Since its inception in 1950 the Canadian Mutual Aid Programme has been guided to serve a dual purpose: (a) to assist in building up the strength of NATO forces, and (b) to contribute to the development of Canada's defence production capacity in a manner consistent with the equipment requirements of Canadian forces.

In the early years of the Programme Canada transferred items out of surplus stocks sufficient to equip two full army divisions. Subsequently, large quantities of new, or slightly used equipment (including such important items as F.86's, CF 100's and various types of naval vessels) were also transferred out of current service stocks. The NATO Aircrew Training Scheme which was set up to help meet the desperate shortage in Europe of trained aircrew graduated, up to its formal termination in 1958, some 5,500 pilots and navigators from ten member countries. Finally, in the period from 1953 to 1956 heavy expenditures were incurred for direct production items, mainly radar and other electronic components, which were in short supply in Europe. These items were also needed by the Canadian forces in quantities which, alone, did not justify direct Canadian production. By combining both our Mutual Aid and Canadian forces requirements, it proved feasible to establish the basis of a Canadian electronic defence industry.

Since reaching its peak of $289 millions in 1953-1954, the annual dollar value of the Canadian Mutual Aid Programme has dwindled to an estimated $90 millions in the current fiscal year. This decline reflects: (a) the virtual elimination of directly produced items from the programme since 1956; (b) the termination of the NATO Aircrew Training Scheme in 1958 (although limited training facilities continue to be made available under special arrangements, particularly with Denmark and Norway); (c) the gradual depletion of our stocks of surplus weapons and equipment; (d) the development of NATO European forces and their sources of supply, both in Europe and the United States, to a point where they now have adequate quantities of conventional armaments and equipment; and (e) the policy in more recent years to equip NATO forces with a "modern"²¹⁶ weapons, which Canada, of course, cannot produce.

In its present form the Programme includes the following components:

(a) air training facilities, which continue to be made available on an ad hoc basis;

(b) spares support for equipment (particularly F.86's and CF 100's) which was transferred to other member countries;

(c) transfers out of surplus service stocks; and

(d) the Canadian contributions to the NATO military budgets and to the NATO Infrastructure Programme.

It is apparent that the content of the Programme, or at least some parts of it, is becoming of lesser value to recipient countries, and consideration must therefore be given to its future. As we see it, there are three alternatives:

1. Renewing the Programme by introducing current production items;

2. Terminating completely the Programme at the close of the current fiscal year;

3. Continuing with a dwindling Programme based on present criteria, but with decreasing amounts of surplus stock equipment being offered.

Alternative (1) would require a considerable cash outlay, which could hardly be justified for budgetary and domestic political reasons, nor on strictly defence grounds, since Canada is relying more and more on United States modern and highly specialized weapons for the equipment of its forces. Alternative (2) might have adverse political repercussions in NATO and would not be realistic, since Canada is already committed to provide spares support to certain member countries and will, in any event, continue to have available from time to time surplus service stocks and/or facilities which could be provided at relatively little cost to the Canadian taxpayer. It appears that alternative (3) commends itself as the best possible solution.

Following informal interdepartmental discussions, the Panel on Economic Aspects of Defence will shortly be asked to consider a draft memorandum to Cabinet recommending that the Canadian Mutual Aid Programme for 1960-1961 should be planned on the basis of continuing limited aircrew training, maintaining our announced policy of providing spares support for materiel already transferred and payment of the agreed share of NATO military budgets and common infrastructure. Surplus materiel that might become available and that might be useful to other NATO nations should be offered on an ad hoc basis.

The principal change from previous years, therefore, would be that the annual programming of surplus materiel in consultation with the NATO Standing Group would be discontinued. It has also been tentatively suggested that the description of the Programme should be changed to "Contributions to infrastructure and military costs of NATO and other assistance." Furthermore, it will be stressed to the Cabinet that, if it is decided to continue with a reduced Mutual Aid Programme, we should explain frankly this new development to our NATO partners, preferably in the course of the forthcoming NATO Annual Review. Rather than try and gain credit for what might appear as a less satisfactory programme we should explain that, in view of the important changes which have taken place, both at home and in Europe we are no longer in a position, nor feel justified, to support an elaborate Mutual Aid Programme. (The statement concerning our Mutual Aid Programme may well have to be made in the light of any decision which may be taken in connection with the re-equipping of the Canadian Air Division in Europe.)

If the above approach is endorsed by the Panel, the required memorandum to Cabinet will be submitted by the Minister of National Defence whose Department is responsible for the Mutual Aid Vote.

If you concur in the above outlined recommendations which have already been agreed inter-departmentally at the working level, we shall support them in the Panel.²¹⁷

N.A. R[OBERTSON]

²¹⁶ Note marginale :/Marginal note:
"nuclear" [H.C. Green]

²¹⁷ Note marginale :/Marginal note:
"nuclear" [H.C. Green]