to the North of these bases will enable the weapons to be fired, if necessary, earlier than would otherwise be possible, and thus have the incidental effect of enabling the air battle to be engaged over relatively unpopulated parts of Canada.

The recommendation to cancel the CF-105 programme is based on several factors which can be summarized as follows:

1. The threat is changing from a predominantly manned bomber attack to a missile attack and the CF-105 has no capability against missiles.
2. The costs of the programme are exorbitant when compared to the alternative of purchasing suitable aircraft in the United States.
3. The Canadian defence programme has a diminishing requirement for manned interceptors and it would not be economical to produce the approximate 100 aircraft now required.
4. The development of defensive missiles by the United States has been more rapid than was expected and these would appear to be equally, if not more, effective against modern jet bombers than the supersonic manned fighter. Furthermore, they are cheaper.

This Department does not share in the responsibilities for producing these changed estimates of the validity of the CF-105 programme, except in so far as we have participated in the intelligence analysis of the changing threat. We have, however, raised questions about the usefulness of increased defence expenditures on manned aircraft in relation both to our NATO and U.N. commitments and to our non-military commitments abroad. We have not stated that our defence expenditures should not be increased and indeed we have made the point that these expenditures should bear some kind of constant proportion to American defence expenditures if we are to justify the maintenance of Canadian control over defence activities in Canada. Our concern has been that, if large and increasing expenditures on continental air defence are considered necessary for military reasons, then Canada should spend her share on projects which can best be justified on political and economic grounds. We have urged the closest possible co-operation with the United States in order to bring this about.

I would draw your attention, in this connection, to the Defence Production memorandum which makes a persuasive case in favour of integrating Canadian and American military production facilities in order that Canada may do her share in the most economical way possible from the point of view of Canadian industry. It seems to me this argument deserves our full support, particularly in so far as its conclusions are relevant to our difficulties with the Americans over the construction and procurement clauses in our Notes on joint defence projects. The concept of sharing production tasks between Canadian and United States industry in the field of continental defence could also be of great value to us in explaining to the Americans the cancellation of the CF-105 programme and in discussing its consequences.

Finally, I have reservations about the language of the recommendations to Cabinet in the Department of National Defence paper,¹²⁹ and would like to suggest for your consideration and possible submission to Cabinet a revised form of recommendation. This revision is attached? to this memorandum. It has been made with two objections in mind to the recommendations as now drafted. These are:

(1) That no reference is made in the recommendations to the question of control and storage of the atomic warheads associated with the BOMARC missile, although this matter is referred to in paragraph 4 of appendix "A" of the National Defence memorandum. I think approval to the installation of the two BOMARC bases should be made conditional on intergovernmental agreement with respect to the problem of control and storage of the atomic warheads.

(2) The present recommendations place approval of the proposed projects ahead of and unrelated to cost-sharing and production arrangements. Our revised draft makes approval conditional upon the satisfactory conclusion of negotiations with the United States on such arrangements, as well as on the problem of control and storage of atomic warheads mentioned above.

J. L[ÉGER]

¹²⁹Léger fait allusion ici au Document D9-58 du 8 août du Comité du Cabinet sur la défense, et non au document du Cabinet 247-58 du 22 août 1958.
Léger refers here to Cabinet Defence Committee Document D9-58 of August 8, not Cabinet Document 247-58 of August 22, 1958. ¹³⁰Note marginale:/Marginal note:
Mentioned to Cabinet early Sept [Sidney Smith]