SU1'Ji'it'i.RY OF Pl..PER ON GERMANY FOR NSC MEETING 
I. Gc~mRny in Persnective 
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. , The Grand .Coalition has sought to give Germany greater 1naependence without sacrificing its close ties with the U.S . and Wes tern Europe. It has embarked upon a course to improve Franco·-German relations, and emphasized a more flexible Eastern policy aimed at opening the way for ultimate reunifj_cation. 
The East German regime is pointing up its continued exi~t­encc by squeezing Berlin access. 
II. U.S. Policy Obiectives
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We seek a friendly unified peaceful and democratic Germany , German support llf European integration, participation in tbe defense of the Hes t , and Ger11.lan reunification . 

A. B..~~.r_l~_i:} -~·we seek to preserve access to the city; main­tClin the confidence of the Berliners in our ability to keep the city free; and maintain Allied solidarity . 
The Soviets 11avc given the East Germans some latitude on Bcrljn access matters. The East Germ.ans have issued bans on trovel through East Germany Rnd to and from Berlin of members of the NPD party and high FRG officials . The Allies have protested this acLion. The present difficulty is likely to be resolved ; the lonr;er term problem of maintaining the city ' s viability will probably remain as a major U. S. security concern as long as the broader problem of the division of Europe remains 
unsolved. 
B. Nc~n.:P_r?_l_if_cr_§tion T:ren!_y__(_ii~.I)_ -The Germans rcrnain 
lnl"ev:0nn. In the end, they are likely to sign the Treaty , but ·with mental reservations , and bruised feelings . 
C. Gcr111an Rcunific0tion and Eastern Policy -Re.unificati on :is a rnaj o~-Gc;r~;3ngo[-tl.--~rE2 Eas-ternpo1-i-Cy_o_f-·t-he govc1:nj 11g 
grand coalj tion (better re1 at.ions \·Jith MoscoH, relations sho~· t of [ormal recognition witl1 East Germany , and diplomatic relati ons 


-OONFrDENTIAL -. 
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with the Eastern European states) reflects an effort to shake up existing rigidities in the hope of developing a climate, or at least opportunities, for reunification steps. They know 
there will be a long, slow evolution at best, requiring great 
patience. FRG Eastern policy is consistent with our own, and we support it. 
D. Security Que.stion.s. -The Germans continue to rely on NATO as the surest guarantee of German survival. They regard the U.S., with 200,000 men in Germany and its nuclear capacity, as the best individual guarantor of German security. Up to July 1, 1962, our foreign exchange losses flowing from the presence of our forces in.Germany were neutralized entirely by German purchases of U. s·. arms. Official talks with the Germans ~ay 9/10 on a new agreement involving increased purchases of Treasury securities (to replace our arrangement for the year ending June 30, 1968) to ri~utralize our foreign exchange losses, were inconclusive. They will resume in a few weeks. 
E. International Monetary Problems -The FRG has proposed Euronean concessions in Brussels to encourage U.S. exports. The Germans have been very helpful in maintaining the inter­national monetary systemo They count on us keeping our own house in order. German help cannot be expected past the point where in the German view the Federal Republic's own financial stability could be jeopardized. 
F. Relations with France -A good relationship with 
France is imnortant for the Federal Republic. The Germans 
ha~e sought ~o pursue this objective without sacrificing 
their ties to NATO and the U.S. In the main, they have 

succeeded in this. 
U.S. Policy -We should continue to express understanding for Gernan desires for good relations with France. At the se..me time;, we expect the Germans to keep the U.S. fully informed of any Franco-German agreements or planning that affect our interests. Over the longer term, good FRG-French relations may contribute to renewed movement toward European unification when conditions permit after de Gaulle's departure from 
political life. 
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