The Transatlantic Alliance in 1998

By ERIN HEATON and GREG ALAN CAIRES

In terms of European security, 1998 was perhaps the most significant year since the Soviet empire's collapse nearly a decade ago. NATO continued its eastward expansion; the West repeatedly threatened the warring ethnic factions in the Balkan province of Kosovo with military intervention; intense preparations were made for the debut of Europe's common currency--the euro--on 1 January 1999; leftist governments continued to win European elections; and the European defense industry continued its inevitable journey toward rationalization.

Because of these developments, Europe in 1998 moved closer to achieving its ultimate goal: the ability--through a combination of pan-continental political, industrial, and military strength and a shared focus--to cooperate and, if necessary (and probably in only a limited number of areas), to compete with the United States as an equal partner. Europe's attainment of this goal should be of significant interest to U.S. policy-makers and defense planners, because coalition warfare will continue to displace unilateral military action. Those who believe otherwise should consider how internationally unpopular America's missile strikes against suspected terrorist facilities in Sudan and Afghanistan turned out to be.

With coalition warfare here to stay, transatlantic military planning and weapons-procurement strategies cannot be made in a vacuum. "If we are going to be fighting together, we need to be able to communicate and we need to have equipment that is interoperable," Jacques Gansler, the Pentagon's acquisition chief, told Jane's Defense Weekly in an interview. As a result, Europe's future identity will directly affect both U.S. national security and America's power-projection capabilities.

These and other factors will shape the size, capabilities, and composition of Europe's future navies, which continued their downsizing in 1998, while naval air forces remained strong. Following are: (a) a brief summary of the major defense and national-security milestones and events of 1998 and their impact on Europe's naval forces; and (b) a forecast of the challenges to intracontinental relations, collective security, and individual European navies likely to dominate the scene in 1999.

NATO's Year of Growth

Transatlantic relations remained relatively positive throughout 1998. There were, however, some serious differences of opinion on such issues as how quickly Europe's defense industry should consolidate, and what the "revolution in military affairs" is all about. The United States and its European allies focused primarily on internal security issues rather than on NATO's overall health. But despite some neglect, the alliance had a busy year--related most notably to its own expansion and its role in the Balkans.

Without the Soviet threat, NATO's current identity and future direction have become unclear. But transatlantic politics continues to encourage the spirit of "collective security," and, as a result, the coalition-warfare concept has evolved from a fad to a trend. With that as its post-Cold War foundation, the NATO alliance has endured, rather than declined, and is now expanding.

The debate about whether to bring new countries into NATO culminated with the 1997 invitation to the Czech Republic, Hungary, and Poland to begin the accession process. The issue of expansion became controversial, however, when it became clear that acceptance of new members still means, for the newcomers as well as previous members, commitment to Article V of the NATO charter, which postulates that an attack on one member is considered an attack on all. This recognition further exacerbated issues of parity in capabilities and interoperability among NATO forces.

But, following the 1998 approval of this "first wave" of NATO newcomers by the United States, which had been considered the alliance member most likely to be opposed to expansion, the three nations will be formally welcomed into the fold at a spring 1999 summit in Washington, D.C. NATO also has made it clear that it will consider making other additions to the alliance in the future, despite France's continued assertions of independence on security matters and its decision not to integrate fully into the NATO architecture until its demands are met for a stronger role in the alliance leadership.

NATO was by far the most significant player in maintaining European security in 1998. While some held out hopes that the Organization for Security and Cooperation in Europe (OSCE) or the Western European Union (WEU) would rise to relieve NATO of its military responsibilities, they were disappointed when NATO continued to hold all the cards. The alliance was called upon throughout the year to assist in maintaining Europe's security, particularly in the Balkans, where ethnic tensions once again caused clashes to erupt in the former Yugoslavia.

Western Europe and the United States have long been concerned about the region, if only because of the spillover potential--the fighting in one area expanding into regions that are directly within NATO's purview and exacerbating tensions between such NATO members as Greece and Turkey--which, as always, find themselves aligned against one another in the region. For these and other reasons, NATO has tried throughout the 1990s to keep the lid on Balkan conflicts, mostly through the mildly successful peacekeeping operations that culminated in the Richard Holbrooke-brokered 1995 Dayton Peace Accords. Since then, the U.S. military has led a number of multinational peace-enforcement operations in the region.

An Adroit Threat

But implementation of the Dayton Accords has not ended the fighting in Kosovo. That southern Serbian prov-ince, 90 percent ethnic Albanian and mostly Muslim, sought to reassert its self-rule against Serbia. The result was serious ethnic clashes that started in the spring of 1998. NATO repeatedly threatened air strikes in order to coerce Serbian leader Slobodan Milosevic into more civilized behavior. By October 1998 Milosevic had agreed with Ambassador Holbrooke to an undisclosed level of troop withdrawals and a detailed verification-and-compliance regime--again adroitly using the threat of a massive military assault to achieve his diplomatic objectives. The primary U.S./NATO goal throughout was to end the conflict and allow refugees to return safely to their homes. Despite some backing and filling, NATO appeared stronger than ever by the end of the year.

However, the problems in the area are far from over. Refugees from the conflict still pose a serious challenge to European security. An estimated 250,000 refugees are technically free to return to their homes, but the overwhelming majority are afraid to do so. Europe, led by NATO, must find a solution to the refugee issue while maintaining peace in the conflict-ridden area.

NATO did pass another key test stemming from the crisis in Kosovo--air-power projection was well-supported and well-coordinated among NATO members during each of the buildups necessary to counter Serbian aggression.

NATO's naval/military successes may be partially offset, though, by an increase in economic tensions. European defense companies are in direct competition with U.S. industry, and, because most defense budgets around the world are declining, lower spending levels have made competition even stiffer. Ironically, at a time when support for coalition warfare seems to be at its peak, attention is distracted and the defense industry's incentives to cooperate and/or focus on interoperable systems and platforms are arguably at an all-time low. Thus, although the transatlantic alliance remains relatively healthy, a serious challenge to peace in the region could turn these embryonic fissures into serious rifts.

A crisis in European security is not the only way that the fissures could widen, though. The 1998 European elections resulted in governments continuing their tilt to the left, particularly with the ascendancy of Gerhard Schroder in Germany. That could mean trouble for defense industries worldwide. This leftward swing, characterized by The Economist as the "gut-anti-Americanism of the European left, often as much cultural as ideological," has strengthened the inter-European alliance at the expense of the transatlantic one. How this affects transatlantic security relations will be carefully monitored throughout 1999.

Competition and Collaboration

What of European defense industry itself in 1998? The end of the Cold War caused almost all of the European defense budgets to decline, some more than others. The U.K.'s defense budget was $37 billion in 1998, but last year's Strategic Defence Review lays out a plan to save (i.e., cut) over $1.5 billion by 2001. France, which maintained its six-year defense plan, had a 1998 defense budget of $30 billion, but procurement funding was reduced. Germany's 1998 defense budget was $26 billion, but a modest increase through the turn of the century is projected. The combined military budgets of the European "big three" amount in any case to barely a third of U.S. defense spending.

Throughout the year, Europe's defense industries struggled to consolidate in order to maintain their competitive edge against the already consolidated and dominant U.S. defense industry. The year began with a joint U.K.-German-French commitment to develop a plan for consolidation of Europe's defense and aerospace industries, with a view toward creating an entirely new structure by the turn of the century. The plan, called "European Restructuring in the Field of Aerospace and Related Defence Industries," was delivered in mid-year. Disappointingly, not only did it not explain how the consolidation desired could be achieved, it instead revealed differences in opinion about the appropriate level of privatization for the European Aerospace and Defence Company (EADC, or Euroco).

Standing in the way of success are several serious issues--e.g., political prestige, employment, and bureaucratic resistance. But France, as usual, has been novel--if not inconsistent--in its approach toward defense-industry rationalization. At first, the Chirac administration appeared to willingly accept the rationalization challenge by ordering Aerospatiale to divide into nine affiliates to facilitate partnering with other European companies. Unfortunately, further progress was thwarted by the French government's willingness to keep Giat Industries afloat--but at a steep price. Giat lost hundreds of millions of dollars in the 1990s, and between 1994 and 1998 slashed its work force from 16,000 employees to about 7,000.

Thomson-CSF and several other companies also reorganized in order to increase their competitiveness in world markets. One result was that at the end of the year Euroco was still mired in the planning stages.

Another fundamental change was then introduced, courtesy of the United States. Serious discussions began in 1998 between the Pentagon and giants of the U.S. defense industry about the possible creation of several international superconsortia that would compete for weapons contracts. The purpose would be to encourage collaboration and mitigate the creation of a U.S.-versus-Europe competitive atmosphere, further supporting the transatlantic alliance.

International vs. Indigenous

In an attempt to cement common procurements on both sides of the Atlantic, the U.S. Department of Defense also proposed creating a committee to coordinate the equipment requirements of all NATO members. The Europeans were not supportive of the creation of a high-level steering committee such as that proposed by U.S. Secretary of Defense William S. Cohen in Portugal in September. Their position was fortified by a NATO report opposed to the plan. While there was a general recognition that a coordination problem exists, Europe interpreted the U.S. proposals as attempts to sneak in the back door and sell U.S. defense products to NATO members. At the same time, the Pentagon made a renewed commitment to cut the bureaucratic red tape that engulfs, and sometimes stops, foreign military sales (FMS), reinforcing European suspicions about U.S. intentions.

With defense dollars dwindling, certain countries appeared to gravitate further to sectors where their special competencies give them an edge. In the most general of terms, France turned its sights to becoming the premier defense electronics manufacturer, Germany to land systems, and Britain to aircraft. Marine systems seem to be the exception, perhaps because of the political importance of indigenous maritime production capabilities--no single European country or company has attempted to dominate marine systems.

As previously noted, future NATO military operations will succeed only if its constituent members agree to the coalition-warfare concept of operations, in which each participant's strengths are matched to the missions most suitable. Coalition warfare also requires each participant's weapons, systems, and platforms to be interoperable, though. For that reason, future European weapons-procurement decisions will be keenly important. During the next decade, real opportunities exist in defense procurement to meet mission requirements, strengthen the NATO coalition, and increase transatlantic collaboration to maximize scarce defense funds. One such opportunity nearly squandered recently related to NATO ground-surveillance requirements; fortunately, alliance members made the acquisition of a NATO-wide ground-surveillance system one of its highest acquisition priorities.

In order to be interoperable with the United States and meet mission requirements, the U.S. Joint Surveillance and Target Attack Radar System (Joint STARS), to which the U.S. Air Force is already committed, was made available in 1997. Each of the principal European militaries looked to different solutions, though, and--despite the system's successes in Bosnia--did not procure Joint STARS for NATO at that time. As 1998 ended, there was some hope that the United Kingdom would look to a Joint STARS solution in its Airborne Standoff Radar (ASTOR) procurement. This is important because Britain's efforts at modernization play a significant part in setting the standard for other European countries to follow.

Alliance supporters say that this is a clear opportunity that should not be squandered. If the United States and Europe are serious about developing a stronger NATO to meet 21st-century threats, increased attention should be given to strengthening collaboration on programs such as Joint STARS/ASTOR.

Tomahawks and TRACERs

There already have been, it should be noted, concrete and promising examples of existing transatlantic cooperation. One was the competition for future combat vehicles in the United States and the United Kingdom, with the U.S. Army's Future Scout Cavalry System (FSCS) and the British Tactical Reconnaissance Armoured Combat Equipment Requirements (TRACER) being bid on by two teams--with American and British partners on each team. Another example is the long-standing cooperation between Germany and the United States on land systems.

In the maritime arena, an upgraded British Swiftsure-class nuclear-powered attack submarine deployed in the summer of 1998 with the capability, for the first time, of launching American-made Tomahawk cruise missiles. Moreover, Britain's 1998 Strategic Defence Review (SDR) states explicitly that all Royal Navy nuclear-powered submarines (SSNs) now will also be equipped with Tomahawks. In addition, Sweden conducted an international competition for constructing vessels for its Coast Guard.

But the more prevalent model is one not of collaboration but of competition across the Atlantic. In the aviation world, for example, the Eurofighter consortium and the American Joint Strike Fighter, with which the United Kingdom has been involved, are competing for coveted new aircraft procurements. The Eurofighter team, a British-German-Spanish-Italian consortium, has commitments from those four countries for 620 aircraft, according to Aviation Week & Space Technology. The Eurofighter is being aggressively marketed elsewhere in Europe. It is in direct competition against Lockheed-Martin's updated F-16 both in Norway, where a decision is expected in early 1999, and in the United Arab Emirates.

The Eurofighter consortium also is competing against another American product, Boeing's F/A-18, in Australia. The F/A-18 and the F-16 should have a competitive edge because both are well-tested and already in the hardware inventories of many countries throughout the Free World. Nonetheless, the pull to have a common fighter among Europeans may win out over these battle-proven aircraft.

Another aircraft option for the future (even though questions exist about its exportability, because of its highly advanced stealth technology) is the Lockheed Martin/Boeing F-22 Raptor.

An Upgrading Of Professionalism

If the goal is, as Gansler said, to make Europe an equal partner with the United States when it comes to transatlantic defense cooperation, it is worth pointing out that in some cases Europe seems to be doing well all by itself--i.e., with minimal or no assistance from the United States. Inter-European alliances--like those, for example, in which certain countries purchase licenses to produce systems developed by other countries--appear to be thriving. That is the case, certainly, with armored fighting vehicles like Germany's Leopard 2--which has been or will be manufactured in Switzerland, Sweden, and Spain.

There also are excellent collaboration opportunities for the countries recently joining NATO. The need for greater professionalization of their forces has generated considerable defense-industry interest as companies look to capitalize on the upgrades that the three newcomers will need. But much work remains, and the financial resources may not exist to support the kinds of weapons that the United States and European members of NATO want to sell.

In mid-1998, the Czech Republic began to develop and implement a long-term military reform initiative. Under this plan, the Czech government hopes to strengthen the fairness of its arms-acquisition process, professionalize its military cadre, and modernize its forces, especially its aircraft and tanks, so that it will be better aligned with and benefit from NATO's warfighting doctrine. The Czech defense budget will be at 2 percent GDP by 2000. This will not fund all of the modernization necessary, but represents a significant improvement over a defense budget that previously had been declining.

Poland also is actively restructuring its armed forces in preparation for joining NATO, while also working toward membership in the European Union. In Poland's aerospace market, a new combat aircraft is needed. The short-listed competitors are Sweden's Gripen and the U.S. F/A-18C/D. Poland has shown its commitment in other ways--it has more troops engaged in U.N. peacekeeping operations, for example, than any other participant.

There also are several non-NATO countries that have procurement dollars available. Turkey, for example, has drafted a 1999 defense budget of nearly $9 billion, with procurement taking up $3.4 billion--including $1 billion for four locally produced submarines. Slovenia, not yet invited to be a NATO member, demonstrated its interest in joining the alliance by committing to increase its defense budget--from the current 2.3 percent of GDP to 3.2 percent of GDP--over the next five years.

A New Role for Naval Power

All of these changes in the security environment have not left naval power unaffected. If anything, an interesting transformation has taken place with the world's premier maritime force--the U.S. Navy. As the Cold War becomes a more distant memory, the Navy's role has become more diverse--and more important--than ever before. But its importance comes from a different emphasis. Far from relinquishing its old responsibilities in undersea and surface warfare, it has now--despite having the lowest number of commissioned combat ships in six decades--added to its missions several duties in the littoral battlespace and the requirement to support the land battle ashore (and sometimes far inland).

The Russian Navy, once America's most formidable enemy, has foundered under monumental budget shortfalls in the post-Cold War era, leaving many vessels rotting in their shipyards. Most of Russia's submarine construction is now consolidated near Murmansk and St. Petersburg. Despite its current state of disrepair, the submarine fleet currently carries one-third of Russia's nuclear warheads, a share expected to increase to nearly two-thirds by 2010. Where the Russian surface fleet is headed is unclear, but with less than one-fifth of the active force actually ready for extended sea duty, the outlook is bleak.

At the same time, the Indian Navy has received the first of two expected Russian Kilo-class submarines, and Pakistan is working with France for three new Agosta 90B submarines. The United States must therefore continue to maintain, and improve, its world-class Navy in order to defend against the 21st-century threats posed by Chinese strategic missiles and by rogue states and terrorist groups with access to weapons of mass destruction.

Modernizations and Reductions

Several of America's NATO allies are working to modernize their own submarine fleets during the coming decade. In the fall of 1998, France's Defense Minister, Alain Richard, announced a $4.6 billion program to construct six SSNs, commissioning one every two years until 2020. France reportedly has two SSBNs (nuclear-powered ballistic-missile submarines) on patrol at all times; the United Kingdom is expected, however, to reduce to only one SSBN on patrol at any given time. In fact, Britain and France have held discussions about the possibility of joint patrols being conducted by their strategic submarines.

The United Kingdom has in any case decided to cut back the overall size of the Royal Navy. Despite recommitting, in the SDR, to acquire five Astute-class submarines, the total number of submarines in the Royal Navy will drop from 12 to 10, and the RN's destroyers and frigates will be reduced by three ships--from 35 to 32.

Europe's naval air power, on the other hand, received a major boost in 1998. France's new aircraft carrier, Charles de Gaulle, scheduled to be deployed in 1999, is expecting to carry a mix of Dassault Rafale M fighters and Northrop Grumman E-2C Hawkeyes (to be delivered after the turn of the century). The United Kingdom postulated in the Strategic Defence Review that it would look to fulfill eight primary missions, among them regional conflict outside of NATO, regional conflict inside NATO, attacks on NATO itself, and peacetime security.

The British government determined that those missions could best be carried out (beginning in 2012) by large-deck aircraft carriers and by combining the aviation assets of the Royal Navy and Royal Air Force (possibly by acquiring Joint Strike Fighters, despite the British commitment to acquire over 200 Eurofighters). The United Kingdom also will augment its airlift abilities by the addition of four C-17s to augment its C-130s. The Strategic Defence Review also emphasized the critical importance of close cooperation with the United States.

Other procurements were closely followed, such as the much-anticipated $1.6 billion sale of frigates to Norway. That plan is now under fire, though. Norway's 1999 proposed defense budget includes a reduction for the Norwegian Defense Ministry that, if passed, is likely to result in the frigates procurement competing with the procurement of modern fighter aircraft. The frigate competition is all-European; the fighter competition is U.S. and European. The outcome of this battle could be an important indicator of the future direction of naval power in Europe.

Other cooperative ventures included one between Spain and the Netherlands, which commissioned similar landing platform dock (LPD) ships, the project definition for which was jointly funded.

The Challenge for the Future

But, despite the calls for further defense collaboration in general, maritime power remains the specific province of each country. Despite cooperative programs like the JSF and FSCS, there are no efforts underway for the development of a collaborative submarine or surface combatant. And, although American shipbuilding is going through a period of rationalization, America's marine systems are specific to American needs and it is unlikely that any alliance input would change the U.S. Navy's procurement schedule. Europe probably will continue to defend its waters with ships built with European technology, therefore. That may be less the case in the years ahead in the area of naval aviation, though, where the superiority of U.S. aircraft over European systems is formidable.

Europe's security has been of primary interest to the United States throughout the 20th century, and European security and America's fate undoubtedly will be even more closely linked during the 21st century. However, as NATO enters its 50th year, the alliance continues to journey into an uncharted territory characterized by the need for
coalition-warfare capabilities, lower defense budgets, rationalized defense industries, and new threats such as terrorism and the proliferation of weapons of mass destruction.

Europe's repeated attempts to strengthen its internal unity through economic and monetary union will have a dramatic impact on how the allies do business. These trends suggest broader opportunities for transatlantic cooperation and collaboration, particularly as the alliance's navies are challenged by new missions that will require either increased resources or (what is more likely) the more cost-effective use of current resources.

Despite predictions of decline, NATO will remain central to transatlantic security. But NATO cannot remain robust unless the new European governments agree to develop interoperable weapons, systems, and platforms that are both compatible with coalition warfare and able to keep indigenous defense industrial bases reasonably healthy.

If Europe continues to work toward equal partnership with the United States elsewhere on the world stage, collaboration is one way to ensure that growing European strength does not adversely affect U.S. interests. This is NATO's challenge. The difficulty of that challenge should not be underestimated, and it cannot be ignored.

---

ERIN HEATON is a research fellow with the Lexington Institute, a nonprofit public-policy think tank located in Arlington, Va. GREG ALAN CAIRES is a senior fellow with the Institute.