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NATO Secretary General Anders Fogh Rasmussen has made clear his intention to ‘cut fat and build muscle’ through ongoing NATO reform. Such reform will make NATO more effective, by concentrating on key capabilities such as cyber- and missile defence; more engaged, by collaborating with other international organisations and Partner countries; and more efficient, by making the best use of taxpayer funds.
The global financial crisis and the resulting austerity in Allied government budgets have made reform more urgent. While structural reform can alleviate some of the painful aspects of budget cuts, less money usually entails fewer capabilities. Meanwhile, NATO finds itself with more responsibilities than ever, making it essential that Allies sustain levels of defence spending adequate to meet current and future needs. How will the consequences of the financial crisis affect NATO military budgets? Will new fiscal and budgetary constraints translate into defence cuts that restrain capabilities too much, with negative consequences for Allied security?
Those were some of the questions asked during a 23 November workshop at NATO Headquarters entitled, “Fiscal and Budgetary Trends in Allied Countries and Implications for the Affordability and Sustainability of Defence Spending.”
Organised by the Defence and Security Economics Section in NATO’s Political Affairs and Security Policy Division, the conference attracted international experts from across the Alliance. Ambassador Dirk Brengelmann, Assistant Secretary General for Political Affairs and Security Policy, opened the conference with remarks on the new Strategic Concept’s significance and the impact of the economic and financial crisis on the future course of defence spending. Among other things, the Workshop provided an opportunity to assess current international economic trends and to consider the risk of economic and industrial protectionism as a result of present global economic imbalances.
During an early afternoon session on the impact of global economic instability on Allied defence expenditure, several attendees expressed their concerns about the future. Mrs Petya Koeva Brooks, Chief of the International Monetary Fund’s World Economic Outlook Division, observed, “The challenges on the defence spending side are as large, if not larger, than on the fiscal side in general. I was struck by the magnitude of the problem… they have to [make tough decisions], given the importance of addressing security problems. There won’t be a choice.”
Mr James Soligan, Director of the Centre for Transatlantic Security of the National Defence University in Washington, noted that many in the transatlantic Alliance may be unprepared for the cuts that materialise. “The Europeans have counted on the US having a certain capability available to the Alliance,” Mr Soligan said. “They may be surprised if the US takes a significant budget cut that lessens those capabilities.”
A recurring theme was the disparity between the capabilities that may be available and the capabilities necessary for required missions. Dr Gordon Adams, Professor at the School of International Service at American University in Washington, was not optimistic. He believes that neither the new Strategic Concept nor the most recent American Quadrennial Defence Review have so far been able to sufficiently prioritise missions. “Everything is an equal priority,” Dr Adams said. “With fewer resources, that’s going to have to change.”