Major investment: The cost of defence equipment
is becoming exorbitant - way beyond that of civilian
goods in any relative sense
(© US Department of Defense)
NATO Secretary General
Lord Robertson said, famously, that his three priorities
on taking office in October 1999 were "capabilities,
capabilities and capabilities". This objective received
powerful resonance when defence ministers meeting on
6 June in Brussels stated that they were "committed
to providing NATO with the capabilities to carry out
the full range of its missions". They agreed that member
nations should therefore be ready "to adapt their military
capabilities to ensure that they can contribute to meeting
the new demands, including those posed by terrorism".
These are powerful statements, but all too often communiqués, replete with ringing, declaratory language, gather dust in the filing cabinet. Are the Allies really prepared to make good their promises? Are they ready, in the procurement area as in others, to augment their national plans? And are they really prepared to spend more smartly and to provide extra defence money where it is needed? The answers to these questions will determine NATO's future.
Critical in this respect will be
the successor to the Alliance's Defence Capabilities
Initiative (DCI), a programme launched at the 1999 Washington
Summit to equip NATO with the capabilities to meet modern
security challenges. This is not to say that the DCI
has been a failure. On the contrary, it has made a difference
and brought welcome enhancements to the Alliance's defence
capabilities. But the overall score card reads rather
like a 1-1 draw in the World Cup: not the worst outcome,
but still unsatisfying.
The national armaments' directors of NATO member countries agree that effort on the DCI should be maintained right up to the Prague Summit. However, they also want a follow-on programme to be focused on "a smaller number of critical capabilities". These views were reflected in the defence ministers' communiqué of 6 June which directed the North Atlantic Council to prepare recommendations for a "new capabilities initiative" based on a "small number of capabilities essential to the full range of Alliance missions". To ensure this new capabilities initiative has more success than the last, ministers agreed that it should be based on "firm national commitments with specific target dates". Among other things, the new initiative is to encourage "cooperative acquisition of equipment and common and multinational funding".
These decisions constitute an important and valuable policy framework of intent. The challenge in the run-up to the Prague Summit is to translate them into a real programme with teeth. These "firm national commitments" need specific funding commitments backed by the necessary resources in national defence budgets.
What programmes will these firm national commitments be targeted at? The short list could simply broadly identify critical capability areas that need to be addressed or, hopefully, be more precise by specifically identifying defence projects and systems. Ministers have already agreed on a number of occasions, for example, that NATO requires a commonly owned and operated core capability for Alliance Ground Surveillance. Now is the opportunity to seek clear funding commitments to launch this project, even if the eventual total programme cost is not yet known.
Success or failure in enhancing NATO's defence capabilities will therefore depend in great measure on the ability of our armaments community to accelerate through the gears of change and innovation and produce more, better and, wherever possible, cheaper defence capabilities. The defence procurement community needs to know what our political masters would like present and future generation defence equipment to be able to do. There is no point building large numbers of tanks, for example, if large-scale armoured warfare is not deemed likely. In this respect, overarching guidance, such as the Alliance's Strategic Concept, already exists and the NATO military authorities play an invaluable role in NATO's specialist armaments' committees by giving advice on military requirements. However, even more fundamental questions concerning the future relationship between the United States and its Canadian and European Allies need to be addressed.
One question is that of future trends in defence spending. Before constructing a new, specific capabilities initiative, it is critical to understand what resources are really going to be made available for defence. Without this, the exercise risks becoming largely theoretical. European Allies collectively spend a lot on defence - more than $150 billion a year - but one main reason for the transatlantic defence capabilities gap is the difference in the size of the defence output, which is growing. Europe's defence spending has been running at about 60 per cent that of the United States for most of the past decade, but European military research and development spending has only been one quarter of the US level. And according to some calculations, per soldier, it has only been one eighth. Moreover, the returns on even this investment are further lowered by the fact that the investment is fragmented between different sovereign states and their respective defence establishments.
A second fundamental question is how the Canadian and European Allies view their future military operational partnership with the United States. Do they wish to be a full partner of the United States across the entire spectrum of warfighting capabilities now associated with high-intensity conflict? Do they wish to take advantage of, and buy into, the revolution in military affairs, and develop forces which can join with those of the United States in high-intensity, high-tech, long-range coalition expeditionary operations? Or will Canada and Europe end up opting - perhaps by default - for far more modest (and less expensive) crisis management and peacekeeping tasks, including post-conflict reconstruction? I hope the former will be the case. The United States needs Allies with military, as well as with political and economic, strength. The transatlantic axis, on which NATO is based, needs to be a balanced axis along its whole length. Balance and strength are inextricably linked. As Lord Robertson has said, NATO must either modernise or be marginalised. And in order to achieve this balance, many more Allies will need to increase significantly their defence spending.
|We need a system which ensures that the military requirements of the NATO commanders can appropriately influence national armaments plans and intentions
Throughout its history, NATO has struggled to mount a collective, conventional defence capability worthy of the aggregate of the individual input of its members. Too often, the whole has been less than the sum of its parts. Insufficient cooperation among Allies in research and development has been one reason. Today, significant shortfalls remain in the capabilities required to implement fully Alliance strategy - shortfalls that were all too starkly exposed in the skies over Kosovo and, since 11 September 2001, in the US-led campaign in Afghanistan. But unlike during the Cold War, we cannot look to nuclear weapons for compensation in addressing the new security challenges of the 21st century.
One thing NATO can do is to improve its interoperability and standardisation. The Alliance has achieved a high degree of both in terms of military planning and doctrine. But in the defence materiel area, the results have been less successful. Materiel interoperability means the ability of different systems to work together. Materiel standardisation means any efforts towards fielding common systems that are the same in form, fit and function. In the words of the defence analyst, Thomas Callaghan: "Interoperability is what we do with the mess we have. Standardisation is what we do to avoid having the mess in the future." Standardised weapons are intrinsically interoperable, whereas non-standardised weapons have to be made interoperable. The benefits of standardisation, both military and economic, are found in terms of longer production runs and lower unit prices.
Although rendering different systems interoperable remains in many instances an important goal of NATO armaments cooperation - and this is certainly reflected in the DCI - the fundamental mission of NATO's armaments community is the enhancement of defence capabilities. Increasingly, such enhancement is more likely to be achieved through common programmes, either by providing NATO-owned and operated capabilities, or by spreading the resulting national assets to the armed forces of member (and perhaps also Partner) nations. This is not to question the importance of making different systems interoperable. When applied to existing, often highly disparate defence systems owned by a number of countries, it can bring real military benefit. But if our goal is merely to attain interoperability for new systems, then we will in a sense be perpetuating the problems that we have today.
Common programmes offer the best prospects for equipment of different member countries to be compatible, because it will essentially be the same. Moreover, NATO commonly operated capabilities clearly provide NATO commanders with immediate assets at their disposal. However, even for larger countries, the cost of defence equipment is becoming exorbitant - way beyond that of civilian goods in any relative sense. It is, therefore, important to examine new forms of ownership. Does it really make sense for small countries to invest huge sums procuring limited numbers of, say, tanks? Would it not make more sense to embrace notions of procurement specialisation, in which common pools of equipment can be developed, and leasing arrangements devised? Leasing potentially offers a solution to one of the intractable problems inherent in the financing of defence equipment programmes, which is that huge up-front investment is required when programmes go into production. The size of the investment, in case after case, has usually resulted in a smaller production line than the one required, which in turn has resulted in higher unit prices. This is the exact reverse of economies of scale.
Another prerequisite of progress is the reform of US export licensing and technology transfer regimes and their underlying legislative basis in US law. The chief executives of 39 US defence companies made this very point recently in an open letter to President George Bush saying: "Major changes to the US export control regime are required to ensure that it reflects both current global market realities and America's strategic policy imperatives. We must ensure the success of critical cooperation and interoperability among the United States and its allies, in time of peace as well as in crisis." Moreover, US Assistant Secretary of State Lincoln Bloomfield has announced that the United States will soon initiate a comprehensive review of its export control regime.
Here, Washington can take a series of measures to improve the situation. It can accelerate and fully implement all ongoing "simpler, faster, more user-friendly" reforms. It can expedite and rigorously pursue the Munitions List review, the review of which equipment and munitions must be manufactured in the United States. It can give give higher priority and special, expedited handling to licences for NATO agencies. It can assign the highest priority to processing licences required to support Alliance acquisition of the items on the short list for the new capabilities initiative that will be launched at the Prague Summit. In its Joint Strike Fighter programme, the United States is using a global project licence to facililtate international cooperation, and this approach could be used as well for the Prague list. The United States has already agreed to exempt Canada from the restrictions of its International Trafficking in Arms Regulations, and exemption negotiations with the United Kingdom, which are now proceeding, should be extended to other Allies. The United States also can recognise the increasingly multinational character of Alliance armaments cooperation and transatlantic defence industry, and negotiate a framework agreement with the six European nations who have signed a "Letter of Intent" to promote greater intra-European armaments cooperation.
While NATO's armaments community has done excellent work over the years to produce guidance for harmonising acquisition practices, countries continue to pursue national policies and practices in this field, which vary greatly from one to the other. Internationally accepted acquisition practices need to be established so that all those involved in acquisition - specification writers, technical draftsmen, financial and budgetary experts and legal experts - sing from the same song sheet. A lot of time and expense is wasted in joint projects learning how collaborators go about their business.
Although defence and force planning are conducted collectively within the Alliance, there is no comparable NATO armaments planning system. Indeed, earlier attempts to set up such a system failed. Membership of NATO brings with it responsibilities, and it is extraordinary that while shouldering those responsibilities collectively in the overall defence-planning field, the armaments community of member countries has sought exemption from them. Such an approach must be reformed. We need a system which ensures that the military requirements of the NATO commanders can appropriately influence national armaments plans and intentions. Only in this way will it be possible to ensure that the men and women who defend our peace, security and democracy are given the best possible tools to do the job.