NATO’s Last Chance Invest Its Scarce Resources Wisely or Accept Strategic Irrelevance Dr. Daniel Goure Lexington Institute| February 2014 Executive Summary The North Atlantic Treaty Organization (NATO) is struggling to transition from a deployed Alliance focused on conducting significant counterinsurgency operations, to a responsive Alliance prepared to react to any number of demanding and unpredictable contingencies. According to NATO Secretary General Anders Fogh Rasmussen, “We must complete the transition from a deployed NATO to a prepared NATO: delivering critical capabilities now while also planning for the future, and finding new ways to generate new capabilities.”1 The Alliance must make this transition while member nations continue to downsize their militaries, struggle with declining defense budgets, suffer from growing costs for military hardware and personnel and pay for a high level of expensive overseas operations. Yet the ability of the Alliance to meet current obligations as well as future operational and technological requirements is open to serious doubts. For more than two decades, NATO spending on defense has declined to levels today that are perilously close to disarmament. Senior U.S. officials have repeatedly warned NATO that its failure to invest adequately and appropriately in defense places the future of the Alliance at risk. In 2011, Secretary of Defense Robert Gates called on NATO to invest its defense resources both more wisely and strategically. Such an investment strategy must recognize that NATO is facing a strategic paradox. On the one hand, Europe has never been safer, wealthier or more integrated, at least economically. On the other hand, it is militarily weaker and more divided on issues of security and the use of force than it has been since the end of World War Two. In addition, in the absence of an existential threat, Alliance members are quite reluctant to give up sovereignty over decisions involving force structure, acquisition programs and research and development (R&D) expenditures in favor of greater collective decision making, increased pooling of assets and more sharing of resources. Yet, both the spectrum of potential crises NATO must face and their geographic diversity continue to increase. The U.S military draw down and the pivot to Asia will stress Washington’s ability to commit forces to NATO. Not only is NATO defense spending continuing to decline and the Alliance’s force structures continuing to shrink but decisions regarding the character of residual forces and the allocation of remaining defense resources are skewed in ways that make it more difficult to deploy effective military power, particularly for expeditionary activities of significant scale. NATO has had to reduce the size of its core crisis response capability, the NATO Response Force (NRF). The lack of coordination among national ministries of defense on force structure changes and modernization programs makes it difficult to ensure adequate capabilities in some areas while there are clear surfeits in others. Non-U.S. NATO continues to lag in its investments in critical enablers for modern, knowledge-intensive power projection military operations. There is nothing about the shortcomings in NATO’s military capabilities that additional money from the members would not fix. However, there is no reason to believe NATO will find either 1 NATO, “National Armaments Directors discuss NATO capabilities,” http://www.nato.int/cps/en/SID-9C89104F- 6A47F864/natolive/news_100107.htm (April 18, 2013). 2 the wallet or the will to increase defense spending in the near future. Therefore, if resources are to be made available to provide for strategic investments they must come as a result of additional force structure reductions and/or changes in the way resources are distributed and managed. NATO not only does not spend enough on defense, but what it does have it spends poorly. NATO consistently overspends on people; half of NATO’s total defense spending goes to personnel. Procurement and, in particular, R&D are shortchanged. In addition, differences in political perspectives and values, concerns over the loss of sovereignty, a lack of trust, the desire to protect domestic jobs and industries and even hostility between member countries are all making it extremely difficult to take the obvious and necessary steps to coordinate defense decisions, pool resources, share assets and seek out opportunities for role specialization. Political differences, concerns over the loss of sovereignty, the desire to protect domestic jobs and industries and even hostility between member countries are all making it extremely difficult to take the obvious and necessary steps to coordinate defense decisions, pool resources, share assets and seek out opportunities for role specialization. NATO must restructure its forces in order to free up resources to devote to critical investments to support the capabilities to perform those missions. NATO members need to reduce traditional combat capabilities by an average of 20 percent, particularly those non-deployable ground forces in favor of air, sea, networks and logistics and sustainment capabilities. NATO members need to coordinate how they reduce forces. An uncoordinated program of force structure cuts could readily result in NATO finding itself without critical enablers or even sufficient front-line combat forces. The Alliance’s level of ambition needs to be re-examined in view of the continuing decline in defense spending, ongoing force structure reductions and the U.S. decision to withdraw additional forces from Europe and shift the weight of its military deployments to the Asia-Pacific region. Currently, NATO’s Level of Ambition (LOA) is to be able to simultaneously conduct two major joint operations (MJOs) and six small joint operations (SJOs). Analysis of past operations suggests that while the Alliance should be able to conduct multiple SJOs, it lacks the available, trained forces and critical enablers to manage one, much less two MJOs particularly if it is also conducting several SJOs. The Alliance should either to fix the NRF or disband it. This should be NATO’s number one priority for strategic investments. NATO needs to decide if the NRF is a rapidly deployable military capability, the leading edge of the Alliance’s ability to respond to a wide range of unpredictable crises or, as it is increasing being portrayed, a tool of transformation. If the NRF is to be a credible force for deterrence and crisis response, it must be fully resourced and staffed. In addition, its training and exercises must reflect the types of missions it will be asked to perform. The NRF would benefit from specific investments in capabilities to enhance its combat potential. These include: tactical mobility platforms, a plug-and-play C4ISR architecture, on- the-move tactical communications systems, night vision gear, Identification Friend and Foe systems, tactical unmanned aerial vehicles and precision munitions. 3 If NATO is serious about deploying a force structure capable of meeting its LOA, it must devote additional resources to creating the capacity to conduct sustained, medium-scale expeditionary operations. This should be its second highest priority, just behind fixing the NRF. In particular, NATO needs to invest in stocks of munitions and spare parts. In addition, NATO nations need to increase their investment in such critical enablers as airborne ISR, intelligence information management systems, unmanned platforms, cyber defense, automated C3 networks, electronic warfare/suppression of enemy air defenses and rapid logistics. Current programs, while addressing some critical capability gaps such as aerial refueling and transport, do not go far enough towards investing in those force elements that almost without exception are absolutely essential to modern military operations. NATO should agree to support more robust R&D spending. NATO is in danger of falling behind, or not even being a player, in a number of important and potentially transformational areas including unmanned systems, directed energy, hypersonics, advanced power systems and cyber security. NATO should renew its efforts to expand defense industrial relationships, perhaps through a trans-Atlantic Smart Defense initiative. This must be a two-way street. Facing its own decline in defense spending, the Department of Defense should avail itself of advanced capabilities NATO allies can provide in such areas as sensors, precision weapons, naval systems and avionics. Finally, NATO would benefit immensely from conducting a comprehensive Net Assessment that examines the Alliance’s ability to meet its defined missions. In particular, such a study needs to focus not on traditional quantitative indicators, the “bean count,” but on qualitative factors such as interoperability, training, exercises, intelligence, logistics and sustainment. The key to an effective defense of Europe, whether conducted by NATO or a coalition of the willing, is a pooling of national assets and rationalizing defense procurement through major collaborative programs. This is at the heart of NATO’s Smart Defense initiative. Nations would promise to make their particular capabilities available to other nations. By unifying national contributions in such pools, the whole becomes greater than the sum of the parts that individual nations can afford. In addition, nations could afford increased specialization in their military force structures knowing that there were pools of assets available.