Select Committee on Defence Seventh Report


The Defence Capabilities Initiative

125. The imbalance in European and US military capabilities has been an issue for NATO throughout its history. As our predecessors in the last Parliament said—

The case for a more capable and more coherent European contribution to the military potency of the North Atlantic Alliance is difficult to contest ... It is a case which has been made since 1949 ... It is a case which has been made with increasing insistence since the end of the Cold War.[134]

At the Washington Summit in April 1999, NATO launched the Defence Capabilities Initiative (DCI), as the first major attempt to redress the imbalance since the end of the Cold War. Its purpose, in the words of the Secretary General, was 'to ensure that all Allies not only remain interoperable but that they also improve and update their capabilities to face the new security challenges'.[135] The overall aim was to reflect the dramatic change in security challenges which the end of the Cold War had brought and to ensure that NATO was able to operate across the spectrum of likely missions. Its objective was to give the Alliance a greater capability to project forces to crisis areas and then to support them in these deployments, outside the NATO area, by ensuring Allies had the necessary equipment, personnel and training and by focusing on interoperability. The DCI contained 58 goals, aimed at improving capabilities in five main areas—

  mobility and deployability—to enable forces to deploy quickly outside the Alliance territory

  sustainability—in order to maintain forces at a distance from home bases, and to have sufficient forces to rotate them during long operations

  effective engagement—to have the ability successfully to engage an enemy in all types of operation

  survivability—to be able to protect forces and infrastructure against threats

  interoperable communications—to have command, control and information systems which are compatible and enable forces from different countries to work together effectively.

Running parallel to the DCI is NATO's European Security and Defence Identity (ESDI) (see paragraph 108) which has the aim of strengthening the European element of the Alliance, and encouraging European Allies to take greater responsibility for their own security. The ESDI was reviewed and reiterated at the Washington summit in 1999.

126. Our predecessors in the last Parliament published a comprehensive assessment of NATO's 1999 campaign in Kosovo (Operation Allied Force), the most severe test of the Alliance's capabilities since the end of the Cold War. The Committee identified deficiencies, on the European side, in: suppression of enemy air defences; strategic lift; all-weather precision bombing capability; tactical communications; information systems; and submarine-launched land attack missiles. It concluded that—

... Operation Allied Force demonstrated just how far the European NATO nations are from having a capability to act without massive US support ... some measures are in hand to address the major shortfalls under NATO's Defence Capabilities Initiative. Kosovo reminded us just how critical it is that this programme is backed by political will and adequate financial resources. Its successful implementation will also demand a high level of European political co-operation.[136]

127. The UK has been at the forefront of European Allies in assessing the capabilities needed in the post-Cold War world and focused its contribution to addressing capability gaps through the Strategic Defence Review (SDR). That Review concluded that—

In the post Cold War world, we must be prepared to go to the crisis, rather than have the crisis come to us ... we must focus our effort on the capabilities we need to be successful today. That will mean reductions in some areas which were needed primarily to meet Cold War threats ... we will place somewhat less emphasis on open ocean anti-submarine warfare and have fewer tanks and fast jets on the front line.

These new circumstances meant that it was necessary 'to project power more flexibly round the world' and 'move our people and equipment rapidly to troublespots'.[137] The SDR aimed to create a Joint Rapid Reaction Force (JRRF), supported by enhanced strategic air and sea lift to facilitate its rapid deployment. The MoD decided to acquire the use of up to six roll-on, roll-off (Ro-Ro) ships (through a private finance initiative (PFI)) and four C-17 aircraft 'or equivalent'.[138] These were among the capability shortfalls identified in both the EU 'Capabilities Audit' (subsequently absorbed in requirements set out for the Helsinki Headline Goal) and the NATO DCI. After a year's delay, the MoD finally signed the PFI contract for six Ro-Ro ships in June 2002, and the MoD anticipate the full sealift service being available from 2003.[139] On strategic airlift, the MoD decided in May 2000 to procure 25 A400M aircraft in a collaborative project, but as these were not then expected to be available until 'towards the end of the decade',[140] the MoD leased four C-17s from last year to provide an interim improvement in airlift capacity.

128. The UK has made progress in improving capabilities, but more slowly than originally intended. The JRRF is expected to achieve full operational capability by 2005, four years later than originally planned, following the SDR.[141] Across NATO countries, strategic air and sea lift remain insufficient, with many Allies contributing nothing. While there are considerable numbers of tactical transport aircraft, for example, the only European strategic air lift capability is provided by the UK's four C-17s.[142]

The EU dimension

129. The European Union's Helsinki Headline Goal (HHG) mirrors the Defence Capabilities Initiative, in seeking to improve the capabilities of European partners of NATO. Although the HHG is directed at securing the necessary capabilities to fulfil the Petersberg tasks, a review carried out by King's College revealed that there is a 70 per cent commonality between the measures of the HHG and the DCI.[143] Progress towards achieving the capabilities needed to fulfil the Headline Goal were assessed by EU governments at the Capability Commitment Conference in November 2000, and again at the Capabilities Improvement Conference (CIC) in November 2001. The latter identified a number of areas which required 'efforts to be made' including: protection for deployed forces; logistics; availability of ground forces, operational mobility and flexibility; naval aviation; maritime medical evacuation; combat search and rescue; air-launched precision guided weapons; deployable communications; intelligence, surveillance, target acquisition and reconnaissance (ISTAR); and wide-bodied aircraft and Ro-Ro shipping.[144]

130. In total, 104 of the 144 designated areas of the Helsinki Headline Goal have so far been achieved. Of the remaining 40 areas, 20 have been designated as high priority and are currently being developed under the European Capabilities Action Plan (ECAP), where ideas for greater practical co-operation between Allies are being developed in working panels. The shortfall areas remain largely the same as those identified at the CIC and include: precision-guided missiles; theatre ballistic missile defence; deployable headquarters; NBC; attack and support helicopters; suppression of enemy air defence; special operations forces; and air to air refueling. The UK is leading four of the active working panels, including those on strategic air and sea lift.[145] It remains to be seen how successful the ECAP will be in translating useful ideas into practical action. In any case, it seems unlikely that the EU's aim of achieving the Helsinki Headline Goal by the end of 2003 will be fully achievable, given that some of the projects will not be available until much later, notably the A400M strategic air lift project, which will not be ready for service until 2010 (see paragraph 127).

A new capabilities initiative

131. NATO carried out an assessment of progress in implementing the DCI for the NAC meeting of defence ministers in June 2001, which concluded that: 'Although progress has been made in certain areas, further efforts are required to achieve the necessary improvements.' 'Critical and long standing deficiencies' remained in such areas as: suppression of enemy air defence and support jamming; combat identification; intelligence, surveillance and target acquisition; day/night and all weather air weapons systems; all aspects of air defence; and capabilities against nuclear, biological and chemical weapons. Defence ministers recommitted themselves to making better use of existing resources, increasing available resources where necessary, and engaging more directly in decisions on potential multinational projects.[146]

132. When they met again in June this year, defence ministers concluded that the urgency for NATO to adapt its military means had increased as a result of the threat from terrorism. A 'greater and more focused effort' was necessary, which should concentrate 'on a small number of capabilities essential to the full range of Alliance missions'. The four priorities identified were intended to contribute to the Alliance's ability to—

defend against chemical, biological, radiological and nuclear (CBRN) attacks;

ensure secure command communications and information superiority;

improve interoperability of deployed forces and key aspects of combat effectiveness;

ensure rapid deployment and sustainment of combat forces.[147]

An important difference in the new initiative is that it is based on national commitments, with specific target dates. Each member is required to say, by the time defence ministers meet again in Warsaw in September, what it intends to do under each of the four headings, in advance of specific recommendations being agreed at Prague. Members are encouraged to refocus defence budgets by reducing the size of their Armed Forces and shifting resources towards modernising equipment, but also to devote more resources overall to defence. NATO members have expressed good intentions about capabilities on many occasions in the past. The Prague Summit will test whether, this time, Allies have the resolve necessary to achieve real improvements in capabilities or whether the new initiative will just be another false dawn.

Role specialisation and pooling of assets

133. It will be difficult for European members of NATO to bridge the capabilities gap with the US when, together, they spend only half of the $300 billion which the US spends (see Figure A).[148] It will be impossible while each of the big countries in Europe continues to attempt to fulfil all military tasks nationally. The new capabilities initiative therefore also encourages the pooling of military assets and role specialisation. The latter would mean that no one country would attempt to cover the full range of military capabilities but that these would be divided up amongst the Allies with each concentrating on developing particular aspects of the total requirement. To some extent this happens already as no country, with the possible exception of the United States, has the full range of capabilities.

134. Finding niche capabilities for smaller nations to fill, such as medical units and CB detection, is straightforward and there are many examples of this happening at present. The Czech Republic has formally offered a chemical and biological (CB) warfare unit for future NATO operations. In Afghanistan, the Danes and Norwegians have provided special forces, and the Danes have also provided mine-clearance specialists. Our analysis of the applicant countries indicates some of the niche capabilities which they are likely to offer to fill (see paragraphs 51-73). Meeting capability requirements in this way is a positive way forward if the skills offered are compatible, useful, sustainable and deployable and if they come without restrictions in their use. NATO needs to decide in a systematic way which country should do what, so that the range of specialisms is covered, without unnecessary duplication. Moreover, offering niche capabilities should not be used by smaller NATO nations as an excuse for not spending appropriate sums on defence.

135. Specialisation by larger nations makes perfect sense in theory but is much more problematic in practice. It means that those countries with significant Armed Forces, which have traditionally ranged across all the main military tasks, for example the UK and France, would have to contemplate giving up certain capabilities in order to focus on others. As a consequence, they would then have to rely on allies to provide the forfeited capabilities when necessary. This requires a willingness to accept a reduced capacity to act alone in pursuit of national foreign policy. It also demands a high degree of trust between allies as any mission which a country undertakes, which might require an asset which they have renounced, will only be possible as a bi- or multi-lateral operation.

136. In our recent report on Major Procurement Projects, we highlighted the sensitivities around a national government deciding to give up a dedicated airborne maritime air defence capability.[

149] Our view was that many factors needed to be in place before the withdrawal of the Sea Harrier from service could be contemplated with any confidence, and that the rationale for such a withdrawal depended critically on other navies and air forces providing air-defence cover for our forces, particularly for open ocean operations. We can therefore fully appreciate that many of our NATO allies will find it equally difficult to make the decision to relinquish a capability which will affect the ability of their forces to act alone. On the other hand, the urgent need for such radical measures was amply demonstrated during the Kosovo campaign, when non-US allies depended completely on the US for some capabilities—most notably suppression of enemy air defences (SEAD). If the national governments which make up NATO genuinely wish to make progress in improving capabilities, they will have to face these difficult decisions.

137. Pooling of assets would mean collaborating with one or more Allies to produce between them a level of capability which cannot be resourced by one country alone. It requires Allies to collaborate to a much greater extent on particular equipment projects, and to share control of some force packages (in much the same way as NATO Sentry AWACS aircraft are currently a shared capability). Collaborative projects between European nations have always been problematic, but are less of a political challenge than role specialisation, although they are frequently subject to delay—the A400M project, which we refer to above, is an example of such delays (see paragraph 127).

Defence expenditure

138. Fundamental to improving capabilities is the commitment of adequate resources. NATO as an organisation has no capacity for financing major procurement projects: this relies on each member state. One of the long-standing complaints of the United States has been the failure of other Allies to devote adequate resources to defence. One of the criteria which applicant states have been asked to meet is to commit to spending two per cent of GDP on defence: a number of existing NATO allies do not fulfil this criteria, as Figure B illustrates.[150]

139. Defence spending in the UK has fallen by a fifth in real terms since the end of the Cold War,[151] and others have made similar reductions. The SDR in 1998, which coincided with the first biennial Spending Review, introduced a 4 per cent real terms fall for the three years to 2001-02, but that was partially reversed in the 2000 Spending Review which provided for a 1 per cent increase in the (overlapping) three years to 2003-04.[152] As a result, UK defence expenditure had been set to continue its nearly 20 year fall as a percentage of GDP—down to 2.3 per cent by 2002-03 from approximately 5 per cent in the 1970s and first half of the 1980s.[153] The 2002 Spending Review, however, setting new budgets for the three years to 2005-06, includes a real terms increase of almost 4 per cent in the UK defence budget by 2005-06. The details have yet to emerge, but the 15 per cent increase for the capital element of the budget is likely to include a significant increase for equipment procurement.[154]

140. There have been more promising signs recently amongst other European allies: France, Germany and Portugal have all indicated that they will increase their defence spending. Even if these increases are marginal, the combined effect should represent a real opportunity to strengthen capabilities in the necessary ways. However, as many commentators have pointed out, it is not just a question of the amount which is spent, but how it is spent. As Figure C shows, the proportion of the defence budget which countries

devote to procurement rather than personnel costs varies considerably.[155] As we have discussed, reducing the size of armed forces is a particular issue for a number of the current NATO applicants and Figure D reinforces this point.[156] NATO defence ministers have agreed to reduce the size of national forces and shift resources to priority areas: this commitment needs to be reinforced and specified at Prague. Within procurement budgets, there is a further issue of the proportion which is spent on research and development and which therefore provides the groundwork for future capabilities. Professor Heisbourg drew attention to the ever-increasing disparity in R&D spending between the United States and European Allies: US spending will be five times greater than European R&D spending by next year.[157]

141. Despite the very real challenges that improving capabilities presents, it is vital that clear progress is made by NATO leaders at Prague. It is a crucial factor in ensuring that the United States remains interested and engaged in NATO and that it is prepared to call on NATO in future operations. As our predecessors noted, improving capabilities requires the necessary political will and co-operation, combined with adequate financial resources. NATO as an organisation cannot compel its member states to spend money on defence or to spend it appropriately. This relies on each of the Allies fulfilling the commitments which NATO membership demands, and to which they have signed up. If NATO is to remain a credible military organisation then we believe that all of its members must fulfil their commitments to improve capabilities. This means having defence budgets which effectively deliver those capabilities.

134   HC 264, Session 1999-2000, op cit, paragraph 85 Back

135   NATO Handbook, Chapter 2


136   HC 347-I, Session 1999-2000, op cit, paragraphs 310-313 Back

137   The Strategic Defence Review, July 1998, Cm 3999, Session 1997-98, paragraphs 6-8 Back

138   Eighth Report, Session 1997-98, Strategic Defence Review, HC 138-I, paragraph 190 Back

139   Fourth Report from the Defence Committee, Session 2001-02, Major Procurement Projects, HC 779, paragraph 66 Back

140   Ninth Report, Session 2000-01, HC 463, Ev 31, paragraph 9. This is now expected to be 2010, and a 'full capability' not until 2015: see HC 779, op cit, paragraph 122 Back

141   See HC Deb, 15 July 2002, c 26w. The MoD's Public Service Agreement for 1999/2000 to 2001/02 set out the intention to establish the full capability of the JRRF by October 2001. This was subsequently revised to 2002/03-see MoD Performance Report 1999/2000. Our predecessors commented on this in the Eighth Report of Session 2000-01, The MoD's Annual Reporting Cycle 2000-01, HC 144, paragraphs 30-33. Back

142   The Military Balance 2001-02, International Institute for Strategic Studies, p 290 Back

143   Achieving the Helsinki Headline Goals, Discussion Paper by Centre for Defence Studies, King's College London, November 2001, paragraph 4.3 Back

144   EU General Affairs Council declaration on the Capabilities Improvement Conference, 19 November 2001 Back

145   Letter to the Chairman from the Secretary of State for Defence, 10 June 2002, not printed Back

146   NATO press release M-NAC-D-1 (2001) 89, 7 June 2001 Back

147   Statement on Capabilities issued at the Meeting of the North Atlantic Council in Defence Ministers Session, NATO press release (2002) 074, 6 June 2002 Back

148   The Military Balance 2001-02, International Institute for Strategic Studies (IISS), Table 37 and pp 48-104. Figure A excludes data for Canada and Iceland. Back

149   HC 779, Session 2001-02, op cit, paragraphs 71-96 Back

150   The Military Balance 2001-02, IISS, op cit, Table 37 and pp 48-104. Figure B excludes data for Iceland. Back

151   Defence Statistics 2001 Back

152   Eighth Report, Session 2000-01, The MoD's Annual Reporting Cycle 2000-01, HC 144, paragraph 98 Back

153   HC Deb, 30 October 2001, cc 565-566w Back

154   2002 Spending Review, Cm 5570 Back

155   Stockholm International Peace Research Institute (SIPRI) Yearbook 2001, Tables 4.8, 4A and 4B. Figure C excludes data for Iceland. Back

156   The Military Balance 2001-02, IISS, op cit, Table 37 and pp 48-104. Figure D excludes data for Iceland. Back

157   Q 24 Back

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