Dear Doug [Dillon],

Yesterday I spoke to you about the negotiations now taking place on cost sharing for NATO infrastructure. The Canadian position is as follows.

In the first NATO infrastructure programme (1950) the United States took a large share of the load: 48.1%. Canada, at 4.43%, bore a share roughly comparable with the United States, in terms of population, but quite high in terms of national income. (In terms of national income, other countries bore a somewhat heavier share: e.g. France, 21.52% and U.K. 17.72%, but of course they reaped economic benefits from the expenditure.)

Since then, Germany has come in as a contributor (and beneficiary) and certain weaker European countries, which were originally left out of the cost sharing arrangement, have become contributors. The United States has insisted, from time to time, that its proportion was too high. As a result of these developments the United States now pays only 36.98%. Canada, at 6.15%, is far too high, both in relation to the U.S.A., and also in relation to other (beneficiary) countries including U.K. (9.88%), France (11.87%) and Germany (13.72%).

About a year ago the U.S. warned that they wished to reduce their share still further. Since that time Canada has given repeated warnings, both to the Infrastructure Committee and to the U.S. directly that, if the U.S. share came down, the Canadian share would have to come down pari passu. These warnings have gone unheeded.

The U.S. has been proposing that their share should be reduced from the present 36.98% to 25%; more recent proposals, made in NATO Council yesterday (December 13), are that the U.S. should come down to 29.48%, with Canada’s share remaining unchanged at 6.15%. From Canada’s point of view, any such proposal is completely unreasonable and unacceptable.

This point is emphasized by reviewing the trends between the 1950 scale and the present scale. Since that time the proportionate burden of U.K. and France have both fallen by about 45%. That of the U.S. has fallen by 23%. That of Canada has risen by 39%. It was proposed yesterday in the NATO Council that there should be a slight increase in the burdens of U.K. and France and that the burden of U.S. should be reduced to 45% (instead of the 48% requested by U.S.A.) below 1950, but that Canada’s share should be left unchanged. Such an arrangement could not possibly be explained or defended in Canada.

Canada would have been willing to allow the present arrangement, unfair though it is to Canada, to continue. But if the United States proportion is to come down Canada’s proportion must come down pari passu.

Yours sincerely,
DONALD M. FLEMING