The Center for Defense Information
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| February 24, 2000 |
| February 24, 2000 |
Money, Money, Who Gets the Money?
Colonel Daniel Smith, USA (Ret.), Chief of Research, dsmith@cdi.org
It has been a ritual for some time, at least the first moves. The President submits his budget to Congress in late January or early February. The Secretary of Defense, Chairman of the Joint Chiefs, and the four service chiefs appear before the Senate and House Armed Services committees to discuss the budget and its general implications for the nation's defense. In March or April, as the authorization committees begin work, the chiefs return for in-depth testimony. At this time, each service offers a "wish list" of unfunded needs (usually equipment and spare parts) that they would fund if they had more money. The wish list for Fiscal Year 1997 totaled some $15 billion (of which $10 billion was appropriated). The FY1998 list was a bit less, $11.4 billion, and that for FY1999 was $8.3 billion.
Maybe it's the result of the faster pace of life in the Internetted world, but lately the timetable for the ritual has accelerated. Moreover, whereas wish lists used to focus on speeding up the acquisition of items already programmed for future years (with the notable exception of National Guard requirements), more recent versions have been focused on items not in the Future Years Defense Plan (FYDP). This, particularly in an election year, simply stokes the fires of the old debate about "who is stronger on defense."
Consider the following.
-In their March 1998 testimony the service chiefs told Congress they "were comfortable" with the readiness of the force, although they would need more money to cover the Bosnia operation, Y2K expenses, and keep enough troops in uniform. Representative Floyd Spence (R-SC), chairman of the House Armed Services Committee, said the Pentagon needed $13 billion more over five years (FY1999-2003) simply to retain its buying power.
-In September 1998, just two days before the start of Fiscal Year 1999, with their appropriations bill passed and with negotiations over the Pentagon's FY2000 budget in full swing, the chiefs told Congress that they needed $17.5 billion more than had been projected in the 1999 budget for FY2000. (That did not include money needed for pay raises and retirement, estimated at $2.3 billion more.) Moreover, the chiefs told Congress they really needed $148 billion over the FYDP (FY2000-FY2005).
-This was followed by an October report, "Going Hollow: America's Military Returns to the 1970s," released by Senator John McCain (R-AZ) detailing a "requirement" for $27 billion over 5 years to "correct" readiness and modernization shortfalls. In the Omnibus Spending Bill (passed and signed in November) that contained funding for many departments and agencies, the Pentagon received $9.3 billion. By the time the FY2000 budget was sent to Congress in February 1999, the Administration had pumped $12.6 billion more into the FY2000 top line and $112 billion into the six year FYDP.
-Even that did not suffice. In March 1999 Representative Spence released a wish list from the services that asked for an additional $8.7 billion over the increase they had already received in the President's budget for FY2000.
This year, the whole process has been accelerated. As usual, the FY2001 budget was submitted in early February and the following week the service secretaries and chiefs appeared before the Armed Services Committees. But this year the chiefs had their list of unfunded requirements in hand when they appeared. The result was a February 11 letter from Representative Spence declaring that the services had unfunded requirements of $15.5 billion for FY2001 and $84.2 billion for the FYDP FY2001-FY2005.
Something doesn't add up, but unless one charts it out and goes through the numbers step-by-step, it's hard to see. Here's our effort (all figures are billions of dollars).
FYDP 2000-05 FY2000 FYDP 2001-05 FY2001 (Six Years) (Five Years) Declared Shortfall $148 $19.8 $84.2 -- Increase Budgeted* $112 $12.6 $15 $5 Post Budget Wish list -- $8.7 -- $15.5 Appropriated Over Budget -- $8.8 -- TBD
*From previous year
(1) The FY2000 declared shortfall and post budget wish list equal $28.5 billion.
(2) This is partially offset by the $12.6 billion budget increase plus the $8.8 billion Congress added to the budget ($21.4 billion), leaving $7.1 billion "unfunded" for FY2000.
(3) Carrying over this amount and adding it to the acknowledged difference in the six year FYDP -- $148-$112 or $36 billion -- totals $43.1 billion going into the FY2001 budget cycle.
(4) This $43.1 billion for the 2001-2005 FYDP is offset by the $5 billion increase in the budget just submitted by the President.
(5) After adding and subtracting, the math produces a declared shortfall of only $53.6 billion, which is only 63.7% of the amount Representative Spence says the Pentagon will be short over the five year FYDP.
It seems that those who ask for and appropriate money are not satisfied with mere budgetary "gimmicks" like supplemental appropriations (not counted against the budget) for non-emergency needs or pushing expenses into the following fiscal year by paying salaries and bills from contractors on October 1 instead of September 30. When the service chiefs arrive on Capitol Hill for initial budget hearings carrying wish lists, the whole process of developing responsible spending plans goes out the window.
Congress may not like the defense budget it receives, but declaring it has massive shortfalls -- especially when the "shortfall" is a third more than what even the service chiefs identify as unfunded -- shortchanges the entire deliberative process that lies at the heart of democratic government. In such circumstances, taxpayers are justified in questioning whether the military budget has been turned into a barrel role -- not just any barrel but a gold-plated pork barrel.
The Passage of Normal Trade Relations with China Is a Security Issue
Dr. Nicholas Berry
Congress is now considering legislation granting China permanent normal trade relations (NTR) to facilitate its entry into the World Trade Organization (WTO). So far, the debate has centered on economic and social issues, such as opening China's market, human and worker rights, and the environment. Suddenly, Beijing's February 21 White Paper threatening Taiwan with military action if Taipei "indefinitely refuses to resolve the reunification issue by peaceful negotiations" injected major security concerns into the NTR deliberations. Congress, predictably, reacted negatively to Beijing's saber-rattling.
In actuality, granting China permanent NTR status has always been a security issue, a point few in Washington seem to have recognized. Beijing, unintentionally, has placed the issue firmly in its proper setting.
Before Beijing's latest White Paper, trade deliberations were a battle among special interests. A number of groups oppose granting China NTR. American labor wants to protect union jobs threatened by goods produced by cheap foreign labor. Human rights activists fear losing the stick of economic sanctions -- which would be restricted if NTR is granted -- to pressure Beijing to treat its citizens better. The Taiwan lobby wants to restrict U.S. relations with the Mainland and expand them with Taiwan, while the Tibetan lobby looks for U.S. backing for its efforts to gain autonomy and the restoration of its culture. Some defense analysts and their Pentagon allies want to slow the Chinese economy and thus its emergence as a major competitor.
A coalition of interests is on the other side. The majority of academic and think-tank Asian specialists want NTR to promote further engagement with China, which they see as a way to encourage economic and political reform. American farmers visualize a vast market for their products. Likewise, multinational corporations want greater access to the Chinese market for direct investments and exports, while American retailers want to maintain imports of inexpensive Chinese toys, appliances, textiles, footwear, and tools.
With two large coalitions fighting it out to advance their narrow interests, the big picture got lost. Until the recent Chinese threat, media coverage barely existed. The public didn't care, and so the larger issue of American security relations with Asia was virtually ignored by the presidential candidates in their campaigns.
If NTR is placed in the context of U.S. security, then arguments for its passage would be bolstered and its passage more likely. The case begins by asking what the consequences will be if NTR is rejected. That our economy will suffer, although obvious, carries little weight in these prosperous times. That our security will suffer, however, would carry far greater weight.
Congressional rejection of NTR for China would be interpreted in Beijing as a hostile act, part of an American strategy to weaken and contain China. In particular, China's Communist elite would likely see the rejection of NTR as an assault on the Party's legitimacy as the country's ruling body. Such an interpretation would easily be possible, since the grounds for denying NTR status must rest on charges that the Beijing government is corrupt, tyrannical, polluting, exploitive, and militarily aggressive. Accusations of this nature could be seen as the initial step in a plot to destabilize China by provoking a struggle for power within China as the U.S. moves closer to Taiwan in order to maintain Taipei's autonomy. Beijing could anticipate that the U.S. plans to abandon the "one China" formula in favor of "two Chinas, two systems." Advocates of modernization, reform, and international integration in the Chinese leadership, especially Prime Minister Zhu Rongji, would be discredited and hardliners' credibility bolstered. There is no question; rejecting NTR would be perceived in China as both insulting and threatening.
Beijing would likely counter with three hostile actions of its own. The first would be a propaganda barrage with the theme that the U.S., under the sway of right-wing, militarily-aggressive circles in Washington, was deliberately risking a dangerous confrontation with China. The target audience would be U.S. allies in Japan, South Korea, Australasia, Southeast Asia, and Europe. These countries overwhelmingly favor integrating China into the global economic and political systems and would see congressional rejection as a further example of U.S. neo-isolationism and unilateralism unchecked by a weak president. U.S. international influence and alliance solidarity would decline as a result. Second, to reinforce its propaganda line blaming the U.S. for raising tensions, Beijing would increase its arms purchases and security consultations with Russia. Already, Russia is selling China advanced Sovremmeny-class destroyers equipped with deadly Sunburn anti-ship missiles, modern diesel submarines and Su-27 and Su-30 warplanes. Moscow, resentful of what it sees as U.S. arrogance in expanding NATO and bombing Yugoslavia, would make a show of siding with Beijing. Third, greater pressure would be put on Taiwan to get it to reaffirm the "one China" policy and begin talks on reunification. The pressure might include more missile firings near the Taiwan coasts, as happened in 1996, or introducing a UN resolution formally denying Taiwan sovereignty, putting the U.S. on the spot.
Any or all of these possible reactions from China would trigger a counter-reaction in Taiwan. Regardless of who wins the March 18 presidential election, the new president would interpret congressional rejection of NTR as a move backstopping Taipei's autonomy as the favored social, economic, and political system for China. Naturally, Taipei would be less anxious to begin negotiations with Beijing on reunification, further inflaming rhetoric -- or worse -- across the Taiwan Strait. More threats from the Mainland could be anticipated, even if Taiwan offers to negotiate to ease Taipei's current restrictions on direct shipping, transportation and communications across the straits (which now have to go through Hong Kong).
The situation in East Asia created by rejecting NTR would inevitably reverberate in Washington. Congress would interpret Beijing's propaganda, its closer ties with Moscow, and its saber-rattling towards Taiwan as confirmation of China's true intentions and justification for its vote denying NTR. China would be seen as tyrannical, incorrigible, and militarily aggressive. Anti-Beijing political forces in Congress, media, think tanks, and Pentagon -- the "Blue Team" -- would be further energized to push the Taiwan Security Enhancement Act through the Senate (it has already passed the House, 341 to 70). By restoring formal military ties to Taiwan and opening the way for more arms sales to the island -- key provisions in the Act -- the confrontation with China could reach crisis proportions. Beijing would have to respond. Who knows what could happen next.
Neglecting the security implications of NTR is to neglect and endanger American security. Where is the leadership on this issue?
CDI on the Presidential Election 2000
As a public service to American citizens and in keeping with the mission of the Center for Defense Information to present objective analysis of military and military related issues, CDI has created a chart details the positions on national defense taken by the major contenders for the Office of the President of the United States in the coming general election.
The Center for Defense Information neither endorses any candidate nor contributes to any candidate's campaign.
The candidates' own web sites proved to be the most useful source of statements on defense and foreign policy issues. Each candidate has given one or more major national security speeches, usually posted on their web sites, addressing most issues included in this survey. CDI also searched transcripts of the candidates' debates and major news databases for defense and foreign policy positions.
CDI carefully selected statements that best summarized the candidates' positions on national security issues. In the interest of brevity, no more than one or two comments per candidate per issue are provided. As a result, some simplification of the candidates' positions inevitably occurred. Nevertheless, the statements selected represent a fair assessment of the candidates' positions. For our analysis, visit CDI's Presidential Election 2000 web site.
Russia Expands Political and Military-Technical Ties with Iran
Olga Kryazheva, Research Assistant, okryazhe@cdi.org
A major reason why Russia continues to help Iran build its military machine is the deep crisis that has engulfed Russia's military-industrial complex. With the collapse of Moscow's military budget, the Russian defense industry has had to survive almost exclusively by exporting arms. Although Russian military officials decline to reveal the price of the weapons and technologies they sell to Iran, Russia is suspected of "bargain-basement" pricing in order to earn much needed hard currency. Last month, Iran began producing on a large scale the Russian-developed 9M13 Konkurs anti-tank missile. This wire-guided missile can be launched from the ground as well as from many types of vehicles. It has a minimum effective range of 75 meters and a maximum daytime range of 4 kilometers (up to 2.5 kilometers at night). Iran also has taken delivery of a Russian-made MI-171 transport helicopter, and under terms of a Russo-Iranian agreement, it will receive four more helicopters by the end of March 2000.
According to the Russian news agency Itar-Tass, CIA officials suspect that Russia is continuing to sell missile technology to Iran despite U. S. efforts to halt this form of technology proliferation. The reported conduits for missile components and nuclear technologies are Rossvooruzheniye, a Russian state agency and arms trading company; NPO Trud, a rocket engine manufacturer; the Russian Space Agency; and private firms. Should the missile and nuclear cooperation continue, U.S. officials believe that by 2001 Iran could produce nuclear-tipped missiles capable of hitting targets in the Middle East and Europe.
The CIA has recently reported to the White House that it can no longer effectively monitor Iran's nuclear weapons production and that Iran has made considerable progress toward building a bomb. However, the Russian government states that although Iran is building a nuclear power plant with Russian help, it is not seeking to build a nuclear bomb or other weapons of mass destruction. On February 9, Russian Nuclear Energy Minister Yevgeny Adamov said that Russia would expand cooperation with Iran in "peaceful" uses of nuclear energy. Specifically, it would "press on" with the construction of a nuclear power station in Iran and provide it with three reactors. Since Russia earns $1 billion for every nuclear reactor it builds, it has refused to suspend the power station construction in exchange for $100 million offered by the United States. For its part, on February 24, the U. S. Senate passed a new Iran Non-Proliferation Bill that halts U.S. financial assistance to Russia, specifically the Russian Space Agency, if Moscow continues to export technology to Iran.
Statements by the secretary of Iran's National Security Council, Hasan Rowhani, echo the Russian position. Rowhani says that nuclear cooperation between Iran and Russia is aimed at the peaceful application of nuclear energy in accordance with international conventions. Iran's ambassador in Moscow, Mehdi Safari, in an interview with Interfax last week, also denied Western media reports that Russia continues to supply missile technology and components for weapons of mass destruction to Iran. As do their Russian counterparts, Iranian officials insist that Russo-Iranian cooperation in nuclear power engineering is monitored by the International Atomic Energy Agency.
Beyond the hard currency that can be earned by Moscow, Russian-Iranian military and nuclear cooperation is intended to balance U.S. influence in the Persian Gulf and Caspian regions. Russia and Iran have called for joint cooperation in the field of oil and gas pipeline construction in order to prevent U.S. control of Caspian Sea oil resources. Both countries have denounced United States investments in the Caspian region and regard them as a hostile attempt to expand U.S. economic influence. For their part, U.S. officials fear that Russian military assistance may encourage Iran to seek dominance in the Persian Gulf and push its neighbors to raise oil and gas prices, which would damage the economies of the United States and Western Europe, the world's largest oil importers.
The stage is thus set for heightened tensions between the U.S. and Iran and Russia which are intent on limiting the "hegemony" of the U.S. in both the Caspian and Persian Gulf regions. The question is how long such opposition will endure, given the historic rivalry between Moscow and Tehran.
Air Force Secretary Predicts Congressional Approval of F-22 -- Secretary of the Air Force F. Whitten Peters believes that even after last year's congressional decision to delay production of the F-22 by at least a year, that there is still broad Hill support for the program. "I think the F-22 will be supported assuming that it continues to meet its testing requirements, which it is doing very well." There is just under $4 billion in the FY'01 budget request for the F-22, which includes funding for the production of 10 aircraft. Each plane is expected to cost $183 million.
UN Authorizes Peacekeeping Force for Congo -- The Security Council has authorized a 5,500-member UN force to monitor the cease-fire agreement in the Democratic Republic of the Congo. The United States drafted the resolution, which was approved unanimously. The resolution increases the current UN mission in the Congo from 90 liaison officers to 500 military observers and up to 5,000 troops. Deployment will begin when UN Secretary-General Kofi Annan believes the warring parties will cooperate with the UN and the troops security can be ensured.
US Suspends Gun Exports to Canada -- The United States has announced that it is temporarily suspending exports of handguns and ammunition to Canada because of fears that the weapons are re-entering the United States. Nine months ago the United States began requiring licenses to export weapons to Canada. Since April, 1999, licenses have been issued for 115,000 handguns, 25,000 rifles and 200 million rounds of ammunition. U.S. officials are not exactly sure where these weapons and ammunition have ended up, and believe they are being smuggled back into the United States. The suspension begins immediately.
Boeing Strike Causing Delays in JSF Program... -- Boeing's labor strikes, which began February 9, are having an effect on its Joint Strike Fighter (JSF) development program. While a Boeing spokesperson described the effects of the strike as "moderate," some of the activities related to the first flight of the company's test aircraft "have been compromised." The spokesperson said that it was too soon to tell if delays caused by the strike would push back the testing flights of the aircraft, which are planned to begin this spring.
....While Lockheed Moves Ahead With JSF Engine Testing -- Lockheed Martin, which is competing with Boeing for the JSF program, says the Pratt & Whitney engines used in its aircraft have exceeded the thrust requirements for the aircraft's short takeoff and vertical landing (STOVL) propulsion system. The Marine Corps requirement for the JSF, which is to replace the service's fleet of Harrier jets, includes STOVL capability.
This week on America's Defense Monitor: "The Military-Industrial
Squeeze"
Despite the rosy talk of surpluses, there is simply not enough money available to the federal government to fund all the programs on its wish lists. Budget gimmickry is a sophisticated art on Capitol Hill these days, but hiding every excess as an "emergency measure" won't work forever. In the years to follow, Americans will be forced by fiscal reality to make hard decisions about acceptable levels of military spending versus investments and spending in non-military areas like social security, education, housing and healthcare.
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