Résidence Palace, Brussels 18 July 2003

"Conference on Transatlantic Defence Industrial Cooperation Challenges and Prospects" Keynote address by NATO Secretary General, Lord Robertson Mr. Drozdiak, Mr. Bell, Ms. Bronson, Mr. Bloomfield, Ladies and Gentlemen It is a great pleasure to be here. Let me begin by thanking Bill Drozdiak and his Transatlantic Center for their fine hospitality in co-sponsoring this Conference. I remember with pleasure, Bill, the Conference that we put on here in October last year. I hope that this second Conference heralds a long and fruitful relationship between NATO and your Center in the future. Let me begin by quoting to you from the European Union’s new strategy paper, which highlights terrorism, the proliferation of weapons of mass destruction, failed states and organised crime. The EU’s paper concludes by saying: “Taking these different elements together – terrorism committed to maximum violence, the availability of weapons of mass destruction and the failure of state systems – we could be confronted with a very radical threat indeed”. I could not put it better myself. And I know that Javier Solana has no trouble endorsing NATO’s own assessments. We may use different words. But we are saying – and meaning – the same thing. The EU paper goes on to state: “We need to develop a strategic culture that fosters early, rapid, and when necessary, robust intervention.” Could Donald Rumsfeld or Tommy Franks have been clearer? So let there be no doubt: when it comes to a common strategic vision, Europe and North America are still singing from the same song sheet. Which is one good reason why NATO is still in business, and more active than ever. In the Eastern and Western Mediterranean, NATO warships are cutting the flow of people and supplies to Al Qaida. In Afghanistan, NATO is taking over the lead in ISAF. Not for theological reasons. But because it makes sense. And we are moving to support the forces of our Polish ally in Iraq. None of these operations surprise anybody anymore. The fact that NATO will soon be keeping the peace in a country which borders on China barely makes the newspaper. But these operations prove that NATO has definitely moved beyond being simply Europe’s beat cop. The Alliance is now carrying out operations wherever it is required. What does this mean? First, it means that NATO has become a unique asset for the international community. No other organisation can provide and command these kinds of forces, when needed. But it also means that we face an unprecedented challenge to muster, train, equip and sustain these forces for operations in theatres very different from those we had planned for in the past. We are already tackling this challenge head on. For example, the Prague Capability Commitments are being delivered. We have good news to report in areas such as strategic airlift, sealift, air tankers and precision guided weapons. And we have certainly made much quicker progress than I had expected in streamlining NATO’s command structure and setting up the cutting–edge NATO Response Force. We are making welcome progress on other fronts. The new Transformation Command will enable the Europeans to tie into the dramatic changes in U.S. high-technology capabilities evident in the Iraq war, while at the same time feeding in their own experience in other military fields. The completion of the Berlin Plus arrangements earlier this year has put down the foundations of a genuine strategic partnership between NATO and the European Union. We have together launched the first Berlin Plus operation in the former Yugoslav Republic of Macedonia . With the EU, we are pushing ahead to close the transatlantic capabilities gap. Overall, NATO and the EU must build on this success, using the linkages so painstakingly agreed to cooperate across the whole spectrum of shared interests, not just on Balkans crisis management. But there remains a lot of hard work still to be done. We in Europe seem slow in waking up to the reality of today’s strategic environment. We are faced with demanding commitments from the Straits of Gibraltar, through the Balkans to Kabul and Baghdad, and down into Congo. Rather a lot of real estate! Yet most European defence budgets are either stagnating, or are in decline. We need to get across the political message that defence investment is not money wasted. Defence is the most basic social service of them all. Security is the oxygen of free peoples, the pre–requisite for society’s development. In theory, the availability of relevant resources should not be a problem for our Alliance. The 18 countries of NATO’s Integrated Military Command Structure in principle declare around 250 combat brigades to the Alliance, each up to about 5000 strong. A huge figure. But fewer than half of that number are declared deployable, and therefore useable for today’s real world operations. In fact, if you subtract the U.S. contribution, together with those forces which NATO assesses to be undeployable in practice, your figure of 240 combat brigades falls to fewer than ………50 brigades. Quite a drop, isn’t it? But of course, the figure of 50 does not take account of the fact that troops need to be trained, rotated, and rested. If you take this into account, the number of non-US combat brigades actually available at any one time drops to around 16 brigades, or some 80,000 soldiers. So there are no grounds here for complacency. We need more defence investment. And we need much more defence output. NATO’s defence procurement community has a decisive role to play in meeting this output challenge, and your Conference today will examine a critical area of that challenge – that of transatlantic defence industrial cooperation. Throughout the time I have been Secretary General of NATO, I have banged the drum in favour of more effective cooperation in the sphere of defence trade and industry. At a time of significant industrial restructuring, the continuation of outmoded technology transfer regimes, and of defence trade and export policies steeped in protectionism, is in nobody’s interests. The excellent Final Report of the CSIS Commission on Transatlantic Security and Industrial Cooperation in the twenty first century contains one sentence which is really the bottom line of this whole debate, and I quote: “….The most important constraints on cooperation are U.S. and European government policies … U.S. and European governments should foster an environment that allows for closer industrial cooperation on the development of advanced military systems across the Atlantic.” In simple terms, we need governments to set up coherent processes and structures within which states can operate, and cooperate on defence. There have already been some welcome developments in this area, such as the setting up of the Organisation for Joint Armaments Cooperation (OCCAR), and the signature by 6 European countries of a “Letter of Intent” to facilitate the restructuring of Europe’s defence industry. But in my judgement, there is a major political vacuum when it comes to international transatlantic defence procurement in general, and transatlantic industrial cooperation in particular. To fill it, governments need to be far more proactive. It is governments who should provide policy and regulatory frameworks that maximise opportunities for defence companies, to enable them to emulate the success of global commercial corporations. It is governments who, after all, must determine the military requirements and come up with the cash to pay for them. Industry has its own vital role to play, but there are limits to what industry itself can achieve if governments fail to actively play a facilitating role. I have tabled proposals of my own in this sphere. They include giving priority and special, expedited handling to licenses for NATO Agencies; assigning the highest priority to processing items required to support the Alliance acquisition of the items contained in the Prague Capabilities Commitment; employing JSF-like global project licenses to these items as well; the extension of ITAR exemptions to other nations; and the negotiation of a framework agreement between the US and the six European Letter of Intent nations. I am encouraged by the willingness of the U.S. authorities to undertake an inter-agency review of US Export Licensing and Technology Transfer Policy . This time last year the NATO Council listened with appreciation to an excellent presentation on this work given by Assistant Secretary Bloomfield and Deputy Under-Secretary Bronson – both of whom will be speaking this morning. They will be doing so at a very important time, as “National Security Presidential Directive (NSDP) 19” is approaching a critical phase. But as we work with our friends in the Administration to ensure the NSPD will represent an important step forward, we must not – we must not – be thrown back into reverse gear. I must in this respect register my very grave concern – over some of the defence trade-related bills recently passed by the U.S. House of Representatives in the past weeks and months. First, there is the House-passed version of the 2004 defence authorisation bill which would unacceptably extend existing “buy American” laws. Were these to be accepted by the Senate and signed into law by President Bush, they would increase the percentage of defence items purchased by the Department of Defence, that must be made in America, from 50% to 65%. This would destroy our Prague Capabilities Commitment and the NATO Response Force, and reinforce those who are argue in favour of military divergence between Europe and the United States. It would certainly imperil major cooperative programmes such as the Joint Strike Fighter and theatre missile defence. And it would take an axe to our efforts to improve transatlantic interoperability, which is essential to all multinational operations, whether by NATO or by coalitions. Protectionism – and worse still, more protectionism – is not the answer. It brings huge associated penalties with it, not only in costs, but in political unity. That is why I was encouraged by Secretary Rumsfeld’s July 8 letter to the conferees on the defense authorization act, making clear he will urge the President to veto this act if the House defense industry base provisions are included. I have recently written to Secretary Rumsfeld and Secretary Powell to assure them I support them 100% on this. I am also very concerned by the export licensing bill passed in the House that would deny President Bush the authority to waive the (ITAR) provisions to implement the important US/UK defence trade Memorandum of Understanding that is close to being concluded. But let nobody in this room conclude that I am urging an “anything goes” liberalisation of the U.S. Arms Export Control Act. I am not. We must retain those controls needed to ensure terrorists, rogue states or other potential adversaries do not gain access to technology or weaponry that would pose genuine threats to the men and women the United States and its allies send into harm’s way. But current regulatory regimes on both sides of the Atlantic were designed in a different era, and concerns have been raised that they unnecessarily make allied arms cooperation and procurement more expensive and complicated, and thereby detract from Alliance capabilities and cohesion. Export licensing reform is not a “Europe versus U.S.” issue. I strongly believe that both sides of the Atlantic stand to gain by working together towards a more level and acceptable playing field in this sphere, and I acknowledge the part the European allies have to play in getting their own act together. And I am sure that this Conference will shed light on the many opportunities we now have to make real, practical progress in this area. The significant, high-level attendance at this Conference speaks for itself. I think there is a general recognition that we can and must make progress in this area of transatlantic cooperation, to the benefit of us all. I have no doubt as to the magnitude of the task. These are immensely complicated issues which strike at the core of national sovereignty, and of security policy. But we need not only political vision but political courage to do what needs to be done. A dynamic, successful transatlantic defence industrial and technological base is the cornerstone of our defence and security. And it is our duty to ensure that the base remains strong and solid. Thank you for your attention, and I look forward to what I know will be a successful and productive Conference.