Full transcript of a NATO Forum public event with the United Kingdom’s Secretary of Defense Philip Hammond.

NATO: The Case for Collective Defense in the 21st Century

Retired USAF Lieutenant General Brent Scowcroft,
Atlantic Council Advisory Board

Frederick Kempe,
President and CEO,
The Atlantic Council

Phillip Hammond,
Secretary of State for Defense,
United Kingdom

Location: Washington D.C.

Date: Thursday, January 5, 2012

Transcript by
Federal News Service
Washington, D.C.

FREDERICK KEMPE: Good morning, and welcome to the Atlantic Council; Secretary Hammond, welcome to Washington and welcome to the Atlantic Council. Thanks in particular for being here to kick off what’s going to be an exciting and busy month for us here in January at the Atlantic Council – and a busy month as well for Secretary of Defense Panetta.

This month alone, the Atlantic Council will host the ministers of defense of the U.K., Norway, Lithuania, the Czech Republic and the – and the Netherlands. Because of this good fortune, and the fact that 2012 – and this year’s upcoming NATO summit in Chicago will prove crucial to the future of the – of the Atlantic Council – excuse me, of the Atlantic relationship –
we’ve restarted what we called in 2009 the NATO Forum, which we founded prior to the Lisbon summit. In the NATO Forum, Secretary-General Rasmussen spoke, Secretary Clinton spoke, Senator Lugar spoke, so you follow a good string of experts who have spoken at the Atlantic Council’s NATO Forum. It will provide U.S. and allied officials a public platform to shape the debate on the future of the NATO alliance and offer ideas on how this alliance can avoid the dim and dismal future warned against by former Secretary of Defense Robert Gates.

It must be said that, December 13th, at a dinner we had honoring General Scowcroft, Secretary Gates built upon that. Some people thought he was just talking about dim and dismal future. He went more deeply in how crucial – even with talking to the Obama administration about a pivot to Asia – the trans-Atlantic relationship becomes, as sort of a basis of what we need to do in the world.

I’m pleased that we can start the year off with Secretary Philip Hammond, who as I understand it will offer something of a British response to Secretary Gates’ tough-love farewell speech. And I’m delighted that we have no less a figure than the chairman of our International Advisory Board, General Brent Scowcroft, here today to introduce the defense secretary.

General Scowcroft has been introduced so many times at the Atlantic Council – (laughter) – and so many times by me, that there really is nothing new to say; but I found it anyway. (Laughter.) The – there was – if there was anything left out about General Scowcroft’s illustrious past and the role he’s played in the United States, then at the dinner honoring him in December, that was filled in richly by President George H.W. Bush and Secretary Robert Gates.

As many of you know, that dinner was an important part of the Atlantic Council’s campaign to build the Brent Scowcroft Center on International Security at the Council, which will be launched later this year. I want to tip my hat to Barry Pavel, the director of that center, and then the person who’s running the NATO Forum underneath him, Jeff Lightfoot. Barry comes from a rich career at the Pentagon and the White House and is just off to a terrific start at the Atlantic Council.

On General Scowcroft, here’s the new part: the – many of you didn’t know – I didn’t know – and that’s in addition to the numerous honors and awards he has been given, including the Medal of Freedom – he has also been knighted by Queen Elizabeth II in 1993 in Buckingham Palace, in recognition of his contributions to the U.S.-U.K. relationship. I’d like to note that General Scowcroft’s partner at the Scowcroft Group, and Atlantic Council board director – Frank Miller, who’s also here – has also been knighted by Queen Elizabeth. As for myself, I lived for many years in the U.K., and I never had my work permit pulled. (Laughter.)

So, without further ado, I would like to welcome the former national security adviser to Presidents Ford, Bush Senior: General – or should I say, Sir Brent Scowcroft. (Laughter, applause.)

GENERAL BRENT SCOWCROFT: Thank you, Fred. You continue to be over-the-top. (Laughter.) Happy New Year to all of you. On behalf of the Atlantic Council, it’s a great privilege for me to welcome Secretary Hammond and his delegation to the Atlantic Council.

Her Majesty’s armed forces were a frequent visitor to the Atlantic Council last year. We kicked off our 2011 programming with a public speech in January by Chief of Defence Sir General David Richards. Later in the year, the council also proudly hosted Air Chief Sir Stephen Dalton and U.K. Vice Chief of Defence General Sir Nicholas Houghton for events at the Atlantic Council, where we discussed the lessons learned from the U.K.’s leading role in the NATO mission in Libya. It’s a great pleasure to start this year’s programming on NATO by hosting a top civilian defense official of the U.K. government, Secretary Philip Hammond.

Both the U.K. and the United States are faced with the serious challenge of preserving our most important defense capabilities, even as we seek to address our serious fiscal challenges – an issue Secretary Panetta will address this afternoon when the Pentagon releases its updated strategy and new defense budget.

Secretary Hammond is well-positioned to address this fundamental challenge of our time, thanks to his experience in business and in managing government budgets. Prior to his election to Parliament as a member of the Conservative Party in 1997, Secretary Hammond enjoyed a successful career in business and consulting.

As a member of Parliament in opposition during the Blair premiership, Secretary Hammond served and – as conservative spokesman on trade and industry, prior to being named Shadow Chief Secretary of the Treasury in 2005. Following the formation of the new U.K. governing coalition in May 2010, Hammond was appointed Secretary of State for Transport, where he served until his appointment as Secretary of State for Defence in October last year.

Secretary Hammond may be new to the job of defense secretary, but he has already been very busy traveling around the world and attending to the U.K.’s most pressing defense issues and alliances, visiting Afghanistan, Japan, Persian Gulf and now Washington. I’m delighted he has chosen the Atlantic Council today to discuss the issues that confront us all in NATO, and collective defense broadly, on his first visit to Washington as Secretary of State for Defence.

Please join me in welcoming Secretary Hammond to the Atlantic Council. (Applause.)

PHILIP HAMMOND: Well, thank you very much, and let me begin in responding to those words of introduction. It’s a great honor to be introduced by someone with such a record of service to this country. I know that General Scowcroft has recently highlighted the importance of taking care of the trans-Atlantic relationship as we go through difficult times. That is very much the focus of my speech today, and if the announcement of a $500 billion budget cut doesn’t count as difficult times, I don’t know what does.

Seventy years ago this month, in January 1942, Winston Churchill was in the United States for the Arcadia Conference, the conference that set the strategy for Allied victory in the Second World War. The dispatch of U.S. army, navy, and air forces to Britain was imminent, marking the second time in a century that the United States had come to the aid of the democratic nations of Europe in their time of need. And it wouldn’t be the last time.

By the end of that decade, the trans-Atlantic alliance would be formalized in the North Atlantic Treaty Organization, NATO, the most powerful military alliance ever to exist. The primary mission: to defend its members against a new threat to the free world, the threat of Soviet communism. Today, here at the Atlantic Council – which is itself now 50 years old, and formed to promote trans-Atlantic cooperation – I want to talk about the future of NATO, why it remains important and how it can respond to the budget pressures that all its members are facing.

There are three central arguments that I want to make today. First, that collective defense is the only practical response to the world we live in – a world in which the unpredictable and diverse threats we face cannot be dealt with by any single country acting alone, and where the economic and fiscal challenges we face mean our only hope of sustaining relative defense capability is through effective collective action.

Second, that however pressing the growing importance of the Asia-Pacific region is to the United States, the alliance between the U.S. and the countries of Europe is, and will remain, of vital interest to both continents. There may, of course, be times when our interests diverge, but they will be far outnumbered by the times when our interests are held in common. The fact that other regions are growing in power and influence is a reason to strengthen the North Atlantic bonds rather than weaken them.

Third, that NATO is the best vehicle to advance our shared security agenda. It is established, proven and based on shared values. But as effective as NATO can be, Afghanistan and Libya have shown that the alliance as a whole, and the contributions of some of its members, fall short of what our collective defense requires – in terms of capability, in terms of the balance of contribution and in terms of the will to deploy. In times of economic austerity, fixing these problems will mean finding smarter ways of working together to get greater capability from the resources that exist.

But before I go on to make these arguments, as this is my first visit to the United States as defense secretary of the United Kingdom, I want to take a moment to reaffirm the special bonds that unite our two nations: the bonds of culture and history, the bonds of commerce and business and of a prosperity underpinned by free markets and competition, bonds of friendship between our peoples and bonds created by our shared values – freedom of speech and conscious – conscience, democracy and the rule of law – a rule of law which has its base in the Magna Carta, something which is very special to me because it was signed nearly 800 years ago at Runnymede in my own parliamentary constituency. And fittingly, to this day, the only commemoration at the site of signing of the Magna Carta is a memorial erected there by the American Bar Association – (laughter) – testimony to our shared values if ever there was one.

Both Britain and the United States have strong and special relationships with other individual countries, with some of whom we share many of these common bonds. But the Anglo-American relationship remains unique, proven and time-honored, particularly when it comes to our defense relationship.

It was Churchill who warned – in his famous speech in 1946 in Fulton, Missouri – that a fraternal association between our two nations would not be enough in the face of the challenges of the erupting Cold War; that together we needed to usher in a new type of defense relationship based on integration, between our nations and with our allies, of doctrine and weapons systems.

My predecessor was a committed advocate of the trans-Atlantic relationship. He and I may be different in style, but on this issue – as on many others – we are at one on substance. And I would not want to leave anyone here in any doubt that my commitment to that relationship is equally strong and equally deep.

So let me set out why I believe we need to strengthen the bonds of our collective defense in this new era. In placing the North Atlantic Treaty before the Senate back in April 1949, President Truman observed: The security and welfare of each member of this community depends upon the security and welfare of all. None of us alone can achieve economic prosperity or military security. None of us alone can assure the continuance of freedom.

So it was in 1949, and so it remains today. International terrorism, nuclear proliferation, failing states, resource depletion, the security consequences of a changing climate – this is a world of diverse and evolving threats, all of which have a global dimension. And in a globalized society, there are no corners left to hide, hoping that bad things happen to someone else.

The fact is, in this era of austerity – when budgets across the democratic world are being squeezed – none of us – as we’re seeing today, not even the United States – can afford, in the long term, the astronomical resource commitment required to deal with every threat from every source concurrently and with certainty. So collective defense is the only rational and long-term sustainable posture.

But this is about more than mutual defense, some alliance of convenience. It’s about an alliance of principles, too – the mutual interest that comes from being democratic, open trading powers who believe in freedom of speech and thought and the rule of law. The adoption of dynamic capitalism in the Asia-Pacific region and Latin America is creating movement in the tectonic plates, as relative economic power shifts south and east. It is unsurprising that the mature economies of North America and Europe look beyond the North Atlantic area, particularly into the Pacific, to ensure their prosperity and indeed their national security.

But even if we nations of the North Atlantic alliance find ourselves sometimes in economic competition, there is also a strong logic to our continued cooperation. It is in all our interests that the emerging powers become responsible members of the international community, observing the norms of behavior and international law that have been established over the past half-century to provide stability to the global system.

And it is in all our interests that the arteries of global trade are kept free, open and running. For example, our joint naval presence in the Arabian Gulf, something our regional partners very much appreciate, is key to keeping the Straits of Hormuz open for international trade. The Royal Navy will continue to play a substantial role as part of the Combined Maritime Forces, both at headquarters in Bahrain, and through our mine counter-measure vessels which help maintain freedom of navigation in the Gulf.

Disruption to the flow of oil through Straits of Hormuz would threaten regional and global economic growth. Any attempt by Iran to close the Straits would be illegal and would be unsuccessful – just one very real and very current example of where U.S. and European vital interests coincide outside the North Atlantic area, reminding us yet again why – as attention naturally drifts to the Asia-Pacific region – Europe and America have more reason to work together rather than less; because we are natural partners, and NATO is a strong and durable expression of that partnership. Like any relationship, the partnership must not be taken for granted. From time to time, it will need a little attention to deliver for all its members. And now is one of those times.

So let me turn to the challenge ahead of us. The successful response of the alliance to the crisis in Libya has reconfirmed the utility of NATO in delivering military force in a coalition and serving the needs of international security. When the United Nations Security Council passed Resolution 1973, who did they think would implement it? When sustained multinational action was required, NATO was the only realistic coordinating mechanism.

NATO provides a ready structure for joint and combined operations which it is impossible to replicate quickly elsewhere. Members can contribute to operations using existing protocols and structures. Other partners outside the alliance can be swiftly and effectively accommodated, as both the Libya operations and ISAF operations in Afghanistan have shown.

That is why NATO remains the most powerful alliance in the world and the most successful tool for collective defense ever invented. But at the same time, Libya and Afghanistan have highlighted the significant difficulties we face in ensuring that NATO continues to serve the needs of collective security.

In the course of the past year, as has already been alluded to, two U.S. defense secretaries have felt the need to express their concern about the future of NATO. Both Robert Gates and Leon Panetta, each in their own way, has asked fundamental questions about the future of the alliance.

Why does the alliance struggle to generate deployable capability from the huge forces nominally available to it? Are we seeing the beginning of a two-tier alliance, with some allies willing to participate in operations more than others? And the $64,000 question, I think: How long will public opinion in those nations who are prepared to invest proportionately more in defense capability be willing to subsidize the defense of those who invest less?

The questions were clearly and fairly posed from this side of the pond. So how should the European side of the alliance respond? First, I believe, with frankness; we have to recognize that a problem exists in order to solve it, and what the problem is. Too many countries are failing to meet their financial responsibilities to NATO, and so failing to maintain appropriate and proportionate capabilities. Too many are opting out of operations or contributing but a fraction of what they should be capable of. This is a European problem, not an American one. And it is a political problem, not a military one.

But the second thing we have to be is realistic. The economic and fiscal circumstances in which most developed countries find themselves makes this problem difficult to fix in the short term. In his message to the Senate in 1949, President Truman talked of security and economic prosperity, recognizing a central historical truth: that military power and economic power are inseparable.

Back then, the Marshall Plan and NATO were parts of the same strategy – a strategy to rebuild European power so that it could assist the United States in the containment of Soviet communism. Forty years later the Cold War was won, largely because the Soviet economic system could not sustain the investment in defense required to match NATO’s power.

Without strong economies and stable public finances, it is impossible to build and sustain, in the long term, the military capability required to project power and maintain defense. That is why today the debt crisis should properly be regarded as the greatest strategic threat to the future security of our nations.

In the United Kingdom, the government is tackling the budget deficit we inherited and a defense program that was over-heated and, frankly, unrealistic. We’ve had to make some very tough decisions to get that program back on track and sustainable in the long-term. As a result, the British armed forces that will emerge from our defense review will be formidable, flexible and adaptable – supported by what will still be the fourth largest defense budget in the world, meeting our NATO responsibilities and equipped with some of the best and most advanced technology in the world – pound for pound, I believe, one of the world’s most capable fighting forces.

The United States itself is having to rein in defense expenditure as a strategic imperative to bring budget deficits under control. The baseline from which the Pentagon is reducing is clearly in a somewhat different league to other NATO members. But the action being taken by the U.K., by the U.S. and other allies to bring their fiscal positions under control is itself a strategically essential underpinning to future sustainable defense capability.

So the simple truth is clear: Across the alliance, aggregate defense expenditure is certain to fall in the short term and, at best, to recover slowly in the medium term. So more money is not going to be the answer. The challenge is to maximize the capability we can squeeze out of the resources we have – prioritizing ruthlessly, specializing aggressively and collaborating unsentimentally. Necessity drives innovation and it breaks down barriers.

With budgets so tight, allies need to revisit approaches and ideas that might previously have seemed politically unacceptable. The secretary general’s Smart Defense points the way to how this is likely to be achieved. The goal in these straitened times is to deliver greater capability that is, crucially, available for operational use.

Let me suggest three ways that we can make this happen. First, this work needs to begin, and begin now, with an objective and clear-sighted assessment of the current state of NATO’s collective competence. This needs to take account of what we know of reductions that are already planned, how these impact on current capabilities and how well these capabilities are supported and able to be sustained. We should stack that assessment up against NATO’s stated level of ambition, which is still less than one year old. That will enable us to identify the gap that we need to tackle.

Now, I predict, with some confidence, that this will not be a comfortable exercise, but we need to start telling ourselves what our potential adversaries will already have worked out. Such an analysis will also provide a basis from which we can collectively direct the drive towards a number of capacity enhancing actions: greater pooling and sharing of capabilities; mission, role and geographic specialization; greater sharing of technology; co-operation on logistics; alignment of research and development programs; and more collaborative training. This is not, of course, an exhaustive list, but contains what are likely to be the most promising areas.

Second, we need to deal with the sensitive issue of political solidarity. Alliance solidarity – particularly the Article 5 commitment – remains sacrosanct. But we may need to think again about how likeminded allies can operate better together for non-Article 5 operations. It seems odd to me that non-NATO nations can use NATO’s SHAPE HQ and assets to undertake EU operations – the so-called Berlin Plus – yet NATO Allies who want to undertake operations are unable to do so if there is no consensus at 28. We must find a way to allow the assets of the alliance, including the command structure, to be used by the few on behalf of the many to implement the will of the wider international community.

Third, we need to build on the ability of nonalliance members to contribute to NATO operations. Both Libya and Afghanistan have shown how agile NATO can be in incorporating the contributions of outsiders. We should capitalize on this experience in making it easier for non-NATO nations and key potential partners – such as Sweden, Australia, Qatar, and the UAE, Japan and South Korea – to contribute to NATO’s operations, to fight as well as to facilitate – often without the caveats that some alliance members insist upon.

That is why another part of making Smart Defense a success should be making the alliance more flexible, encouraging collaboration among groups of members – including with partners outside the alliance – which could have the effect of boosting the overall capability of the alliance. Such an approach allows natural bilateral partnerships and regional groupings to flourish, and crucially has the capacity to add value to the capabilities available to the alliance as a whole. Britain is actively pursuing such collaborative initiatives.

The new northern group of nations – which includes the Baltic and Nordic countries, Germany, Poland and the Netherlands, as well as the U.K. – is part of this process for us. The Franco-British Defense Treaties, signed last year, herald another deepening partnership for the United Kingdom. The decision by France to rejoin NATO’s integrated command structure has opened the way for much wider defense co-operation between the two European NATO allies with the largest defense budgets, which should deliver capability available to the NATO alliance as a whole.

More widely, since the publication of our strategic defense review last October, we’ve signed three defense treaties, 26 memorandums of understanding and many other subordinate agreements with nations we see as long-term key partners, including NATO members like France and Turkey, and emerging powers such as Brazil and Vietnam. All of these relationships will enhance, not diminish, Britain’s ability to contribute to NATO. This is an ongoing program. We’re currently negotiating other agreements with a range of key allies, and this is in addition to our extensive and intensifying defense cooperation with the United States.

Britain’s commitment to retain our nuclear deterrent means that our collaboration with the U.S. – which is historic, broad and deep – will continue and strengthen. We will be working closely with the U.S. on a bilateral basis over the decade ahead as we regenerate our carrier-strike capability, to the significant benefit of NATO as a whole. And I very much look forward to signing an agreement later today with Secretary Panetta that will set out how we will take that partnership forward.

Our approach of building a network of targeted cooperation with key partners, within and outside the NATO alliance, is aimed at making Smart Defense real. We think it shows what can be achieved when major defense nations put their minds to it and when circumstances demand it. There are many different ways of working together, and we should not be afraid to explore initiatives that add value to the capability of the alliance as a whole. But for these initiatives to benefit the alliance, the capability that is produced has to be additional and it has to be deployable. As the going gets tough, we must resist the temptation of cosmetic capability and focus resolutely on that which is real.

So in conclusion, ladies and gentlemen, the solidarity of the NATO alliance is something we have come to take for granted over the decades. Of course there have been tensions from time to time, but that is always true within even the closest families. What Secretary Gates and then Secretary Panetta have done is remind us that the alliance cannot rest forever on the post 9/11 surge in U.S. defense spending. And there could scarcely have been a more timely day to make that point.

In the absence of a crock of gold anywhere in sight, that means we must renew our vows and resolve to work smarter, to deliver more with less by working ever more closely together. Doing so will provide reassurance to each other and to those who observe us. And the Chicago Summit provides the perfect opportunity. It will also offer the chance for the NATO allies to demonstrate the same resolve in drawdown from Afghanistan, and in post-2014 support for ANSF, as they have in prosecuting the campaign.

We Europeans need to reassure the U.S. that we are serious about defense, the U.S. needs to reassure Europe that you are not going away, and NATO as a whole needs to reassure the world of our solidarity and our continued commitment to our own and to the world’s security. It is worth recalling that 20-odd years ago some powerful voices were questioning the continuation of NATO in the aftermath of the fall of the Berlin Wall. We should therefore take some considerable satisfaction in the fact that NATO has proven itself both robust and flexible over the years, flourishing as its membership has grown and its strategic concept has changed.

But now, perhaps, more than ever the challenge of renewal is urgent. We’ve seen unfold over the last few years the most severe economic crisis to engulf the countries of the North Atlantic alliance since the 1930s – and I’m afraid it is not over yet. And when all of us face the same inexorable pressure to reduce deficits, when defense must compete for a share of a shrinking pot of money, it becomes ever more difficult to justify to our citizens delivering security for those who seem reluctant to value it by investing in it themselves.

So the wake-up call has come. Now let us work together to ensure that the resourcefulness that has allowed us to triumph in adversity in the past is used to turn this fiscal challenge into an opportunity – an opportunity to work more closely and more effectively together, to strengthen and renew the NATO alliance as it enters the next phase of its proud history.

Thank you. (Applause.)

(Audio break.)

MR. KEMPE: – Defense Secretary, thank you very much for what was a powerful and, I think, very important statement – powerful in the sense that you not only gave us a feeling for what the problems were, which is hard enough, but then outlined some interesting solutions. The whole notion of the greatest security threat being the defense crisis, this wake-up call, the challenge of renewal urgent – but I won’t go through all those points. People have them in their speech.

Let me start with a question and then – a question or two – I’ll go to the audience. You did talk about one of the – at the end – the need for the U.S. to reassure Europe as its part of this bargain. Some of our allies coming to the Atlantic Council have expressed concern over the decreasing number of U.S military forces in Europe. CNN.com has reported that the withdrawal of an additional 4,000 troops from Europe will be announced later today.

So first of all, does this – do these moves concern you? Second of all, have you been consulted and have you given your opinion on – and how will allies and European partners respond to these moves on the part of the United States?

MR. HAMMOND: Well, of course, reductions in U.S. troop numbers are not going to be welcomed by European allies in the alliance, but I think we all understand the budget pressure that the U.S., like all of us, is under, that the strategic imperative is to address that pressure, and also that the world is changing and a nation like the United States cannot ignore those changes – must focus on the long-term strategic challenges that the Asia-Pacific region presents.

I think Europe needs to respond in a mature way, not in a histrionic way. We need to understand why the U.S. is doing what it’s doing. We need to work with the U.S. And we need to make the case for – as I hope I’ve done this morning – for continuing the Atlantic alliance, even while recognizing that some of the new strategic challenges are elsewhere in the world, in the Asia-Pacific region.

The thing that strikes me is that the big nation-to-nation strategic challenges may be reorienting themselves, but what has been the focus of much defense activity over the last decade has been the challenge arising from failing states, chaotic subregions. And the truth is most of those failing states and potential failing states and chaotic subregions are in our backyard rather than yours, but they threaten you at least as much as they threaten us.

So I think there – that the – that the trans-Atlantic relationship needs to endure, and it is in both America’s and Europe’s interest that it should endure while we are mature and responsible about the fact that you also have to address the long-term strategic challenge of the rise of China.

MR. KEMPE: One other question regarding the announcement that’s likely to be made by the Pentagon: Partly because so much of global security has been offered by the U.S., if it is indeed true, as we think it is, that the United States is going to abandon a two-war ground capability in the face of budget cuts, what are the potential dangers in that? Is that just a natural thing, we’ve moved on from that, or is there a chance that this could invite aggression by adversaries? Are there steps one has to take as U.S. allies or does this put us into a more dangerous sort of situation?

MR. HAMMOND: Well, I think – I mean, in doing our – carrying out our own defense review we focused on making our armed forces more flexible and adaptable. And I think as you move away from – if indeed you do move away from a posture of being able to fight two big ground wars at once – you have to focus on a flexible and adaptable posture that will provide sufficient deterrence and sufficient intervention capability, but in a more adaptable and mobile way, perhaps, than the concept has been hitherto.

MR. KEMPE: The – and last question from me and then I’ll go to the audience, and this is on Iran, which you mentioned in your speech: Tensions are on the increase. We can all see them: attack on the U.S. – U.K. – I’m sorry – the attack on the U.K. embassy in Tehran last December, and war games from Iran in the Straits of Hormuz. As you look at all these tensions is just – is this just gaming or do you – do you seriously believe that threats could spiral out of control into an accidental conflict? And of course, with U.K. ships in the Persian Gulf, this has a direct impact on you as well.

MR. HAMMOND: Well, we have a strategy of pressure and engagement. The pressure is clearly mounting; the sanctions announcements have clearly rattled Tehran. The economy – the Iranian economy is already fragile and tightening pressure on their oil revenues and their ability to function as an economy is ratcheting up the pressure on the regime. At the same time, I think we also have to be prepared to engage if the regime is prepared to back down from the position that is – that it has adopted over the illegal acquisition of nuclear weapons.

So we hope that there will be a peaceful outcome, but part of ensuring that peaceful outcome is to make it – make our resolution very clear: You don’t – you don’t – in my judgment, you don’t deal with regimes like the Iranian regime by backing away. You stand firm while making it clear that there is scope for peaceful resolution if they choose to take the opportunity.

MR. KEMPE: On the other hand, they may be trying to egg on a conflict right now, and that’s what I was talking about – an accidental conflict. You know, you’ve been watching this. We’ve all been watching this for a long time. One has a feeling that one’s in a considerably different and more volatile situation right now. And I’m just wondering if one’s overestimating that at the moment or not.

MR. HAMMOND: Well, I think certainly on our side and the U.S. side, great care will be taken that any response to any provocation is very measured and that there isn’t an accidental escalation. Of course, what we cannot answer for is whether there is a plan on the other side to escalate.

MR. KEMPE: Provocation – (inaudible) –


MR. KEMPE: Please. Let’s just – Harlan, and please identify yourself too. Yeah.

Q: Mr. Secretary, I’m Harlan Ullman at the Atlantic Council and a former Royal Naval person. Thank you for your comments. I wanted to raise a question about defense management and organization. In many ways, your acquisition system is almost approaching ours in terms of cost overruns and delays. The report of the commission headed by Lord Levene had some very interesting ideas and recommendations: First, to give the services a greater input in their management and, second, to form a joint forces command which is to deal with so-called “jointery.” The services for the last 10 years, at least, have been focused on operational issues not management ones, so what do you see as the way of introducing the necessary management skills for the services to be able to do better in terms of that defense management?

And second, the U.S. had very, very bad luck with its Joint Forces Command. Why do you think yours is going to be better?

MR. HAMMOND: (Chuckles.) That’s a – that is a very good question. I think – you know, I’m 10 weeks into the job, and I have to say that one of the things that has struck me as an outsider coming in is that everything I thought I knew about this – about the insularity of the individual services turns out not to be true anymore.

I think the budget penny, in the U.K. at least, has dropped quite a long time ago. And the senior people at least, across all three services, have already moved on. They accept the need for reform; they understand that with a defense budget the size of the one we have trying to do things in stovepipes just cannot work. And the Joint Forces Command that we’re set up will enable us to manage our budgets more effectively and to make sure that the joint enablers are managed in an – in the most effective possible way.

I think the concept of delegated budgets appeals to me very much. I’ve always believed that you can’t micromanage a large organization from the top. Nobody in the private sector would even try anymore. So delegating budget responsibility and accountability is the key to making progress.

But you’re absolutely right to point out that this cannot be a cliff edge. There is a – there is a learning process. There is an acquisition of skills process, and some of those skills will have to be brought in from outside. We intend to appoint financial controllers at command level, financially qualified people. This is not simply taking the nearest convenient air marshal or admiral. This is – these posts have to be occupied by somebody who is properly qualified and competent to do the job with a dual reporting line to the department’s director general of finance, as well as to the chief of the individual command. So this will be a process and it will be an issue how we develop those skills over time.

And I think one of the – to be frank – one of the big challenges that I’m seeing in making work Levene’s recommendation is creating within the command budgets sufficient flexibility that they really can make a difference and be held accountable themselves, because there will be a tremendous instinct on the big strategic programs to still try and manage them from the top. And frankly, some of them will have to be managed from the top because the risk of cost overruns is just too large for the individual command budgets to be able to take that risk. But we have to do it.

Q: Thank you very much. Frank Kramer of Atlantic Council. Thank you for your speech, sir. I put a proposition to you, that NATO not only uses force, but it also creates stability, so initially, stability for Western Europe; after the fall of the Soviet Union, really, stability for the Central and Eastern Europe. Now, we have a situation around the perimeter – the Mediterranean, the areas around Turkey, perhaps even with Russia – and then an internal situation with respect to cybersecurity, where there are a whole host of potential instabilities or actual instabilities. Collective defense, focusing on force, doesn’t really get it all though, as collective security, which you talked about, did.

And the question I really have for you is, is NATO the only institution, or do we need to actually have a much better collaborative set of efforts so that we can reach out and use all the capabilities that are necessary, both economic, political, and alike. And if so, how does one really do that? How does NATO reach out and deal with issues like Libya post-the NATO operation or Egypt or the area of northern Iraq and others?

MR. HAMMOND: Well, I think you’re absolutely right. And I hope I touched on some of those issues in terms of an increasingly flexible approach that would allow individual NATO members, groups of NATO members to work with us outside to the enhancement of the alliance and ensuring that our structures are open to nonmembers to collaborate on an ad-hoc basis. But I think we should never forget – and this probably is the driver for the small group approach – we should never forget that even with a membership of 28, it can be challenging to get alignment. If you expand to bring in those with whom you may have very clear alignment on some issues but not on all issues, you may make the structure ineffective. And I think that would be – we risk diluting as we seek to strengthen by broadening. So we need a flexible geometry that allows us to work with those outside to bring in the resources that they have. And very frankly, that’s probably the immediate, most pressing challenge.

But I think we also should not forget that although the threat of Soviet communism has passed, Russia as a nation still exists, is still an important global player, the intentions of which are perhaps not entirely clear or predictable at this stage. And certainly, some of our NATO allies, the Baltic states would not urge us not to take our eye off that particular potential set of future challenges as we reconfigure our security and defense posture to deal with the challenges we’re immediately facing.

MR. KEMPE: Should the EU at some point be a member of NATO or have some vastly changed relationship, but membership perhaps would solve the whole issue? And that gets to the political and the economic and, you know, stability questions.

And then, with Russia, is the path sufficient? Or do you really need something even leading to some sort of membership prospective for Russia?

MR. HAMMOND: On the first question, I think the answer is no. I don’t think the EU should be a member of NATO. I think there are things that the EU can do that NATO – where NATO doesn’t choose to act. And we’re very much supportive of the EU being in a position to do that. That means EU member states focusing on real defense capability that is genuinely deployable, and there are some – there are some challenges there.

But we are very strongly opposed, in the U.K., to the creation, the replication of command structures, for example, which simply duplicate things we already have without producing any additional deployable capability. And I’m afraid some of the initiatives that we’ve seen talked about are in that space. They’re not adding to the overall capability of the European nations to defend themselves.

On the question of Russia, and this is a – this is a probably, perhaps the most important single strategic challenge – if the U.S. – if the U.S. is going to see its focus increasingly drawn to the Asia-Pacific region, how does it – how does it secure the backyard? How does it ensure that that Russia is locked into a system of global governance and collaboration, which means that we can co-exist peacefully and resolve our differences in – through structures that do not lead to conflict? I’m not sure we have the answer to that yet. And whether or not the ballistic missile defense system is an insurmountable obstacle to a proper accommodation with Russia, I don’t know whether the Russians will attend Chicago. I don’t know. And I guess that is going to be one of the big challenges of the first half of this year – how that relationship is managed forward – and one of the things we need to focus on. But I don’t have a ready answer I’m afraid.

MR. KEMPE: Would you view that as a failure if the Russians don’t come to Chicago?

MR. HAMMOND: I would hope the Russians will attend. Keeping talking is, in my view, the best way to make progress.

MR. KEMPE: Please. I’m trying to go in the order that I’ve seen people, but – yes.

Q: Mr. Secretary, thank you for being here with us today. I’m Mike Costi, recently retired from the Senate Armed Services Committee.

You’re here at a very challenging time, no question, with the reductions and budgets looming large. But at the same time, as you’re pointing out, with the complexity of the world, if anything other than increasing Russia, our entire shift towards Asia is China-based to some extent. With all the other complement of problems around us, it brings to mind the wonderful poster that I saw at the Pentagon, along the lines of what you were saying earlier that we need to do more with less. The poster says: We will do more with less until we can do it all with nothing. (Laughter.) And we have to be careful that we don’t put our planners and our warfighters in untenable positions as we all, I’m sure, would agree.

My question really is toward strategic systems that you were talking about – the need to be managed better or from above or from below or somehow managed better. Specifically, what you call the Joint Combat Aircraft and we call the Joint Strike Fighter, several British companies are very much involved in this. And there’s a lot of debate and discussion here now of how are we going to manage that going forward. I know you’ve only been here on the job 10 weeks, but do you have an opinion on this? And if so, hopefully you’d voice it. Thank you.

MR. HAMMOND: Well, one of the things I hope to begin to understand later on today in the meetings I’m having is what, if any, impact the announcements that are being made today will have on the Joint Strike Fighter program.

XXX Christina 52-62 minutes XXX

MR. HAMMOND: Well, one of the things I hope to begin to understand later on today in the meetings I’m having is what, if any, impact the announcements that are being made today will have on the Joint Strike Fighter Program. We are committed to purchasing the carrier variant, and the regeneration of carrier strike force is at the heart of our defense strategy, and we believe will be – bring a big gain for NATO, and potentially a big relief to U.S. effort in the European sphere. And we will work with the French to ensure that we have a European carrier capability always available. That will be an important step forward.

But of course we are concerned that any slippage in the program, any reduction in U.S. numbers required, could have impacts on availability and on unit cost. And with budgets very tight, we will be watching very closely any movement in predicted unit cost. And we’re already – as you may know, we’re already under some pressure from public opinion in the U.K. over the fact that we’re going to – we’re going to have built and launched carriers some years before we have any aircraft to fly off them. It’s – really, it’s a caricaturist’s dream, isn’t it – (laughter) – a navy with aircraft carriers and no jets to fly on them. And so the prospect of any further delays to the carrier variant would be – would be of concern to us.

MR. KEMPE: Excellent question. Barbara Slavin.

Q: Mr. Minister, I’m Barbara Slavin; I’m here with the council, and I focus on Iran. I wanted to follow up a little bit on Fred’s questions. There have been some suggestions in this country that, if there were to be some sort of altercation in the Persian Gulf, that the United States should take advantage of this to go and attack the Iranian nuclear installations. You spoke of a measured response to provocations. I take it that you would oppose such a widening of a conflict.

And also I wanted to get your personal view on whether you think all the pressure placed on Iran is really helping to resolve this conundrum – whether it’s not perhaps pushing the Iranians toward accelerating their nuclear program in the hopes of deterring a Western attack. Thank you.

MR. KEMPE: Given the shortness of time, let me pick up one last question as well – the gentleman in uniform. I apologize; there are a number of other people who have raised their hands, but we’ve just run out of time. Please.

Q: Thank you very much, for your intervention (very key ?), are very comprehensive. I am General (Caitucoli ?), the French defense attaché here. Very often in your speech you have said that we are facing a European problem and not an American problem, in terms of capabilities in particular. And when you were asked question about the EU, that you did not mention as such in your – in your speech, I find your answer quite strong.

So I have a question about how you could interpret what we call the mutual reinforcement between both organizations with two very concrete examples in the field of capabilities. Would you foresee in a positive way – let’s say in Chicago, for instance – a session with a side-by-side representative of NATO – of the European Defence Agency, for instance – and another person coming from Australia, Japan, Korea or whatever – to show how we can put together the efforts in the field of capabilities? That’s one.

And the second point is related to the strategic planning capabilities, C2 capabilities, of the European Union. You have spoken about duplication; that’s a word that was, I think, used the first time in this country. And you also said yourself that there is a risk of a blockage in a very wide organization if one nation does not agree to launch an operation – for instance, with a consensus rule. Do you really think that it would be duplication if we have an alternative with a European C2 structure to run an operation if there is a blockage in NATO – a wonderful mechanism when it works, but when there is a blockage, we cannot.

MR. KEMPE (?): Thank you.

MR. HAMMOND: Well, I think – again, you’re testing my – some of my technical knowledge 10 weeks into the job. But I think – you know, if the – if the European nations want to take concerted military action, there are headquarters capabilities available already for such action. We don’t need – in our judgment, there isn’t a compelling case for creating an additional standing headquarters capability, if that is the thrust of your question.

Does that mean that we shouldn’t sit down at Chicago and discuss how we can do things more smartly, how we can, you know, exchange views about how to achieve, you know – the main issue here is achieving the maximum that we can with the resources available? Of course it doesn’t mean that we shouldn’t do that. We should – we should engage with everybody and anybody.

And – but our view is, clearly, that we will move forward most effectively by bilateral and small-group collaborations, as we are doing in Europe – as we’re doing very effectively with France, not only around carrier strike but on unmanned aerial vehicles, on nuclear testing and other areas of defense collaboration – driven, I think, by a recognition on both sides that we can get more for our buck by working together than we can by duplicating things when we’re – we have no reason to build separate capabilities.

So it’s a – I would – I would advocate a pragmatic approach, and I certainly would not – if I can burrow down into what I suspect may be at the bottom of your question – I would not take an ideological position on European capability versus – EU capability versus NATO capability. I would take a pragmatic position, asking the question: Does it deliver something that we don’t already have? Does it use our scarce resources in a way which genuinely enhances the defensive capability of the countries of the alliance?

And where we do see the EU having a really powerful and important role is in combined civilian military operations of the type that we’re now exploring for Somalia, where the EU has very strong credentials in the civilian side and can build military support into that as well. And we see that as a sort of niche speciality that we should try and build on.

If I can come back to the Iranian question – if I can remember the sequence of your question – at the end you asked whether I had a concern that any of the ratcheting-up of pressure on the regime would simply cause them to accelerate an illegal nuclear program. My working assumption is that they are flat out. I’d be very surprised if there’s somebody in Tehran who’s listening to what people in Washington or London or Berlin or Paris are saying, and saying, you know what, I’m going to call up the guys down at the centrifuges and tell them to turn up the speed and go a bit faster. (Laughter.) I think they’re going as fast as they can.

And I think our working assumption also has to be that Iran has – you know, has set on a course which it will only be deterred from if the price of achieving the goal that they’ve set out becomes too high. And that is what – that is what we’re in the process of doing, by stepping up the pressure on oil revenues, on the operation of the central bank, on the economy generally. It is about raising the price and causing the regime to think about the price that it will have to pay in order to achieve the goal that it appears to have set its heart on.

Q: But no pre-emptive strike on the nuclear program – (inaudible).

MR. HAMMOND: We would – we would not favor a pre-emptive strike. We are very clear that we need to maintain the pressure, but we also need to engage. And any suggestion of a pre-emptive strike clearly is abandoning the engagement program.

MR. KEMPE: Mr. Defense Secretary, you’ve been very generous with your time. But more than that, you’ve been generous with your mind. This was a(n) engaging conversation – ideas – collective defense only practical response – responding to the pivot to Asia-Pacific and talking about the continued vital interests of both continents in the alliance.

The notion of NATO falling short on capability, balance and will – defense crisis is a great security threat – and then really outlining some responses to this: collaborating unsentimentally, smart defense, taking a look at how we can have more political solidarity within the alliance but also work better with our capable friends outside the alliance. I think there’s a lot to chew on here, very important speech and very good conversation. We thank you for that. Thank you.

MR. HAMMOND: Thank you very much. (Applause.)

MR. : Hear, hear.

MR. HAMMOND: Thank you.


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