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Smart Defence Policy
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Dr Kunic, Ladies and Gentlemen,


It is a very great pleasure to be with you this evening, for what I hope will be a lively, provocative and ultimately informative discussion on what I will describe as the broad topic of Smart Defence.


This is my third visit to your beautiful country and Ifeel very privileged to be here again.  My first visit was in February 2008, to attend a seminar on the Comprehensive Approach during the Slovenian presidency of the EU, and I very much believe that delivering the Comprehensive Approach falls as part of doing things ‘smart’.  On the second occasion, I spoke at your officer training school in Maribor in 2010.  But this is my first visit to your capital city, Ljubljana.  From what I have seen,it is quite stunning and I just wish I had more time to explore it.   Perhaps on my next visit.


In my correspondence with Dr Kunic, he asked me to provide a 40 minute lecture on Smart Defence. If I may, I would prefer to categorize it as a presentation.  A lecture, to me, sounds very formal andacademic, and I can certainly not have any pretensions of being an academic, just a simple former soldier.  However, I will comply with the brief of no more than 40 minutes.


In my very first remark, I said I described the theme for this evening as the broad topic of Smart Defence, and I chose that description deliberately, because in the year since the Smart Defence Initiative was announced by the Secretary General at the 2011 Munich Security Conference, much has happened and there have been a number of relevant and significant associated developments.  In particular, the Secretary General launched another initiative at this year’s Munich Security Conference, the Connected Forces Initiative, and in the context of a credible defence package for the Chicago Summit, the United States proposed a vision and goal of NATO Forces 2020. But in addition to those two issues, there has been considerable progress in both the initiation of multinational projects under Smart Defence, but perhaps more important, development of a conceptual background to underpin the Initiative. 


I will talk about all of these issues in more detailas I go through the briefing, but at this point, I should say that they have all been brought together as a coherent whole to underpin the Defence Package that is being negotiated in Brussels as a deliverable for Chicago next month.


If one looks a strategy as ends, ways and means, then NATO Forces 2020 is the end, or goal, that is being aimed at, with 2020 being an underpinning  target date.  Smart Defence and Connected Forces are the key elements in the ways and the details of those two initiatives provide the means.  Looked at in this way, it all makes sense and also is generic enough that we do not get tied by any procedural bounds that might decree that what we have developed so far is the end of the matter.  The way I have described this allows for new ways and new means to be incorporated in the overall effort.  It offers therefore,both a flexible and responsive way of adapting to and exploiting change and opportunities on route to the goal.


The Defence Package itself will look very different to those of previous Summits.  It will not be yet another list of capability commitments that Allies are asked to sing up to.  For this Summit, there is recognition that the critical capabilities that were agreed 2 years ago in Lisbon as ones that are essential to the Alliance will be more difficult to pursue in the changed fiscal and global economic climate and we need to address different ways of acquiring them.  They are still the capabilities we need and there is no new ‘wish list’ being developed.


Perhaps it is worth dwelling for a few minutes on the changes that have driven us down the path of Smart Defence, and now ConnectedForces as well.


There are a number of factors.  First, as I have already alluded to, the world economic crisis has led to fiscal challenges that have resulted in most Allies decreasing defence budgets.  Here in Slovenia, while still committed to the NATO target of 2% of GDP for defence, I understand that you will face defence budget contraction until at least  2015, when hopefully global economics will have turned the corner and will allow for an increased defence budget.


But it is not just a question of decreasing defence budgets alone, it is the consequences associated with them that are of enormous concern.  Allies have and are essentially looking at internal national issues in determining the capabilities they are cutting.  They are not consulting NATO or other Allies before arriving at decisions. The result is uncoordinated cuts in capability that the Alliance only becomes aware of once announced and then has to determine what effect they have on our declared Level of Ambition.  This becomes a fire fighting exercise rather than a forward looking planning exercise.


The fiscal challenges the United States is facing,which have led to a revised Defence Strategy with a shifting focus from Europe to Asia and the Pacific, also has consequences for the Alliance and European Allies in particular.  The United States has made it very clear in public statements over the last year, and particularly those by former Secretary Gates, that Europe must do more for its own security.  The Defence Strategy itself stated the US view that European Allies are now security providers and no longer security demanders.  This can be interpreted in a number of ways, but it is undoubtedly a clear message that Europe must do more.   There are many on Capitol Hill for whom the Cold War was not their informative years and who see Europe as ‘freeloading’ on the United States in terms of defence.  And who can blame them when in the decade since 2001, the US share of NATO defence expenditure has increased from 63% to 77%, representing an increase in defence spending in the United States of 82% against a decrease over the same period in Europe of almost 6%.


For the first time in 2012, defence spending in Asia will overtake that of Europe.  Already we are beginning to hear from Industry that while in the past they have principally developed equipment for the European market and adapted it for the Asian market, they are now beginning to reverse that process.  It seems that from a number of angles that Europe is becoming very much second division in defence terms. 


Two other factors are of direct relevance.  The operation in Libya last year demonstrated  that European Allies can lead in NATO operations, but it also identified the over reliance on some capabilities from the United States.  In that operation, it was Intelligence,Surveillance and Reconnaissance capabilities and air to air refuelling in particular. 


Second, in 2014 we will draw down from operations in Afghanistan and NATO will then be at its lowest level of operational tempo since 1995, a period of almost 20 years. When we began operations in 1995, we were an Alliance of 16 nations who,in today’s terms would mostly have been medium to large military powers – with of course one very large military power. Today we are an Alliance of 28 nations, who, with the exception of one,are small military powers, or in some cases struggling to remain in the medium bracket.  Maintaining the interoperability that has been developed over the past 20 years of operations, and indeed building on it in the face of new threats and challenges, such as cyber, requires that we invest at the necessary level in training and exercises.  Few Allies have the means of putting army formations of brigade strength into the field today.  In 1995, all Allies could do so.  To deliver formations of brigade, division or ultimately corps size in the future will require much greater integration of national land forces that we ever had to contemplate in the Cold War years.  And this can only be done through regular multinational training that covers all the missions described in the 2010 Strategic Concept.  Without the right investment, this will not happen.


This is a stark picture of where we find ourselves in2012.  While it is reality and we have to acknowledge this, the story is by any means all one of doom and gloom.  We must recall that, despite the unprecedented fiscal circumstances, NATO has continued to meet its operational commitments in Afghanistan,  Kosovo and off the Horn of Africa with considerable success.   We undertook Operation Unified Protector,reacting quickly and effectively to the UN Security Council resolutions,including integrating partners we have not worked with operationally in the past into air operations.   And, as I have already said, this was led by European Allies.


The Alliance has also pushed forward with its reform agenda.  It is implementing the new NATO Command Structure, which will deliver a more deployable, leaner and effective organisation and the Agencies Reform is also in the implementation phase.  All this is necessary for a forward looking Alliance, suitable for the challenges of this century.


In capability terms, we have completed the Afghan Mission Network, that will also provide a platform for future mission networks, Alliance Ground Surveillance has been agreed, the Ballistic Missile Defence programme is on track, including the interim capability to be declared at Chicago and NATO air policing for the Baltic States will be extended beyond 2014.


All this points to an Alliance that is collectively meeting up to its commitments and the challenges it faces and continues to deliver,even in the current economic and fiscal circumstances.  But NATO has always lived up to its challenges, with the unity and solidarity that has made it the most effective and enduring collective defence organisation in history.  For me, this is something that all Allies have the right to be justly proud of.


And it is in this spirit that Allies have addressed Smart Defence over the last year and will also address Connected Forces.


As I have already mentioned, the Secretary General introduced Smart Defence at the Munich Security Conference in 2011.  He did so with the realisation that NATO and Allies would face considerable challenges in maintaining current capabilities and acquiring new capabilities in the coming years, while weathering the economic crisis.


Smart Defence is a new way of thinking about generating the defence capabilities we need for the year 2020 and beyond.  It is about deciding how to best manage what we have to cut, but also staying focused on what we need to keep, so that we can meet the Alliance's strategic goals now and in the future, and on what we need to develop.  It is about Allies working together to deliver capabilities multinationally that would be too expensive for many of them to deliver alone, ensuring that we all get the maximum return on available defence budgets. And it is also about Allies coordinating their plans more closely than they do now, so that they can specialise in what they do best, focus their resources in those areas, and contribute effectively to the overall capability requirements determined by NATO as needed to meet its Level of Ambition and toundertake the essential core tasks of the Strategic Concept (Collective Defence, Crisis Management and Cooperative Security).  To quote the Secretary General -

If we cannot spend more, we have to explore how to spend better. But he has also emphasised that Smart Defence is not an excuse to spend less, but to get more from the money we have to spend. 


Multinational cooperation in developing, fielding, maintaining and operating the capabilities the Alliance requires should become the normal way of doing business.  While there are may examples of multinational cooperation in procurement in the past, both successful and unsuccessful, they have largely been projects of choice. Smart Defence requires a new culture of cooperation, in which multinational cooperation becomes the instinctive and enduring way of proceeding, born from the necessity of the circumstances we face today, but with the realisation that it makes total sense to do so for the good of the Alliance as well as individual Allies.


Our work is not limited to developing the conceptual dimension of Smart Defence; there is also a very practical dimension to our Smart Defence agenda.  Following the Security Conference, Defence Ministers discussed the initiative at their June 2011 meeting and agreed to establish a Multinational Approach Task Force to find out what multinational projects were underway, the scope for other ongoing projects to be opened to multinational participation and other proposals for multinational projects that Allies wished to offer. 


The Task Force reported in September.  The essence of their report was that there is considerable multinational work already underway and that there was real enthusiasm for the Smart Defence Initiative, with nations offering multinational projects for their consideration.  Projects were divided into 3 tiers, Tier One are projects with an agreed scope, a lead nation, at least one additional participating nation and the project is coordinated with the EU to avoid duplication.  At the bottom, Tier Three projects are those which really are little more than an idea.  In between, Tier Two projects are those the idea is more developed, there are a number of interested nations, but they do not yet fully meet Tier One criteria. All this is a bit technical, but describes the measures in use.  Of more importance is that today we have 21 Tier One projects and   Tier Two projects.  Slovenia is involved in 2 Tier One projects at present, individual training and education and the multinational joint headquarters in Ulm in Germany and has shown an interest in 5 Tier Two projects.


The majority of the projects for now are relatively small scale, although nonetheless important,but we are at the beginning of a process, where for some nations this really isabout learning to work with others for the first time.  There are issues of trust and confidence building to be overcome and these important first steps will lay the foundations for larger scale projects in the future.


The Multinational Approach Task Force report was presented to Defence Ministers in October last year and they were very clear that they wished the Smart Defence Initiative to be pursued.  The Secretary General appointed 2 Special Envoys to lead on the further development of the Initiative, the then Deputy Secretary General, Ambassador Bisogniero (now replaced by Ambassador Vershbow), and the Supreme Allied Commander for Transformation, General Abrial.


Building on the ongoing practical work done on the multinational projects, they undertook a programme of visits to all Allies between October last year and March this year to maintain momentum and impetus, to encourage Allies to become involved to the maximum extent possible in projects and, as important, to hear nations views on the development of Smart Defence and any concerns they might have.


During those visits, one common theme was the need for a conceptual underpinning for Smart Defence and the need to bring it into the existing defence planning process, the NDPP.  In their report to Defence Ministers in February this year, the Special Envoys provided a conceptual food for thought paper for Ministers’ consideration. 


In that paper they described three interdependent components that provide the conceptual basis for Smart Defence, prioritisation, cooperation and specialisation.


It is recognised that aligning NATO’s and national capability priorities has been a challenge for many years. But building on the strategic direction set at the Lisbon Summit and on national projects offered in priority areas, Smart Defence provides an opportunity for a cooperative, transparent and more affordable approach to fulfilling key capability requirements.  As such, it allows nations to focus better on aligning collective and national priorities.


By coming together through cooperation, nations can have access to capabilities they could not afford independently and also achieve economies of scale, making capabilities more affordable and improving interoperability. Cooperation can work in a variety of formats: often in small groups of nations within the broader framework of the Alliance.  General Abrial introduced the notion of strategic proximity, where geography, culture, language, common equipment, political ambitions and military requirements, as well as a clear commitment towards shared goals, provides a strong motivation for cooperation among groups of Allies and with partners.


A regional focus and exploiting the opportunities offered by existing or planned regional groups has become a strong driver for Smart Defence. NORDEFCO (the Nordic Defence Cooperation) is a strong example of nationswith strategic proximity, and not just in terms of geography, coming together to procure equipment, achieving economy of scale and successfully addressing the very challenging issue of fair industrial shares.  Other groups, such as the Central European Visegrad 4 and the Adriatic 5, are in their infancy, but promise much.  The BENELUX nations, where maritime forces have been integrated for a long time, are pursuing further integration in other areas.


Specialisation is a particularly challenging issue.  Under budgetary pressure nations have unilaterally cut entire capabilities, leaving others with an increased burden and obligation to maintain them.  Such specialisation ‘by default’ is the inevitable result of the uncoordinated defence cuts that have been going on and is not effective.  NATO seeks to promote specialisation ‘by design’, whereby nations build on their national strengths and agree to coordinate any planned defence cuts with their Allies.  This requires a new commitment to a more transparent consultative process with NATO and fellow Allies than we have at present.


From this conceptual basis, other issues arise.  I have already mentioned industrial shares.  All nations seek a return on investment in their own country, yet the major defence industry in Europe is concentrated in only a few nations. 


How do we assure that capabilities procured cooperatively, and perhaps operated cooperatively, will be made available for operations.  This is a particularly difficult challenge, one that touches on sovereignty, trust and  mutual confidence.  But it cannot be avoided.  Nations looking to go into partnership with others must have a mutual understanding of the conditions under which capabilities can be used for national, NATO and EU operations.  It would be very difficult, if not impossible, to achieve assured availability, but at the least we should seek aset of principles that underpins availability and against which Force and Operational Planners can work.


The whole issue of partner involvement in multinational projects with the Alliance is also challenging.  But we have relied on partners to support us on operations for the last 20 years, and none more so than in Afghanistan.  To deny them the opportunity in a post operational environment to be part of capability procurement or training with the Alliance would make no sense and would not bein either their or our interests.  This does not mean including them in our defence planning or relying on their capabilities to meet our Level of Ambition. It is about allowing them the opportunity to continue the close association with the Alliance that has developed over years of operations, if they wish to do so.

No less important is the relationship with the EU.  The statement that nations have only one set of forces is old and perhaps clichéd, but nonetheless true.  At a time when the United Stateshas laid down a challenge for Europe to bear a greater share of the Alliance burden and to share more equitably leadership within NATO, we simply cannot ignore the development that is going on within the EDA.  To do so would lead to duplication and waste, as already happens.  We must be determined to ensure complementarity with the EU,  provide the EU space for the projects that are important to them and establish mechanisms for use by both organisations.  The EU have expressed a determination to address the imbalance between the United States and Europe and the challenge posed by Secretary Gates when he spoke last year in Brussels and their Air to Air refuelling project is manifestation of that intent. 


Finally we need to determine if our common funding arrangements, which have evolved over the time we have been on operations, remain suitable for the needs of an Alliance seeking to change its mindset in the way it does business.  But this again touches on very sensitive national perspectives and positions and must be handled delicately. 


All these issues are being discussed in Brussels as the Defence package is negotiated.  We hope to end up with a number of taskings from Chicago to take these issues forward. However, to be credible publicly and to ensure confidence within the Alliance, we need strong political commitment from all Allies to Smart Defence and all that it implies.  The Defence Package will be a major deliverable from Chicago.  While its details will remain an internal matter, it will be supplemented by a public political declaration that will underpin all that I have described.   This really is a most important document that will set us on the way to achieving our end or goal of NATO Forces 2020.


Before closing, I think it is appropriate to say just a few words on the Connected Forces Initiative announced at Munich this February.  It was launched against the realisation of the challenges of maintaining the levels of interoperability we have achieved over the last 20 years, and building on them, in an expanded Alliance and with partners in a post Afghanistan environment and with severe fiscal pressures remaining.


Three ‘means’ to deliver this ‘way’ are envisaged and will be worked on in detail following the Summit.  The first is expanded education and training, which might focus on refocusing our education and training institutions along 2020 priorities – readiness, deployability and connectivity – improving communication skills, including language and improving command and control skills across all Allies.


The second is increased exercise, which I have already mentioned, to ensure that our forces maintain the skills necessary to operate together under all possible circumstances and conditions,including high end war fighting, and our ability to deploy and operate joint force formations at the scale required. The NRF is seen as crucial to this and we have an opportunity post Afghanistan to renew our focus on it as an effective fighting force and a vehicle for continued transformation. But we must be under no illusions, to achieve and maintain the standards required will require considerable sustained investment.  The consequences of not doing so would be a hollow and increasingly incredible Alliance.


Finally, the third of the means is better use of technology to allow plug and play options to connect critical national and NATO capabilities, such as command and control, intelligence and surveillance assets.  Also included in this is technology to allow our weapon systems to operate together, and an example of this is a project being led by Canada to develop a universal armaments interface to ensure that all allied aircraft can employ all national weapons, something that was not possible over Libya.


Connected Forces is included in the Defence Package and will be an essential part of getting to NATO Forces 2020.


Well, ladies and gentleman, I have gone on long enough.  I hope I have been open and honest in addressing the challenges we face, the stark circumstances of today’s realities, but not is a too dispiriting way.


Above all I hope I have left you withan overriding impression of an Alliance that understand the challenges, is already addressing them and has plans through Smart Defence and Connected Forces to maintain what we have and to build when opportunity permits.  This is what will be delivered at Chicago and is what will keep NATO as the foremost defence Alliance in the world.


I think it is now long overdue that I turn the floor over to you for discussion.  Thank you very much for your attention.







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