Trans-Atlantic Austerity: Can NATO Remain Relevant Amid Defense Cuts?

Defense spending

When NATO leaders convene in Lisbon in November to adopt a new Strategic Concept, the alliance’s blueprint for the future, they will find that trans-Atlantic security has entered an age of austerity. Burdened by weakened economies, allied governments are cutting their defense budgets, some significantly. However, retrenchment and reduced ambitions are not NATO’s only options.

Resource constraints are a double-edged sword. They can halt multinational cooperation, under mine capabilities and generate division, but they can also drive strategic prioritization, innovation and collaboration. How NATO navigates these dynamics will have a profound impact on its unity, capabilities and, ultimately, its relevance.

Allies already are finding it more difficult to meet their financial commitments. After a decade of growth in operational demands, NATO’s leaders lack the capacity to take on new missions without dropping others, a problem given likely new cyber and missile defense requirements.

Budget cuts have forced some allies to withdraw from multinational programs, including NATO’s UAV program and the Joint Strike Fighter. Pressure to withdraw or reduce forces in Afghanistan will increasingly reflect the financial costs of global operations.

All allies are cutting or flat-lining defense spending. Italy reduced its budget by 10 percent. Germany may reduce the Bundeswehr from 250,000 soldiers to 163,000. The U.K. defense review could generate budget cuts of up to 15 per­cent. Denmark is considering $500 million in savings by 2014 out of an annual budget of just under $4 billion. Central European allies are contemplating cuts of similar magnitude, and growth of the Pentagon budget will be surpassed by inflation. These trends are likely to be enduring.

North American and European defense firms, facing declining procurement budgets, have decided to compete more aggressively outside their home markets. British De fence Secretary Liam Fox recently reassured U.K. firms that London would support their export efforts.

Increased competition is a healthy dynamic. What is new is that it has become a matter of survival and jobs. If not properly man aged, this competition could strain trans-Atlantic relations. Frustrations over policies that limit opportunities for American arms sales to Europe and vice versa are long standing. France and the U.K. are already discussing closer defense industrial collaboration. The pooling of allied efforts and resources will become more imperative, but it would be counterproductive if European industrial cooperation comes at the cost of trans-Atlantic defense collaboration.

Hard economic times are prompting some European defense firms and governments to close deals that are not in the alliance’s best interests. France’s efforts, led by President Nicolas Sarkozy, to sell its versatile Mistral-class helicopter carrier to Russia could well be the first case. A Europe facing job losses could seek to open new defense markets, including those in Russia and China.

If Europe is viewed as less able and willing to stand with the U.S. in confronting global challenges — or even undercutting U.S. security by selling potential adversaries defense equipment — skepticism in the American polity toward the trans-Atlantic security relationship will grow. This perception could catalyze protectionist instincts on Capitol Hill, torpedoing the Obama administration’s efforts to reform export control laws, a key step to ward a more modern, integrated trans-Atlantic defense market.

NATO is history’s most successful multinational defense cooperation, but there is a compelling need for deeper, more effective integration and cooperation; this should be a central theme of the Lisbon summit. Defense budget cuts need to be coordinated to minimize their negative effects on alliance capability. They should be leveraged to pool resources, with more modularity among platforms and systems and national capability specialization.

NATO’s strategic airlift consortium, in which 10 allies and two partners pool resources to operate C-17 transport aircraft based in Hungary, is the right cost-saving model. Allies must stick with their commitment to a single UAV program and adopt missile defense as a common project. Bud get realities also can encourage cooperation outside of NATO channels, such as Romania, Bulgaria and Greece potentially sharing logistics and training for fight er aircraft programs.

The summit should also initiate a new phase in NATO-European Union defense collaboration. NATO’s Allied Command Transformation and the European Defense Agency should be tasked to coordinate, if not merge, their efforts, particularly in the realm of military re search and development. It is foolish for the trans-Atlantic community to have two separate organizations promulgating multinational in­teroperability standards and driving military capability development.

A new Strategic Concept will be meaningless if the alliance allows its financial strains to undercut co operation, cripple capabilities and undermine solidarity with international arms sales. The summit’s success will be determined by how NATO leaders harness budgetary austerity to reinforce unity, drive forward collaboration and deliver military effectiveness. Only then will NATO’s new concept have real strategic substance.

Ian Brzezinski is a Senior Fellow in the International Security Program and is on the Council’s  Strategic Advisors Group (SAG). Damon Wilson is vice president and director of the International Security Program. This article originally appeared in DefenseNews.

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