NATO is in urgent need of revitalisation. Its credibility is at stake. Shortfalls in Allied capabilities have been brought into sharp focus by the US-led operations in Afghanistan and the lack of a clear role for NATO is raising serious questions about its continued relevance. This crisis of confidence is exacerbated by a transatlantic rift manifest in several areas. Unless the November meeting of Allied leaders in Prague, originally billed as the "enlargement summit", is truly turned into a "transformation summit", NATO will have outlived its utility and will fade away. Steps were taken to pave the way for such transformation at the recent meetings of Allied foreign and defence ministers. It remains to be seen whether rhetoric will translate into action. Is the United States truly committed to NATO as a military alliance, or is it merely regarded as a useful political instrument? And will the European Allies demonstrate their commitment to closing the capabilities gap?

The terrorist attacks of 11 September 2001 realised our worst fears. A threshold was crossed when suicide hijackers turned civilian aircraft into weapons of mass disruption and deliberately targeted a densely populated area. The response of the Allies was swift and resolute. The very next day, they invoked Article 5 of the Washington Treaty, NATO's founding charter, declaring that the attack against the United States was an attack against all Allies. This meant that, under the provisions of Article 51 of the UN Charter, the Allies could take action against those behind the attack. The pledge to support the United States came with no geographical limits: de facto, NATO became a global alliance.

The significance of the Allied solidarity expressed on 12 September 2001 is undeniable. Since then, however, NATO has failed to match words with deeds. While individual Allies are contributing to the US-led operations in Afghanistan, NATO has been unable to offer much more than political support. Nor has the US Administration asked for much more, implying that they do not need, or do not wish to use, NATO.

Worse still, some US officials - influenced by a flawed perception of NATO's performance in the Kosovo air campaign, which they denounce as "war fighting by committee" - believe that NATO is not capable of acting effectively in such a crisis. Others deny that NATO has any relevance for future crises and, when asked about NATO's purpose, answer flatly: "Keep the illusion alive." A third group appears to think that, over time, closer cooperation between Russia and the United States will result in bilateral decision-making, leaving European Allies out of the loop.

Should such perceptions become the prevailing view in Washington, this would almost inevitably mean NATO's demise. The European Allies cannot afford this to happen. Europe still faces risks, which are increasingly of a global nature. But Europe does not have the global capabilities required to meet global challenges and therefore remains dependent on the United States, and NATO, for its security and stability.

The problem is the apparent transatlantic divergence in perceptions of NATO. European Allies see NATO as a collective-defence and crisis-management organisation, whereas the United States, its most powerful and indeed indispensable member, no longer looks at the Alliance as the military instrument of choice to use in conflict and war. Instead, NATO is regarded as a useful political instrument and collective-security arrangement through which to stabilise Europe and achieve the vision that originally led to the founding of NATO in 1949, a Europe "whole and free". Consequently, in the run-up to the Prague Summit, the United States has been promoting a rather ambitious enlargement of the Alliance, which is likely to absorb most of NATO's energy, as well as the strengthening of NATO's relations with Russia. Some conceptual work on a military doctrine for combating terrorism is also being proposed, though I am sure most would agree that it will be equally, if not more, important to identify ways and means to eliminate the underlying causes of terrorism.

If NATO were to become an essentially political organisation and no longer be used in a crisis, its defence guarantee would look hollow and it would soon lose support and fade away. This would not only be disastrous for Europe but a severe blow to US national interests as well. The United States would risk losing control of one of its opposing coastlines and relinquishing one of its most powerful instruments of political influence on Europe.

To prevent this from happening, the United States and its Allies must find ways to revitalise NATO. This must go beyond further enlargement and new cooperative arrangements with Russia. NATO can no longer remain the regional defence alliance it used to be. It must become a global alliance, ready to defend its member countries' interests wherever they are at risk and able to act as the core of future ad hoc coalitions of the willing. NATO must adapt its command and force structures accordingly and acquire the capabilities necessary to meet new requirements.

The Prague Summit in November is the venue for the necessary decisions to be taken. Initiatives taken at the recent meetings of NATO's foreign ministers, in Reykjavik in May, and defence ministers, in Brussels in June, have to some extent paved the way for such a transformation.

As part of its adaptation, NATO's headquarters in Brussels should be modernised to improve the organisation's ability to run crisis-management operations. Some have argued that this requires the merger of the International Staff and the International Military Staff, but I am not convinced. On the one hand, headquarters staff has to contend with the political control of crisis management and, on the other, the political control of the integrated military command structure and the forces transferred by nations to serve under NATO authority. Dealing with the multifaceted issues related to these two tasks within one staff is likely to be very time-consuming - and time is of the essence in crisis management. Moreover, NATO has not fared badly in the way it has handled consensus shaping so far.

The first set in this difficult game is often played in the Military Committee; the second and decisive set in the North Atlantic Council. To do its job properly, the Military Committee needs its own staff with expertise in the areas of intelligence, operations, force planning and logistics. If it were to rely on the same source of advice as the Council, the risk would be that staff might be tempted to anticipate political considerations, reducing the quality of the military advice provided to the Council. The Military Committee and the International Military Staff are effectively the top level of the integrated command structure and, in this capacity, they considerably reduce the workload of the Council. While I see no merit in the merger proposition, this does not rule out a review of staff structures at NATO headquarters to reduce superfluous overlap on both sides of the house.

Deployability and mobility should be the guiding principles for the adaptation of NATO's command structure. The flexibility and sustainability offered by two strategic-level commands and the regional commands should be preserved, provided that the regional commands can be made deployable. More importantly, a minimum of two Combined Joint Task Forces (CJTFs) should be established. The justification for three levels of command in the European Command was questionable during discussion in 1997 and 1998 and remains so today, at least in the Northern Region, where the sub-regional commands could be used to form the nucleus of one of the two CJTFs. In the Southern Region, it would be advisable to retain the sub-regional commands but to make them fully deployable. This should be accompanied by a reduction of the number of Combined Air Operations Centres and a decision to make them all deployable.

The CJTFs are the link to the force structure. They would provide the framework for organising the new capabilities which the Alliance so badly needs by enabling the pooling of assets and the establishment of multinational component forces. In acquiring such new capabilities, NATO would overcome the main reason it was not initially called on in the war against terror. This will obviously not close the capabilities gap between the United States and its Allies, but it will help to narrow it. These steps will not come for free but they will not require as drastic an increase in European defence budgets as we have seen in the United States.

NATO needs to identify key areas for modernisation and select those capabilities which are crucial for the operational readiness of the two CJTFs and which restore interoperability. A key lesson needs to be drawn from experience gained in implementing the Defence Capabilities Initiative, the high-level programme to boost Alliance capabilities launched at the 1999 Washington Summit: setting too many priorities means that there are effectively no priorities. The 58 items identified for priority action diluted the focus of the DCI, making it too easy for nations to find excuses for not coming up with the essential goods. This lesson appears to have been learned, judging by the Allied defence ministers' recent decision to have recommendations for a new capabilities initiative prepared in time for the Prague Summit, focused on a small number of capabilities essential for the full range of missions and based on firm national commitments and target dates.

However, while it is necessary to prioritise and focus on what is feasible and affordable in the shorter term, European Allies must understand that this will just be the beginning of a modernisation process that could well extend beyond the end of this decade. It would only be the first step in a programme to improve European defence capabilities. Such a programme would kill two birds with one stone: allowing NATO to acquire much-needed new capabilities and enabling the European Union to succeed in implementing the "headline goal" it set itself at Helsinki in December 1999, namely to develop a 60,000-strong rapid reaction force by 2003, which would be deployable within 60 days and sustainable for up to a year. The European Allies should not be expected to copy the US force structure but rather to complement US capabilities and, in this way, enhance NATO's strategic flexibility and sustainability. The United States also needs to play its part by agreeing to the transfer of technology that will be essential to improving capabilities.

One key area of modernisation, which would be ripe for implementation decisions at the Prague Summit, is that of command, control, communications and computing, and intelligence, surveillance and reconnaissance (C4 ISR). This is the skeleton or grid around which all other capabilities necessary to implement the revolution in military affairs could be built. NATO should concentrate on interoperable C4 and improved ISR which are the prerequisites for battle management. Military commanders need to be able to command and control their forces and communicate with them in a sophisticated and secure way, using systems that are interoperable, and they need to know what is happening around them. Improving capabilities in this area will also facilitate the two paths open to the Alliance in its pursuit of strengthened capabilities: namely the component force approach and the pooling approach.

Improvements in C4 should be focused on providing the two CJTFs with the necessary capabilities. If possible, NATO should try to acquire a broadband command and control (C2) system, the only technology that can cope with tomorrow's amount of data. To this end, rather than launching NATO-owned satellites, which will cost a huge amount and generate more capability then NATO will ever need, NATO should lease commercial broadband services.

Improvements to ISR would be best achieved by following NATO's proven Airborne Warning and Control System (AWACS) model, which surveys and controls air space. A small NATO-owned and operated Alliance Ground Surveillance component force should be established equipped, for the time being and as an interim solution, with JSTARS aircraft, the only fully operational system on the market.

At the same time, NATO should commit itself to establish, by the end of the decade, a state-of-the-art, commonly owned ISR component force. This should consist of an appropriate mix of manned aircraft and unmanned systems, such as the Predator, as well as some helicopters if needed. The interim JSTARS, upgraded by a co-developed radar, could well serve as the manned element of such a component force.

Improvements in C4 and ISR are key to all modernisation. If they do not take place, most other steps would be rather meaningless. But they must be complemented by the acquisition of stand-off precision-guided weapons and by low-to-no-cost decisions to pool existing or planned national capabilities, which will allow unnecessary overhead costs to be avoided in areas such as air-to-air refuelling, air transport, sea transport, air defence or disaster-relief forces. The latter should be able to be deployed throughout the NATO treaty area as needed.

Decisions taken along these lines at Prague, compiled in a programme to improve European defence capabilities, would be important steps, which are feasible and affordable, towards modernising capabilities and the implementation of the revolution in military affairs. Such a programme of improvements could initially be funded through streamlining and reducing some rather inflated programmes, such as the Air Command and Control System (ACCS). European Allies would also need to commit themselves to increase their defence budget, over the next ten years or so, to the level they have sought to impose on countries applying for NATO membership, namely two per cent of gross domestic product.

These are just first steps, which will go some way towards NATO Secretary General Lord Robertson's call for "capabilities, capabilities and capabilities". But they will have to be complemented by further adaptation after the Prague Summit, once NATO has had time to think through and digest the implications of the transformation to a truly global alliance for Alliance strategy. This may lead to a revised Strategic Concept or an umbrella paper, similar to the 1967 Harmel Report, outlining NATO's strategic direction. In my view, we have entered a period in which the old strategy is no longer seen as viable and valid, but a new one is not yet in place. It will likely take years to agree a new stategy, which will need to reconcile the non-military efforts to prevent conflict with a modified deterrence strategy aimed more at denial than punishment, and with new efforts to enhance protection and defence including new multilateral arms-control and confidence-building initiatives. Such a new or modified strategy would require a global dimension to address global threats.

It is imperative that the Prague Summit sets in motion a transformation of NATO to ensure that the Alliance is prepared for the unexpected and the unthinkable. This will help restore the transatlantic link and reaffirm the indispensable role of the Alliance for the security of all its member states. There could be no better message of assurance for Americans and Europeans alike in these times of unprecedented uncertainty and multifaceted risks. The Europeans also urgently need to start putting their money where their mouth is in terms of improving their defence capabilities. This will demonstrate their commitment to narrow the capabilities gap, help win political influence and provide the United States with Allies ready, willing and able to participate fully in future operations to protect common interests.