Address

Minister,
Commandant,
Excellencies,
Ladies and Gentlemen,

It is a great pleasure for me to speak at the Royal High Institute for Defence. This great institution can trace its roots back nearly 180 years, and many of its traditions endure today. But at the same time, the nature of warfare and conflict has evolved considerably, and the pace of that evolution continues to accelerate.

No one knows with certainty what the future holds in store, but I confidently predict that many of the military personnel in this audience will spend much of their future careers on foreign deployments. Some of them will deploy on operations and missions under national command, but many will also deploy under the command of the United Nations, or the European Union, or NATO.

As its Secretary General, I am responsible for making sure that NATO is properly structured, properly equipped, completely interoperable, and fully effective.

Later this year, at our Summit in Lisbon in November, we will unveil a new Strategic Concept for the Alliance. It will describe not only the security environment the Alliance faces today, but also the one it can expect to face in the future. And it will lay out the roles the Alliance should play in that environment.

I want the Alliance’s new strategy to be visionary – that goes without saying. But I also want it to take into account political and economic realities. Because, as the US National Security Adviser and former SACEUR, General Jim Jones, is fond of saying, “a vision without resources is a hallucination”.

All Allies face a severe financial crisis. It would therefore be foolish to expect defence budgets to increase. So if we want to enhance the Alliance’s ability to anticipate the emerging security challenges, if we want to adapt its capabilities accordingly, we need to do this by making more effective and efficient use of the resources we currently have. And this is where transformation and reform can be exploited to our advantage. Put simply, transformation and reform can help us to get “more bang for the buck”, or “Euro” – and to ensure that tax-payers’ money is spent most effectively.

But let me issue a warning here. There are some who believe that transformation and reform can be used as an alibi for defence cuts, or that we can get a transformed and reformed Alliance on the cheap – well, we can’t. If we want NATO to be more anticipatory, more deployable, and more adaptable to a wide range of circumstances, the Alliance also has to be appropriately resourced. What we need to do is to make sure that the resources we devote to defence are used in the best possible way – so let me give you six examples of how we can do that.

Firstly, through prioritisation. As your Defence Minister, Pieter de Crem, has so succinctly put it, “NATO can no longer afford to spend resources on non-essentials”. By eliminating expenditure on those requirements that are least important, Allies and the Alliance can create the financial headroom to fund our most urgent requirements. That means we must regularly, and ruthlessly, review our requirements and our expenditure – and we must ensure that they remain aligned.

In my own country, Denmark, we decided in 2004 to scrap our last two submarines, and to invest the savings that we made in higher priorities.

When I look at the extensive Allied inventories of tanks and fighter jets and compare them with the analysis of what conflict is likely to look like in the future, I am convinced that we do not need them all. If we were to subject them to a rigorous prioritisation process, we would be able to free up considerable resources for use on higher priority requirements.

But identifying the right priorities – and reviewing them regularly – is only part of the answer. We also need to identify the most effective and efficient way of meeting them.

And this leads me to my second example – collective solutions. Whether in the Alliance as a whole, or as a group of nations acting collaboratively, collective solutions offer many advantages and can deliver real value for money.

The intensive cooperation between the Belgian and Dutch navies, with their shared single operational command and integrated staff, is an innovative collective solution that has already proven its value.

Another example is air policing. Several NATO nations are taking turns to patrol the airspace of the Baltic region, as well as that over Iceland and parts of the Balkans. This is not just a collective solution; this is also NATO solidarity in action.

Collective solutions offer many advantages. Take the NATO Airborne Warning and Command System aircraft – or AWACS. The 15 nations who participate in this collective programme get fully interoperable equipment. They also get reduced acquisition and operating and maintenance costs through a combination of economies of scale, common logistics, and shared manpower commitments.

NATO’s Strategic Airlift Capability is an equally sound project. 12 NATO and PfP nations share three C-17 aircraft. This means that instead of 12 national authorities having to assure the airworthiness of these massive airlifters, there is only one such authority. Instead of requiring 12 stores of C-17 spare parts and supplies, there is only one storage facility. And by linking up with the Movement Coordination Centre Europe, we will make sure that the aircraft do not waste capability by flying empty.

These are all significant benefits. But the greatest benefit of all is that they actually deliver a capability. Without collective solutions, the only alternative is often no capability at all.

I am aware that some multinational projects have been perceived as time-consuming, complex and expensive. Agreeing the exact statement of requirement among several nations can be time-consuming. And the capabilities chosen for multinational projects are often high end, and therefore both complex and expensive.

But these problems can be overcome if we harmonise our requirements, if we focus on what we really need rather than what we would like to have, and if we build permanent arrangements for collective solutions, rather than creating ad hoc structures each time.

If we do all this, then collective and multinational solutions can be a cost-effective way of providing more nations, and the Alliance, with access to key capabilities. I would certainly like to see us reach the point where multinational defence acquisition becomes the norm, rather than the exception.

My third example is common funding. NATO nations all contribute to some of the Alliance’s day-to-day running costs – including parts of our infrastructure, special communication systems, and our Headquarters. But as a total percentage of Allied defence budgets, this common funding represents less than a half per cent.

When it comes to operations, the basic principle is that “costs lie where they fall”. Which means that Belgium pays for the deployment of Belgian troops to Afghanistan, just as all other Allies pay for their own contribution. To my mind, this is not the best incentive for Allies to participate – especially when you consider how expensive today’s operations have become.

I personally would like to see a much greater use of common funding to finance our Alliance and our operations. And I see at least three arguments in favour of that.

First: There may be Allies who have troops or equipment to contribute to a NATO operation, but not the money to get those assets into theatre. If they could tap into a common budget to help them do this it would strengthen our capability as an Alliance.

Second: There may be Allies that – for one reason or another – do not want to actually participate in an operation. If we have better common funding arrangements in place, those Allies can still be part of the Alliance solidarity that is vital to the success of any of our operations, now and in the future.

Third: Certain military capabilities are so expensive that the only way for smaller Allies to acquire and operate such capabilities is by pooling together with other Allies.

For all these reasons, I do believe that a wider use of common funding and collective solutions is the way forward if we want to get the right capabilities, to conduct military operations in a cost effective manner, and to strengthen our cohesion and solidarity as Allies.

Greater solidarity would, I believe, encourage nations to consider another way of making more efficient use of resources – and this is my fourth example -- specialisation. Through specialisation, individual nations or groups of nations share the responsibility for providing a particular capability.

We have already pursued this approach most successfully in training. Our Centres of Excellence are hosted by a particular nation, and provide training support in a specific field – cyber defence training in Estonia, medical training in Hungary, and the Belgian-Netherlands Naval Mine Warfare Centre of Excellence -- these are all successful examples of this approach.

The next step is to move from training specialisation to capability role specialisation. Clearly, all Allies should maintain basic war fighting capabilities, such as infantry and combat engineers, and be prepared to share the risk of actually using them in our operations.

But we cannot expect all nations, even the bigger ones, to cover the full spectrum of high-end capabilities, such as strategic air transport, combat helicopters, fighter aircraft, or main battle tanks. If we were able to agree on who does what in these increasingly expensive areas, then nations – or groups of nations – could sacrifice certain national capabilities and re-invest in their specific area of expertise.

Such role specialisation would go a long way to providing some of the critical capabilities that are currently in short supply, and it would help to reduce the considerable duplication we see in some areas.

Avoiding duplication – my fifth example -- is where I believe we have the biggest scope for making savings that can be put to better use. Do we really need so many different types of infantry combat vehicles, or radios, or helicopters? If European nations buy 600 NH-90 helicopters, does each of them really have to certify its allotment on a national basis – when it is estimated that, if this certification were harmonised, it could save up to 5 billion Euros?

But duplication is not just financially wasteful, it also brings operational penalties. The Commander in Helmand province in Afghanistan has needed four different radios to communicate with four different national contingents. Similarly, we found that different Friendly Force Tracking Systems allowed nations to track their own forces, but not those of other nations - putting lives at risk.

To solve this problem, NATO common funds had to be used to connect the different systems. This was the right thing to do in the circumstances. But it did mean that nations ended up paying twice – once for their initial national capability and then again to make it fully interoperable.

I understand that there are strong national interests at work here, and in the current economic climate, there is a real danger of protectionism. But we must resist these temptations – purely national thinking is no longer affordable.

We must overhaul our defence industrial markets – particularly here in Europe – to reduce the fragmentation and make them stronger.

The European Commission has already taken the initiative to enhance transparency and fair competition in defence markets by encouraging member states to open their defence equipment markets and to offer contracts to non-national bidders.

This is an essential first step. But more must be done. It makes no sense for Europe to have sixteen naval shipyards and twelve separate manufacturers of armoured vehicles. That is why I will continue to encourage NATO Defence Ministers to work more closely with their national defence industrial leaders to pursue collaborative and multinational projects wherever possible, and to seek out opportunities for consolidations and mergers.

These combined efforts should not only make protectionism more difficult, but they should also help to reduce the current fragmentation of the European defence industry.

But overhauling our industrial base is not enough. We must also overhaul our defence acquisition and procurement systems so we can avoid the financial and operational penalties that arise from duplication.

The European Union, NATO, and the individual nations share many of the same capability requirements, yet far too often they continue to pursue solutions in isolation. I have already identified Heavy Lift helicopters, counter Improvised Explosive Devices, and Maritime Situational Awareness as areas where enhanced cooperation between NATO and the EU makes operational sense, and could save lives as well as money.

My sixth, and final, example is reform. In short, NATO – including the NATO Headquarters here in Brussels – must be a faster, more efficient service provider for its member nations.

One priority is to reform NATO’s own command structure. I intend to present options to Defence Ministers in June for making the structure leaner, more effective and less costly.

We also need to streamline our agencies to make them more efficient and cost effective. There are currently 14 NATO Agencies. We must rationalise that system as well.

Finally, I have also started a number of reforms to streamline NATO’s decision-making, as well as our internal structures, procedures and working practices at NATO Headquarters in Brussels. I am looking to reduce the number of committees. And I have also created a new staff focus on emerging security challenges.

In all these areas, the biggest reform challenge is to change our mind-set. I believe that, twenty years after the Cold War, we still have not fully shifted our focus from planning to action and implementation. And I am determined that NATO should complete that shift during my term in office.

Ladies and Gentlemen,

I have laid out for you this afternoon my ideas on how to transform and reform NATO, to improve its capabilities, and to get far better value for our tax payers’ money.

Prioritisation; collective solutions; common funding; specialisation; avoiding duplication; and reform – these are all opportunities for making NATO more effective and for making better use of our nations’ limited defence resources. They are also opportunities for ensuring that NATO continues to deliver value for money, and real security.

Thank you.