NATO in the Land of Pretend

Recent trends in defense spending threaten NATO’s ability to confidently face a dangerous and unpredictable future. Most European Allies are hollowing out their militaries, jettisoning capabilities, and failing to spend their existing budgets wisely. As a result, the gap between American and European contributions to the Alliance is widening to an unsustainable level. Something must be done. The trends need to be reversed.” U.S. Ambassador to NATO, Ivo Daalder, June 17, 2013, as part of his farewell remarks before leaving Brussels.

Senior U.S. farewell addresses to Europe are becoming repetitive. Former secretary of defense Robert Gates’s now famous farewell address in 2011 was the equivalent of a diplomatic five-bell alarm to European leaders on defense spending. Ambassador Daadler’s recent message was a milder rebuke. Yet for all of the endless urging, pleading, yelling and cajoling, NATO defense ministers in June didn’t discuss NATO’s future ability to project military power either for the purposes of collective defense or for regional stability and security.

Simply put, NATO’s future rests on the prospects for European defense spending and European political willingness to use the capabilities in which they invest. The outlook is sobering.

Just look at the two European allies that constitute 41 percent of European NATO defense spending: France and the United Kingdom. On April 27 the French government released its Defense White Paper or Livre Blanc. Surprising many U.S. analysts who anticipated significant cuts, French defense spending will remain unchanged in 2014, equaling €31.4 billion or 1.76 percent of French GDP. Over the 2014-2025 timeframe, the French multiyear defense budget is set at €364 billion, a slight reduction from €377 billion. French forces will be reduced by 24,000, again a smaller reduction than the one between 2008 and 2013. Yet despite its efforts to “stay the course,” realistically France will need to make further reductions.

The French decision to review its defense competencies follows a similar process undertaken by the British three years ago, which ultimately produced the UK’s 2010 Strategic Defense and Security Review (SDSR). The review updated the UK’s national and security policy while reaping savings to address a £38 billion funding deficit in the Ministry of Defense. The SDSR reduced British military spending by approximately 8 percent, and called for reducing military forces by 17,000 by 2015. The UK is now beginning its work on the 2015 SDSR, which could potentially result in far deeper cuts than in 2010. Unanticipated defense cuts could be announced shortly as Treasury Minister George Osborne announces the 2015-2016 Treasury Spending Review despite Defense Secretary Philip Hammond’s staunch defense of his Ministry’s budget, arguing that further cuts pose a grave threat to future military capability.

According to NATO, the 26 European allies (minus Canada and the United States) combined spent $282 billion on defense budgets in 2011 (or about 27.2 percent of the NATO total). While that isn’t an insignificant sum, in comparison, the United States spent $731 billion (70.5 percent). Washington policymakers are now arguing that NATO must quickly move toward a 50/50 rather than a 75/25 alliance.

The tried and true way that NATO members have demonstrated their commitment was to allocate 2 percent of their gross domestic product (GDP) to defense spending. Over the last decade, Washington has been pushing NATO allies to reach the magic 2 percent threshold, yet in 2011 European NATO members fell $80 billion short of that commitment. On average, defense spending of European Allies was 1.62 percent of the GDP, with 20 out of 28 NATO members spending less than this average and only 6 European countries (Estonia, France, Greece, Poland, Turkey, and the United Kingdom) spending more.

It is time to move beyond the “2 percent rule.” While the rule at least maintains some pressure on member governments to refrain from even greater free riding, continued U.S. harping on the issue is not a substitute for more meaningful conversations that must occur. The United States should not accept NATO’s anemic defense spending levels, but it must accept that political realities make achieving 2 percent very unlikely in the foreseeable future. More importantly, the rule doesn’t capture what matters most: actual military capabilities. Take Greece, for instance. The weakest European economy satisfies the rule—it is spending 2.1 percent of its atrophied GDP on defense—but its investments are not in support of NATO’s expeditionary military capabilities, but for territorial defense against a potential conflict with another NATO member, Turkey.

Like the United States, which spends upwards of 45 percent of its overall defense spending on personnel costs and health benefits, it is likely that over 50 percent of Europe’s defense spending goes towards personnel and to maintain domestic bases. Unfortunately, these funds are not going to purchase what Europe really needs: strategic airlift, refueling or intelligence, surveillance and reconnaissance (ISR) capabilities. Rather, European NATO members are buying  duplicative capabilities to support their own domestic industries which undermine proposed pooling and sharing arrangements. For example, there are no less than 23 different types of armored vehicles with varying calibers of ammunition that will be commissioned in Europe in the next 10 years for 26 European NATO members. European armed forces have seven types of combat helicopters and four types of main battle tanks. Simply put, European military capabilities are fragmented, duplicative, and more expensive than they need to be.

At the moment, both sides of the Atlantic are pretending that nothing fundamental is happening within NATO today. But pretending only delays a needed intervention to begin to arrest the problem.

The United States pretends that its posture in and commitment to Europe is not changing while Europe watches the last A-10 Thunderbolt aircraft and the last U.S. tank depart the continent. This is compounded by the planned closing of 40 U.S. bases in the next two years (combined with the other 100 facilities closed over the past decade). Clearly, Europe doesn’t need tanks and they don’t need U.S. bases in Europe. Apparently, Europe also doesn’t need the fourth phase of a missile defense shield or U.S. tactical nuclear weapons. Europe sees the United States rushing to the exit but goes along with it, pretending that it doesn’t really matter.

And Europe pretends that the U.S. security umbrella over Europe is a permanent fixture, allowing it to divert resources to other forms of security, specifically social security and pensions for a rapidly aging population. Americans may scold Europe from time to time about this but Washington pretends that all they really need from Europe is political support and validation of U.S. policy objectives.

This self-deception represents a real crisis for an institution that remains a crucial provider of stability and security, not only within Europe but globally. Given this cognitive dissonance, the question becomes how to change this dynamic in light of diminished political leadership and defense budgets on both sides of the Atlantic.

Step One: Acknowledge the problem. Yes, it begins with “Hi, my name is NATO and I have a defense spending and political leadership problem.” While we can continually rebrand NATO’s declining capabilities as “smart defense,” only to become “smart-er defense” at the next summit, it doesn’t stop the decline. No more gimmicks, just hard and unpleasant truths about the current state of the alliance. One of these very hard truths is acknowledging that the alliance does not have a common threat assessment. Some NATO allies are deeply concerned about instability in North Africa and the Sahel, many others are not. Some NATO allies are concerned about potential Russian aggression, many Allies are not. If NATO cannot agree on the threat (as they could during the Cold War), they cannot rationalize both their future defense spending and military capabilities.

Step Two: Rationalize European defense capabilities, with strong U.S. involvement. This critical reconstruction process begins with a trilateral discussion between the United States, the UK and France (and eventually bringing Denmark, Germany, Norway, the Netherlands, Canada, and Belgium into the conversation).

This is where we need to take a closer look at what the French have said in their Defense White Paper and what Paris will say in its Procurement Annex in the next few months. French expeditionary capabilities are maintained but the number of deployable forces is reduced. The French now hope to deploy 15,000 troops, 45 fighters and a carrier strike group for a major operation. The original plan envisioned five years ago was a deployment of 30,000 forces. While this limits the range of operations, it does ensure that the existing capabilities, equivalent to the force numbers actually deployed by France in the last few years, will be adequately trained and ready.

Importantly, the commission appointed to oversee the development of the French White Paper had a British member (British Ambassador to Paris, Sir Peter Ricketts) and a German member (Dr. Wolfgang Ischinger, former German Ambassador to the United States). This initiative begins to lay the groundwork for greater transparency and coordination between European allies as they reduce spending in ways that will meet both national and collective security interests. Although the White Paper is a French product specific to French requirements, the document can and must spur continued dialogue.

Britain is a few years ahead of France in the implementation of the results of its Strategic Defense and Security Review. The French should continue to work closely with their British colleagues to learn from UK experiences from the SDSR—the good, the bad, and the ugly. One of most important lessons must be that there is no such thing as a “one-off,” unilateral defense decision. Defense reviews and subsequent budget reductions are ongoing processes that require constant consultation, as their impact will be felt for years, and across the entire alliance.

This is why NATO’s current National Defense Planning Process (NDPP) is out of synch with the current “cascade effect” of national decisions on power projection capabilities of the alliance as a whole. The 2011 NATO Libyan operation was a perfect case in point: the British decision to eliminate its Harrier Aircraft and air carrier capability for a decade was a national decision that left NATO scrambling for options.

These efforts, while laudable, will fail without sustained involvement from the United States. The 2010 Quadrennial Defense Review (QDR) stated that “Strong regional allies and partners are fundamental to meeting 21st century challenges successfully. Helping to build their capacity can help prevent conflict from beginning or escalating, reducing the possibility that large and enduring deployments of U.S. or allied forces would be required.” This sounds encouraging but “build[ing]” European “capacity” doesn’t translate into specifics, just as repeating tired phrases like 2 percent or 50/50 will never gain results. Washington must roll up its sleeves and work closely with those European allies that have both the political willingness and military means to project power and tell them what capabilities and enablers we believe they must maintain. We must engage in a new conversation about more relevant capability measurements, such as research and development expenditures, training ratios, overseas deployments, and interoperability. Critically, a mechanism must be found to begin this crucial dialogue.

Step Three: Seek to better understand and leverage  defense industries as a whole. Unfortunately, no country seems to have a solution for the increasing cost of military hardware. Western militaries rely heavily on technology to achieve superiority in the battlefield yet these high-tech capabilities are very expensive. On both sides of the Atlantic, we have all experienced fraught procurements. Clearly, there is a need for better intra-analysis of the evolution of these costs and an ability to identify ways to mitigate them. One important incentive to invest in defense spending is national industrial participation. Building a local defense industry and support for an integrated transatlantic defense industrial supply chain through a network of European companies would be a strong incentive for these countries to give more importance to military capabilities.

Step Four: Despite the difficulties, stay positive. Perpetual optimism is a force multiplier. One of former Secretary of State Colin Powell’s famous “13 Rules to Live By” could be generously deployed around NATO headquarters and Washington these days and applied to the future direction of the transatlantic defense relationship. Some in Washington complain that NATO is becoming a “coalition of the unable and the unwilling,” others say NATO operations look more and more like “come-as-you-are and don’t stay long” efforts. Stop the nattering and focus on the positives. The UK and France are quite able and willing to take the lead of a medium size overseas military operation. German defense spending has increased slightly since 2011 while Poland recently announced it would increase its procurement spending by €43 billion over the next decade targeting a new missile defense system, new vessels for the naval fleet, upgraded tanks, unmanned aerial vehicles and equipment for troops. Add to this list Norway, Denmark, Belgium, and the Netherlands and you have willingness and capability to act in the framework of a coalition, with modest but modern and effective capabilities.

Although NATO European allies’ $282 billion in defense spending is not going to increase anytime soon, it still represents more than the Chinese and Russian defense budgets combined. The French and British have signed a Defense Cooperation Treaty in 2010 that begins to pave the way for the type of real integration that must occur. The Nordic countries are engaging in similar bilateral agreements.

Unfortunately, there is no meaningful or purposeful process in place to begin this type of reconstruction of European defense capabilities. Yet there is no greater task before Europe, with strong engagement by the United States, than this.

However, none of these steps will matter until we do one basic thing—stop pretending. NATO is a different organization than it was 15 years ago and failing to acknowledge this reality has put the alliance on a path toward obsolescence. We must urgently redefine what NATO can do realistically, both militarily and politically, to ensure that NATO will be institutionally relevant in the future.

Heather A. Conley is a senior fellow and director of the Europe Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Maren Leed is a senior adviser with the Harold Brown Chair in Defense Policy Studies and Ground Forces Dialogue at CSIS.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2013 by the Center for Strategic and International Studies. All rights reserved.


Heather A. Conley

Maren Leed