By Alexandra Hudson
GRAFENWOEHR, Germany (Reuters) - Walter Brunner, a lively 82-year old whose blue baseball cap matches the color of his eyes, leans across a red leather booth at the American-style diner in this southern German town and tries to make light of the looming pullout of U.S. troops.
"We Germans fought for the Russians to go, now we are fighting for the Americans to stay," jokes Brunner, chairman of the German-American contact club in Grafenwoehr, whose lifeblood is its U.S. military base.
He watched a young Elvis Presley arrive here for training in 1958 and still goes tenpin bowling with his American friends every Monday night.
News that the 172nd infantry brigade, with its 3,500 soldiers and 8,000 family members, is being pulled from Grafenwoehr to return to the United States has hit this town hard.
After 67 years of living together, locals in Bavaria say the Americans are not just their employers and customers, but also close friends.
The Pentagon on Thursday announced sweeping defense cuts of $487 billion over the next decade, as it seeks to create a smaller, more agile force with a strategic focus on the Asia-Pacific region and Middle East. The demands of the Cold War, where Russians and Americans faced off across the walls, fences and barbed wire of the Iron Curtain, have receded into history.
Under the new strategy, two combat brigades, one in Grafenwoehr, the other in Baumholder near the French border, will leave Germany, reducing the size of the U.S. army in Europe by almost 10,000 from its present number of 41,000.
That would leave just two brigades remaining in Europe -- one in Vilseck in Germany, close to Grafenwoehr, the other in Vicenza in Italy. The military plans to rotate U.S. based units into Grafenwoehr and Baumholder for training, keeping the sites. Grafenwoehr will also continue its key role training allied troops.
The economic impact however will be severe.
Local businesses say up to 90 percent of their trade comes from Americans. The town of Grafenwoehr receives 2.8 million euros in state subsidies every year largely due to the U.S. presence. Some 2,900 Germans are employed directly or indirectly by the military.
According to U.S. army data American purchasing power in and around Grafenwoehr, a quaint town of 7,000 not including the U.S. base, is around 35 million euros. Another 30 million euros is spent per year on rent by American families.
"Grafenwoehr lives from the Americans and will die without them. It's as simple as that," said 35-year-old Helmut Dostler, whose family have run Grafenwoehr's Hotel Zur Post for four generations.
"Losing troops would be fatal for the area. They are the biggest employer. Even if troops come here for training for a few months we will barely see them in the town."
At Spahn, a photo studio outside the gates of the base where framed photographs of U.S. servicemen and women and their families line the walls the concern is the same.
"Only a few years ago new houses and facilities were built for soldiers. We'd expected the area to bloom. Now the opposite is happening," said 42-year-old Alexander Kneidl.
Youngsters here grow up as comfortable with American culture as their own, German women marry American soldiers and frequently Americans opt to leave the military and stay in this picturesque region of gentle hills and dense forests just 80 kilometers (50 miles) from the Czech border.
Today, the barbed wire is gone and there remains a simple crossing point from one European Union member state to another. It is because of this transformation that the function of the American military in Germany has had to change.
The Russians left eastern Germany with the reunification of the country two decades ago. No longer needed to counter or deter a Soviet attack, American bases in Germany are today home to units who serve with international partners in Afghanistan and beyond.
Grafenwoehr also provides state of the art training for NATO partners and dozens of other allies, preparing them to work together in overseas conflicts.
"The advantage in Germany is that you are in an allied state with good infrastructure and a comfortable climate. But logistically Europe is not so important anymore," said Henning Riecke, an expert on transatlantic relations at the German Council on Foreign Relations.
"Troops in Germany just don't have the same meaning as during the Cold War when they were a way for the U.S. to show they were serious as an ally and show solidarity ... Now the Americans must do more for their own security, and alter their footprint."
Grafenwoehr has a 100 year history as a military and training site base but the troops, threats, and alliances have changed dramatically over the past century.
The Bavarian III Corps, part of the Imperial German Army, first commandeered the site and trained here for World War One after clearing eight villages.
A massive expansion followed under Adolf Hitler in the 1930s, taking the site to its current size of 22,600 hectares and displacing 3,500 people from 58 villages. The Fuehrer came to visit Nazi troops here in 1938. Six years later Italian fascist leader Benito Mussolini also visited the base.
The Americans took over the site in the then U.S. occupation zone in 1946 and have remained ever since. Initially viewed with suspicion by the vanquished Germans, they quickly became allies for Germans fearing the influence of Soviet occupiers across the border in Czechoslovakia or East Germany.
The relationship of allies was cemented once West Germany joined NATO in 1955.
As the Cold War escalated the United States had more than a quarter of a million troops in Europe. German civilians complained about the noise of low-flying aircraft, drunken troops or damage to the environment.
The 1960s saw demonstrations across West Germany against the Vietnam war and the 1980s brought large protests outside some U.S. bases against plans to deploy new medium-range nuclear missiles. U.S. forces have always been viewed by some, especially on the political left, with hostility, as occupiers.
"In the 1970s we had more U.S. soldiers in Germany than there were in the entire French army. The size of the deployment was grandiose," said Jack Clarke, a professor of defense planning at the Marshall Center in Germany.
The number of U.S. troops on German soil has been sharply curtailed since then, but their continued presence is a constant reminder here of the close post-war alliance.
"I think at times the Europeans need reminding of this alliance," said Riecke, referring to recent conflicts where the United States has felt let down at the lack of support from its foreign partners.
German opposition to President George W. Bush's war in Iraq, which involved U.S. troops based in Germany, caused particular strain. Most recently Germany surprised its allies by refusing to back a U.N. resolution authorizing military action in Libya.
Unlike British forces which plan to leave Germany entirely by 2020 there is no talk of a complete U.S. pull-out from the country, in part to show newer NATO partners to the east that Washington remains committed to the alliance.
"Most Europeans outside the political and security elite view the US presence over here today as outdated and not particularly useful, and serving to support U.S. foreign and security objectives," Clarke said.
"But the further east you go - the Baltics, Bulgaria, Poland, there the presence of U.S. troops in Europe somehow helps to reassure people that NATO really works."
There is wide political consensus in Germany in support of the troops staying, not least for their economic importance. Only the pacifist Left Party has challenged the 50 million euros a year Germany contributes towards the cost of U.S. bases, and called for all U.S. troops to leave.
American soldiers past and present and of all ranks express huge enthusiasm for postings in Germany.
"Part of the popularity comes from where the Americans were, we were always in the southern part of Germany in Bavaria, many equate Bavaria with Germany," Clarke said. "I think the British experience in northern Germany was somewhat different."
Brunner said he believed the relationship had worked so well because both Bavarians and Americans are outgoing.
Americans living on Grafenwoehr base, which has a cluster of German timbered houses at its heart, eat typical American food, shop at special stores where they pay in dollars, but can also enjoy Europe's charms as soon as they leave the compound.
"I love being in Europe, it is a great experience there are so many cultural opportunities," said 26-year-old William Webster from Savannah, Georgia, who lives here with his wife and 15-month daughter, and serves with the Second Cavalry Regiment.
"I was ecstatic when I found out we'd be moving to Europe. I'd always wanted to travel. I love the history here, the castles," said 29-year-old Honey Shewbert, from Pensacola, Forida, who works with the American Forces Network broadcast service.
"They offer a little of the United States on base. You find things you wouldn't be able to find elsewhere in Europe."
(Reporting by Alexandra Hudson; Editing by Noah Barkin)