Updated: 25-Jul-2002 NATO Speeches

At the GKN
RAC Club,
25 July 2002


by NATO Secretary General, Lord Robertson

Ladies and Gentlemen,

Farnborough is about promises and about realities. The elusive promises of silver-tongued salesmen and the hard realities of the equipment on display. NATO's 2002 Farnborough is our Summit in Prague in November. Here too we will have silver-tongued persuasion, from politicians and diplomats. But we will also have our hard realities. Realities that are too powerful to be ignored. Realities that cannot be papered over by high-flying rhetoric.

What are these realities?

The first is the new security environment. From regional conflicts to terrorism, from Kosovo to Afghanistan, this new security environment confronts us with new demands on our military forces. In a nutshell, it forces us to put a much stronger emphasis on the long-range application of force, deployability, sustainability, and effective engagement.

As Secretary Powell put it: September 11 and the new cooperation with Russia means that not only the Cold War is over, but the post-Cold War era as well. Which means in turn that Cold War forces and structures are definitively out of date.

The second reality is the increasing gap in defence capabilities between the US and its Allies. This gap was highlighted in Kosovo. Afghanistan has brought it home even more forcefully. Because the US has a range of military options that remain unavailable to its Allies, America's armed forces are obliged to carry the lion's share of some key combat missions and, hence, of the risks.

If this gap is not addressed, we will face a political, conceptual and military divergence, which will make the transatlantic Alliance ever harder to sustain, on the battlefield and in the conference chamber.

The transatlantic capabilities gap leads to the third reality, and this is the main issue I want to address here tonight: the need to maintain a healthy transatlantic defence industrial base. NATO draws its political momentum from its ability to preserve peace - and, if necessary, to prevail in conflict. That is why a healthy transatlantic defence industrial base remains a source of political strength. A strength that we must preserve.

If far-sighted policies were the most important factor in ending the Cold War, NATO's technological edge didn't hurt us, either. It served as a constant reminder of the dynamic nature of our democratic Western societies, of our capability to innovate, and of our determination to prevail.

Today more than ever, maintaining a sound transatlantic defence industrial base means working towards close transatlantic defence industrial cooperation. In key areas, the enhancement of NATO's capabilities is simply more likely to be achieved through common programmes, ideally by providing jointly owned and jointly operated capabilities, such as AWACS.

We therefore need common agreement on operational requirements, and new and more efficient ways of managing projects collaboratively. Finally, we need to coordinate acquisition purchases, because, as every consumer knows, products cost less when they can be bought in bulk.

I know this is all much easier said than done. Compared to Cold War levels, defence industry has declined dramatically. The number of defence suppliers has shrunk. Governments are increasingly relinquishing direct ownership and control over defence companies. These companies now face stronger competition from other industries for financial capital, human talent and technological competence. Over time, the rapid global growth in non-defence sectors and the increasingly widespread use of commercial products in defence have reduced the overall market share and influence of traditional defence industries.

More parochially, Europe still suffers from a fragmented defence industrial base. As a result, Europe spends 60% of what the US spends on defence, but it generates nowhere near 60% of the capabilities.

Another damaging impediment is the imbalance between R&D and procurement spending. The current imbalance between European and US R&D spending is a major obstacle to better long-term defence industrial cooperation within the Alliance. There simply is no equal playing field.

By the same token, inadequate European procurement spending prevents attractive European technology from being translated into improved capabilities on the battlefield. To put it bluntly, reduced R&D and procurement spending puts European defence industry at risk.

If this sounds like a ritual attack on Europe's poor performance, it is not. Faults and problems lie on both sides of the Atlantic. For another key weakness stems from US export and security controls.

Everyone understands that governments need to control the technologies that impact on national security, regional stability and proliferation. So no one is advocating an "anything goes" liberalisation of the U.S. Export Control Act. But there is legitimate concern that the rules are sometimes - perhaps unintentionally - applied to distort economic competitive advantages rather than protecting legitimate security concerns. As a result, we remain far away from a level-playing field on both sides of the Atlantic and allied cohesion and our capabilities for coalition warfare are being needlessly degraded.

This is a formidable list of challenges. But it is NATO's business to overcome challenges. So I will turn now to the proverbial "silver lining".

First, NATO is already becoming much more capabilities-minded. We have drawn our own lessons from Kosovo and Afghanistan. As a result, we have concluded that to acquire the new capabilities that we need, we will have to change gear. For example, we need to address critical shortfalls through national-specific commitments rather than, as in the past, Alliance-wide decisions, which do not bind any Ally individually.

Rather than producing long lists of Alliance-wide shortfalls, and hoping that the Allies will attend to them, we must focus on what nations - individually or collectively - are ready to commit to do now, and then pursue a much more directed approach to acquiring these capabilities. I want these specific national commitments in time for the Prague Summit. And I want them pursued in close cooperation with the European Union, so that our work and the EU's Headline Goal remain fully consistent with each other.

This is a vital element of NATO's Summit agenda. I have spent the past three years hammering home the capabilities message in Alliance capitals. Prague will, I am confident, see this hard pounding provide real results.

Second, the free-fall in defence budgets seems to be slowing. I am encouraged by the UK's recent defence budget increases. But the UK is not alone. Norway recently increased its defence budget, and President Chirac has made important proposals for higher French defence spending.

Third, there are now encouraging signs of defence industry consolidation within Europe - a process the Unites States has already gone through in recent years. The creation of OCCAR also demonstrates a new political momentum.

Fourth, there is some movement on the issue of export policies. The Defense Trade and Security Initiative, the new review of the US export control regime, and the UK-US Declaration of Principles will I hope lead to a better environment for mutual defence equipment and industrial cooperation. I am also encouraged that Washington is now poised to issue a National Security Presidential Directive mandating a comprehensive, six-month review of U.S. arms export control policies.

These initiatives should facilitate new types of collaboration by defence companies from both sides of the Atlantic. For example, it is clear that the US Administration believes that the Global Project Authorisation it is establishing for the Joint Strike Fighter will provide a model for improved transatlantic defence cooperation on other important projects. We recently had a very interesting discussion on this in the North Atlantic Council.

We are already seeing practical results. I am encouraged by the US Administration's decision to allow the export of the "Predator" Unmanned Aerial Vehicle to Italy. The campaign in Afghanistan has underlined the remarkable capabilities of UAV technology, access to which by the Europeans would help them in their efforts to close the capability gap and remain effective as a "high-end" warfighting partner to the United States.

This welcome change in US policy could also have significant implications for NATO's Alliance Ground Surveillance programme. Incorporation of UAVs, including some form of co-development with the US Global Hawk programme, into the planned NATO AGS architecture could well make the difference between whether we succeed or fail in meeting this crucial capability goal.

Ladies and Gentlemen,

An open and innovative defence industrial base is the essential foundation for meeting our defence needs. A fortress mentality on either side of the Atlantic will make coalition interoperability even harder to achieve, and waste precious resources. Joint transatlantic ventures, if handled well, will bring synergy, not damage, to our technological and industrial bases. But it requires an honest, open and transparent dialogue between North America and Europe.

This is not a dialogue for industry alone. Alliance Governments, too, have a major role to play. They must provide policy and regulatory frameworks that maximise opportunities for defence companies, to enable them to emulate the success of global commercial corporations. And it is they who, after all, must determine the military requirements and come up with the cash to pay for them.

Will Governments deliver? You can be sure that I will not let them off the hook. At the Prague Summit, I want NATO's Presidents and Prime Ministers to commit fully to specific programmes of action to correct our critical shortfalls. And I will do all I can to make sure these commitments include funding. No lofty declarations of intent, or pious expressions of goodwill. I want clear, unambiguous commitments to practical action, with funding guaranteed as soon as it is needed.

Dean Acheson once said that "the really successful international organisations are those that recognise and express underlying realities". The Prague Summit will vindicate Acheson's dictum. It will address the need to respond to the new strategic environment, and it will address the need to acquire new capabilities. As the old saying goes, quality is better than quantity - especially in large numbers! Thank You.

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