Lexington Institute Publishes New Study on NATO’s Use of Scarce Resources

The Lexington Institute today is posting a study entitled “NATO’s Last Chance: Invest Its Scarce Resources Wisely or Accept Strategic Irrelevance.” If you would like to read the study, click here to download it in PDF format.

For more than two decades, NATO spending on defense has declined to levels today that are perilously close to disarmament.  Senior U.S. officials have repeatedly warned NATO that its failure to invest adequately and appropriately in defense places the future of the Alliance at risk.  In 2011, Secretary of Defense Robert Gates called on NATO to invest its defense resources both more wisely and strategically. Yet, nearly three years later, NATO spending continues to decline, forces are being cut and military modernization programs are being deferred or cancelled.

NATO not only does not spend enough on defense, but what it does have it spends poorly.  NATO consistently overspends on people; half of NATO’s total defense spending goes to personnel.  Procurement and, in particular, R&D are shortchanged.

NATO has sought to compensate for reduced resources and fewer forces by encouraging its members to pool available assets and enter into multinational programs. Unfortunately, political differences, concerns over the loss of sovereignty, the desire to protect domestic jobs and industries and even hostility between member countries are all making it extremely difficult to take the obvious and necessary steps to coordinate defense decisions, pool resources, share assets and seek out opportunities for role specialization.

A wise investment strategy for the Atlantic Alliance would include the following elements:

• Restructure existing NATO forces in order to free up resources that must be applied to filling critical capability gaps and pursuing long-term modernization. NATO members need to reduce existing forces by an average of 20 percent, particularly those non-deployable ground forces in favor of air, sea, networks and logistics and sustainment capabilities.  NATO members need to coordinate how they reduce forces.

• Either fix the NATO Response Force (NRF) or disband it.  This should be NATO’s number one priority for strategic investments.  NATO needs to decide if the NRF is a rapidly deployable military capability, the leading edge of the Alliance’s ability to respond to a wide range of unpredictable crises or, as it is increasing being portrayed, a tool of transformation.  If the NRF is to be a credible force for deterrence and crisis response, it must be fully resourced and staffed.

• Devote additional resources to creating the capacity to conduct sustained, medium-scale expeditionary operations.  This should be its second highest priority, just behind fixing the NRF.  In particular, NATO needs to invest in stocks of munitions and spare parts.

• Increase Alliance-wide investment in such critical enablers as airborne ISR, intelligence information management systems, unmanned platforms, cyber defense, automated command, control and communication networks, electronic warfare/suppression of enemy air defenses and rapid logistics.  Current programs, while addressing some critical capability gaps such as aerial refueling and transport, do not go far enough towards investing in those force elements that almost without exception are absolutely essential to modern military operations.

• Agree to support more robust R&D spending.  NATO is in danger of falling behind, or not even being a player, in a number of important and potentially transformational areas including unmanned systems, directed energy, hypersonics, advanced power systems and cyber security.

• NATO should renew its efforts to expand defense industrial relationships, perhaps through a trans-Atlantic Smart Defense initiative.  This must be a two-way street.  Facing its own decline in defense spending, the Department of Defense should avail itself of advanced capabilities NATO allies can provide in such areas as sensors, precision weapons, naval systems and avionics.

• Finally, NATO would benefit immensely from conducting a comprehensive Net Assessment that examines the Alliance’s ability to meet its defined missions.  In particular, such a study needs to focus not on traditional quantitative indicators, the “bean count,” but on qualitative factors such as interoperability, training, exercises, intelligence, logistics and sustainment.