The principle of common funding
When a need for expenditure has been identified, countries in the Resource Policy and Planning Board discuss whether the principle of common funding should be applied – in other words whether the requirement serves the interests of all the contributing countries and therefore should be borne collectively.
The criteria for common funding are held under constant review and changes may be introduced as a result of changing circumstances, for instance, the need to support critical requirements in support of Alliance operations and missions.
Common funding arrangements principally include the NATO civil and military budgets, as well as the NATO Security Investment Programme (NSIP). These are the only funds where NATO authorities identify the requirements and set the priorities in line with overarching Alliance objectives and priorities.
Where military common funding is concerned - the military budget and the NATO Security Investment Programme – the guiding principle for eligibility is the “over and above” rule:
“common funding will focus on the provision of requirements which are over and above those which could reasonably be expected to be made available from national resources.”
The civil budget
The civil budget provides funds for personnel expenses, operating costs, and capital and programme expenditure of the International Staff at NATO Headquarters. It is financed from national foreign ministry budgets (in most countries), supervised by the Budget Committee and implemented by the International Staff.
The civil budget is formulated on an objective-based framework, which establishes clear links between NATO’s strategic objectives and the resources required to achieve them. There are four front-line objectives and four support objectives.
The four frontline objectives
- Active operations: provide effective policy and planning in support of NATO operations and missions;
- Alliance capabilities: conduct necessary policy and planning work to promote and support improved Alliance capabilities;
- Consultation and cooperation with partners: conduct effective consultations and cooperation activities with partners to strengthen security and respond to new security challenges and threats to the Euro-Atlantic region;
- Public relations: build awareness of, and support for, NATO, its operations and its role in promoting security through a comprehensive public diplomacy action plan.
The four support objectives
- Consultation and support: support the North Atlantic Council (NAC), its subordinate committees, the Military Committee Structure and the International Staff in the consultation process with Allies;
- Headquarters Operational Environment: operate and maintain the NATO Headquarters facility and site, including through the development of a viable and tested Business Continuity Plan and continue to provide effective support to the new NATO Headquarters project;
- Governance and Regulation: develop, implement, control and monitor NATO Headquarters-wide business policies, processes and procedures;
- Headquarters security: ensure compliance NATO-wide with NATO security policy and provide a safe and secure environment for all HQ staff and operations.
The military budget
This budget covers the operating and maintenance costs of the international military structure. It is composed of over 50 separate budgets, which are financed from national defence budgets (in most countries). It is supervised by the Budget Committee and implemented by the individual budget holders. In all cases, the provision of military staff remains a nationally funded responsibility.
The military budget effectively provides funds for the International Military Staff, the strategic commanders and the NATO Airborne Early Warning and Control (NAEW&C) Force and, more specifically for:
- the Military Committee, the International Military Staff and military agencies;
- the two strategic commands and associated command, control and information systems;
- theatre headquarters for deployed operations and support of critical theatre-level enabling capabilities such as theatre medical capabilities or theatre engineering capabilities;
- the NATO Standardization Agency, the NATO ACCS Management Agency, the NATO Command and Control Agency and the NATO CIS Services Agency;
- the NATO static and deployable Combined Air Operations Centres, deployable ARS and radar systems, and deployable HQ communication systems;
- the Joint Warfare Centre (Norway), the Joint Force Training Centre (Poland), the Joint Analysis & Lessons Learned Centre (Portugal), the NATO Defense College (Italy), the Communications and Information Systems School (Italy), the NATO Programming Centre (Belgium), the Multi-Service Electronic Warfare Support Group (United Kingdom);
- the Scientific Programme of Work of the NC3A, Allied Command Transformation experimentation funds, the Research and Technology Agency (France) and the Undersea Research Centre (Italy);
- limited partnership support activities and part of the Military Liaison Offices in Moscow and Kyiv.
During a crisis management operation, when an operational decision with financial implications is taken by the NAC, the RPPB is immediately consulted for the availability of funds. Effectively, this means that in the throes of a crisis, the RPPB can at times be in quasi-permanent session, as was sometimes the case for instance during the Libya operation (March-October 2011).
The NATO Security Investment Programme (NSIP)
This programme covers major construction and command and control system investments, which are beyond the national defence requirements of individual member countries. It supports the roles of the NATO strategic commands by providing installations and facilities such as air defence communication and information systems, military headquarters for the integrated structure and for deployed operations, and critical airfield, fuel systems and harbour facilities needed in support of deployed forces.
The NSIP is financed by the ministries of defence of each member country and is supervised by the Investment Committee. Projects are implemented either by individual host countries or by different NATO agencies and strategic commands, according to their area of expertise.
Joint funding arrangements are structured forms of multinational funding within the terms of an agreed NATO Charter. The participating countries still identify the requirements, the priorities and the funding arrangements, but NATO has visibility and provides political and financial oversight.
Joint funding arrangements typically lead to the setting-up of a management organization within a NATO agency. NATO Agency activities range from the development and production of fighter aircraft or helicopters to the provision of logistic support or air defence communication and information systems. NATO agencies also coordinate Research and Development activities or are active in the fields of standardization and intelligence-sharing.
Jointly funded programs vary in the number of participating countries, cost-share arrangements and management structures. Work is underway, however, to streamline their activities around procurement, logistic support and air defence and communication capabilities, and to introduce shared service arrangements.
Other forms of funding
In addition to common funding and joint funding, some projects can take the form of trust fund arrangements, contributions in kind, ad hoc sharing arrangements and donations. The most important trust fund is the one supporting the sustainment of the Afghan National Security Forces.