SACLANT Seminar Lisbon, Portugal May 4-5, 1997

Speaking Notes for the Secretary General for his Afternoon Remarks

Introduction After our stimulating discussion today, I am happy to share a number of personal thoughts with you. SACLANT and the other speakers today have very eloquently described some of the important challenges NATO will face in the coming days and in the next century. Many of these challenges do not receive the attention from us they deserve during this busy period leading up to the Madrid Summit. But the implementation of decisions we plan to take at Madrid will, in the long-term, depend largely on cooperative technology and NATO's handling of other key challenges we have discussed today. Over the years, the Alliance's cohesion, unity and strength of purpose have been underpinned by the strength of our defence industry and technology. Today, there is a growing gap in trans-Atlantic technology and capabilities. We will need to work harder to close this gap and avoid the potential divergences and friction within the Alliance. I would like to mention five areas where divergence could become a real problem for us. Some of these areas have already been highlighted in today's debates. Technology Divergence First, there is a growing technology divergence between North America and Europe. Europe and North America are marching in different directions and at different paces. The reason for the divergence is essentially money, and the way it is being applied. The US is spending 4 - 5 times as much as Europeans on research and development, and it is doing so in a focussed way. Europe is spending far less and its efforts are not so concentrated. One example is the collection and distribution of intelligence. I am told that, in the US, "Information Warfare" is now seen as a priority capability to be developed. Other Allies are far behind in this area. This disparity in how Allies approach something as basic as intelligence could have profound consequences for the Alliance. This kind of technological divergence could result in different doctrines, different tactics, different force structures. If this occurs, then interoperability and our ability to mount joint operations will be impaired. And as we progress towards enhanced PfP and new members, we need to consider the problems we will have improving interoperability with Partners if we are losing interoperability among ourselves. Capability Divergence Secondly, I am concerned about the Alliance's own ability to procure common systems and manage common programmes. The processes for common NATO acquisition are lagging further and further behind those used for national procurements. Overall, our common procurement is slow and cumbersome. The Air Command and Control System saga, which took some 15 years to resolve, shows that we must find ways of doing common acquisition in a more business-like fashion. Divergence in European and NATO Arrangements The third area of divergence is in the handling of armaments cooperation in NATO and in Europe. In Europe, European armaments cooperation is being strengthened: not only the Western European Armaments Group, but a Western European Armaments Organisation with the authority to make contracts. Four nations have set up an Armaments Agency to manage cooperative programmes. By contrast, in NATO, we are still trying to cooperate on the basis of a process of rather casual information exchange that was set up 30 years ago. Thus, transatlantic ventures are pursued within individual ad hoc structures on an uncoordinated basis. European and transatlantic processes for cooperation should be compatible. Instead, they are diverging. European and transatlantic processes should also be more transparent. The Western European Armaments Group is represented at all meetings of the CNAD. There is no reciprocal arrangement, except on a case-by-case basis. It would be useful if the Western European Armaments Group extended an invitation to NATO for such participation. Resources We have a divergence between what we say we need, and what we are willing to pay for. We have been increasing the work-load for Staffs whose numbers we are decreasing. Some nations are calling for freezing or decreasing budgets at the same time they are pressing for enhanced PfP, enlargement and a new NATO/Russia relationship. In the equipment area, there are similar pressures to do "more with less". It is unclear whether Allies are willing to fund all the requirements in areas such as Alliance Ground Surveillance, and Theatre Ballistic Missile Defence. An "upper layer" TMD system alone is estimated at $2-3B. We need to make a political commitment that NATO common resources will grow to keep pace with our ever-widening Alliance Agenda. The Divergent Industrial Bases The fifth area of divergence concerns the very different pace and extent of defence industry restructuring on either side of the Atlantic. The decision taken in Berlin to build ESDI within the Alliance has certain inescapable consequences. Perhaps the most important is that we need to promote the existence of two complementary, and mutually reinforcing, technological and industrial bases - one North American, the other European. On both sides of the Atlantic there are calls for more protectionism. Competition between Europe and North America for a share of the diminishing world market is increasing. This presents us with a political problem, not an armaments problem - and one we should address, lest the Alliance's political and military cohesion be adversely affected. Conclusion Let me conclude these remarks by referring to the wider political agenda of the Alliance. The Madrid Summit will put in place a new political framework. Taken together, the various initiatives on PfP, Enlargement, Ukraine and Russia will profoundly change the way we do business with our Partners. We must balance these separate arrangements and processes, without giving favour to one above the other. I am optimistic that we can do that. But we will also have to strike balances internally within the Alliance. For example, the new Command Structure must sustain and reinforce various elements of the transatlantic link. This requires a balance between the responsibilities of SACEUR and SACLANT, as well as in the new missions. Burden-sharing between the two Strategic Commanders is essential to success. Balance is needed also in the transatlantic and European dimensions of the Alliance. The decision of Berlin to develop the ESDI within the Alliance was an important, positive step in moving towards this balance. After Madrid, we will have a framework for advancing the ESDI which is transparent and respects the interests of all Allies. Achieving the right balance - such as in the areas I have just mentioned - will be key as we move into final stages of Alliance adaptation and transformation. It will be critical to ensuring that the Alliance's future cohesion will remain intact. If we do this, I am confident we will reach our objective of a reformed Alliance - adapted to meet the security challenges of the 21st century.