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NATO and the Economy-Security Nexus: Reflections on a New Strategic Calculus

NATO and the Economy-Security Nexus: Reflections on a New Strategic Calculus

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This policy brief addresses the new strategic age for the Atlantic Alliance.
This policy brief addresses the new strategic age for the Atlantic Alliance.

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Published by: German Marshall Fund of the United States on Nov 25, 2013
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This paper addresses the new strategic age for the Atlantic Alliance, considering the greater assertiveness regarding the future direction of the Alli-ance’s collective force devel-opment and defense posture as well as greater uncertainty regarding the circumstances shaping the Alliance’s economic and resource wherewithal. Analyzing these challenges, it argues for continued political investment by political elites on both sides of the Atlantic in sustaining an ambitious transat-lantic partnership and a strong NATO.
Transatlantic Security Task Force Series
Policy Brie 
NATO and the Economy-Security Nexus:
Refections on a New Strategic Calculus
by Diego A. Ruiz Palmer 
German Marshall Fund o the United States-Paris 71 Boulevard Raspail 75006 Paris : +33 1 47 23 47 18 E: inoparis@gmus.org
November 2013
NAO is entering a new era in its urther transormation. Tis new strategic age or the Alliance — no longer simply “post-Cold War” or “post 9/11” — is characterized by greater assertiveness regarding the uture direction o the Alliance’s collective orce development and deense posture. Tis was the objec-tive o the “NAO Forces 2020” text agreed upon at the Chicago Summit in May 2012. At the same time, there also exists greater uncertainty regarding the circumstances shaping the Alliances economic and resource wherewithal, as well as its external environment.Te Alliance is emerging rom two decades o operations — some 36 operations, missions, and precau-tionary deployments since the initiation o operation
 Maritime  Monitor
in the Adriatic Sea in July 1992
 — with a sense o both achieve-ment and relie. Tere is a measured expectation that the next several years will see a lower operational tempo and a smaller operational ootprint. Operation
Unified Protector
in Libya
1 Diego A. Ruiz Palmer, “Two decades of NATO opera-tions: Taking stock, looking ahead,”
NATO Review 
, May 2012.
in 2011, however, showed that new, unoreseen contingencies cannot be excluded and that NAO must remain prepared. ogether with enlargement rom 16 to 28 members, an expanded web o partnerships with nations across Europe and around the globe, and the enhanced expe-ditionary make-up o allied orces, operations on three continents have transormed the Alliance and made it more assured. Te Alliance’s Strategic Concept approved at the 2010 Lisbon Summit conveys a stronger sense o purpose than many observers had anticipated.
During these two decades o opera-tions, NAO demonstrated the inherent adaptability o its structures and procedures to changed strategic conditions, including the ability o the Alliance to act as the core o wider coalitions. Its post-Cold War ate and new role as a cooperative security hub were ofen shaped, however, by external circumstances, rather than governed by an internal design. Now, with “NAO Forces 2020” as its mid-term horizon, the Allies wish to set out the path orward more deliber-ately — in effect, the transition rom
 Active Engagement, Modern Defence
, Lisbon, Novem-ber 19-20, 2010.
Transatlantic Security Task Force Series
Policy Brief
a “deployed NAO” to a “prepared NAO” that retains its long-standing attributes o a high-level o operational competence and responsiveness, but also leverages the operational experience and enhanced interoperability asso-ciated with engagements rom Bosnia to Libya.At the same time, circumstances influencing the Alliance’s collective capacity to meet the ambition set-out in the Strategic Concept have become less determined and their effects more difficult to calibrate since Lisbon. In partic-ular, the enduring global economic crisis, declining U.S. deense spending, and the uncertain direction o the Arab Spring represent new dimensions in this complex strategic calculus.
Economic Statecraft: The Assumed, but Neglected Partner of Strategy
Te economy-security nexus is, inescapably, a central element o an alliance o democratic nations. Resource concerns have also shaped the NAO agenda persis-tently, rom the days o the 1952 Lisbon ministerial meeting, through the 3 percent deense spending annual growth target o the 1970s, to the more recent guideline o devoting 2 percent o the Gross Domestic Product to deense expenditures.
 Te economic and financial crisis gripping the world since 2007-2008, however, has altered a undamental assumption underpinning the transatlantic relationship: that while politics and strategy — the “hard power” statecraf — might be, on occasion, sources o intra-Alliance disagreement and even conflicting poli-cies, the underlying strength and resilience o the North American and European economies ensured that nothing o consequence would affect adversely that relationship. While politics and strategy might be, at times, a source o riction, economics, characterized by steady growth and low inflation since the end o the “Great Inflation” era o the 1970s and 1980s, could be counted upon to exercise a  virtuous influence in virtually all circumstances.No two continents depend more on each other economi-cally than Europe and North America. ogether, they account or about hal o the world’s economic output and almost 40 percent o global trade. Every single day, more than €2 billion in goods and services are traded across the Atlantic, with millions o jobs on both sides o the ocean depending on that trade. Te United States and the Euro-
3 The 3 percent guideline was approved by heads of state and government at the NATO Summit meeting in London in May 1977. The 2 percent guideline was approved by Allies in 2006.
pean Union are also each other’s primary source — and destination — or oreign direct investment. For example, in Europe, more than 60 percent o all oreign investment in research and development is by U.S. affiliates. And European entities are responsible or some three-quarters o oreign investment in research and development in the United States.Regrettably, there is increasing concern that the evolving circumstances, as much as the original causes, o the current economic crisis have depleted to some extent that essential reservoir o mutual confidence, while adding a urther source o strain to a relationship already laboring under an unresolved military burden-sharing debate. At the same time, a new sense o urgency regarding the resolve and capacity o Allies on both sides o the Atlantic to put their economic house in order, as well as the opportunities that might arise to trigger renewed economic activity, have prompted new efforts. Tese efforts have taken the orm o the ransatlantic rade and Investment Partnership, as well as less visible measures in the regulation o banking practices,
 to place the transatlantic economic relation-ship on a new, well-anchored ooting. Whether these steps, while welcome and necessary, will be enough to steady the transatlantic economy remains uncertain.
Allied Defense Cooperation in an Age of Austerity: Retrenchment or Opportunity?
Declining deense spending among many Allies since 2008 and the resultant adverse impact o such a trend on a air sharing o the risks, roles and responsibilities associated with the common deense have been a deepening source o concern or several years. Former Secretary o Deense Robert Gates’ speeches in Washington, D.C. and in Brus-sels, in February 2010 and June 2011, respectively, illus-trated U.S. worries.
NAO Secretary General Anders Fogh Rasmussen has repeatedly warned against any complacency regarding the adverse influence that insufficient investment in deense, as well as an unbalanced sharing o the burdens and benefits o NAO membership, would have on both the military
4 Kate MacKenzie, “European Bank Deleveraging: Basel III edition,”
Financial Times
, October 24, 2012; Darryl E. Getter,
Implementation of the Basel Capital Regula-tory Framework 
, Report R42744 (Washington, D.C.: Congressional Research Service), November 14, 2012.5 Remarks by Secretary of Defense Robert M. Gates as delivered at the National De-fense University on February 23, 2010, and at the Security and Defense Agenda on June 10, 2011, U.S. Department of Defense.
Transatlantic Security Task Force Series
Policy Brief
capacity o individual Allies and the public perception o the Alliance.
In 2012, the United States alone bore 72 percent o all Alliance deense spending.
 Admittedly, a fixed allocation o a nation’s GDP to deense cannot be the only indicator o deense perormance, and burden- sharing is expressed in NAO in several, complementary ways. No single ally should be expected, however, to shoulder a dispropor-tionate share o the collective burden alone, much less to fill gaps in capability areas where other Allies have military assets available in their inventories, or, i not, should. Tis burden-sharing situation becomes increasingly unsatisac-tory when the Alliance’s largest and most militarily capable ally is conronted with the necessity to significantly reduce the scale o its investment in deense, possibly, up to $1 trillion over a decade — and this is a second source o increased uncertainty — but has assumed such a salient position in the provision o standing capabilities to the Alliance, as well as in the contribution o specialized assets to individual NAO operations. Te longer-term implica-tions or the overall U.S. deense posture and or NAO o the recalibration o the U.S. deense spending effort should become a growing source o attention rather than the so-called “pivot” to Asia. Tis is because the rebalancing o U.S. orces toward the Pacific (USPACOM Area o Respon-sibility) is dwared in scale by the global repatriation o U.S. orces to the United States, initiated in the afermath o the end o the Cold War, ollowing their gradual draw-down in the Middle East (USCENCOM Area o Responsibility).At the same time, too ofen, gloom and doom dominate assessments as well as orecasts o the Alliances collective military capacity. Tese assessments neglect the ormi-dable military capabilities possessed by European Allies and Canada, collectively only second in the world to those o the United States. Tese include, but are not limited to, rapid reaction headquarters,
 deployable fighters, smaller-size aircraf and helicopter carriers as well as large amphibious ships, modern rigates and destroyers, attack submarines and increasingly strategic airlif, in the orm
6 Speech by NATO Secretary General Anders Fogh Rasmussen at the annual session of the NATO Parliamentary Assembly in Dubrovnik, Croatia, October 11, 2013.7
NATO Secretary General’s 2012 Annual Report
(Brussels: North Atlanc Treaty Organisa
on, January 30, 2013).
8 European Allies provide 17 multinational, land, air, and maritime rapid reaction deployable headquarters at different levels of readiness, often equipped with state-of-the art communications and shelters suited to exercise command and control in an expeditionary operations environment.
o C-17s, extended-range versions o the C-130 and, soon, A-400M transport aircraf.Tese assessments ofen also measure European capa-bilities against those possessed by the United States, instead o calibrating them against an optimized Euro-pean capability target that does not need to mirror that o the United States to make an essential contribution to the Alliance and meet national requirements and other international commitments. Te opportunity, as well as the challenge, is to consolidate and package the capabili-ties o European allies into pools o coherent orces that are balanced, sel-sustainable, and complementary across the range o mission sets associated with the Alliance’s three core tasks. Building blocks o such a consolidated set o capabilities exist already in many cases in the orm o standing or on-call, deployable, and usable orce pack-ages o variable scale. Tese include, but are not limited to, the British-French Combined Joint Expeditionary Force, Allied Rapid Reaction Corps, Eurocorps, 1
 German-Neth-erlands Corps, Standing NAO Maritime Groups, Euro-pean Maritime Force, United Kingdom-Netherlands and Spanish-Italian Amphibious Forces, German-Netherlands Extended Air Deence ask Force, Belgium-Denmark-Netherlands-Norway-Portugal Expeditionary Air Wing, European Air ransport Command and the multinational C-17 Heavy Airlif Wing. Many o these multilateral arrangements provide capabilities to rotations o the NAO Response Force in the orm o component command head-quarters or orces or both.Te ambition should be to aim or greater overall coher-ence and gradual convergence between these various complementary, but currently excessively ragmented and dispersed, arrangements. Using NAO’s Smart Deense initiative, greater convergence could be pursued through new collaborative endeavors among interested allies aimed at achieving greater efficiency in development and procure-ment practices, larger economies o scale, and expanded standardization. Te Alliances Connected Forces Initia-tive also provides a path or enhanced connectivity and interoperability among allied nations and between multina-tional ormations. Efforts within NAO and the European Union should be mutually coherent, complementary, and transparent and should rely, where advisable, on collective and multilateral arrangements, such as NAO’s Conerence o National Armaments Directors and Agencies, as well as the European Deence Agency and OCCAR.

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