THE DEBATE ON ENLARGEMENT (continued)
The Financial Costs of Enlargement
53. Since the decision was taken to enlarge NATO
at the Brussels Summit, an overriding concern of current and potential
Allies has been the financial cost of accepting new members. Numerous
studies on the possible resource implications of enlargement have
been produced, giving widely varying estimates. These are described
below, and are briefly summarised, in chronological order, in
the table below.
|
Cost of enlargement ($ billions)
|
No. of new entrants
|
Time-span |
Risk assessment
|
Cost to new entrants ($ bns)
|
Cost to US ($ billions)
|
Cost to other Allies ($ billions)
|
CBO[65]
|
61-125 |
four[66]
|
1996-
2010
|
high |
42-52
|
5-19 |
14-15
|
RAND[67]
|
10-110 |
four[66]
|
10-15 years |
lower
|
»8
|
|
|
DoD [68] (2.1997)
|
27-35 |
four[69]
|
1997-
2009
|
lower |
3-4.5
|
1.5-2 |
4.5-5.5
|
NATO |
1.5[70]
|
three |
ten years
|
lower |
|
|
|
DoD [71]
(2.1998)
|
1.5[70] |
three |
ten years
|
lower |
|
0.4 |
|
54. The first of the major and often-cited reports on the possible
costs of enlargement was published by the US Congressional Budget
Office (CBO) in March 1996,[72]
at the request of the House Committee on International Relations.
The study projects costs of between $61 billion and $125 billion
for five different military options and an Alliance expanded to
twenty members, and has been criticised by pro-enlargement groups
while being widely quoted by those against enlargement.
55. The study was completed before the Madrid Summit and assumes
that enlargement would involve the four Visegrad nations-the Czech
Republic, Poland, Hungary and Slovakia. It outlines five illustrative
options for enlargement, depending on the perceived security context,
and calculates the cost of each option to the Alliance over fifteen
years. The options were
- to enable the defence of a Visegrad state against limited
attack by: enhancing the defence capabilities of the new Allies,
including C3I (command, control, communications and
intelligence); increasing their interoperability with NATO forces;
improving infrastructure; procuring certain categories of equipment
and upgrading others; and facilitating NATO reinforcement if necessary
(at a cost of $60.6 billion)
- option one, plus projecting NATO air power east by upgrading
and operating air bases in Visegrad states to enable NATO forces
to be deployed from them in times of threat (at a total cost of
$79.2 billion)
- option two, plus enabling the movement of almost all the NATO
divisions based in Germany east to bases in the Visegrad nations
in times of threat (at a total cost of $109.3 billion)
- option three, plus the movement of weapons stockpiles currently
located in western Europe to permanent new facilities in the Visegrad
states (at a total cost of $110.5 billion)
- option four, plus the permanent stationing of limited numbers
of NATO forces (2 _ divisions of ground forces and 2 air wings)
in the territory of the new members (at a total cost of $124.7
billion).
56. The CBO report asserts that even the least expensive option
would require the new member countries to increase their defence
expenditure by around 60% from 1995 levels (to meet projected
costs of $42 billion), with costs to the US of about $5 billion
and the rest of the Alliance of $14 billion. Option five would
cost the new members around $52 billion, the US around $19 billion
and the rest of the Alliance around $53 billion.
57. Published in the autumn of 1996, the RAND Corporation Study[73]
also assumes that the first wave of enlargement would embrace
the four Visegrad states, with the caveat that Slovakia's prospects
for membership had "clearly diminished". The Study outlines
four options for NATO enlargement not dissimilar to some of the
CBO Report's options, and costs them over a ten to fifteen-year
period.
- self-defence support, at a cost of $10-$20 billion
- air-power projection, at a cost of $20-$30 billion
- joint-power projection, at a cost of $30-$52 billion
- NATO forward presence, at a cost of $55-$110 billion
In each case the precise cost of adopting the defence posture
would depend on the package adopted-the type of equipment or size
of forces chosen. For example, the 'self-defence support' option
could cost $14 billion with the Russian SA-10 system or $20 billion
with Patriot missiles.
58. The authors of the study do not consider these four options
to be of equal value. They point out that the 'self-defence support'
option would not provide for NATO forces to carry out new Article
5 commitments, while the 'forward presence' option "is clearly
not needed today" because it would antagonise Russia, was
too expensive and would not be based upon a reasonable risk assessment.
The chosen package would depend on the aims of enlargement and
decisions would have to be taken on how much of the posture should
be complete before the entry of the new members. The study suggests
that priorities for progress before enlargement should be C3I
interoperability, key units of the new members' forces capable
of working with NATO forces, certain infrastructure elements and
technical compatibility of weapons.
59. The study focusses on a middle defence posture option aiming
to promote stability in Central and Eastern Europe. Costed at
$42 billion over ten to fifteen years, this option would adopt
a 'joint-power projection' posture consisting of ten NATO fighter
wings and five divisions available for contingency operations
within and around the new member states. Costs are assumed to
be divided between the current Allies ($25.5 billion), the new
members ($8 billion) and NATO infrastructure funds ($8.4 billion).
The study points out that the total cost of this package would
be equivalent to the cost of a single US major weapons system,
such as buying a new fighter aircraft, or a quarter of the European
Allies' annual defence spending.
60. The RAND costings are significantly lower than those postulated
by the CBO Report. There are several reasons for this. First,
the risk assessments used by the studies are significantly different-the
CBO Report is based on the threat of a defensive war against Russia
while the RAND study is "goal- and capacity-based",
and considers that confrontation with Russia, by adopting an aggressive
force posture, should be avoided. Second, the RAND report insists
on less 'gold-plating', asserting that "because NATO allies
will help them carry out important missions, [the new members]
will not need a gleaming collection of new weapons".
61. A study commissioned by Poland's Euro-Atlantic Association,[74]
also written before the Madrid Summit, is critical of both the
CBO and, to a lesser extent, the RAND reports. The report contends
that the CBO and RAND have not drawn a sharp distinction between
the cost of on-going modernisation of the new entrants' armed
forces and the direct costs of enlargement. It groups equipment
improvement, modernisation of the armed forces, air defence systems
modernisation, infrastructure improvement, modernisation of military
training areas (apart from costs relating to interoperability
with NATO forces in all these categories) among costs that should
not be considered as direct enlargement costs. The report argues
that the CBO and RAND have underestimated the capabilities of
the aspirant members. Its assertion that the CBO's analysis becomes
"nearly ridiculous" when it recommends $4.7 billion
investment in Polish military training areas, which are currently
used by British troops, was supported by the Polish Minister for
National Defence, who told the Committee "for $4.7 billion
I do not know what we would do, what sort of Hilton hotels we
should build!".[75]
62. The Polish report also takes issue with the CBO's risk assessment,
and appraisal of Russia's military capabilities; it claims that
the current security situation does not warrant the projection,
much less the stationing, of NATO forces on the Visegrad states'
territories; and that should a serious threat require such involvement
from NATO, "the costs involved should not come under the
heading of the cost of NATO enlargement [as they would] simply
result from its broader...security policy".
63. The report makes no attempt to put a figure on the overall
costs of enlargement, but concentrates on the costs to Poland
and whether these are affordable. It unsurprisingly comes to a
low figure; estimating the cost of achieving interoperability
in the key areas of command systems, telecommunications, the air
defence system, and airfield modernisation as $1.26 billion over
fifteen years, annually equivalent to around 3.3% of the Polish
defence budget. The additional payments to NATO's common budgets
plus the costs of joint missions to Allied Command give a total
cost of less than $1.5 billion over fifteen years, which would
require an increase to the 1995 defence budget of around 4% annually.
The report concludes that the "costs of Poland's integration
with NATO do not exceed the country's budgetary capabilities"
and predicts that "the ultimate costs to current NATO members
will prove considerably lower than those projected in both the
CBO and the RAND Corporation analyses". This position is
supported by the argument of the MoD's supplementary memorandum[76]
that the demands placed upon the new members will result from
a negotiation between NATO and the new members' governments over
the 'Target Force Goals' to be set for each of them. As the memorandum
makes clear, this is the same process by which current members
negotiate with NATO over their own goals.
64. This study[77], released
in February 1997, explored issues including the rationale and
process of enlargement and its impact on European security. On
the issue of financial costs, it concludes that the total costs
of enlargement for a classified "first group of new members"
will average at about $2.1-$2.7 billion per year, totalling $27-$35
billion over thirteen years from 1997. This costing deliberately
includes both the direct and indirect (ie., modernisation of CEE
armed forces where required) costs of enlargement; about $10-$13
billion of the total cost would be spent on military restructuring
for the new members' armed forces, which is not an additional
cost caused solely by NATO enlargement. Direct enlargement costs
are estimated at $9-$12 billion over the thirteen year period
The study assumed that there would be no requirements for the
forward stationing of NATO troops on the new members' territory.
65. DoD argues that direct costs fall into two categories: steps
taken before 2001 to achieve "initial capability"-enhancements
in C3I, reinforcement reception facilities, air command
and logistics-and steps taken to attain "mature capability"
by 2009-additional improvements to the above categories plus infrastructure
and exercise facility upgrades. It is assumed that new members
will pay for their own enhancements except where they might qualify
for common funding; DoD estimates that 35% of direct enlargement
costs ($3-$4.5 billion) could be funded by new members; 15% ($1.5-$2
billion) by the US; and 50% ($4.5-$5.5 billion) by the rest of
the Allies. DoD concludes that the cost to the US are affordable-less
than 0.1% of the US defence budget over the period.
66. The US General Accounting Office (GAO) published a report[78]
in August 1997 commenting on the DoD report. The report makes
no attempt to assess the costs of enlargement itself, but asserts
that while the assumptions behind the DoD study were reasonable,
its cost estimates are questionable because of its lack of supporting
documentation; the actual costs could be "substantially higher
or lower" that DoD's estimate. However, the GAO did not regard
the RAND or CBO studies as being more reliable than DoD's.
65 The
Costs of Expanding the NATO Alliance,
Congressional Budget Office, 1996 Back
66 The
four Visegrad states: Czech Republic, Hungary, Poland and Slovakia Back
67 What
will NATO enlargement cost?
Ronald D Asmus, Richard L Kugler, F Stephen Larrabee, Survival
Vol 38, No 3, Autumn 1996 Back
68 Report
to the Congress on the Enlargement of the North Atlantic Treaty
Organization: Rationale, Benefits, Costs and Implications Back
69 An
unspecified group of two large and two small CEE states Back
70 Excluding
costs payable by new members for modernising their armed forces
and infrastructure. Back
71 Report
to the Congress on the Military Requirements and Costs of NATO
Enlargement Back
72 The
Costs of Expanding the NATO Alliance,
Congressional Budget Office, 1996 Back
73 What
will NATO enlargement cost?
Ronald D Asmus, Richard L Kugler, F Stephen Larrabee, Survival
Vol 38, No 3, Autumn 1996 Back
74 Estimated
Cost of NATO Enlargement: A Contribution to the Debate,
The Euro-Atlantic Association, available on the Internet at www.urm.gov.pl Back
75 Q
687 Back
76 Ev
p 102 Back
77 Report
to the Congress on the Enlargement of the North Atlantic Treaty
Organization: Rationale, Benefits, Costs and Implications,
available on the Internet at www.state.gov/www/regions/eur/9702nato_report.html Back
78 NATO
Enlargement: Cost Estimates Developed to Date Are Notional
GAO/NSIAD-97-209 Back
|
