The Center for Defense Information
Center for Defense Information
1779 Massachusetts Ave., NW * Washington, DC 20036
(202)332-0600 * Fax (202)462-4559 * www.cdi.org
| June 7, 2001 |
| June 7, 2001 |
The Economics of European Missile Defense
Tomas Valasek, Senior Analyst, tvalasek@cdi.org
Defense Secretary Donald Rumsfeld is meeting NATO officials in Brussels, Belgium on June 7-8. U.S. plans to deploy a homeland missile defense system are expected to be high on the defense ministers' agenda. The meeting comes amidst an intensive series of U.S.-European consultations, which will continue with President Bush's visit to Europe later this month. The European allies' skepticism on the need for a ballistic missile defense (BMD) system protecting U.S. territory is well documented. Less known is the impact of these deliberations on the defense plans of the European countries themselves. The debate about ballistic missile threats to NATO has prompted, at least in some European countries, a search for an alternative to the current reliance on diplomacy and deterrence (see "Europe's Missile Defense Options, CDI Defense Monitor, Issue 3, March 2001). But even as the political will seems to be changing, budgetary realities make the deployment of a European missile defense system a distant goal at best.
Missile defenses are very expensive even by the standards of modern weapons systems. Preliminary estimates of the cost of the U.S. homeland BMD system range from $60 billion to over $100 billion over a period of ten to fifteen years. The U.S. Department of Defense spent $4.2 billion dollars on missile defense development in 2000 alone, which is more than the entire defense budget of 8 of the other 17 European NATO allies.
European BMD prospects face two kinds of budgetary obstacles. The overall amount of military spending as a percentage of total government outlays has been steadily decreasing in most European countries since the end of the Cold War. The absence of an easily identifiable military threat makes substantial defense spending increases difficult to justify. Moreover, defense funds compete with a host of other priorities. European Monetary Union membership imposes indirect constraints on government spending by limiting the amount of budget deficit relative to the country's gross domestic product. The next round of the European Union enlargement, expected to occur around 2005, will bring additional costs. Many current members will likely lose a portion of their subsidies from the EU while their contribution to the Union may have to increase in order to pay for aid to newer, poorer members. Over the long term, the demographic trends in most of Western Europe will put an increasing strain on national pensions systems. These may require higher government subsidies, thus further reducing the amount of funds available for other priorities, including defense.
Most European countries are in the midst of costly transitions from Cold War-era stationary (territorial defense) militaries to more expeditionary-type armed forces better suited to conflicts such as the missions in Bosnia and Kosovo. These processes, which generally began in the mid to late 1990s, have tied up budgetary resources at a time when, in virtually all European NATO countries, overall defense spending dropped sharply. In 1996, France unveiled a military reform plan that called for conscription to be abolished, 38 of 129 regiments to be stood down, and overall military personnel to be cut from 500,000 to 350,000. In Great Britain, the 1998 Strategic Defence Review reduced the size of the Territorial Army by around 17,000 and the size of the operational budget by about ten percent. In Germany, the 2000 military reform plan outlined by Defense Minister Rudolf Scharping envisions reductions of the number of military personnel from 310,000 to 285,000. Some 47 military sites and installations will also be closed.
However, a leaner, trimmed-down military does not necessarily guarantee savings, especially not in the short term. While the personnel expenditure - which constitute the largest portion of defense spending in most European countries -- can be expected to decline, these savings will be at least partly offset by increased procurement expenses. For example, the renewed emphasis on mobility necessitated the lease by the United Kingdom of four C-17 military transport aircraft from the United States at the cost of $210 million. The Strategic Defence Review also calls for the Royal Navy to acquire two new aircraft carriers and a number of support vessels.
Moreover, the savings derived from base closures and downsizing may take years to materialize, as the experience with base closures in the United States showed. The U.S. Defense Department shut down hundreds of installations beginning in the early 1990s in a bid to trim excess infrastructure and save money. The U.S. General Accounting Office (GAO) put the savings from base closures in the 1990-1999 period at $16.1 billion. However, during the same period, the Pentagon incurred one-time implementation costs (environmental cleanup, relocation, construction etc.) of almost $16.3 billion. Therefore, during the initial ten years of the process the Pentagon actually lost $189.6 million.
The two components of defense budget that, in general terms, would determine a country's ability to acquire a missile defense system are procurement spending and research and development (R&D) spending. R&D spending is crucial for developing the nascent missile defense technology. U.S. BMD development is being supported by an R&D program which totaled $36.5 billion in 1999. As one expert pointed out, the amount is greater than reliable estimates of the entire defense budget of any other country." In contrast, R&D spending for European NATO members plunged from $11.9 billion in 1995 to an estimated $8.9 billion. This comparison actually exaggerates the European part of the equation because a portion of the investment in Europe is lost due to duplication and lack of coordination of the countries' R&D efforts. The disparity actually prompted worries in the NATO alliance of a two-tiered membership, with Europe unable to keep up with the United States in developing and deploying modern warfighting technology.
Procurement spending dropped sharply across Europe as well. By some accounts, French equipment expenditures decreased by nearly 30 percent between 1990 and 1999. Much like R&D, procurement usually bears the brunt of spending cuts in times of financial crises because it does not require painful personnel cuts or reductions in ongoing operations. Moreover, the impact of the reductions is not felt until later. When Germany's Defense Minister, Rudolf Scharping, concluded in March 2001 that the government's defense allocation would not meet the needs of his department, he responded by ordering cuts of $240 million, a vast majority of it from the military procurement and R&D accounts.
Even countries with relatively robust procurement budgets such as Great Britain will not be in a position to allocate substantial amounts to missile defense in the near future. Britain's multi-year, $30 billion procurement plan is already appropriated for a mix of upgrades and new weapons purchases. London is planning to buy 55 new Eurofighter aircraft, as well as dozens of transport aircraft and attack helicopters. Long-term plans envision a purchase of up to 150 Future Carrier-Borne Aircraft, at a cost of $11 billion. Even without a missile defense system, critics are questioning the country's ability to finance the ambitious procurement program. But the changing nature of NATO's operations as well as EU plans for a Rapid Reaction force will continue to dictate more spending on mobility and sustainability. Even though the new posture also provides an argument for acquisition of a BMD system, it continues to sap most of the financial resources available for the near future.
Missile defense currently figures low on most European governments' list of defense priorities. Typical of the view of many allies, Britain 's 1998 Strategic Defence Review concluded that "technologies in this area are changing rapidly and it would, at this stage, be premature to decide on acquiring such a capability." Similarly, a European military official in Washington, DC told CDI that "there is a feeling [in Europe] that we need not hurry. The technology is not there and the governments have yet to decide on what type of missile defense they want."
But in many regards, the technology argument merely masks a larger budgetary problem. Defense budgets across Europe cannot accommodate the sheer cost of missile defense, at least not in the near future, without sacrifices in other procurement areas. The overall amount of defense spending in Europe is expected to stay flat or even decline. An internal NATO paper leaked to the European press concluded that only six of 16 European members of NATO plan real increases over the next five years, and these countries are all minor players, with the exception of Turkey. Similarly, the UK-based Institute for International Strategic Studies predicts that European defense spending will continue to fall at a rate of nearly 5 percent a year.
Under these circumstances, a sizable investment in missile defense would require cuts in other weapons programs, a step that may not be popular with the European defense establishments. There is "an apprehension about the cost of missile defense and what it might mean for the real investment that the European countries have got to make in the nuts and bolts of defense, like getting their soldiers and their sailors and their air crews much more relevantly trained and organized and configured for the challenges of tomorrow," said NATO Secretary General Lord Robertson.
Unlike the United States, where military spending is geared toward providing the maximum level of security technologically feasible and politically acceptable, fiscal conservatism permeates the thinking of budgeters in Europe. This philosophy is nicely reflected in the British Strategic Defence Review. "We must not skimp on the premium because we will pay a heavy price if we get it wrong. At the same time, we cannot afford the luxury of having additional forces ‘just in case'." The European approach ensures fierce competition for defense funds, in which the cost of each new program is measured in terms of very real and painful trade-offs. Assuming that defense budgets in Europe will not increase substantially, European BMD programs face an uncertain future unless they assume a far more central role in the countries' defense plans.
(This article is a portion of an upcoming CDI monograph on ballistic missile defense in Europe).
Massive Problems Prevent a Grand Design for U.S. Foreign Policy
Nicholas Berry, Senior Analyst, nberry@cdi.org
Scholars, analysts, and policy makers have tried mightily to create a U.S. foreign policy grand design to replace the Cold War paradigm.
All have failed.
The current State and Defense Department reviews -- now underway for over four months -- are likely to fail as well.
The closest anyone has come to a new design are variations on the globalization theme made popular by Thomas Friedman's The Lexus and the Olive Tree. Foreign Policy magazine proceeded to measure globalization by counting and categorizing the rapidly increasing volume of exchanges between countries. So far, translating descriptions of the new, more interactive globe into a foreign policy design has eluded even the best minds in Washington.
While efforts continue, no one has tried to explain why creating a new foreign policy design has proven elusive.
Ironically, explaining why the task is so elusive also explains why the most obvious design is destined to fail. Once it is proclaimed, the rest of the world would loudly condemn it and reject playing by America's grand design.
A grand U.S. design fully in tune with national interests would have to emerge from answers to three essential questions:
All historically dominant powers -- from the Chinese Qin Dynasty, to Greece, Rome, Spain, Portugal, France, Britain, and the United States -- have sought ways to create rules to guide international relations so they could stay on top. Dominant powers, of course, like the status quo and intensely dislike challenges to the international system that so rewards them. The last attempt, so very short lived, was Franklin Roosevelt's "Grand Design," which created the Security Council, World Bank, and International Monetary Fund and their rules for establishing a universal, liberal, world order under an American-dominated United Nations. Alas, the Soviet Union would not play by the rules and prevented the United States from consolidating its dominance.
The demise of the bipolar Cold War removed any security challenge to the United States and opened the world to a single system -- hence globalization. This new system has indeed facilitated the growth of international regimes and myriad sets of rules to regularize international relations. Although far from perfect, structuring trade relations via the World Trade Organization, managing regional conflicts via the UN Security Council, stabilizing financial transactions via the IMF, and orchestrating other exchanges through a vast number of other international organizations has made the world the most stable it has been in human history. No international wars of any note exist today (unlike many brutal internal conflicts), and none are on the horizon.
It would seem that all U.S. policy makers would welcome such a global system and build on it. The Clinton administration certainly tried, most notably in successful efforts to integrate Mexico, China, India, Vietnam, and North Korea into various international regimes. There were limits, however. One problem was ancient enemies. Domestic pressure groups working through Congress would not countenance the integration of Cuba, Iran, and Iraq into global systems. Another problem found the far left and far right opposing globalization on a series of nationalist issues ranging from loss of U.S. jobs to hatred of the sovereignty-robbing UN. As a result, U.S. accession to the Comprehensive Test Ban Treaty (CTBT), the International Criminal Court (ICC), Anti-Personnel Mine Treaty, Kyoto Accord on global warming, and other treaty-based regimes failed.
However, integrating countries into international regimes generally proved easy because virtually all governments (with the exception of Afghanistan and possibly Burma) wanted to join. Despite occasional outbursts that the United States was making too many of the rules (and avoiding the rules it disliked), revisionist blocs hostile to the United States did not emerged. The answer to the first question, therefore, was relatively easy for the Clinton administration. The United States would encourage virtually all governments to join the international community. It wanted an integrated, orderly, and peaceful world.
The second question became much more difficult to answer.
Enforcing the rules of the various regimes faced numerous problems. Any grand design authored and enforced by Washington would bring strong opposition at home and abroad. At home, opposition to "peace operations" emanated from the Pentagon, Congress, and segments of the media. Peacekeeping and peace enforcement (Somalia, Rwanda, Sinai, Bosnia) diverted the military from its combat role, it was argued, and put soldiers in harm's way in conflicts far removed from U.S. interests. An alternative enforcement mechanism, economic sanctions, generated minority opposition from international business groups and humanitarian non-governmental organizations (NGOs).
But the main opposition to U.S. military operations and sanctions arose abroad. Russia and China had misgivings over U.S.-led operations in the former Yugoslavia. They were joined by France and others in rejecting heavy-handed sanctions against Iran, Iraq, Cuba and elsewhere, arguing that the people, not governing elites, suffered under sanctions and that Fidel Castro, Saddam Hussein, and other tyrants actually used sanctions to blame the United States for their economic failings and thus remained in power.
No consensus at home or abroad, therefore, favors U.S.- (or UN-) led enforcement of the rules of international regimes. No grand design can be proclaimed. At best, the Bush administration can only suggest that regional groupings, such as the European Union in Bosnia, should bear the burden of enforcement. Letting others be responsible for keeping regional security and economic stability is no grand design.
The third question is truly impossible to answer. Even if the United States could figure out how to permanently structure U.S.-led punitive operations against aggressors, rogue states, weapon proliferators, international terrorists, and human rights violators, it could not mask its unipolar domination. Pax Americana is not an option in the world of sovereign nation states. By definition, a state cannot be under the command of another state (or international organization) and be a state. Certainly China, Russia, France, India, and the rest of the world would demand a role in shaping mutually beneficial international relations and punishing aggressors.
This is not to say that a design, perhaps one far less grand, is impossible.
The formula for international leadership has been and will remain largely based on muting self-interest. The United States provided leadership in World War II and the Cold War by taking the interests of other states into account and defending them. The process was ultimately a diplomatic one. One gave in order to receive. Against known foes, whether the Axis or Soviet Union, Washington built coalitions to overcome the enemies who threatened peace and prosperity. Its military forces and aid were tailored to meet the needs of that coalition, not just to defend the United States. The ability to create winning coalitions was the test of their validity and of American leadership.
That formula has not changed.
What is troubling is the growth of a unilateralist design in Washington that sees defensive capabilities, especially a national missile defense, as the foundation of American security. That is a self-centered design that rejects leadership, avoids diplomacy, and designates enemies.
Changing Direction
Colonel Daniel Smith, USA (Ret.), Chief of Research, dsmith@cdi.org
As undersecretary of defense for Acquisition, Technology, and Logistics between 1997-2001, Jacques Gansler often spoke about the "death spiral." He was referring to a sequence that, from the Pentagon's viewpoint, threatened the ability of the military to perform its missions: the inexorably increasing average age of military weapons in the inventory -- especially tactical aircraft; the resultant high costs of maintaining the systems to ensure the readiness of combat forces; and the subsequent reductions in force modernization accounts which delay the entry of new weapons into the inventory.
Edward Aldridge, the new undersecretary of defense for Acquisition, Technology, and Logistics, also likes the "spiral" image. But his is an "evolutionary " -- hence a presumed ascending -- spiral. As reported in the defense trade publication, Aerospace Daily, during his Senate confirmation hearing, Mr. Aldridge indicated he would not oppose fielding weapon systems before they had reached their final configuration, thus leaving room for improvements and upgrades.
On its face, following the principle that the perfect is often the enemy of the good, this policy orientation makes sense. It would encourage reductions in costs by not trying to "hang bells and whistles" on every new system, which also prolongs development time (which now can stretch to 15-20 years) and contributes to massive sub-system obsolescence by the time troops get their hands on the item.
But a caution is also in order. While it may be desirable to field systems that have not reached full potential, they must still meet rigorous, minimum performance standards -- and above all must have proven through equally rigorous testing that they are better than the equipment being replaced.
Equally, for a system that provides virtually new capabilities, such as the proposed national missile defense, whatever is operationally deployed must be credible -- to the users of the system, to the American public, and to the leaders of other nations. Deploying a "scarecrow" missile defense system whose reliability would be questionable to these three key audiences -- and which might not be evolutionary -- would be a colossal waste of human talent, resources, and time. Under such conditions, the spiral would simply unwind and collapse.
Macedonia Threatens to Declare War -- The Macedonian government has requested that a state of war be declared after the deaths of five Macedonian soldiers this week, the latest incident in four months of fighting between government troops and ethnic Albanian rebels. The rebels say they are seeking equal rights for the 600,000 ethnic Albanians in the country. Under the Macedonian constitution a declaration of war, which must be approved by the parliament, devolves all power to the president and prime minister, excluding all political parties from the political process. Analysts worry that such a move will cause the collapse of the shaky coalition government, and heighten ethnic divisions in the country.
Russia Testing Super-quiet Submarine -- The Russian newspaper "Izvestiya" reported on June 5 that the Russian navy has begun testing a super-quiet submarine in the White Sea. The boat will be put on active duty, possibly as early as July, once it passes its trials, the paper said.
Air Force Considering New Tanker -- The U.S. Air Force is considering a proposal from the Boeing Company to replace the service's KC-135 tanker fleet with a derivative of the company's 767 commercial jet liner, according the Air Force Chief of Staff Gen. Michael Ryan. The KC-135 is the backbone of the Air Force's tanker fleet, and currently nearly 650 aircraft are in service with the Air Force, Guard and Reserve. According to General Ryan the services need to begin replacing the existing fleet, whose average age is 38.5 years, within the next 15 years.
U.S. Sub Program $1.2 Billion Over Budget -- According to the trade publication Defense Week the Navy will need an additional $1.2 billion to complete the first four boats of its new "Virginia" class nuclear attack submarine (SSN-774). Originally the Navy budgeted $9.5 billion for the first four boats, but now estimate that further funding is necessary. The majority of the additional costs are higher than expected labor and material costs. So far about half the construction has been completed on the first boat, roughly a third on the second vessel, while work on the third boat has just started, so it remains to be seen if the initial part of the program will experience further cost growth.
U.S., Marshall Islands in Discussions Over Kwajalein -- With the Compact of Free Association -- the agreement which gave the Marshall Islands their independence from the United States -- set to expire, U.S. and Marshall Island officials are in discussions about the future of the Kwajalein testing range. Although the U.S. lease for the use of the atoll does not expire for 15 years, the use of the facility in the development of ballistic missile defense technology has made the testing range very valuable to the United States. The United States currently pays the Marshall Islands $13 million annually to lease Kwajalein. According to Jane's Defense Weekly, Imata Kabua, the former president of the Marshall Islands and Kwajalein atoll land owner said he would prefer to give the United States "indefinite" use of the facility in exchange for "money put up front into a trust fund."
Quotation of the Week -- "Both the Bosnia and Sinai [U.S. peacekeeping] missions are modest, and their political and diplomatic value far surpasses their military costs. To put these commitments in perspective, the U.S. Army alone has more than 1,000 personnel assigned full-time to marching bands. Now we all love a parade, but if cost-cutting is the order of the day, it might be better to get rid of the second trombone before jeopardizing regional stability and America's l eadership in the world," former Clinton administration State Department officials John Norris and Derek Chollet on Defense Secretary Donald Rumsfeld's proposals to reduce certain U.S. overseas commitments, Chicago Tribune Op-Ed, June 4, 2001.
This Week on America's Defense Monitor: "Understanding Human Security"
At the close of the 20th Century, the globalization of commerce and communications has shrunk the world and made it vastly more interconnected. The struggles of distant lands to achieve liberal institutions and better standards of living are brought home immediately by satellite and the world wide web. The new century is marked by the emergence of a new doctrine that holds that the safety and prosperity of the world community starts with respect for individual human rights. The implications for international relations and the use of military force are staggering.
Airs in Washington, DC on Sunday, June 10 at 10:30 a.m, on Channel 32.
Airs in NYC on Saturday, June 16 at 7:00 a.m. on Channel 13.
Visit our web site for transcripts, CDI resources, and related links.
Regular Price: $39 each
INTERNET PRICE: $29
Order at 800-CDI-3334, or on the web.