European Drawdown:

Status of Residual Value Negotiations in Germany

NSIAD-94-195BR: Published: Jun 23, 1994. Publicly Released: Jun 23, 1994.

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Pursuant to a legislative requirement, GAO provided information on the: (1) potential residual value of U.S. installations being returned to European host countries; and (2) status of the residual value negotiations between the United States and Federal Republic of Germany.

GAO found that: (1) the United States has recovered only a small portion of its total estimated residual value claim in Europe; (2) the U.S. investment in Germany is estimated at $3.4 billion; (3) most of the potential residual value in Germany comes from returned installations; (4) although recent high level discussions with German officials have opened channels for negotiating a settlement, the State Department does not expect to receive a large monetary settlement as a result its negotiations; (5) Germany will not be able to repay much of the claim due to financial constraints as a result of its outstanding foreign assistance obligations; (6) the United States has received about $3 million in cash from Germany for a small number of properties returned before 1991; (7) the U.S. military is focusing on payment-in-kind settlements in which the German government will fund military construction projects rather than paying in cash for returned U.S. installations; (8) since April 1993, U.S. negotiators have concluded payment-in-kind agreements with the German government totalling $197.7 million; (9) the value of Army and Air Force payment-in-kind agreements will be applied against future settlements; and (10) the U.S. military intends to continue focusing on payment-in-kind settlements in future negotiations with Germany.

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