MR MARTIN WOLF CBE

19 JUNE 2007

  Q1 Chairman: This is, interestingly enough, the first of our evidence sessions on NATO. It seems as though we have been discussing this issue for a very long time. Nevertheless, I welcome Martin Wolf to give evidence on this very important subject. Mr Wolf, thank you for coming to give evidence. Perhaps you would begin by saying what you see as the current role and purpose of NATO, whether you consider that the Alliance is still relevant and whether you believe it has a long-term future.

  Mr Wolf: I begin by saying that I am a little surprised to be here because it is somewhat outside my normal area of expertise, which perhaps gives me the benefit of ignorance. I do not know fully why I was invited and I just give that qualification, but it allows me to be brief. As to what NATO is for, it is the military arm of the West; it exists in present circumstances to provide security to its members and to extend military action to other parts of the world if there is a consensus among its members that such action is needed. It is relevant to the extent that the West with NATO at its core itself remains a relevant alliance in the world today. My view is that it ought to remain a relevant alliance in the sense that there are still large common interests and substantial common values binding together the two sides of the Atlantic. Those are values we share with one another and with no other great powers to the same degree. Whether it remains relevant depends on the future of the West itself.

  Q2  Chairman: When I ask whether the Alliance is still relevant the answer is that it ought to be but you are unconvinced that it does?

  Mr Wolf: It ought to be. I do not say "unconvinced"; that is not the way I would put it. Whether it turns out to be depends on the choices made by NATO members, particularly its leading ones, above all the United States, in terms of how they perceive their interests and the achievement of their security objectives in the world under today's circumstances. I believe they ought to see the maintenance of the West as an integrated alliance, including a military component. This is an essential part of that interest. It is pretty clear that in recent times that has not been a dominant idea in America. Whether or not it will be a dominant idea is in play and is to be decided in succeeding years. I know what they ought to decide in our own interests and what we ought to decide in ours, but it is to play for; it is not obvious that it will evolve. I can perfectly well imagine a world in which essentially the two sides of the Atlantic go their separate ways.

  Chairman: We will come on to the American perceptions in just a moment.

  Q3  Willie Rennie: What do you believe are the principal challenges facing NATO, and do you think it is capable of meeting those challenges?

  Mr Wolf: I define it in terms of maintaining the security of its members in the first place and out-of-area operations. To deal with those separately, despite what has happened recently in relation to Russia, which is clearly our most important and potential threatening great power neighbour, I do not envisage a return to the cold war circumstances, but we have made commitments vis-a"-vis members in central and Eastern Europe and they are vulnerable states. I believe that our ability to meet those commitments under all circumstances is in question. The meeting of those commitments under certain circumstances could be very difficult, so that is part of the answer as to what we are there to do and whether we can do it. Clearly, there are also security concerns in all NATO members, particularly European ones. In relation to terrorism on the European mainland and North America I think NATO is fairly irrelevant. I do not see that as essentially a NATO issue though it is a very big security concern. There may be circumstances which are not too difficult to envisage in which other powers pose quite a significant military threat to Europe, for example a nuclear-armed Iran. In those circumstances to meet that threat would obviously fall within the purview of NATO, and it would be quite difficult to do so. Presumably, one would go back to some form of nuclear doctrine. In terms of out-of-area missions, particularly in the crucial case of Afghanistan, these are above all new areas of activity for NATO and were not the sorts of things that it did for most of its history. I believe that as part of being an effective alliance it should be able to do these things. It is not obvious to me—I am by no means an expert—that it does have the capacity, resources and will as an alliance to carry out those out-of-area missions. It seems to depend heavily on a limited number of members who are very overstretched.

  Q4  Willie Rennie: That is quite a traditional view of NATO as being very military-focused. Do you not think there is room for rethinking its role and looking at other issues?

  Mr Wolf: The way I see it is that NATO exists to perform a military security function. There are institutions to provide other aspects of policy and security, particularly the European Union in the economic sphere. If you mean whether, starting off obviously with the West, we should be thinking of a broader transatlantic community which goes far beyond security questions, that is a very interesting question. I am not at all convinced that the right way to deal with it is to extend NATO itself into those areas. I have a general rule developed from 35 years of observation which is that institutions exist to do the things they were created to do, and that is what they are good at. If they are no longer relevant they should be scrapped. If you want them to do something altogether different create a new institution.

  Q5  Linda Gilroy: You said that there would be issues arising from obligations to newer member states, but Turkey has been a member for some time and is in an interesting position, particularly in view of whatever happens in Iraq. What do you think about the attitude to that in the American administration and on the Hill?

  Mr Wolf: Clearly, the issue is not the need for other NATO powers to defend the security of Turkey as Turkey perceives it; rather, the issue is one of dissuading Turkey from taking certain actions which the Turkish military may believe is in its interests from a security point of view but we do not. That is the basis of this particular conflict. I will not talk about the wider conflict over Iraq which is a separate thing. We have a fairly powerful interest in dissuading the Turkish military from invading Kurdistan which I think would create lots of problems. It is not a traditional security obligation of NATO in the sense it is Turkey that is under military attack or threat; it perceives the security danger because it perceives a risk to its own integrity, but there is nothing NATO can do about that. The grave risk is that Turkey will take actions which enormously worsen the position in both northern Iraq and Kurdish Turkey—not that they would ever be likely use that term—or regions of Turkey in which Kurds live. NATO has very little leverage in this situation. There are two institutions that have some leverage. The relationship between the United States and Turkey has become very difficult since the Iraq invasion for obvious reasons and, in a completely different way, with the European Union because of Turkish membership that goes well beyond narrow security issues. Because of the fast declining credibility of EU membership the leverage of the EU over Turkish politics is declining very rapidly. Turkish politics are moving into an extremely unstable phase over which I think we have next to no leverage. I have followed Turkey very closely for about 25 years.

  Q6  Linda Gilroy: Do you believe that the United States needs to take more interest than it appears to be taking at the moment? On our recent visit we understood they felt it was very much an EU issue. For the reasons you have just outlined, do you see any sign of that happening?

  Mr Wolf: Membership is an EU issue, but it must be said that very consistently the United States has under all administrations of which I am aware pushed Turkish membership of the EU. I have always regarded that as somewhat cheeky. My response has been that perhaps they should take Mexico into the American union. The point is that they have always been very interested in Turkish membership for these reasons, but surely they are interested in what happens in Iraq, not least because they have a very large army there, and I am reasonably sure that they would find a significant Turkish invasion of Kurdistan immensely worrying. I would be terribly surprised if they were not discussing that with the Turkish army directly. My impression is that the Americans are the only political entity to which the Turkish army ever listens.

  Q7  Chairman: You said that we had next to no leverage now. Were you referring to Europe as opposed to the West?

  Mr Wolf: The United States continues to have substantial leverage as long as it remains a major Middle Eastern power particularly in Iraq, because the outcome in Iraq, about which the Turks care a great deal particularly with the possibility of the fragmentation of Iraq so that Kurdistan emerges as a state, is of enormous concern to them, rightly or wrongly. Clearly, the Americans will continue to play a very large role in it. I do not say that the EU has no leverage but its leverage is substantially diminished, because no intelligent person believes any more that the EU will let in Turkey.

  Q8  Linda Gilroy: I was interested in your comment that NATO's future depends on choices as to how it perceives its interests and security objectives. Do you think that NATO has a role to play in energy security? If so, would you care to discuss any differences there may be in terms of the perspectives on either side of the Atlantic?

  Mr Wolf: I would have thought that NATO as an organisation, as opposed to its members, had at least rather limited functions in energy security. I have not thought about it much. I have written about energy security. The only area where I think it would be relevant would be the potential for large-scale military attacks on energy installations. I do not know where that would be and from whom. I leave aside terrorism in which obviously armies would be involved to some degree. The only other respect in which military force might be relevant to energy security would be the Middle East itself. One can just about imagine circumstances in which a very large military force might be needed to deal with threats to energy security emanating from the Middle East. I would have thought it very unlikely that they would be NATO missions. The last and most obvious example of a major military engagement related directly to energy security was Gulf War One. For very obvious reasons, that did seem to me to have very clear energy aspects since it was not in our interests that Saddam should control Kuwait, let alone Saudi Arabia, but in the end it did not involve a NATO mission. I can imagine circumstances in which NATO would be involved in energy security, but it does not seem to me to be central either to the issue or the organisation.

  Q9  Linda Gilroy: There are various predictions about how long oil supplies will last and what we shall be able to do in response to that. One way in which energy security is beginning to appear on the horizon is in relation to climate change and the movement of people that that could entail if predictions over the next 30 to 40 years come to pass. I guess that is what NATO needs to begin to prepare itself for.

  Mr Wolf: We are talking about very long-term risks to do with climate change. I have looked fairly closely at the forecasts on climate change. Not many of them suggest the need for enormous movements of people within any of our lifetimes. Most of the significant changes occur well into this century or even the next. I would assume—but I am a cynic—that every effort will be made to prevent these movements. Whether NATO will end up as the police force in this case so far in the future I honestly do not know; it will in part depend where they come from and the precise nature of the climatic changes and their impact, but I suppose that the most obvious continent to be affected is Africa.

  Q10  Linda Gilroy: And the Mediterranean?

  Mr Wolf: Yes. One can imagine a situation in which one would be spending a lot of time shooting desperate refugees, if that is what you are thinking of.

  Q11  Linda Gilroy: I hope not!

  Mr Wolf: That is the implication of using military force to deal with this. It does not seem to be a very satisfactory solution. There are quite a few other and more desirable solutions than that one. As to energy, except in an extreme situation of somebody getting monopoly control of the world's principal oil reserves in the Middle East—they account for two thirds—I cannot see any role for military force as a central element in energy security beyond the obvious things like pipeline facilities, oil terminals, refineries and so forth which need to be protected.

  Q12  Mr Hancock: How important do you think NATO now is to the United States, and to what extent is Washington re-engaging with the Alliance? Do you think that the cost of NATO is a burden that the American taxpayer will be prepared to go on shouldering?

  Mr Wolf: I followed this debate quite closely in the early part of this decade and less so in the past couple of years. My honest answer is that I do not know because I think the Americans do not know. My perception—it was an important part of the columns I wrote on this subject, which I suspect is why I am invited here—is that the United States is in the process, rather unsatisfactorily, of working out a new foreign policy in response to a new world. This has been going on since the fall of the Soviet Union and has been greatly accelerated by two further developments: the rise of China and Islamic terrorism and fundamentalism. US foreign policy as designed after 9/11 is widely regarded in the United States as having been a failure and is about to be rejected by both parties. Clearly, that foreign policy was essentially a rejection of the Alliance structure as a constraining force. It was seen as a constraint on American power and therefore a nuisance. The splits in Europe at the time of the Iraq war really confirmed that view. Today, the view is very different for two reasons. First, the policy pursued outside the Alliance structure has been seen very widely to be a failure. I am not talking just about the obvious opponents; it has been regarded widely as a failure. Second, there is a need to have allies that are potent, credible and consistent and therefore, obviously, within some sort of structure they are also perceived as of much greater value than before. But I do not think that means they have gone all the way back to thinking that the entire security aims of the United States should be pursued within NATO, because they are also not at all clear what the other members of NATO give them. The way I perceive it is that the foreign policy, a fortiori the security policy, of the United States is "up for grabs" at the moment. We are in a time of enormous flux in American thinking about what they should be doing, what their role in the world should be and how their allies fit into that. One can perfectly well imagine outcomes in which they decide that NATO is an important element in their foreign and security policy but not the only one, or possibly even the central element. It will depend on what the other members of the Alliance bring to the table that is of value to them and how co-operative they are from their point of view, that is, how widely they share similar perceptions, interests and values, how effective the institution is and how grievous the constraints imposed upon US action by the requirements of alliance cohesion are seen to be. All of that is to play for and will depend on who wins the Washington debates and the presidency, which is very important, but also, more broadly, how the debate in Washington goes and how the allies behave. In that regard Afghanistan will be a crucial test.

  Q13  Mr Hancock: How does the United States now see ESDP? Does it view it as a threat to its view of what NATO ought to be and what it could be, or does it regard it as something that complements NATO and maybe takes on some of the burden?

  Mr Wolf: To show my ignorance, can you spell out ESDP?

  Q14  Chairman: It is the European Security and Defence Policy.

  Mr Wolf: I have forgotten these abbreviations; there are so many in the field of economics. I do not believe that the US regards it as relevant or as a threat.

  Q15  Mr Jenkin: Assuming that we have no ambivalence in the United Kingdom about the indispensability of NATO to our national interests, how should the UK Government conduct a policy in order most effectively to engage the United States? Is not the mixed signal of creating a European Union defence identity creating more difficulty than it is worth? Is not the engagement of the United States a more important policy priority for the United Kingdom?

  Mr Wolf: I do not know how much it will put them off. I think the Americans have concluded that it does not amount to anything. Their point of view is that if the Europeans, either as individual state members of NATO or through the ESDP, turn out to be effective militarily and as allies they are not particularly worried which institutional form it takes. At the moment the American view would tend to be that on the whole they are effective neither militarily nor as allies, but I am not convinced that the particular institutional form that the Europeans seek will be determinative of how the Americans view it.

  Q16  Mr Jenkin: If it duplicated NATO assets wastefully, discriminated against non-EU members of NATO or decoupled security policy between Europe and the United States those would be concerns?

  Mr Wolf: If all those things were true they would not be very happy.

  Q17  Mr Holloway: If there was a very large terrorist attack against a NATO country what sort of political effects might emerge from it?

  Mr Wolf: What do you mean by "a very large terrorist attack"—for example somebody letting off a nuclear bomb?

  Q18  Mr Holloway: Let us say that someone loses a city. At a macro level of warfare, does that throw the West into confusion?

  Mr Wolf: I have discussed this in many of my presentations. If somebody succeeds in letting off a major device in a significant city anywhere in the word and kills 100,000 or several hundred thousand people the world in which we live will be entirely altered in unimaginable ways. I would then have to talk for half an hour about the implications. We would be living in a totally different world in which the assumptions with which we have lived about sovereign autonomy around the world, nuclear proliferation and all the rest of it would come into question in a massive way. Among other small things, the global economy would collapse. It is such a huge question and an enormously interesting one. I hope it does not happen.

  Q19  Mr Holloway: How do you describe the relationship between NATO and the EU? Is a rivalry now developing?

  Mr Wolf: It is related to the earlier questions. The answer is yes potentially, but that rests on the future of the EU and its effectiveness as an integrated security and foreign policy structure. Outside a complete collapse of NATO and withdrawal of the US from interest in Europe, I do not believe that the EU is likely to emerge as such a structure. It seems to me that the past five or six years have demonstrated that, so I do not believe it is a serious worry.