Transatlantic Security Task Force Series

May 2013

Policy Brief

Summary: Fiscal constraints on both sides of the Atlantic have drastically reduced transatlantic capabilities, even as continuing geopolitical instability requires attention and resources from the transatlantic partners, and calls for close cooperation. However, it seems that agreeing to common frameworks is laden with difficulties that are difficult to overcome, whether that be at the level of NATO, or within Europe itself. Are existing structures appropriate to answer the current challenges?

Defense in an Age of Austerity: Implications for Transatlantic Power Projection and Strategic Cooperation
by Stephen J. Flanagan

German Marshall Fund of the United States-Paris 71 Boulevard Raspail 75006 Paris T: +33 1 47 23 47 18 E: infoparis@gmfus.org

The Context Enduring fiscal constraints will result in a significant contraction of European and U.S. defense capabilities over the next decade. The political will to undertake protracted expeditionary operations has been diminished by these economic constraints and operational fatigue. A complex and unpredictable security environment, shaped by globalization, the rise of new powers, and a widespread political awakening, is likely to produce continuing instability and many disruptive shocks. Further proliferation of weapons of mass destruction and the growth of nontraditional security threats, as well as conflict due to resource scarcity and the consequences of climate change, will continue to place high demands on smaller U.S. and European armed forces. This situation makes enhanced European and transatlantic defense cooperation an imperative. It also requires candid assessments of the level of ambition of the EU and NATO and of acceptable levels of risk in maintaining transatlantic security. European military capabilities, already suffering from two decades of under investment, will further

decline over the next five years. The three most capable European militaries those of the U.K., France, and Germany will see considerable contraction in key areas and elimination of certain missions. The defense reforms being implemented in Berlin will result in very limited German capabilities for high-intensity contingencies even if there were willingness to engage in them. Spending by mid-sized and smaller European countries will erode their more limited contributions to future NATO and EU operations. Of particular concern is the prospective erosion of full-spectrum capabilities and the defense and aerospace industrial bases in Spain and Italy. Some smaller countries will struggle to maintain even niche capabilities. Aside from the big three, most European governments will probably be able to contribute no more than a battalion of ground forces to any sustained future expeditionary operations. European navies will be able to commit surface combatants for modest counter-piracy and maritime task forces, but reduced force levels will limit operational flexibility and global presence missions. Only the

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Policy Brief
U.K. and France will retain significant capability to support littoral combat or sustained maritime operations. European air forces will suffer from aging aircraft, limited acquisition of replacements, and declining readiness due to limited training. Under the terms of legislation enacted in 2011 that sought to resolve the U.S. debt ceiling crisis, the U.S. Congress and the president agreed to cut the defense budget by $487 billion over the next decade. While some of this contraction is projected to come from reduced costs of operations, force levels, defense procurement, and operational capabilities will decline by about 10 percent. When Congress failed to reach agreement by early 2013 on a deficit reduction package, the legislation triggered across-the-board cuts (sequestrations) on all discretionary spending, including an additional $500-600 billion reduction (roughly another 10 percent) in the projected U.S. defense budget through 2021. The arbitrary way these reductions are to be imposed absent further action was intended to force agreement on a more palatable budget agreement, although it did not ultimately have that effect. While comparable in scale to previous (post-Vietnam, post-Cold War) drawdowns, these cuts will place significant constraints on modernization and operations and require accepting higher levels of risk and increased reliance on allies and partners. The guiding mission statement for the U.S. Armed Forces, Joint Vision 2020, calls for full spectrum dominance operating unilaterally or in combination with multinational and interagency partners. The new U.S. defense strategy also envisions a shift by 2020 in U.S. Navy deployments from the current 50-50 split in the Pacific and Atlantic to a 60-40 ratio, respectively. This posture is driven by assessments of the emerging requirements for maintaining stability and the security of the United States and its allies and partners in the East Asia-Pacific region, not a pivoting away from Europe. That said, the posture is likely to place additional demands on European armed forces to take the lead in limited contingencies along its periphery, as was the case in the Libyan operations. While the total defense spending of the European members of NATO declined 14 percent over the past two decades, as U.S. spending was growing by 28 percent, European members of NATO still spent over $282 billion on defense in 2011. The European armed forces are well equipped, but there are many redundancies and they are not well suited
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to deal with the most likely contingencies. High personnel costs and continuing investments in legacy equipment and largely non-deployable land forces consume resources, while capabilities essential for ongoing operations transport aircraft, helicopters, and intelligence, surveillance, and reconnaissance assets and other enablers remain scarce. In the face of the projected austerity, NATO and EU governments have two main options in the defense sector: to resolve once again to pursue reforms and multinational collaboration to preserve key capabilities and get best value from available resources or to reconsider, and possibly lower, their levels of ambition. The second option has proven politically unpalatable for most governments because it requires both a candid prioritization of security threats and an admission that it will be accompanied by a higher degree of risk in handling areas where countervailing defense capabilities are being diminished. But such a discussion may be inevitable as defense budgets continue to contract. Smart Defense/NATO Forces 2020 NATOs Strategic Concept, Active Engagement, Modern Defense, was adopted in 2010 with an acknowledgement of the fiscal constraints. At the Lisbon Summit, allies agreed to achieve more efficient use of defense resources

In the face of the projected austerity, NATO and EU governments have two main options in the defense sector: to resolve once again to pursue reforms and multinational collaboration to preserve key capabilities or to reconsider their levels of ambition.

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Policy Brief
through enhanced defense planning, multinational development of capabilities, and broad reforms of NATO structures, including a 40 percent downsizing of its military command staffs and consolidation of civilian agencies. In early 2011, NATO Secretary General Anders Fogh Rasmussen launched the campaign for Smart Defense to get more value and effect from available defense resources through better prioritization, multinational cooperation, and specialization. Following an intensive study of opportunities for multinational cooperation, NATOs Allied Command Transformation (ACT) recommended an initial package of projects as candidates for greater pooling and sharing, each with an assigned lead nation and grouped according to the critical capability shortfalls they address. Smart Defense has the potential to staunch the erosion of European military capabilities and to foster a more coherent and integrated, albeit smaller, NATO military posture. In February 2012, U.S. Secretary of Defense Leon Panetta called for development of a long term plan to achieve the military capabilities the Alliance needs to execute its core tasks by the end of the decade NATO Forces 2020. The Obama administration encouraged allies to integrate the reforms agreed to at Lisbon with the Smart Defense Initiative, and proposed improvements in training and exercises (the Connected Forces Initiative) and enhancements to the NATO defense planning process, along with closer consultations on changes in national defense plans, to ensure realization of that goal. NATO leaders endorsed the 2020 goal at their Chicago Summit, along with two significant defense initiatives (an interim ballistic missile defense capability and a much-needed air-ground surveillance system), and noted progress in developing several capabilities identified at Lisbon as critical to the success of current operations. Considerable analysis and political dialogue will be needed over the next few years to define NATO Forces 2020. Efforts were already underway within the NATO Defense Planning Process to identify the minimum capability requirements and to allocate capability targets (formerly known as force goals) to various allies. Given the widespread fatigue with long-duration expeditionary missions, a debate is brewing over whether priority should be given to meeting requirements for collective defense over the Alliances two other core missions crisis management and cooperative security. Some governments, particularly
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from Central and East Europe, contend that the Alliance must first ensure it has the capabilities required to meet even the most stressful Article 5 challenges for all allies, as this goes to the core of the North Atlantic Treaty. Other allies argue that this standard would actually raise the Alliances current level of ambition to be able to undertake multiple Major Joint Operations (dubbed MJO Plus) and favor a more balanced approach to capabilities development across the spectrum of more likely threats. Allies will need to reach consensus on priority capabilities and then agree on which nations will retain or develop those capabilities. A Feeble European Response to Gates The promised role of European integration in galvanizing support for the development of European military capabilities has proven illusory over the past two decades. Neither the Common Security and Defense Policy (CSDP), nor Permanent Structured Cooperation, nor the European Defence Agency (EDA) has delivered much capability. The 2010 Headline Goal, approved in 2004, declared that the European Union is a global actor ready to share in responsibility for global security. Member states committed to be able to respond with rapid and decisive actionto the full spectrum of crisis management operations covered by the Treaty on the European Union by 2010. Many of the milestones and benchmarks of the 2010 Headline Goal, however, remain unfulfilled. Even before the 2008 financial crisis took hold, France and other key European governments had diminished ambitions for CSDP, content not to push it beyond short-term crisis management operations at the low end of the Petersberg Tasks. While Operation Atalanta, the counter-piracy mission in the Gulf of Aden, has been commended for its effectiveness by NATO and U.S. commanders, most other

Allies will need to reach consensus on priority capabilities and then agree on which nations will retain or develop those capabilities.

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Policy Brief
missions since 2008 have been small, short-duration operations and with limited risks. While EDA has endeavored to facilitate bilateral and regional cooperation among EU member states, the results thus far are strategically insignificant. At their November 2010 Ghent meeting, EU defense ministers endorsed pooling and sharing (P&S) of military capabilities among member states as a way to preserve and enhance national operational capabilities with improved effect, sustainability, interoperability, and cost efficiency. In November 2011, the EDA Steering Board endorsed 11 P&S initiatives. Among these initiatives, one of the most significant is a commitment by EU ministers to develop and better coordinate European air-to-air refueling capabilities to overcome serious shortfalls that were highlighted once again during operations over Libya. France, Germany, and the Netherlands seem firmly committed to this effort, and EDA will support member governments enhancing use of existing assets and in developing new capabilities after 2020. Other P&S initiatives are underway in helicopter training, maritime surveillance networking, military satellite communications, and medical support to multinational operations. While encouraging, these initiatives do not amount to the robust response some in Europe were promising to the warnings by former Secretary of Defense Robert Gates in his June 2011 Brussels speech that the lingering imbalance transatlantic defense burden sharing could erode U.S. political support for the Alliance. Bilateral and multilateral cooperation efforts are showing some promise in sustaining European military capabilities in an era of austerity. The 2010 Franco-British Defence Co-operation Treaty and package of joint defense initiatives is designed to coordinate and harmonize the defense policies and plans of these two governments to include more combined units (including a rapid reaction force), coordinated research and development and procurement programs, and complementary operational concepts. Prospects for continuing this cooperation remain strong, and it has the potential to be both more extensive and serve as a lodestone for other allies. Increased regional defense integration also promises to achieve more efficient use of resources. The Weimar Group Poland, Germany, and France are committed to improving their capacities to plan and to conduct combined operations and to strengthen cooperation among their militaries, including the contribution of an
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Bilateral and multilateral cooperation efforts are showing some promise in sustaining European military capabilities in an era of austerity.
EU Battle Group to be available in 2013. Defense cooperation among the five Nordic and three Baltic countries to enhance security in Northern Europe has also been given new impetus by the economic crisis including through the Nordic Battle Group, additional exercises, joint acquisition programs, and common logistics. Cooperation among the Visegrd Group the Czech Republic, Hungary, Poland, and Slovakia is also starting to show some promise in rationalizing these smaller armed forces. All this suggests several issues Task Force members might consider: If Smart Defense and the EU Pooling and Sharing initiatives are to be more than passing slogans, they must produce long-term commitments by member governments to new ways of doing business. Improved prioritization, cooperation, and specialization in development of defense capabilities will require some compromise in sovereignty and arrangements to assure access in times of need to shared assets or capabilities nations have eliminated through role specialization. It will also demand greater transparency in the development of national defense plans and willingness to discuss the impact of prospective budget cuts on the overall coherence of the combined NATO and EU force postures. This will require compromises to sovereignty in the defense and security realms analogous to adjustments that European governments are now making in fiscal matters in order to save the euro. Do governments see the risks to transatlantic and European defense cooperation as dire enough to warrant such compromises and initiatives? What should NATOs defense priorities be following its 2014 disengagement from Afghanistan? Is there an affordable and sustainable balance among capabilities

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Policy Brief
for collective defense, effective crisis management, and contributions to cooperative security to realize NATO Forces 2020? Should Allies give top priority to collective defense and treat requirements for crisis management and cooperative security as lesser included cases? Do the current fiscal and defense budget trends in Europe and the United States warrant a formal reconsideration and downsizing of the current levels of ambition of both CSDP and NATO? This would require a candid prioritization of security threats and discussion of acceptable levels of risk in dealing with challenges where countervailing defense capabilities are being diminished. Would this lead to more realistic defense planning or just risk justifying even further reductions in capabilities?
About the Author
Stephen J. Flanagan was until May 2013 Henry A. Kissinger Chair in Diplomacy and National Security at the Center for Strategic and International Studies (CSIS) in Washington, capacity under which this paper was authored. Before joining CSIS in June 2007, he served as Director of the Institute for National Strategic Studies and Vice President for Research at the National Defense University for seven years. Flanagan is now Senior Director for Defense Policy and Strategy at the National Security Council.

About GMF
The German Marshall Fund of the United States (GMF) strengthens transatlantic cooperation on regional, national, and global challenges and opportunities in the spirit of the Marshall Plan. GMF does this by supporting individuals and institutions working in the transatlantic sphere, by convening leaders and members of the policy and business communities, by contributing research and analysis on transatlantic topics, and by providing exchange opportunities to foster renewed commitment to the transatlantic relationship. In addition, GMF supports a number of initiatives to strengthen democracies. Founded in 1972 as a non-partisan, non-profit organization through a gift from Germany as a permanent memorial to Marshall Plan assistance, GMF maintains a strong presence on both sides of the Atlantic. In addition to its headquarters in Washington, DC, GMF has offices in Berlin, Paris, Brussels, Belgrade, Ankara, Bucharest, Warsaw, and Tunis. GMF also has smaller representations in Bratislava, Turin, and Stockholm.

Contact
Dr. Alexandra de Hoop Scheffer Director, Paris Office German Marshall Fund of the United States Tel: +33 1 47 23 47 18 Email: adehoopscheffer@gmfus.org