[Senate Hearing 106-572]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 106-572

         NATO AND THE EU'S EUROPEAN SECURITY AND DEFENSE POLICY

=======================================================================

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON EUROPEAN AFFAIRS

                                 OF THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                              MARCH 9, 2000

                               __________

       Printed for the use of the Committee on Foreign Relations


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 senate

                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
65-627                     WASHINGTON : 2000


                     COMMITTEE ON FOREIGN RELATIONS

                 JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana            JOSEPH R. BIDEN, Jr., Delaware
CHUCK HAGEL, Nebraska                PAUL S. SARBANES, Maryland
GORDON H. SMITH, Oregon              CHRISTOPHER J. DODD, Connecticut
ROD GRAMS, Minnesota                 JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas                RUSSELL D. FEINGOLD, Wisconsin
CRAIG THOMAS, Wyoming                PAUL D. WELLSTONE, Minnesota
JOHN ASHCROFT, Missouri              BARBARA BOXER, California
BILL FRIST, Tennessee                ROBERT G. TORRICELLI, New Jersey
LINCOLN D. CHAFEE, Rhode Island
                   Stephen E. Biegun, Staff Director
                 Edwin K. Hall, Minority Staff Director

                                 ------                                

                    SUBCOMMITTEE ON EUROPEAN AFFAIRS

                   GORDON H. SMITH, Oregon, Chairman
RICHARD G. LUGAR, Indiana            JOSEPH R. BIDEN, Jr., Delaware
JOHN ASHCROFT, Missouri              PAUL S. SARBANES, Maryland
CHUCK HAGEL, Nebraska                CHRISTOPHER J. DODD, Connecticut
LINCOLN D. CHAFEE, Rhode Island      PAUL D. WELLSTONE, Minnesota

                                  (ii)



                            C O N T E N T S

                              ----------                              
                                                                   Page

Gedmin, Dr. Jeffrey, resident scholar, American Enterprise 
  Institute and executive director, The New Atlantic Initiative, 
  Washington, DC.................................................    38
    Prepared statement...........................................    40
Grossman, Hon. Marc, Assistant Secretary of State for European 
  Affairs, Department of State...................................     3
    Prepared statement...........................................     6
      Chart--Key NATO & EU Statements--Washington Summit and 
        Helsinki Summit..........................................     9
      Chart--Goals--Washington Summit and Helsinki Summit........    10
Hunter, Hon. Robert E., senior advisor, RAND Corp., Washington, 
  DC.............................................................    48
    Prepared statement...........................................    49
Kramer, Hon. Franklin D., Assistant Secretary of Defense for 
  International Security Affairs, Department of Defense..........    11
    Prepared statement...........................................    15
      Charts of slides shown during testimony entitled, ``NATO's 
        Defense Capabilities Initiative--Kosovo Lessons Learned 
        and Allied Defense Improvements''........................    22
Larrabee, Dr. F. Stephen, senior staff member, RAND Corp., 
  Washington, DC.................................................    44
    Prepared statement...........................................    46

                                 (iii)



 
         NATO AND THE EU'S EUROPEAN SECURITY AND DEFENSE POLICY

                              ----------                              


                        THURSDAY, MARCH 9, 2000

                               U.S. Senate,
                  Subcommittee on European Affairs,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:03 p.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Gordon H. 
Smith (chairman of the subcommittee) presiding.
    Present: Senator Smith.
    Senator Smith. Good afternoon, ladies and gentlemen. We 
welcome you to this hearing of the Senate Foreign Relations 
Committee. The Subcommittee on European Affairs has convened 
today to discuss the emerging European Security and Defense 
Policy, known as ESDP, and how its evolution may affect the 
NATO alliance.
    I would say at the outset of my remarks, I apologize in 
advance that there are three scheduled votes beginning in about 
10 minutes. So we are going to get into this hearing as far as 
we can before we are interrupted. We will be joined by Senator 
Biden after those votes.
    Representing the administration in our first panel will be 
Ambassador Marc Grossman, Assistant Secretary of State for 
European Affairs, and Mr. Frank Kramer, Assistant Secretary of 
Defense for International Security Affairs.
    The second panel will consist of: Dr. Jeffrey Gedmin from 
the American Enterprise Institute and the New Atlantic 
Initiative; Dr. Stephen Larrabee from the RAND Corporation and 
Ambassador Robert Hunter, our former Ambassador to NATO who is 
now also at the RAND Corporation. All of our witnesses are well 
qualified to address this important subject and I appreciate 
their willingness to share their views this afternoon.
    I am confident that the EU's ESDP project has the potential 
to strengthen the transatlantic partnership. I want to 
emphasize that: I am confident that it can strengthen the 
transatlantic partnership. If our European partners will truly 
improve their military capabilities, it will lead to a more 
powerful alliance with more balanced burden-sharing, and this 
in turn will yield a more influential European voice in the 
transatlantic security issues. I see it as a win-win 
proposition, a win-win scenario for both sides of the Atlantic.
    However, this is not a foregone conclusion. Success will 
require a genuine effort by the Europeans to strengthen their 
defense forces and careful management of the nascent 
relationship between NATO and the EU. There is no question that 
our European allies need to upgrade their military 
capabilities. The war in Kosovo highlighted the fact that the 
current arrangement, where the United States bears a 
disproportionate share of the burden in the alliance, is 
unsustainable, and I am pleased that many Europeans understand 
that they must take concrete steps to address this problem.
    I was surprised to learn that Javier Solana, the EU's 
foreign and security policy czar, believes the United States 
suffers from schizophrenia on this subject. He and other 
European leaders mistakenly argue that the United States calls 
upon them to take more responsibility for European security and 
then complains bitterly when they attempt to do so.
    I say to them and I assure them that I am not alone, that 
we encourage European efforts to increase defense capabilities 
and we welcome greater European participation in transatlantic 
security. However--and this is the important part--stronger, 
more effective European partners, not new European 
institutions, are the key to strengthening NATO and the 
transatlantic partnership.
    I fear that in the absence of significantly improved 
European defense capabilities the EU will find itself building 
hollow institutions. This could develop into a dangerous 
circumstance. First and foremost, NATO's ability to respond to 
a crisis could be undermined due to insufficient European 
capabilities. The current state of the alliance, with two tiers 
of military capabilities, would continue and once again we 
would find American and European servicemen undertaking 
dramatically different risks. That is, in itself, a recipe to 
undermine alliance cohesion and consensus.
    Second, the European Union could give the false impression 
that it is capable of conducting a military operation without 
American involvement when in fact it is unable to do so, 
creating a security vacuum that necessarily will be filled, and 
not necessarily to our advantage.
    These negative scenarios are the outcomes that I and other 
supporters of the transatlantic relationship want to work to 
avoid. I am concerned about the EU's rush to create new 
security institutions without dedicating the necessary 
resources to assure that these institutions have real 
capabilities at their disposal. I need not remind anyone here 
that the trend in European defense budgets is not encouraging. 
Germany, the most telling example, is cutting nearly $10 
billion from its defense budget over the next 4 years. But even 
other European members have made clear that the EU's defense 
project is not about spending more money, and no country has 
indicated that it plans to do so.
    These same EU members that want to establish an independent 
European defense identity are not meeting their current 
obligations under NATO. This is the rub for a lot of U.S. 
Senators.
    At its Washington summit last April, NATO established a 
process known as the Defense Capabilities Initiative to upgrade 
and modernize members' military capabilities. Our NATO allies 
endorsed this process and promised to fulfill its requirements. 
Now the ESDP has added new military goals for the European 
members of NATO. Which requirements will take priority, NATO's 
or those of the EU? To what degree are they overlapping or 
coordinated? Will it be enough for European leaders for EU 
members of NATO to meet the EU goals and not their requirements 
under the NATO Defense Capabilities Initiative?
    Finally, I am struck by the reluctance of the European 
Union to formalize its relationship with NATO. Now is the time 
to shape the evolution of the EU's new security institutions as 
well as to fund them, so that they strengthen the transatlantic 
relationship. Informal contacts are insufficient. It is 
imperative to establish a clearly defined and transparent 
relationship between the two organizations now, not after the 
EU has finished setting up its new institutions.
    I look forward to discussing these and other issues with 
our distinguished panel this afternoon. Before that, the vote 
has not gone off, so we will turn to you, Mr. Secretary. 
Secretary Grossman.

 STATEMENT OF HON. MARC GROSSMAN, ASSISTANT SECRETARY OF STATE 
           FOR EUROPEAN AFFAIRS, DEPARTMENT OF STATE

    Mr. Grossman. Mr. Chairman, thank you very much, and I know 
I speak for Assistant Secretary Kramer in thanking you for the 
opportunity to be here today to testify on our interest in the 
developing European Security Defense Identity, the European 
Security and Defense Policy. As usual when we are here, you and 
I obviously could have swapped opening statements, because the 
points that you made are exactly the points we both believe:
    One, that ESDI has the potential to be a very important 
part of the transatlantic relationship and be a good thing for 
NATO;
    Second, that ESDI has the possibility of being a win-win 
proposition for everybody;
    And third, that there is a lot of work to do.
    I would just say that, I do not know about Frank, but I 
certainly do not feel schizophrenic about this at all. I think 
this can be a good thing for the United States and, if we pay 
attention, will be a good thing for the United States.
    I should also say, Mr. Chairman, that from my perspective 
the views that have been expressed in this committee and 
certainly in the Senate as a whole have been very, very helpful 
to the way that we think about transatlantic security. If you 
go back to the Kyl amendment, which really defined for us what 
you wanted us to get out of the new strategic concept, the Roth 
resolution describing the framework on the way ahead for ESDI, 
and resolutions passed last fall in Senate and House which 
reinforced the administration's approach to this emerging 
European Security and Defense Identity.
    My view is simple. It is that we want to get ESDI right, 
and that is because we want ESDI, ESDP, to succeed, because I 
think if we can, we and our allies and partners in Europe can 
get it right--and I think we can if we pay attention--the ESDI 
will be good for the alliance, good for the United States, and 
good for U.S.-European relations.
    As you say, more European military capacity, more 
capability, will make the alliance stronger, lift some of the 
burden that we now have to act in every crisis, and make the 
U.S.-European relationship more of a partnership.
    When we were here, Mr. Chairman, just before the NATO 
summit in April, we tried to lay out our goals for that summit 
and also for a NATO alliance for the 21st century. What I would 
like to do today, if you would permit me, is just to report for 
a minute or two on how we did and how we want to go about now 
promoting an ESDI which advances America's security interests 
and a strong NATO.
    Last April we told you that ESDI should focus on enhanced 
capabilities and be compatible with U.S. and European security 
commitments in the alliance. We said that ESDI should develop 
in a way that avoided duplication of existing NATO 
capabilities, avoided the de-linking of European and NATO 
decisionmaking, and avoided discrimination against the non-EU 
NATO allies.
    At the Washington summit, the allies reaffirmed the 
indivisibility of the transatlantic link and the need to pursue 
common security objectives through NATO wherever possible. You 
and I have talked about this in the same way, that NATO is the 
organization of choice when Europe and the United States want 
to work together militarily.
    Now, NATO's leaders at Washington also recognized that 
there could be cases where the alliance does not want to engage 
as a whole, but where there is a need for some kind of military 
intervention. So at the Washington summit allied leaders also 
agreed in principle to presumed access to NATO access for EU-
led operations, while recognizing that the actual provision of 
these assets would be decided on a case-by-case basis.
    What I have tried to do is graphically demonstrated this in 
the two charts \1\ that we have brought along today: first in 
the goals that we set for ourselves, first in Washington and 
then moving forward to the Helsinki summit, which took place in 
December 1999, and then some of the statements to compare for 
you how we think we did in trying to get compatibility between 
what we said in Washington and what we thought was achieved at 
Helsinki.
---------------------------------------------------------------------------
    \1\ The charts referred to by Mr. Grossman appear on pages 9-10.
---------------------------------------------------------------------------
    I think it is important to look at the Helsinki side of 
this, which is to say that we wanted our European partners to 
be focused on, as you said, defense capabilities and the link 
with NATO. I think the quotations that they put out in Helsinki 
are very important ones. For example, that ``NATO remains the 
foundation of the collective defense of its members and will 
continue to have an important role in crisis management''--and 
here, very importantly in terms of the transatlantic link, that 
very key phrase for us--``where NATO as a whole or the alliance 
as a whole is not engaged,'' so that we do not have this 
confusion between what is going on in NATO and what is going on 
in the European Union.
    Very important for us also, and I know Assistant Secretary 
Kramer will talk more about this, is the key step the European 
Union took in improving its capabilities by committing to 
develop a pool of rapid reaction forces of 50,000 or 60,000 
troops, deployable within 60 days and sustainable for a year. 
This would increase deployable forces both for the European 
Union, of course, but very importantly for NATO as well.
    Again, in terms of DCI, the EU recognized that efforts to 
enhance its military capabilities should be mutually 
reinforcing with NATO's Defense Capabilities Initiative. That 
is what we support.
    As you said, there is a huge amount of work still to be 
done. And as I say, I think it can be done successfully if we 
keep paying attention. For example, as you say, NATO and the 
European Union have to be able to work together successfully 
and efficiently.
    Now, on the 1st of March the European Union established in 
Brussels interim committee structures to address security and 
defense matters, and it is these structures which will provide 
the basis on which to develop institutional links to NATO and 
to engage non-EU NATO allies in EU deliberations. We want to 
use the coming months to help create concrete NATO-EU links, 
make it possible for those non-EU NATO allies to participate in 
shaping EU security decisionmaking, and to press all allies to 
carry out their commitments to improve defense capabilities.
    In other words, what we would like to see is the European 
Union meet the objective it set for itself in Helsinki to 
develop the principles for NATO-EU links by the summit in 
Portugal in June. Now, of course NATO's got some work to do 
here, too, and NATO has to develop its structure so that after 
June these links can be established immediately and clearly.
    In our view--and I think I would take it as yours as well--
the best of these institutional links will be transparent and 
they will be cooperative. We believe that the new EU structures 
should interact fully with NATO.
    The closest possible links between European Union and NATO 
are necessary if NATO is to support an EU-led action where the 
alliance is not engaged, and the right NATO-EU links will 
ensure that organizational decisions about future military 
operations will not be taken in isolation either by NATO or by 
the European Union.
    It is fundamental to us as well that allies who, like us, 
are not members of the European Union deserve a special status 
in the EU security and defense deliberations. ESDI's success 
depends in the end on the ability of our European partners to 
create new military capabilities. The EU's commitment to 
meeting the headline goal is key, but, as Secretary Cohen and 
Secretary Albright have reiterated in recent months, our 
European allies and partners will not be able to make progress 
on improving capabilities without more resources, and I know 
Assistant Secretary Kramer will have more to say on this 
subject.
    Mr. Chairman, there are some people who worry that ESDI 
will weaken the alliance. My view is if we can get it right 
NATO will be stronger and U.S. interests served. The critical 
issue here is that the United States and Europe share a common 
vision of the indivisibility of our security interests. Now, we 
have successfully met the security challenges of the past 50 
years through this shared commitment, and I think as long as we 
stay in this together and create the right institutional 
framework the SDI and the ESDP can, as you say, has the 
potential to be a very good thing for this alliance and for the 
United States.
    I know that NATO Secretary General Lord Robertson and the 
European Union High Rep Javier Solana share that commitment, 
and Secretary Albright will be visiting both of them in 
Brussels tomorrow.
    There is a trap, though, I think that is worth stopping and 
warning about today. There are some people who are demanding 
that EU candidates in Eastern Europe choose somehow between 
Europe and the transatlantic relationship. As Secretary 
Albright said on the 26th of January--I quote this because it 
is such a good quote--``What a false choice that is. What a 
fatal choice it would be.''
    NATO remains the foundation of our common security and our 
common defense. Our European partners have pledged to improve 
their defense capabilities. We believe that ESDI should develop 
in the way that Lord Robertson has prescribed, highlighting his 
three i's: improvement in capability, indivisibility of 
security structures, and the inclusiveness of all allies. That 
is the vision we support.
    The job over the next year is to turn it into reality. Here 
is how I would consider to be the way forward. First, we must 
keep the focus on improving military capabilities through the 
Defense Capabilities Initiative. Building real new capabilities 
is hard, it is expensive, and it takes time. But without them 
there is no ESDI, there is no ESDP, no headline goal. I think 
the alliance would be more unbalanced and weaker if we do not 
pay attention to this very important part of our job.
    Second, we will work with our NATO and EU partners to 
establish EU-NATO links and to find the right way to include 
non-EU NATO allies in structures and processes. We're 
consulting with all of our allies in NATO, with our partners in 
the European Union, in capitals, in Washington, with Solana, 
with Lord Robertson, with everybody who will listen to us, to 
try to make sure that we get these links right, because it is 
the detailed arrangements for presumed access to NATO assets 
for the EU-led operations which will follow from these links.
    Third, if I might say, your continued support from the 
Senate and from this committee will also be very important. So 
the time you take to see allies or to travel to allied capitals 
will help us build the practical mix that we need between NATO 
and the European Union.
    ESDI can increase the European contribution to our common 
defense. It can ease the burden on the United States and 
strengthen the transatlantic partnership. These are the things 
that are vital to our Nation's yesterday.
    Mr. Chairman, I thank you for the opportunity to make this 
short statement, and with your permission I turn it over to 
Secretary Kramer and would be glad to answer any questions.
    [The prepared statement of Assistant Secretary Grossman 
follows:]

                Prepared Statement of Hon. Marc Grossman

                                  esdi
    I welcome this opportunity to testify on the U.S. foreign policy 
interest in the development of the European Security and Defense 
Identity.
    The views of this committee--and of the Senate as a whole--play a 
key role in how we think about trans-Atlantic security. The Kyl 
Amendment guided our work both on NATO enlargement and on the 
Alliance's new Strategic Concept. The Roth Resolution describes the 
framework for the way we want ESDI to develop. In resolutions passed 
last fall, the Senate and the House reinforced the Administration's 
approach to ESDI.
    Our goal is simple: we want to get ESDI right. That's because we 
want ESDI to succeed. If we and our Allies and partners in Europe can 
get it right, and I think we can if we pay attention, ESDI will be good 
for the Alliance, good for U.S. interests, and good for the U.S.-
European relationship. More European military, capacity will make the 
Alliance stronger, lift some of the burden we now have to act in every 
crisis, and make the U.S.-European relationship more of a partnership.
    When Frank Kramer and I were here just before the NATO Summit, we 
laid out our goals for the Summit and for a NATO for the 21st century. 
I'd like to report to you on how we're doing one year later. I'd also 
like to describe our ideas for promoting an ESDI which advances 
American security interests and a strong NATO.
    Last April, we told you that ESDI should focus on enhanced 
capabilities and be compatible with U.S. and European security 
commitments in NATO. We said that ESDI should develop in a way that 
avoids duplication of existing NATO capabilities, avoids the delinking 
of European and NATO decision making, and avoids discrimination against 
non-EU NATO Allies.
    At the Washington Summit Allies reaffirmed the indivisibility of 
the trans-Atlantic link and the need to pursue common security 
objectives through NATO wherever possible. NATO is the institution of 
choice when Europe and America want to act together militarily. NATO's 
leaders also recognized that there could be cases where the Alliance 
does not want to engage as a whole but where there is a need for some 
kind of military intervention. So at the Washington Summit, Allies also 
agreed in principle to presumed access to NATO assets for EU-led 
operations while recognizing that the actual provision of these assets 
would be decided on a case by case basis.
    The charts are a way to took at where things stand. They compare 
what NATO agreed at Washington and what the EU agreed at the Helsinki 
Summit, which took place last December.
    At the Helsinki Summit, our European partners said that, ``NATO 
remains the foundation of the collective defense of its members and 
will continue to have an important role in crisis management.''
    The EU also said, like we did in Washington:

          The EU should have the autonomous capacity to take decisions, 
        and where NATO as a whole in not engaged, to launch, and then 
        tc conduct EU-led military operations in response to 
        international crises.

    The Helsinki statement also took a key step in improving European 
capabilities by committing to develop a pool of rapid reaction forces 
of 50-60,000 troops, deployable within 60 days, sustainable for at 
least one year. This would increase the deployable forces available for 
NATO operations as well as for EU operations.
    And the EU recognized that efforts to enhance its military 
capabilities should be ``mutually reinforcing'' with NATO's Defense 
Capabilities Initiative.
    There is still work to be done, which I believe can be done 
successfully.
    For example, NATO and the EU must be able to work together.
    On March 1, the EU established in Brussels interim committee 
structures to address security and defense matters. These structures 
will provide the basis on which to develop institutional links to NATO 
and to engage the non-EU NATO Allies in EU deliberations.
    We want to use the coming months to help create concrete NATO-EU 
links, make it possible for non-EU NATO Allies to participate in 
shaping EU security decision making, and press all Allies to carry out 
their commitments to improve defense capabilities.
    We want the EU to meet the objective it set for itself in Helsinki 
to develop agreed principles for NATO-EU links by its Summit in 
Portugal in June. NATO needs to work on its own position so that links 
can be established quickly after June. The best institutional links 
will be transparent and cooperative. We believe that the new EU 
structures should interact fully with NATO.
    The closest possible links are necessary if NATO is to support an 
EU-led action where the Alliance is not engaged. The right NATO-EU 
links will ensure that organizational decisions about future military 
operations will not be taken in isolation by either NATO or the EU.
    We also believe that Allies, who, like us, are not members of the 
EU, deserve special status in the EU's security and defense 
deliberations.
    ESDI's success depends in the end on the ability of our European 
partners to create new military capabilities. The EU's commitment to 
meeting its ``headline goal'' is key. But, as Secretary Cohen has 
reiterated in recent months, our European Allies and partners will not 
be able to make progress on improving capabilities without more 
resources.
    Assistant Secretary Kramer will have more to say on this subject.
    Some worry that ESDI will weaken the Alliance. If we get it right, 
NATO will be stronger and U.S. interests served.
    The critical issue is that we and the EU share a common vision of 
the indivisibility of our security interests. We've successfully met 
the security challenges of the past fifty years through this shared 
commitment. As long as we continue to ``be in this together'' and 
create the right institutional framework, ESDI and ESDP can strengthen 
the Alliance. I know NATO Secretary General Lord Robertson and EU HiRep 
Solana share that commitment.
    But, there is a trap I warn against today. Some demand that EU 
candidates in Eastern Europe ``choose'' between Europe and the trans-
Atlantic relationship. As Secretary Albright said on January 26, ``What 
a false choice that is. What a fatal choice it would be.''
    NATO remains the foundation of our common security and defense. Our 
European partners have pledged to improve their defense capabilities. 
ESDI should develop in the way Lord Robertson has prescribed, 
highlighting his 3 i's:

        improvement of capabilities,
        indivisibility of security structures,
        inclusiveness of all Allies.

    We support that vision. The job over the next year is to turn 
commitments into reality.
    Here's how we see the way forward:
    First, we must keep the focus on improving military capabilities 
through the Defense Capabilities Initiative. Building real, new 
capabilities is hard, expensive and takes time. But without them, there 
is no ESDI, no ESDP, no headline goal. The Alliance will be unbalanced 
and weaker.
    Second, we will work with our NATO and EU partners to establish 
NATO-EU links and to find the right way to include non-EU NATO Allies 
in EU structures and processes., We are consulting with all Allies in 
NATO, the EU, in capitals, and Washington; with NATO Secretary General 
Robertson and EU HiRep Solana; and with the Portuguese EU Presidency. 
Detailed arrangements for the presumed access to NATO assets for EU-led 
operations will follow from these links.
    Third, your continued support and the time you take to meet Allies 
and to travel to NATO and EU countries will help us build the practical 
security links between NATO and the EU that will help make ESDI 
operative.
    ESDI can increase the European contribution to our common defense, 
ease the burden on the U.S. and strengthen the trans-Atlantic 
partnership so vital to our nation's security.
    Thank you. After Assistant Secretary Kramer's testimony, I'd be 
glad to answer any questions.





    Senator Smith. Thank you very much, Secretary Grossman.
    Mr. Kramer, we welcome you as well. Thank you, sir.

 STATEMENT OF HON. FRANKLIN D. KRAMER, ASSISTANT SECRETARY OF 
   DEFENSE FOR INTERNATIONAL SECURITY AFFAIRS, DEPARTMENT OF 
                            DEFENSE

    Mr. Kramer. Thank you very much.
    I agree fully with Assistant Secretary Grossman's 
statement, so let me make a few points that would focus on one 
aspect of ESDI which he himself highlighted and which you 
highlighted in your opening statement, and that is the issue of 
capabilities and how does what we are doing in NATO relate to 
the capabilities issue with respect to ESDI.
    I have got a few slides,\2\ and if we can run through them, 
we will make this sort of a Pentagon briefing, if you will. The 
first several are what did the Kosovo war really show us? As 
you can see, on the left I have got the strengths and on the 
right I have got some weaknesses. One element is that we were 
able to do with our allies combined air to air operations. In 
short, all that NATO training paid off.
---------------------------------------------------------------------------
    \2\ The slides referred to by Secretary Kramer can be found 
following his prepared statement, which begins on page 15.
---------------------------------------------------------------------------
    In addition, they were able to do a pretty good job for 
themselves when they would work together. I highlighted the 
Dutch and the Belgians, who really have a combined air task 
force and, given that, they were able to do over almost 2,000 
of the ballpark 37,000 missions. If they had not worked 
together, they never could have done half of that each 
separately.
    On the other hand, again as you well know, none of the 
allies really were able to do very much in the area of all-
weather day-night type operations, so there is a real 
deficiency.
    On that second point, we did about the same number of 
strike sorties--that is, so to speak, combat sorties--and we 
found for all of us that if we had PGM's we could really do a 
very good job. However, the U.S. in the early days did 
virtually all of the strike sorties and there were certain 
kinds of things that only we have the capability to do, so-
called support jamming, suppression of enemy air defenses.
    We also did a lot more in the overall of the support 
sorties, and that would include the intelligence, surveillance, 
reconnaissance kinds of capabilities that we have and many of 
the allies do not have. We also have the majority of the PGM 
stocks.
    Finally, again on the strengths side, the command structure 
really worked and they got their airplanes there pretty 
quickly, as did we.
    On the weakness side, there was a real failure of secure 
aircraft communications. That was an operational problem, and 
when we finally did deploy the KFOR ground forces--that was 
mainly going in later--we found that they deployed a lot more 
slowly than we would have liked.
    So what did that tell us? What that said was that the five 
DCI categories which we had approved at the summit and we have 
been working on for well over a year before the summit and 
therefore before Kosovo turned out to be the right kinds of 
things. We needed deployability, mobility, we needed C3, 
engagement, and the like.
    This is what we have been doing in the last year. We 
established in NATO a high level steering group which works on 
these issues. I represent the U.S. We have comparable people 
from all other countries, and we most importantly have gotten 
the NATO military authorities to use the force planning process 
to build into that NATO force planning process the goals of the 
DCI.
    I may get my numbers wrong, but I will get the point about 
right. There are about 170 specific force planning goals now 
that have DCI comparable issues, deployability----
    Senator Smith. Do you see those reflected in our 2001 
budget?
    Mr. Kramer. Yes, in fact. You mean in our defense budget?
    Senator Smith. Our defense budget.
    Mr. Kramer. Yes, they are. One of the advantages we had was 
that, since we have always had to go to the right, if you will, 
we have been doing a lot of this historically. But we have also 
added specific things to our budget in light of Kosovo. One 
example would be we have added additional jamming aircraft, EA-
6B's. We have added additional C-17's, mobility aircraft. We 
have a whole host of additions that we have done in light of 
this. We think the allies need to do comparable things.
    Senator Smith. Do you see, in the European budgets are 
these lessons learned priorities in their military budgets now?
    Mr. Kramer. There are two parts to that question. The 
lessons learned are there for sure. The Europeans, one of the 
benefits of the DCI, as exemplified by Kosovo, is they know the 
issues. Second, they are making some strides in terms of their 
budgets. What they have not done, which you have said yourself, 
is increase the budgets.
    So to the extent that they are able to do things by 
reallocation, we are seeing that. But to the extent that they 
need to add resources--and we think they need to add 
resources--they have not done that part yet.
    Senator Smith. Do they think they need to add resources or 
just redirect resources? That is what I am always told, is all 
that is necessary is redirecting existing and reduced 
resources. Does that get the job done?
    Mr. Kramer. You are hearing the same as we generally are 
hearing. But like all countries, there are differences of view 
internally. I think the militaries know perfectly well that 
they need to add resources and I would say so do the defense 
professionals. I think from a financial point of view, 
especially with the Euro criteria and other economic 
constraints, that they have a hard time now. We, just as a 
matter of history, are in a better place economically than they 
are.
    You will see I have a quote at the end from the French 
defense minister who talks about the necessity for more 
resources. So I think the understanding is there. What is not 
yet there is the action.
    Just briefly, one of the reasons we went into this is 
because we had a number of countries already doing or talking 
about restructuring their forces. The reason they were doing 
that is in the old days, in the Soviet days, it made a lot of 
sense to have forces that, so to speak, dug in at the inter-
German border. You did not need mobile forces. You knew where 
you were going to fight.
    In this environment that is not true. So it is not that the 
forces were done wrong before. It is that the times have 
changed.
    The U.K. was doing a strategic defense review, France 
likewise. The Netherlands, Norway, Denmark, Italy, and Germany 
is in the process. So you have--it is not just a U.S.-imposed 
effort here. It is an effort in which the allies themselves 
have been doing reviews in capitals and likewise have brought 
some of these concepts to the table.
    What have we actually done in NATO? One important thing 
that we found is fighting away from home, so to speak, is much 
harder than fighting at home. If you cannot go down to the 
neighborhood store to get food and gas and you have to have it 
shipped out to you, that is a tough proposition, especially if 
you do not get it.
    You may not have it, but the guy next door may have it. But 
unless you can talk to each other, keep track of it, you cannot 
take advantage of what he may have. This form of words, which 
was meant to be politically obfuscating, ``multinational joint 
logistics center,'' because it is a military term, simply means 
that we can work together in a common way on logistics, share 
logistics as necessary, share support. Every country has the 
responsibility, but from time to time as necessary one country 
can support another.
    We do that as a practical matter. Now we have set this up 
in Kosovo. We are going forward to set it up. We need to build 
it into the doctrine so we do it all the time. It has a benefit 
in terms of overall resources. If you know you can rely on the 
other guy, you do not have to bring as much, you can be much 
more efficient.
    Businesses do this all the time now, the concept of just in 
time delivery, for example. Well, in war we will not quite do 
just in time, but we can have that basic concept built in. We 
can use computers and the like, and this is one effort.
    Another area, the allies have all too few mobility 
capabilities. The Germans and then with the French proposed a 
European Transport Command. It is early days. It is not much 
more yet than a sign on the door. I actually had a meeting with 
the German under secretary of defense to talk about this today. 
But it is a very good concept. They are working to actually get 
aircraft assigned to it, and if it works it will give them a 
much more substantial capability.
    One of the things they can do is they can use civil 
aircraft in emergencies. They can pull them in. We have that 
capability in the U.S. They could do it.
    Likewise, just about 2 weeks ago, I think it was, France 
and The Netherlands announced that they would develop a 
combined maritime lift cell, so the same idea. They would work 
together on mobility in the sea-based, which is very important.
    These are things that we are stressing, and ``we'' includes 
particularly. The lift I have already talked about; air to air 
refueling; suppression of enemy air defenses; jamming; 
precision guided munitions; secure communications. It is worth 
saying that there are enough forces there. The allies have far 
more, for example, than the 50,000 to 60,000 forces that are 
mentioned in the so-called headline goal. The question is can 
you get the forces someplace in a timely fashion and can you 
sustain them over time? It is not are there enough people, are 
there enough tanks, are there enough airplanes, and the like. 
There is an issue of high tech in certain areas, but the 
overall number of forces is perfectly adequate.
    These are the milestones. As you know from your knowledge 
of NATO, we have force goals every 2 years. We have the new 
force goals coming out this year. We are in the process. The 
so-called force proposals have gone out. The allies will come 
back and say how they plan to fulfill them, and then we 
actually have to implement them as force goals.
    We have to reallocate resources. We talked about that. And 
the third tick, as you can see, reallocation will not be 
enough, in my view. We will have to have some increase in 
defense budgets.
    Now, what about ESDI? Because that is what we are doing. I 
think it is useful to say here, there is only one set of 
forces. It is not a separate set for the European Union and a 
separate set for NATO. Every country has one set of forces, and 
historically NATO has given guidance as to what needs to be 
done with those forces.
    If you will, down the left here are the DCI objectives. 
Down the right are the Helsinki objectives, and those words are 
taken actually out of the Helsinki documents and you see there 
is a huge overlap and almost complete identity actually. We 
worked very hard with the European allies to make sure that 
what they were doing, going to say was their goal in Helsinki, 
was compatible with what we are doing in NATO, so the goals are 
compatible.
    Now, of course comes the implementation. One thing we worry 
about is the U.S. should not be left to do the so-called high 
intensity missions and the allies just do the low intensity 
missions. They have assured us that is not the case and I think 
for many of the allies that is true. It is a harder sell for 
some people who are in the EU who are not NATO allies, like say 
for example Sweden, which has a history of peacekeeping. But 
the Swedes can be both in the EU and do what they want, at the 
same time they do not have to hold the EU down to the lowest 
common denominator.
    What this chart is meant to show is that right now, as I 
said, from the goals point of view they have perfectly 
reasonable goals.
    Now, this chart I almost did not show you because it says 
``Why This Time Is Different.'' And you know, in 6 months you 
will crucify me for being so dumb, but it is useful to say out 
loud what the Europeans are saying. You see the Blair quote and 
one of the important aspects is that the British are in this 
fully. As he has talked about, the Prime Minister has said in 
substance: We need to have the capability. They really kicked 
it off with the French in St. Malo and since then we have gone 
forward.
    The Italians, you ask do they recognize the problem? Well, 
yes, they do. Those numbers are about right. They do spend 60 
percent and they get about 10 percent. Why? Partly because it 
is duplicative, too many overheads, not buying the right stuff, 
history. They have those forces in place as opposed to mobile 
forces. But it is a real recognition of the problem.
    Last is the French defense minister's quote that I 
mentioned before and, as you can see when you get to the end, 
he talks about a greater willingness to spend money on defense. 
Now, will that be translated into actuality? I think the answer 
is we will have to wait and see.
    There is a lot that can be done by reallocation, but not 
all that should be done. So I do not want to throw reallocation 
out. That is not to be pushed away as a non-important point, 
but I do think a greater amount of resources is appropriate.
    So as Assistant Secretary Grossman said, I think we have a 
real shot at this. The proof will be in the pudding, of course.
    [The prepared statement of Mr. Kramer follows:]

             Prepared Statement of Hon. Franklin D. Kramer

    Mr. Chairman, Members of the Committee, thank you for the 
opportunity to be here today to discuss with you NATO's Defense 
Capabilities Initiative (DCI) and the European Security and Defense 
Identity (ESDI).
                              introduction
    Secretary Cohen introduced the idea of focused improvement of 
defense capabilities to his NATO counterparts in June 1998. The 
Secretary's observations at the time relied heavily on the Allies' IFOR 
and SFOR experiences in Bosnia. In Bosnia, the Alliance learned that 
when a military operation is conducted at a distance--even a small 
distance--deficiencies in mobility, communications, and sustainment 
become more than minor inconveniences--they can become unacceptable 
impediments to mission success. Allies learned that future conflicts in 
Europe would likely place a premium on the ability to deploy troops and 
equipment to a crisis rapidly, often outside NATO territory, with 
little or no preexisting host nation support.
    The military operation in Kosovo also demonstrated the need to 
improve Allied capabilities. While our NATO partners contributed 
significantly to the military capabilities employed in Operation ALLIED 
FORCE, the operation highlighted a number of disparities between U.S. 
capabilities and those of our Allies, including precision strike, 
mobility, and command, control and communications capabilities. The 
gaps that we confronted were real, and they had the effect of impeding 
our ability to operate at optimal effectiveness with our NATO Allies.
    The discussion with Allies continued at the NATO Informal Defense 
Ministerial in Vilamoura, Portugal in September 1998. There, the 
Secretary assessed the state of Alliance capabilities and expanded on 
his earlier concept. He formally proposed the idea of a Defense 
Capabilities Initiative (DCI) to be approved at the April 1999 NATO 
Summit in Washington.
    Allied Heads of State and Government met in Washington at the April 
1999 NATO Summit and officially launched the DCI. Specifically, Allied 
leaders agreed to improve capabilities in five functional areas: 
deployability and mobility; sustainability and logistics; command, 
control, and communications (C3); effective engagement; and 
survivability of forces and infrastructure. Within these functional 
areas, they agreed to numerous short- and long-term objectives.
    The lessons learned from Kosovo validated the capability 
improvements sought by the DCI, and gave greater incentive for nations 
to take action to improve their capabilities in these five core areas. 
At NATO, the DCI did not necessarily mark the beginning of efforts in 
each capability area, but rather provided additional impetus to work 
already underway.
    As DCI's key mechanism for implementation, Heads of State also 
established at the Summit a High Level Steering Group (HLSG) to oversee 
implementation of the initiative, and to coordinate, prioritize and 
harmonize the work of NATO's defense-related committees. The U.S. has 
been represented by myself as the Assistant Secretary of Defense for 
International Security Affairs.
        dci implementation: the high level steering group (hlsg)
    The Alliance is pursuing DCI improvements on two tracks, both of 
which involve work in Brussels and in Allied capitals. First, to 
specifically address each of the DCI objectives, NATO committees are 
meeting regularly to address those objectives that fall under their 
purview. NATO's HLSG oversees this process.
    Since the Washington Summit, the HLSG has met five times. It has 
focused its work on monitoring all of the DCI objectives, examining 
specific objectives in-depth, and considering relevant policy issues.
Monitoring
    Responsibility for the individual DCI objectives remains with 
nations and the appropriate NATO bodies and authorities. In order to 
execute properly its coordinating function, the HLSG has identified 
specific NATO committees that have primary and supporting 
responsibilities for DCI implementation, and is monitoring short- and 
long-term objectives.
    How successful has the HLSG been thus far? It has:

   seized the opportunity to focus high-level attention on the 
        DCI and to define precise milestones, thereby creating a 
        heightened sense of purpose and urgency;
   reviewed objectives in each of the five core capability 
        areas;
   ensured that key NATO committees have reorganized with a 
        view towards fulfilling the DCI objectives as one of their 
        highest priorities;
   generated synergy between NATO defense planning 
        ``stovepipes'' and forced NATO committees to work together, 
        thus beginning to produce common solutions to DCI objectives;
   been the catalyst, in some cases, for long-delayed decisions 
        to be taken just before HLSG meetings at which these delays 
        would otherwise have been exposed;
   prompted: timelines for projects in the committees to be 
        revised in many cases to accelerate progress; working groups to 
        be established; questionnaires to nations to be issued (and 
        replied to); studies to be launched; and temporary staff 
        augmentations to be provided.

    Just as significantly, separate committees which each hold 
responsibility for partial accomplishment of a DCI objective have been 
strongly encouraged to coordinate with each other, and have done so in 
many cases. In short, the HLSG has been an efficient and effective 
forcing mechanism.
    While the HLSG has been successful in moving many of the objectives 
forward, many others still require work. Real capability improvements 
will only be achieved when nations translate this work into action and 
the action is brought to a successful conclusion. The HLSG will 
therefore continue to monitor all of the objectives and recommend 
further action as appropriate.
Examination of Specific Objectives
    The HLSG has also examined specific objectives more in-depth. In 
the DCI area of Sustainability and Logistics, for example, the 
establishment of the Multinational Joint Logistics Center (MJLC) 
concept has been a priority of the HLSG since the Washington Summit. 
The MJLC concept will help the Alliance manage deployed task force 
sustainment and re-supply operations in a much more efficient and 
timely manner. It demonstrates the evolution from logistics as a 
national responsibility to logistics as a shared responsibility. It 
furthers the concept of interoperability and will increase the 
efficiency of coalition operations. The Alliance has moved forward on 
doctrine, testing and personnel and has thus met the 1999 Summit goal 
of beginning implementation of the MJLC concept by the end of last 
year.
    The Deployability and Mobility DCI objectives are arguably some of 
the most difficult to attain, because they require considerable 
resources and procurement decisions involving long lead times by 
nations. NATO committees in Brussels have taken some steps to help 
improve this core capability. Individual nations need to do much more. 
We continue to seek innovative approaches with the Allies to improve 
capabilities in this area in efficient and effective ways. Germany and 
France agreed at last November's Franco-German Summit to create a 
``European command for aerial transport in order to manage in common 
available European means for military aerial transport and to 
coordinate use of civil means that might eventually be utilized.'' 
France has also recently agreed to work with the Netherlands to develop 
a maritime lift cell to better utilize European maritime strategic 
transport capabilities. We have welcomed the concept of pooling of 
European lift resources and look forward to German, French and Dutch 
plans regarding their initiatives.
    In the communications area, one method to ensure interoperability 
among national and NATO Consultation, Command and Control (C3) systems 
is to have an approved plan that shows what exists and what is planned 
and/or required for the future. A C3 systems architecture is such a 
plan. The NATO C3 environment is, and is increasingly becoming, 
technologically complex. Achieving interoperability between NATO and 
corresponding national systems is no longer a simple task, especially 
considering the number of systems that must be interconnected.
    To overcome this problem, NATO will develop a C3 systems 
architecture by the end of 2002. This architecture should portray 
current systems and the migration to future replacement and/or enhanced 
systems. The C3 systems architecture will assist in focusing NATO and 
NATO nations' C3 efforts and in achieving interoperability among the 
wide variety of systems being acquired nationally and by NATO.
    Regarding Effective Engagement, the suppression of enemy air 
defenses and the acquisition and deployment of precision guided 
munitions (PGMs) are high priorities for NATO and the DCI. Low cost 
solutions to upgrade existing munitions appear to provide for 
improvements, assuming appropriate funding is made available by the 
nations and production can be adjusted to the requirements of nations. 
The procurement of PGMs could potentially be facilitated through 
coordinated acquisition by a number of European Allies.
    Finally, the HLSG is beginning to examine objectives under 
Survivability of Forces and Infrastructure, such as those related to 
the proliferation of nuclear, biological, and chemical weapons.
    The HLSG has also received input from nations, expressing their 
specific views on the five implementation areas of DCI and, in some 
cases, describing in detail how they intend to implement the specific 
objectives. These give valuable insights on the further development of 
DCI. Countries participating in collective defense planning--all Allies 
except France--provide further information on their plans within the 
defense planning process. Nevertheless, the information so far 
available does not provide a sufficiently comprehensive picture of 
national implementation activities. Allies have discussed ways of 
gathering additional data on national efforts in the coming months.
Policy Issues
    The HLSG has also been considering the policy issues relevant to 
DCI implementation. One such issue is the availability of resources. 
The success of DCI depends upon the provision of sufficient resources. 
Allies need to show leadership in making the necessary investments to 
field a 21st century force. Defense budgets will always be a function 
of national priorities, but they must also be a function of both 
international challenges and the capabilities needed to address those 
challenges as an Alliance. Yet unresponsive defense budgets continue to 
erode Alliance capabilities. While Allies acknowledge their capability 
shortfalls, few have made concrete efforts towards their amelioration 
by increasing their defense budgets and reallocating funds. In fact, 
defense spending has been cut by several key Allies.
    Yet we are beginning to see hopeful signs of movement towards 
increased defense spending. At a recent speech at Georgetown 
University, the French Minister of Defense Alain Richard said, ``The 
present unsatisfactory state of defense budgets within NATO partially 
reflects a state of complacency deriving from U.S. protection.
. . . Just as enhanced European capabilities should imply increased 
European responsibilities, so will, I believe, increased 
responsibilities translate into a greater sense of entitlement by EU 
citizens and, thereby, a greater willingness to spend money on 
defense.'' To provide the necessary resources to support DCI, nations 
must re-evaluate the percentage of their GDP devoted to defense 
spending and will need to consider restructuring existing forces, 
reallocating within existing defense budgets, and increasing defense 
spending.
    In short, NATO nations must begin to focus on more efficient, more 
focused, better-planned and coordinated use of resources. Innovative 
approaches to improving capabilities can increase the efficiency and 
effectiveness of the resources spent. For example, many mobility and 
logistics capabilities can be met through commercially available assets 
and off-the-shelf technology. One approach would be to harness the 
capabilities of commercial sector shippers for military logistics 
management. Increased leveraging of commercial logistics and mobility 
assets holds opportunities for greatly improved capabilities without 
large spending increases. Finding ways to leverage the unique strengths 
of our industrial sectors could lead to procurement reforms that can 
make the most of defense spending. Further savings could potentially be 
found by restructuring forces in order to be lighter, more mobile and 
more sustainable.
    As an example, in order to improve U.S. readiness and respond to 
the full range of Alliance missions, the U.S. has embarked on the 
largest sustained increase in defense spending in some 15 years. Many 
lessons learned from Kosovo have been incorporated into the U.S. 2001 
defense budget: the acceleration of Global Hawk at $400 million; the 
addition of another JSTARS at $250 million; a new squadron and upgrades 
to the EA-6B at $500 million; 624 new Tomahawk missiles at $400 
million; and the acceleration of the procurement of joint direct-attack 
munitions for approximately $178 million. Yet the U.S. cannot be alone 
in its budgetary reaction to the lessons from Kosovo; other Allies must 
also respond by increasing defense spending and shifting budgetary 
priorities to areas identified as capability shortfalls.
    Nations need not all respond to the lessons of the Balkans in the 
same way--there is no ``one size fits all'' solution to increasing 
national and Alliance capabilities. While not all Allies must develop 
equal capabilities, the collective goal should be compatible 
capabilities. While not all nations need to buy the newest or best 
equipment, those nations capable of doing so through increased defense 
budgets should find a way to take that step. For example, nations 
expecting budget surpluses should increase defense spending, and 
nations undergoing review of their force structure should look into 
radically restructuring existing forces. Ultimately, it is not only 
imperative that nations maintain sufficient defense spending, but that 
they also realize the full potential of the resources they already 
spend.
    As another policy issue, the HLSG will also consider the 
possibility of Partner involvement in any future NATO-led non-Article 5 
operations; interoperability not only between Allies but between Allied 
and Partner forces will therefore need to be addressed in due course.
    Finally, the HLSG is considering the policy issue of ESDI, which is 
discussed below.
                    dci implementation: force goals
    The second track for DCI implementation is to ensure that NATO 
Force Proposals are geared to achievement of DCI objectives. Force 
Proposals, which are developed every two years and become Force Goals 
once approved by NATO Defense Ministers, are currently being developed 
by the two Strategic Commands as part of the NATO defense planning 
process for the year 2000 and beyond. They must be sufficiently robust 
so as to provide a measurement of how each member nation is being 
called upon to enhance Allied capabilities.
    The success of the DCI will depend considerably on the action taken 
by individual nations. For the 18 countries that participate in NATO's 
defense planning process, a very large portion of the national activity 
to implement DCI falls under the purview of that process. Force Goals 
are intended to represent a ``reasonable challenge'' to nations. This 
means that in each NATO force planning cycle, nations are expected to 
meet this ``reasonable challenge'' by providing the forces and 
capabilities requested by the Strategic Commands. For NATO to realize a 
true increase in its capabilities, the U.S. Administration has spent 
much of the past six months arguing that Force Proposals 2000 should be 
more robust and Allies must accept the new proposals and fully 
implement them.
    Through the assiduous monitoring of SHAPE and SACLANT, NATO has 
developed Force Proposals 2000 that are more robust and are closely 
tied to the DCI objectives. Furthermore, many of the new Force 
Proposals have been accepted by nations, indicating that they consider 
the military requirement as valid and implementation as feasible. Some 
nations have exercised their right to refuse a Force Proposal when they 
believe it imposes an unduly harsh burden. However, acceptance of Force 
Goals as reasonable planning targets does not guarantee implementation, 
but is only the beginning of the process of increasing capabilities. 
This year, as NATO moves into the next stage of the defense planning 
process, we will again have the opportunity to encourage Allies to 
accept their 2000 Force Proposals and implement them after they become 
Force Goals.
                              dci and esdi
    We and our NATO Allies have been working on the European Security 
and Defense Identity (ESDI) since 1994 with the Western European Union 
(WEU) and since last year with the EU. ESDI should mean stronger and 
more capable European Allies--Allies who will be better partners for 
the U.S. in pursuit of our shared interests and values and better able 
to contribute to transatlantic security. The success of ESDI, like that 
of DCI, is an integral part of equipping the Alliance with the tools 
and options it will need to deal with the challenges of the new 
century.
    The key to the success of ESDI is real improvements in European 
capabilities. Both we and our Allies recognize that one of the lessons 
of Kosovo is that NATO's European pillar needs to do a better job in 
acquiring and maintaining the types of capabilities Operation ALLIED 
FORCE required. In this area, the DCI and the EU's December 1999 
Helsinki Summit Communiqu3 are major steps forward. At Helsinki, the EU 
laid out a ``Headline Goal,'' pledged at the Head of State level to be 
able to field, by 2003, a force of 50-60,000 troops deployable within 
60 days for up to a year's duration. To do this, the nations of the EU 
will have to follow-up on enhancements in the five capabilities areas 
identified in the DCI--deployability and mobility; sustainability and 
logistics; command, control and communications; effective engagement; 
and survivability.
    DCI and ESDI must be consistent. Both DCI and ESDI will fail unless 
some nations spend more, all spend smarter, and all stop reductions.
    As work continues within NATO and the EU, the United States needs 
to ensure that ESDI meets what NATO Secretary General Lord Robertson 
has called the ``three I's'': indivisibility of the transatlantic link; 
improvement of capabilities; and inclusiveness of all Allies.
Indivisibility of Security
    In building the European capabilities, we must not weaken NATO, the 
most successful and enduring multinational alliance in history. There 
needs to be not only a private conviction, but a frequent public 
affirmation, that both European and American governments are committed 
to the idea that NATO must continue to be a strong and effective 
instrument of security for the Euro-Atlantic area and the principal 
forum for political, as well as military, cooperation on security 
matters.
    The principle must be maintained that Europe will act alone (and 
would only want or need to act alone) only where NATO itself is not 
engaged--not because NATO has some abstract right to priority, but 
because any different approach would mean duplication, if not 
competition, and would be wasteful at best and divisive at worst.
    The EU will naturally have to have a capability for independent 
decisions and directions, including ``strategic'' planning, but should 
not replicate NATO's operational planning system or its command 
structure. Instead these NATO capabilities should be available to the 
EU from NATO as needed. ESDI should build on existing NATO-WEU links to 
provide EU Common Foreign and Security Policy (CFSP) mechanisms with 
assured access to NATO planning capabilities, and presumed access to 
NATO collective assets and capabilities for those EU-led operations to 
be decided on a case-by-case basis. Close coordination and transparency 
between NATO and EU planning will be essential if only to ensure that, 
if the question of EU access to NATO assets for an operation arises, 
all NATO members are comfortable with the proposed operation.
    Formally, NATO and EU will maintain independence of decisions--but 
in practice, they have to be closely linked and cooperative, not 
competitive, and between NATO and the EU there needs to be complete 
mutual transparency and coordination. Of course, for those cases where 
NATO is not engaged, Europe needs to have both the military capacity to 
act and the institutions to reach a decision on whether to do so and to 
conduct the operation. Additionally, there can be no question of an 
``EU Caucus'' inside NATO: NATO decisions must continue to be reached 
in real collective discussion, so that NATO will remain, in fact as 
well as in rhetoric, the principal forum for security consultation.
    Therefore, we favor moving forward rapidly with building the needed 
NATO-EU links. In the short term, this means formalizing NATO-EU 
cooperation beyond the occasional breakfasts that NATO Secretary 
General Robertson has with Javier Solana in his new capacity as High 
Representative for the EU CFSP. Some argue that the EU first has to 
complete the internal process of developing the European Security and 
Defense Policy (ESDP) before turning to these matters. However, if we 
want to ensure that NATO and EU processes are mutually reinforcing, we 
need to develop institutional ties as promptly as possible. We 
recognize that the EU will need some institutional structure for the 
NATO-EU discussions to be productive, but the interim EU institutions 
are sufficient to provide a valid EU side to the NATO-EU links. Maximum 
transparency between NATO and the EU as the latter develops its 
institutional security architecture is the best way to ensure that 
everyone's equities are covered and duplication is minimized. We also 
need practical working contacts to hammer out the procedures and 
arrangements to permit NATO planning and assets to be provided to the 
EU when needed. In pushing for NATO-EU ties, of course, we fully 
respect the sovereignty of European Union decision-making.
Improvement of the Capabilities
    The war in Kosovo dramatized that NATO must and can find the 
political will to respond to new security challenges. It highlighted 
that NATO can--and did--conduct a highly effective military operation. 
But it also made obvious the gap between the U.S. and European 
contributions--not of courage, skill, political will, or commitment, 
but of military capability in the fields most relevant to modern 
warfare. To close that gap, our European Allies and partners must take 
steps to improve their capabilities in the five core capabilities 
areas. Doing so will contribute to both NATO and EU capabilities, and 
better balance burdens, responsibilities and influence inside NATO.
    Powerful, deployable, flexible, sustainable and effective military 
forces geared to the challenges they are likely to face are essential 
to protect European security. The U.S. will continue to do its part--
and there have been lessons for America, as well as for others, from 
the experience of the Kosovo war. But it is also true that increased 
European focus on, and capability for, defense will be a key element of 
assuring that NATO itself remains strong and able to meet the new 
threats to security we will face together in the coming years--and it 
is no secret that in this regard, Europe has some catching up to do.
    Catching up will require a significant shift in the force structure 
of European militaries. Providing a European dimension to defense can 
reasonably be expected to help focus attention on the need to improve 
European forces and aid in finding both the resources and the will to 
do so.
    It is of critical importance in this connection that the priorities 
of the NATO DCI and of the EU's program of defense improvements, 
including the ``headline goal'' of a deployable force of 50,000 to 
60,000 troops, are not only compatible but also largely identical and 
mutually reinforcing. Indeed, these themes are also consistent with the 
priorities for defense restructuring and modernization set on a 
national basis by the United Kingdom, France, the Netherlands and other 
Allies.
    Actually executing the programs laid out under both DCI and ESDI 
remains essentially a national task, a job for individual nations. 
Neither NATO nor the EU will, for the foreseeable future, actually 
dispose of significant military power, aside from national 
contributions, except for some headquarters, communications systems, 
and, in the case of NATO, airborne surveillance. Even where units are 
nominally multinational, or pledged to NATO or the EU, it will remain 
an issue for national decision whether they will actually join an 
operation, a decision that will be made in the specific context of a 
crisis. Thus, greater capacity for the European nations to make 
contributions to modem military operations will be available for either 
NATO or EU-led operations and that greater capacity will strengthen 
equally the potential of both institutions.
    The key, of course, is actually to do what has been outlined. 
Appropriate institutions are needed for ESDI, but unless accompanied by 
appropriate improvement in capabilities, these institutions will have 
little to command. The EU commitment at Helsinki to a ``headline goal'' 
for a corps-size deployable force soundly focuses on capabilities and 
concrete measures--for that force would be available equally for EU-led 
and NATO-led operations.
    This is not fundamentally a problem of gross resources--European 
Allies spend two-thirds to three-quarters as much on defense as the 
United States and have nearly half-again as many troops under arms. The 
central task is more efficient, more focused, better-planned and 
coordinated use of such resources. It is for European nations to decide 
on defense industrial policy, but it is hard to believe that a ``Buy 
European'' policy will serve efficiency in the use of limited defense 
resources, much less criteria of military effectiveness and operational 
capacity in coalition warfare. A better approach is the transatlantic 
one, and the United States recognizes that there are steps we need to 
take to make that approach more attractive. The hard fact remains, 
however, that reform is difficult, and in the end, improved 
capabilities will require more resources--or at least no more cuts in 
defense budgets overall. They also call for the political will to 
change established patterns and challenge entrenched ways of doing 
business.
Inclusive of all Allies
    Finally, the new European capability must take account of the fact 
that while European security is indivisible and universal, the primary 
institutions that deal with security, NATO and the EU, are not as yet 
universal, nor are their memberships identical. The non-EU NATO Allies 
must be fully included. This is especially important regarding Turkey--
but it also affects Norway, Iceland, the Czech Republic, Hungary and 
Poland. Moreover, those European states that are in neither NATO nor 
the EU must have a path to join in the common efforts.
    Recognizing that, by definition, the EU and the EU alone must 
finally decide on EU missions, the non-EU NATO Allies have to be able 
to participate in ESDI in meaningful ways, such as planning and 
preparation, not just signing on after all decisions are already made. 
There are several reasons why we believe that these six countries 
deserve special status above and beyond what other EU partners should 
have. First of all, they want to contribute, they have military means 
to bring to the table, and they have experience as Associate Members of 
the WEU. Moreover, any significant EU operation will likely require 
assets from NATO, which would require a decision by the North Atlantic 
Council at NATO in which all Allies, including the six, will 
participate. The EU members should not, in their own interest, want to 
complicate getting assets by excluding the non-EU Allies from having 
input into the shaping of the policy leading up to the operation.
    As we look ahead, there is still hard work to be done to realize an 
ESDI that benefits both sides of the Atlantic. It is in the interest of 
both the Alliance and the EU that it is done well and expeditiously. 
The promise of ESDI--a stronger European pillar in NATO and a new step 
in European unification--is a goal worth cooperating to achieve. A 
stronger Europe means a stronger Alliance and a stronger Alliance is 
better able to deter threats and maintain peace and stability.
                                summary
    While the DCI, as launched at the Washington Summit, has been taken 
up by nations and the relevant Alliance bodies as a means to focus 
their efforts to enhance the defense capabilities the Alliance will 
need in the future, it is too early in the transformation process to 
have measurable indices of increased capabilities. The United States 
will need to continue to work closely and intensely with its NATO 
Allies to ensure these initial efforts mature and broaden into 
substantial further capability improvements. The HLSG will need 
continued high-level support, by Defense, Foreign, and Finance 
Ministers, as well as Parliaments. A key factor will be the provision 
of necessary resources, both nationally and through commonly or jointly 
funded programs. This will require the personal attention of Ministers 
and Parliaments.
























    Senator Smith. You will forgive me. I better go vote or I 
will miss this one, and I think there are three right in a row. 
I will bring Senator Biden back and we will continue with some 
questions.
    Are you OK to wait until then?
    Mr. Kramer. Sure.
    Senator Smith. We will stand in recess.
    [Recess from 2:36 p.m. to 3:24 p.m.]
    Senator Smith. We will reconvene, and I apologize again for 
that disruption, but we do have to vote.
    Secretary Grossman, I think one of the questions that has 
concerned me about this whole new structure are the overlaps or 
the lack of overlaps between membership of NATO and the 
European Union. My own experience and involvement with some of 
the new members of NATO is that there is some uneasiness about 
being in NATO, not in the European Union, wanting to be in the 
European Union, but also concerned that this defense identity 
may ultimately undermine the alliance they have just joined.
    I wonder if in your experience are they being told, get 
along and go along, not to make any waves on this? Is there any 
undue pressure about this? What is your sense?
    Mr. Grossman. Senator, one of the reasons that I put in my 
statement that we need to stop today to make sure that 
everybody understands that this choice, that somehow people are 
saying that you can only be a good European or only a good 
transatlanticist, is a false choice and a choice that nobody 
should have to face.
    My feeling is that those countries that want to be members 
of the European Union and that are now NATO members have a very 
important role to play, not only in keeping the NATO 
conversation going on ESDI and ESDP in the right direction, but 
also to make their views known as about-to-be candidates of the 
European Union, so that the European Union knows that they have 
views as well.
    One of the reasons that we set as a goal and worked so hard 
to make sure that there is no discrimination or, as Lord 
Robertson talks about, the inclusion of all allies stays on the 
agenda is because countries like Poland, Hungary, the Czech 
Republic, that are going to get into the European Union, I hope 
someday, but countries as well like Turkey and Norway, that are 
NATO members, that have a different relationship with the 
European Union, have got to have links, have to be, in our view 
anyway, part of shaping EU decisionmaking.
    I hope in the end that what we come out with is an alliance 
that is stronger and also a European Union that is stronger for 
them as well. They have played a role in all of this and we 
have certainly heard from them. We have kept in very close 
contact with those NATO members that are not members of the 
European Union. We want to make sure that we understand their 
views.
    But just to finish where I have started, this idea that 
somehow there is a choice between being a European and being a 
transatlanticist is something that we just really want to have 
nothing to do with.
    Senator Smith. As you understand the defense identity, is 
there anything comparable to Article 5 guarantees being offered 
as part of this defense identity?
    Mr. Grossman. On the European Union side?
    Senator Smith. Yes.
    Mr. Grossman. I think you would really have to ask them. I 
do not think so, because they have focused so far on what they 
know as the Petersberg tasks, which were mostly in emergency 
management, some crisis management. But one of the reasons that 
your second question and your first question are linked 
together is that so many, so many of those NATO allies--Poland, 
Hungary, the Czech Republic--with which we now have Article 5 
guarantees are also going to be members of the European Union.
    So that is why these links and that is why making sure 
there is compatibility is so absolutely important.
    Senator Smith. I believe Russia is supportive of this 
defense identity, that the European Union should develop it. I 
also know Russia would not be comfortable with Estonia's 
membership in NATO. Estonia may become a member of the European 
Union before it becomes a member of NATO. How do you think that 
will be viewed by the Russians and what do you think the 
Europeans are promising to the Estonians should they not be a 
member of NATO but are a member of the European Union and there 
were some conflict between them and Russia again?
    Mr. Grossman. I do not know how to answer your question 
specifically. Obviously, you would have to ask the Russians or 
Europeans what that is all about. I would say first in terms of 
Estonia and NATO that we want to make sure, obviously, as we 
said in the Washington summit that the door is open and the 
membership action plans, the door to membership, remains open.
    That is a decision, obviously, as we said in Washington, 
that is going to come in the future. But people ought to have 
the opportunity to join the alliances and join the groups that 
they want.
    I would have to say, although I am not a representative of 
the European Union, that if the Estonians want to be part of 
the European Union that ought to be their choice as well. I do 
not think there ought to be any country, whether it is Russia, 
the United States, or anybody else, who says, well, you can be 
a member of this but you cannot be a member of that.
    In terms of Russians and ESDI, ESDP, obviously this is one 
of those areas in which the more dialog I think there is going 
to be, the better. That is one of the reasons that we are glad 
that the Permanent Joint Council has started again at NATO. The 
Russians and NATO allies are talking again. The European Union 
and Russia have a summit meeting I think twice a year.
    So that conversation has really got to keep going so 
everybody in Europe certainly can understand what the security 
issues are and that really these are not security structures 
designed to threaten anybody. They are designed to make sure 
that people can respond to crises in the proper way.
    Senator Smith. As either of you have heard the defense 
identity developed, would the deployment of European troops be 
more likely in places like Bosnia and Kosovo, not necessarily 
to conduct a military operation like in Kosovo, but perhaps a 
peacekeeping operation as is now ongoing in Kosovo? Is that 
sort of what is contemplated, do you think?
    Mr. Grossman. I think that what is contemplated is that 
both NATO and the European Union have options, and so that you 
could respond in some fashion. When I talk about this with 
Europeans and others, I think back, for example, to 1997 when 
in Albania there was the collapse after the end of that pyramid 
scheme, and the Italians really stood up and, after NATO 
decided not to be engaged in this, they stood up and they tried 
to intervene in that crisis, and I think they did an excellent 
job.
    But had there been this headline goal, had it existed at 
that time, you could have seen the European Union perhaps move 
more smartly into an instance like Albania.
    Senator Smith. Can you not see, though, if this structure 
had existed at the time the United States was enticed into 
Bosnia, that we would not have been responsive? Do you think it 
less likely we would be there today had this structure existed, 
if there was an option? What is your sense?
    Mr. Grossman. Well, there would have been an option, but I 
think Bosnia was such a big job that probably we would have 
done something similar to what we did do in Bosnia. And the 
same in Kosovo. Some people say: Oh well, with the ESDI you 
wouldn't have had to act this way in Kosovo. I actually do not 
think much would have changed with Kosovo at all, because the 
alliance chose to be engaged as a whole.
    That is the key thing here and why that phrase is so very 
important to us.
    Senator Smith. Secretary Kramer, any comment on that?
    Mr. Kramer. I think a couple of points. One, when the 
French defense minister was here 2 weeks ago he gave a speech 
at Georgetown, I believe, which I think is worth reading. It is 
a speech that was worked on by the whole French Government, and 
he summed up in one sentence what he said was the goal. He 
said: ``We want to be able to put fires out in our own back 
yard, with you when you choose to help us and without you when 
you cannot.''
    I think that is something that we are very compatible with. 
If, as Marc said, it is a major issue, then it will probably be 
an issue of major consequence for the United States. For 
example, Kosovo was that way, so we wanted to be there. It was 
not that we were looking to avoid it. It was an unfortunate 
situation, but, having been presented with it, we wanted to be 
there.
    Bosnia started out as a pure chapter 6 kind of operation 
and turned into a situation where we actually used force, as 
you will recall. So again, I think we wanted to be there and 
they wanted us to be there.
    Senator Smith. I just wonder if we have actually thought 
through how all this will work. In other words, the EU is 
stating that we will only undertake military operations when 
NATO as a whole is not engaged. Is there any mechanism that has 
been developed where this decision will be made?
    Mr. Grossman. Well, that is why we have been emphasizing 
these NATO-EU links. As Frank said on some of his issues, we 
are still in the early days. What we do not want to have 
happen, though, is where everybody will just say, well, we will 
figure this out when the time comes, or these links do not have 
to, as you said in your opening statement, be transparent or be 
clear, because if you are ever in a crisis we want to be able 
to have a handoff or make sure that people understand exactly 
what it is that is going on.
    Senator Smith. As you examine the interim political and 
security committee, the military committee, is there 
duplication that we do not want to see between these two 
institutions?
    Mr. Grossman. I have come to conclude actually, Senator, 
there is bound to be some duplication. Yes, there is going to 
be a committee over here and a committee over there with 
similar names. But I do not think that the interim security 
committee that has been established at the European Union is 
going to be like the NAC, because the NAC has different 
responsibilities. It has got a different treaty. It works 
together in a different way because it has 40 or 50 years of 
working together militarily.
    Our goal is to make sure that whatever structures get set 
up are compatible, transparent, open, clear, and connected to 
NATO. The other point, as Assistant Secretary Kramer made so 
well, is whatever committee structures are set up, there has to 
be the military capacity increased so that Europeans themselves 
meet their own requirements.
    One of the very good things about being in the position 
that we are in now is that we are actually encouraging our 
European allies to meet the promises they have made to 
themselves, the headline goal, NATO-EU links by June. So these 
are things that we are for. We are not pressing on anybody 
goals that they have not set for themselves, and I think for 
the United States that is a very good position to be in.
    Mr. Kramer. If I could add, there is going to be some 
similar types of institutions, because there has to be somebody 
to run the policy if the EU is going to run the policy, just as 
there is the NAC to run the policy for NATO. What we have said, 
though, from a military point of view is we want to have the 
operational planning done in the NATO structure even for EU 
type operations, and we want to have the force planning done in 
the NATO structure.
    So if you use the NATO operational planners, the NATO force 
planners, then you will not have the kinds of duplicative 
structures that could cause problems, that could cause 
inconsistent requirements.
    Of course, there are some differences, but there is 
tremendous overlap. I was in Paris last week and I said, look, 
we is they. I mean, you are on both sides of this fence. There 
is not really--the same with U.K., the same with Germany, the 
same with the Dutch. You cannot act as if that NATO is somehow 
different totally from the EU. It is not true.
    Senator Smith. Gentlemen, I thank you both very much for 
being here. It has been very helpful and I think we have got a 
good record now in the Senate on this discussion.
    We appreciate your being here, and now we will call up our 
second panel. We are pleased to have: Dr. Jeffrey Gedmin from 
the American Enterprise Institute; Stephen Larrabee from the 
RAND Corporation; and Ambassador Robert Hunter, also of the 
RAND Corporation.
    Dr. Gedmin, I understand you have a plane schedule that we 
are going to try to help you meet. So we will start with you.

STATEMENT OF JEFFREY GEDMIN, PH.D., RESIDENT SCHOLAR, AMERICAN 
ENTERPRISE INSTITUTE, AND EXECUTIVE DIRECTOR, THE NEW ATLANTIC 
                   INITIATIVE, WASHINGTON, DC

    Dr. Gedmin. Thank you, Mr. Chairman. That is extremely kind 
and generous of you. My apologies in advance to you that I have 
to run after my testimony, and to my co-panelists. The fact is 
I am co-hosting your colleague Senator Biden at a New Atlantic 
Initiative meeting in Paris, and if I am going to be a good 
host I should arrive before the guests. So thank you very much.
    Mr. Chairman, I got off the phone yesterday with a friend 
of mine in Berlin, chatting a little bit about this topic, and 
this friend of mine said to me on this European Union security 
and defense policy business: You know, we Europeans like 
building things and you Americans like doing things, and you 
Americans are always talking about initiatives, but we 
Europeans are so frequently preoccupied with identity.
    I think that this points to part of the problems that you 
alluded to in your introduction this afternoon. I think that we 
do have broad agreement on the fundamentals, that there is a 
need for Europe to become more self-reliant militarily, that 
Kosovo was a wake-up call to all of us about the dreadful 
imbalance that exists within the alliance, that there are 
important questions that we should be asking about this 
process, but if I could underscore, I think we have to 
communicate more carefully with our Europe friends.
    They should not be anxious about our skepticism because you 
are right, Senator Smith, we want Europe to succeed. I think we 
have to repeat this as many times as we can. There is no one in 
Washington who has any interest in a Europe that remains weak 
and dependent on the United States. It is unhealthy and it 
breeds mutual resentment.
    The Europeans ought to understand that, while that is true, 
the questions and skepticism that arises in Washington is 
generated by the atlanticists, not by the isolationists, not by 
the global unilateralists, but the people who actually do take 
Europe seriously and take the partnership seriously.
    Let me mention to you that I agree entirely that at the top 
of the list the first problem or question we ought to have is 
about capabilities. I will not belabor that point. It is in my 
submitted text and it has been discussed amply today, and I 
imagine my colleagues Dr. Larrabee and Ambassador Hunter will 
address that, too.
    Let me just say with one word, I think that it is hard to 
take the European defense project too seriously as long as the 
EU's largest state, Germany, spends roughly 1.3 percent of its 
GDP on defense and that is a figure that is in decline. As you 
mentioned earlier today, Mr. Chairman, Germany will cut $10 
billion from its defense in the next 3 years.
    Let me spend a couple moments concentrating on something 
that we have not discussed yet today, the character and the 
quality of the project, European Security and Defense Policy, 
European defense capabilities. I think it is harder to discuss. 
I think it is more sensitive, but I think it is important for 
two reasons.
    First of all, because the cold war is over, because 
generational change is taking place, and West Europeans broadly 
feel less dependent on the United States than they did before, 
and that there is institutional changes taking place as well. 
For the last decade, more than ever before Europeans, West 
Europeans, are busy energetically and enthusiastically building 
European institutions, European institutions with minimal 
American influence and minimal American participation.
    The European Union is not a transatlantic organization. The 
European Union reflects European aspirations and ambitions, and 
I do not believe that there is anything at all inherently wrong 
about that. But I think we and the atlanticists on the other 
side ought to be asking very hard and very serious questions 
about what these developments mean for transatlantic 
cooperation and the preeminent institution for this 
cooperation, and that remains NATO.
    The second point I wanted to mention which I think gives a 
broader context in which we should discuss ESDP, European 
Security and Defense Policy, is the long list of European 
grievances that is piling up over the last 8 years vis-a-vis 
the United States. I do not in making this quick list for you, 
Mr. Chairman, argue that all these grievances are legitimate. 
Some are, in my view some are not. But they all fit under one 
rubric. That is, America has too much power, America is a 
hegemon that behaves clumsily and often without proper 
reference to our interests.
    You know this list as well as I. It is European grievances 
over sanctions and secondary boycotts, the Senate rejection of 
the Comprehensive Test Ban Treaty, accusations that U.S. 
diplomacy sidelined the West Europeans in Dayton, that the 
United States dominated the Kosovo operation not only 
militarily but also politically.
    There begins now and will be in my judgment a big debate 
and argument over ballistic missile defense. Even recently the 
debate and discussion over the new head of the International 
Monetary Fund, where the Europeans see or believe that America 
is rejecting a European, in this case a German, candidate Mr. 
Koch-Weser, because American dominance will always prevail and 
European and allied interests will always come second.
    I mention to you, Mr. Chairman, that I picked up a 
prominent German newspaper the other day, the Suddeutsche 
Zeitung, and the lead to this particular story read in the 
following way: What is happening now over Koch-Weser--I 
paraphrase--reflects the massive dissonances in the 
transatlantic relationship that have to do with the struggle 
over power, interest, and influence.
    Once again, Europeans are drawing a lesson. What guides 
American policy? It is--and the writer wrote in English--
``America first, which becomes America's fist.'' And that is a 
quote.
    I simply want to mention that I believe that, for all the 
healthy and positive things that ESDP may bring to the table 
and it can, I believe that the conversation about European 
security and defense policy should be put in the larger context 
of transatlantic relations. I believe that, finally, that we do 
have allies in Europe who want this to work, want legitimate 
self-reliance, and want to make, produce a healthy partnership, 
healthier partnership with the United States.
    But I do not believe, Mr. Chairman, that everybody in 
Western Europe shares those goals and objectives. I just quote 
to you briefly something that Secretary General Robertson said 
about this relationship. He conceded that ``Some Europeans do 
indeed want something separate'' from NATO.
    Recently the Spanish foreign minister warned of, as he put 
it, ``extreme pro-Europe positions on the continent,'' and he 
admitted ``that there are those who believe that anything today 
done within the alliance will not be European.''
    So what do we do with this? I think on our side there are 
things we can do. I think we have to make a clearer picture for 
the Europeans of what our strategic priorities are. I think we 
have to consult more and hector and lecture less.
    But I also think that we have to tell the West Europeans 
that we do have concerns about a spirit and character at times 
that guides this project that at a minimum has a strong anti-
hegemonic impulse to it and at times is outright anti-American.
    Those are broad brush strokes. The devil is always in the 
detail, and I will close with one particular detail, Mr. 
Chairman, and that was what you raised at the outset this 
afternoon. We do have some European friends who tell us that we 
are working on the details now of the relationship between NATO 
and the European, that we should relax, we should take our 
time, to get into too many details is premature.
    I simply want to second your comment of earlier: It is not 
premature. In fact, I think it is like pouring concrete. If you 
want to shape it, now is the time. This is the formative stage. 
I think later it will be too late. So in detail, but also in 
general, as atlanticists I think we need to share the concerns 
with the Europeans very directly.
    Thank you, Mr. Chairman.
    [The prepared statement of Dr. Gedmin follows:]

                Prepared Statement of Dr. Jeffrey Gedmin

                              introduction
    Mr. Chairman and Members of the Committee, I want to thank you for 
the opportunity to appear before you today to testify on developments 
in Europe, and specifically on the European Union's plans to develop 
its own defense force. I have a prepared statement, which I submit for 
the record. I'm happy at this time to summarize my statement briefly 
before answering any questions you have.
             1. european defense as an answer to a problem
    There is broad agreement between Americans and Europeans that 
Europe should become more self-reliant militarily. That, in the first 
instance, is what Europe's current defense initiative seeks to achieve. 
French Defense Minister Alain Richard stated it nicely during his 
recent visit to Washington. ``What is it all about?'' said Richard. 
``We want the Europeans to be able to put out fires in their own back 
yard, with the Americans where you want to join, without you where you 
don't.''
    Mr. Chairman, we all want the Europeans to do more. NATO's 
intervention in Kosovo, of course, underscored the dreadful imbalance 
that has come to exist within the alliance. The U.S. launched 80 
percent of the precision-guided munitions, provided 95 percent of the 
cruise missiles, and flew most of the sorties. This was because 
European arsenals were either inadequate, badly outdated, or both. 
Klaus Naumann, the recently retired senior NATO official, summed things 
up at the time with one simple example: ``Most European planes have to 
fly more or less over the targets, which is the most stupid thing you 
can do, since you expose yourself to enemy air defense.'' In Kosovo 
Europeans flew only a third of the total number of aircraft sorties and 
only 20 percent of the strike sorties.
    This experience in Kosovo seems to have served as a wake up call to 
the allies. As a result, at a summit in Helsinki in December, EU 
leaders pledged to develop by 2003 the ability to deploy up to 60,000 
soldiers within 60 days and sustain that force for up to a year. Again, 
the purpose of this force, if we take the Europeans at their word, is 
to enable Europe to put out fires in its own back yard. To quote from 
Helsinki, the aim is ``to develop an autonomous capacity to take 
decisions and, where NATO as a whole is not engaged, to launch and 
conduct EU-led military operations in response to international 
crises.'' In instances where the alliance might not act, NATO has 
agreed to make NATO assets and capabilities available to the European 
Union.
    Since the EU has announced steps to redress the imbalance in the 
transatlantic security partnership, a number have questions have 
arisen. These questions include: How will the 60,000 man force be 
financed? Will the EU force jeopardize the security interests of 
countries that belong to NATO but not to the European Union (Turkey, 
Norway, Iceland, Poland, Hungary, and the Czech Republic)? Is there a 
geographic limit for the activity of a new EU force? Finally, what will 
the relationship be between this new EU entity and NATO? Will a 
European Security and Defense Policy harm NATO and ultimately undermine 
the transatlantic link?
    Mr. Chairman, I'd like to spend a few minutes discussing with you 
what, in my judgment, should be seen as the primary opportunity; but 
also the chief dangers linked to West Europe's current defense 
initiative.
                           2. the opportunity
    The opportunity is clear. Kosovo forced the Europeans to focus on 
the growing military-technological gap between the two sides of the 
Atlantic. They've now realized, apparently, that they need to reduce 
the substantial deficits that exist in European military capabilities. 
This is necessary for the good of Europe and the transatlantic 
relationship. Dependency is unhealthy. It breeds resentment--on both 
sides of the Atlantic. And the dependency that existed during the Cold 
War is no longer tenable--or sustainable--in the changed conditions of 
the post-Cold War world. West Europeans have heard us say for years 
that we want them to do more. They now say they are ready; and are 
trying to take initial steps. To this, our reply should be unambiguous. 
We should support the allies and applaud their initiative.
    It's not hard to understand the dismay that many of our European 
friends have when they hear skeptical voices in Washington. NATO's 
secretary general, George Robertson, was quoted in a Washington Post 
story earlier this week as saying: ``The United States suffers from a 
sort of schizophrenia. On the one hand, the Americans say, `You 
European have got to carry more of the burden,' And when the Europeans 
say `Okay, we will carry more of the burden,' the Americans say, `Well, 
wait a minute, are you trying to tell us to go home?' ''
    Mr. Robertson has a point. In fact, one of the worst things we can 
do, in my view, is fall into the role of naysayer. The result would be 
counter productive and very likely encourage strong anti-American 
sentiment in Europe. It's a point I'd like to emphasize. No one in 
Washington wants a weak Europe or a Europe that remains dangerously 
dependent on the United States. We should constantly remind the allies 
of this fact. A European contribution to fairly share burdens within 
the alliance is indispensable to the health and future of the alliance. 
Having said this, though, Americans should not refrain from asking 
serious questions both about the process itself and the ultimate 
objectives of the EU's defense project. And here, our European friends 
should understand the constructive spirit in which these questions are 
raised. They should remember that it is the Atlanticists in the U.S. 
who ask hard and serious questions, precisely because they do take 
Europe and our partnership seriously. If misunderstandings and 
misperceptions grow, however, it will be the isolationists and the 
global unilateralists who benefit as a result and to the profound 
detriment of us all.
                             3. the dangers
a. Building Institutions or Capabilities?
    Mr. Robertson says that the United States suffers from a sort of 
schizophrenia. The U.S. wants to have it both ways. We want Europe to 
do more. But when Europe shows signs of doing so the United States 
becomes anxious that the West Europeans are really interested going 
their own way, undermining NATO, and snapping the transatlantic link. 
But Europe sends its own contradictory signals.
    Europeans tell Americans, ``we want to do more; we're ready to 
become adult partners in the alliance and pull our own weight. Take us 
seriously.'' Then the EU proceeds to invest its energies in building 
toothless institutions rather than real capabilities, hardly an 
inspiring gesture. If the allies do not concentrate on the capabilities 
of European defense, it's hard to imagine how this project will ever 
develop in a credible fashion. While the United States spends about 3.2 
percent of its GNP on defense, the United Kingdom and France spend 
approximately 2.8 and 2.6 percent, respectively. And defense spending 
in Europe is declining. What conclusion should one really draw when the 
EU's largest state, Germany, spends 1.3 percent of its gross national 
product on defense and plans to slash military spending by $10 billion 
over the next four years? This is just the start of it, of course. The 
United States also significantly outspends our European allies in 
research and development. The U.S. spends roughly $35 billion each year 
on defense R&D NATO's other 18 members spend only about $9 billion 
combined. Does it appear that the EU is really serious about shaping a 
modern, technologically advanced force ready to deal with the crises of 
tomorrow?
    Some in Europe recognize the problem. Javier Solana, the former 
secretary general of NATO who now serves as the EU's spokesman on 
foreign policy, has said repeatedly that at the end of the day it will 
be about money. Mr. Solana is right. But there is no consensus in 
Europe today. Some argue that it's necessary to build institutions 
first. Others contend that European defense can be financed largely by 
a better and more efficient allocation of existing resources. Even if 
consensus existed that you can't do anything serious on the cheap, 
raising defense budgets in Europe would not be easy. In Germany, for 
example, the Red-Green coalition in Berlin is battling double-digit 
unemployment at home and facing additional strains over EU enlargement 
in the coming years. Despite the pleas of German defense minister 
Rudolf Scharping, the picture is unlikely to change in the foreseeable 
future. In the long term, things could get even worse. If Europe 
struggles to make up its current deficit in defense capability, the 
U.S. will likely pull even further ahead in defense technology.
    This would be a dangerous trend and not only regrettable for the 
long run, Mr. Chairman. It may be dangerous in the short-term, too. 
Consider an example in the heart of Europe. After wars in Bosnia and 
Kosovo, the primary source of Balkan terror, the regime of Serbian 
dictator Slobodan Milosevic, is still in power in Belgrade. If the tiny 
republic of Montenegro does not find a way to achieve separation from 
Serbia peacefully, this might well be the site of the next Balkan war. 
I hope that the West will devote sufficient diplomatic and economic 
resources to the problem so that we might avert the next crisis. The 
key to this problem is the task of removing Milosevic from power and 
permitting the growth of a democratic Serbia. If we do not succeed, 
though, and NATO is again confronted with the prospect of intervention, 
our European allies, at this rate, are likely to be no better prepared 
to act militarily than they were before. Thus the matter of European 
defense capability is not of abstract or academic nature. If European 
defense is being created to actually do something, then time is of the 
essence.
b. Will European Defense Harm NATO and Undermine the Transatlantic 
        Link?
    One vital question is whether the West Europeans will properly 
finance European defense capabilities. Will they establish a credible 
force capable of action? Are they prepared to correct the significant 
imbalance that currently exists in the transatlantic security 
partnership? But there are other questions, too, about the spirit, 
character, and ultimate objectives of the EU's project. Will European 
Security and Defense Policy be compatible with a strong and healthy 
NATO? Or is European defense likely to emerge as a rival to the 
alliance? Will it destroy NATO's cohesion and undermine the 
transatlantic link?
    Permit me, Mr. Chairman, to return for a moment to the lessons of 
Kosovo. I believe that Americans and Europeans learned different 
lessons. The U.S. learned that West European defense capabilities lag 
far behind America's and that this imbalance is no longer tolerable. 
The West Europeans see the imbalance is intolerable, too; but for 
slightly different and important reasons. The West Europeans were 
reminded in Kosovo that when America dominates militarily it is apt to 
dominate politically as well. The truth is, it left a bitter taste in 
the mouths of many Europeans that the U.S. played such a leading role 
in the Kosovo operation.
    There were probably a number of reasons for this. The problem was 
aggravated in part, in my view, by the fact that President Clinton 
chose to rule out the use of ground troops at the outset. While it's 
true that most of our allies were no more interested in considering 
grounds troops than the United States, the U.S.-led high-altitude, low-
risk campaign raised questions on the continent about the seriousness 
of the world's only superpower. Officials of the Blair government 
complained privately at the time about Washington's ``ABC problem,'' a 
reference to secretary of state Madeleine Albright, national security 
adviser Sandy Berger, and secretary of defense William Cohen. The 
Financial Times wrote at one point, ``The very weakness of U.S. 
leadership [has] almost certainly prolonged the campaign [and has] 
raised serious questions . . . about the relationships between the U.S. 
and Europe.''
    What does this have to do with European defense? The Cold War is 
over and the transatlantic relationship is being re-negotiated. The new 
Europe is now being led by a new generation of leaders, hailing from a 
continent that feels, broadly, less dependent on the U.S. than before. 
And Europeans want more of an equal partnership. We Americans should 
not be naive or oblivious about the fact that the conversation about 
European defense takes place in this larger context. Nor should we 
forget that the long list of European grievances about American 
behavior, some legitimate, some not, has been growing over the last 
eight years. It defines the current context in important ways.
    There has been anger over sanctions and secondary boycotts. There 
was dismay over the Senate's rejection of the Comprehensive Test Ban 
Treaty (The Clinton administration did not do a service to 
transatlantic relations, by the way, by reinforcing the misguided West 
European judgment that Congressional isolationism had led to the 
rejection of the Treaty). Before that, the West Europeans had felt 
side-lined by U.S. diplomacy at Dayton--to such an extent that one NATO 
official told me privately that a problem at Ramboulliet was the 
Europeans were still trying to get back at the U.S. for its previously 
heavy-handed behavior.
    Last summer, in the midst of the Monica Lewinsky mess, President 
Clinton chose to hurl missiles at a chemical factory in Sudan, a site 
that turned out to be, by all credible accounts, an aspirin factory. 
Now, there's the debate about missile defense ready to erupt. Without 
proper and intensive consultation with our allies, when the U.S. 
eventually deploys, the action is nearly certain to illicit cries in 
Europe of America destroying international arms control and once again 
clumsily going it alone.
    The image of America as a dangerous rogue superpower is becoming 
popular in Europe. The recent controversy over the European candidate, 
the German Caio Koch-Weser, to become the new head of the International 
Monetary Fund, underscores this point. As one leading German newspaper 
put it in writing about the IMF story, these ``massive dissonances'' in 
the transatlantic relationship turn on a ``power struggle over 
interests and influence.'' And Europe's gripe, once again, is that 
America is guided by one simple approach: It's ``America First'' 
through ``America's Fist.''
    Americans need to listen to the Europeans--and take to heart the 
breathtaking and profound changes that have taken place in the last 
decade. We need to prioritize our strategic interests more; we need to 
hector and lecture far less. And when it comes to matters of the 
alliance, there is no substitute for close, intensive, and mutually 
respectful consultation.
    But West Europeans need to listen to Americans more carefully, too. 
And then brings us immediately back to European defense. Again, to 
quote NATO's secretary general, George Robertson is quick to dismiss 
U.S. fears of anti-Americanism in the new Europe by insisting that we 
not take seriously certain ``exaggerated European rhetoric that has 
nothing to do with reality.'' If Mr. Robertson is referring to France's 
frequently stated objective of building a Europe that will serve as a 
counterweight to the U.S., it's hard not to take this idea seriously. 
This has been a long-standing objective of the French political class. 
Mr. Robertson knows this. But there's more. The European Union is not a 
transatlantic organization. It's an organization that reflects European 
ambitions and European interests. There's nothing inherently wrong with 
that. But it's appropriate for Americans to ask--and our European 
friends should understand this--what European aspirations mean for 
American and common transatlantic interests. This is especially the 
case now that the European Union intends to become actively involved in 
the defense business.
    In referring to European defense, Mr. Robertson himself has 
conceded that ``some Europeans do indeed want something separate'' from 
NATO. The Spanish foreign minister recently warned of ``extreme'' pro-
Europe positions on the continent and admitted that today ``there are 
those who believe that anything done within the alliance will not be 
European.'' It's a spirit that's catching in Europe. It's driven in 
part naturally by structural changes introduced by the end of the Cold 
War; in part, by America's mishandling of the transatlantic 
relationship. It's also growing in strength, though, guided by latent 
anti-Americanism and those who want to build a European super state 
that will act as a counterweight and behave as a rival to the United 
States.
    Of course, the current modest steps toward a European defense, no 
matter their quality or character, do not signify any real and present 
danger to NATO or the transatlantic relationship. But I do want to 
emphasize the importance, in my view, of this larger context. It is 
precisely because of this context that it is important for Americans 
and Europeans to debate these matters in the most open and candid 
fashion possible. It's also why it is essential that we get the NATO-EU 
relationship in European defense right from the start. That's why, Mr. 
Chairman, we should reject, for example, the position of some of our 
European friends who tell us today that to discuss such matters is 
premature. On the contrary. We're pouring concrete, which will be 
likely impossible to reset at a later date. We need to think carefully 
and get everything right at this early and formative stage.
    In sum, Mr. Chairman, we've reached an odd point. Transatlantic 
relations are not at all dismal, to be sure. NATO remains in tact. 
Trade and business mergers flourish. But tensions in political and 
security cooperation are also increasing. Steady and principled 
American leadership is needed to help steer developments that could 
hold great promise for a revitalized transatlantic relationship--but 
which may also, if not properly managed, cause serious damage to the 
links between America and our most important allies.

    Senator Smith. Thank you very much. That was excellent. You 
have answered the questions I had for you, so we thank you for 
being here, and when you have to leave we understand.
    Dr. Gedmin. I will stay for a few minutes. Thank you.
    Senator Smith. Very good.
    Dr. Larrabee, we will go to you next.

 STATEMENT OF F. STEPHEN LARRABEE, PH.D., SENIOR STAFF MEMBER, 
                RAND CORPORATION, WASHINGTON, DC

    Dr. Larrabee. Thank you very much, Mr. Chairman. It is an 
honor to appear before this committee again today to testify on 
a subject as important as the European Security and Defense 
Identity.
    Let me clarify at the outset, however, that my remarks and 
those of Ambassador Hunter as well represent our personal views 
and not necessarily those of RAND or any of its sponsors.
    In my view there are three important criteria for judging 
ESDI: First, does it strengthen overall security in Europe. 
Second, does it help build a stronger and healthier 
transatlantic relationship. Third, does it strengthen NATO's 
ability to deal more effectively with crises in Europe and 
beyond its borders?
    My answer to these questions is a qualified yes. Done 
right, ESDI could contribute to all three goals. The final 
answer, however, will depend on how ESDI deals with six 
important issues.
    First, will the Europeans really build the necessary 
capabilities? This will be the litmus test of European 
seriousness about ESDI and about defense more generally. There 
is a danger that the European allies will concentrate on 
institutions rather than actually building the military 
capabilities needed to manage crises.
    At the Helsinki summit in December, the EU decided to 
create by the year 2003 a 50,000 to 60,000 man rapid reaction 
force that can be sustained up to a year. In reality, this 
means raising a force closer to 200,000 men because of the 
problem of rotation. At a time of declining European defense 
budgets, there is some reason to question whether the Europeans 
will be willing to provide the funds needed to pay for the 
manpower and logistics support needed to sustain such a force.
    Second, ESDI is meant to deal with the low end of the 
military spectrum, the so-called Petersberg tasks, which 
involve essentially peacekeeping, humanitarian rescue, et 
cetera. But many of the crises in Europe, such as Kosovo, 
require more than peacekeeping. They require capabilities to 
conduct war-fighting operations. Thus there is a danger that we 
could end up with a two-tier alliance, one in which the U.S. 
and perhaps a few European allies are able to conduct high 
intensity operations while the rest of the allies focus on the 
low end of this military spectrum. This would not strengthen 
the alliance, but rather weaken it.
    Third, the link between NATO and the EU needs to be more 
clearly defined. At Helsinki it was decided that the EU would 
act only ``when NATO as a whole is not involved.'' But there 
needs to be, as we have said before here, adequate transparency 
in decisionmaking. Without clear links between the EU and NATO, 
there is a danger that the two institutions will get bogged 
down in bureaucratic disputes over jurisdiction while a crisis 
escalates out of control.
    Fourth, we need to ensure that ESDI does not lead to a 
duplication of capabilities. In theory, there is a possibility 
that the European allies could develop separate capabilities 
that enable them to act without drawing on U.S. assets. In 
reality, however, given the decline in European defense 
budgets, it is unlikely in my view that the Europeans will have 
the money to create such capabilities. Thus, they will be 
dependent on U.S. assets for some time to come. This gives the 
U.S. some leverage and influence over how these assets are used 
in a crisis.
    Fifth, there is a need to ensure that ESDI evolves in a way 
that does not discriminate against members of the alliance who 
are not members of the EU, such as Turkey, Norway, Iceland, and 
the new Central European NATO members. They need to be 
consulted and brought into the decisionmaking process. As 
Assistant Secretary Grossman said, Central European members 
should not be forced to choose between EU and NATO. This is a 
false choice.
    Sixth, if not properly managed, ESDI could undercut DCI. 
Many of the DCI programs are expensive and they could face 
competing claims from ESDI. Many European governments may be 
tempted to utilize existing forces for ESDI rather than create 
new capabilities. This is all the more true because many 
European countries may find it easier to mobilize public 
support for increased defense spending in support of an EU 
enterprise rather than for one within NATO.
    Moreover, many of the forces and assets that will be 
required for ESDI already have NATO commitments. If these 
forces are restructured for ESDI-related tasks, and especially 
if the planning for these missions is not done in close 
cooperation with NATO's defense planning process, ESDI could 
end up weakening rather than strengthening NATO.
    Indeed, unless full transparency and formalized 
institutional links are established between the EU and NATO, a 
situation could arise in which the forces that are dual-hatted 
could face conflicting guidance from the EU and NATO defense 
planners.
    That said, if our European allies develop an integrated 
capability that is able to plug into U.S.-NATO systems, but is 
also able to operate on its own, then there is no basic 
incompatibility between NATO and the EU. Indeed, this could 
strengthen the alliance's ability to act more effectively in a 
crisis.
    In short, a lot depends on how ESDI is managed. Done right, 
with close cooperation and transparency between NATO and the 
EU, ESDI could strengthen the transatlantic relationship and 
the ability of NATO to act more effectively in a crisis. But 
done wrong, it could end up weakening the transatlantic 
relationship. Hence, it is imperative to ensure that the 
project is managed well from the outset.
    In closing, Mr. Chairman, let me make two final caveats. 
First, the U.S. should avoid overreacting. The fact is that 
there are very few crises, in my view, where the Europeans will 
want to act without the U.S. if the U.S. wants to be involved. 
Moreover, some of the nightmare scenarios that worry U.S. 
defense planners, such as that France might block a NAC 
decision for NATO to act in a crisis, are implausible. France 
needs the support of its EU allies and it knows that it would 
not get this support if it consciously sought to prevent NATO 
from acting in a crisis in which the alliance as a whole wanted 
to act.
    Second, some members of the Senate have suggested that we 
should develop a new division of labor in which the European 
allies look after European security and the U.S. looks after 
security beyond Europe. In my view, this idea is both wrong-
headed and dangerous. It would seriously erode the sense of 
common purpose that is at the heart of the transatlantic 
relationship and lead to a diminution of the U.S. role in 
Europe.
    Instead, we should be striving for a new transatlantic 
bargain in which the U.S. remains engaged in Europe while 
encouraging its allies to assume more responsibility for 
security in Europe, but also outside of it.
    Thank you very much.
    [The prepared statement of Dr. Larrabee follows:]

             Prepared Statement of Dr. F. Stephen Larrabee

    the european security and defense identity (esdi) and american 
                               interests
    Mr. Chairman. It is an honor to appear before the Committee today 
to testify on a subject as important as the European Security and 
Defense Identity (ESDI).
    In my view, there are three important criteria for judging ESDI:

   Does it strengthen overall security in Europe?
   Does it help build a stronger and healthier Transatlantic 
        relationship?
   Does it strengthen NATO's ability to deal more effectively 
        with crises in Europe and beyond its borders?

    My answer to these questions is a qualified ``yes.'' The final 
answer, however, will depend on how ESDI deals with six important 
issues.
    First, will the Europeans really build the capabilities? This will 
be the litmus test of European seriousness about ESDI and defense more 
generally. There is a danger that the European allies will concentrate 
on institutions rather than actually building the military capabilities 
needed to help manage crises. At Helsinki in December, the EU decided 
to create by the year 2003, a 60,000-man rapid-reaction force that can 
be sustained up to a year. In reality, this means raising a force of 
some 200,000 men because of rotation. At a time of declining defense 
budgets in Europe, there is some reason to doubt whether the Europeans 
will be willing to provide the funds needed to pay for the manpower and 
logistics support needed to sustain such a force.
    Second, ESDI is meant to deal with the low end of the military 
spectrum--the so-called ``Petersberg tasks,'' which involve 
peacekeeping, humanitarian rescue, etc. But many of the crises in 
Europe, such as Kosovo, require more than peacekeeping. They require 
capabilities to conduct warfighting operations. Thus, there is a danger 
that we could end up with a two-tier alliance--one in which the U.S. 
and perhaps a few European allies are able to conduct high-intensity 
operations while the rest of the allies focus on the low end of the 
military spectrum. This would not strengthen the Alliance, but weaken 
it.
    Third, the link between NATO and the EU needs to be more clearly 
defined. At Helsinki, it was decided that the EU would act only ``when 
NATO as a whole is not involved.'' But there needs to be adequate 
transparency in decision-making. The French, however, have been 
resisting establishing any clear link between EU and NATO. In a speech 
in Strasbourg in October, President Chirac dismissed such links as 
``premature'' and ``putting the cart before the horse.'' Without clear 
links, however, there is a danger that the two institutions will get 
bogged down in bureaucratic disputes over jurisdiction while a crisis 
escalates out of control.
    Fourth, we need to ensure that ESDI does not lead to a duplication 
of capabilities. In theory, there is a possibility that the European 
allies could develop separate capabilities that enabled them to act 
without drawing on U.S. assets. However, given the decline in European 
defense budgets, it is unlikely that Europeans will have the money to 
create such capabilities. Thus they will be dependent on U.S. assets 
for some time to come. This gives the U.S. some leverage and influence 
over how these assets are used in a crisis.
    Fifth, there is a need to ensure that ESDI evolves in a way that 
does not discriminate against members of the Alliance who are not 
members of the EU, such as Turkey, Norway, Iceland and the new Central 
European members of NATO. They need to be consulted and brought into 
the decision-making process.
    Sixth, if not properly managed, ESDI could undercut DCI. Many of 
the DCI programs are expensive and they could face competing claims 
from ESDI. Many European governments may be tempted to utilize existing 
forces for ESDI rather than create new capabilities. This is all the 
more true because many European countries may find it easier to 
mobilize public support for increased defense spending in support of an 
EU enterprise than for one within NATO.
    Moreover, many of the forces and assets that will be required for 
ESDI already have NATO commitments. If these forces are restructured 
for ESDI-related tasks, and especially if EU planning for these 
missions is not done in close cooperation with NATO's defense planning 
process, ESDI could weaken rather than strengthen NATO. Indeed, unless 
full transparency and formalized institutional links are established 
between the EU and NATO, a situation could arise in which forces that 
are dual-hatted could face conflicting guidance from EU and NATO 
defense planners.
    However, if our European allies develop an integrated capability 
that is able to plug into U.S./NATO systems but is also able to operate 
on its own, then there is no basic incompatibility between NATO and the 
EU. Indeed, this could strengthen the Alliance's capability to act more 
effectively in a crisis.
    In short, a lot depends on how ESDI is managed. Done right, with 
close cooperation and transparency between NATO and the EU, ESDI could 
strengthen the Transatlantic relationship and the ability to more 
effectively manage crises. But done wrong, it could end up weakening 
the Transatlantic relationship. Hence, it is imperative to ensure that 
the project is managed well from the outset.
                           two final caveats
    First, the U.S. should avoid overreacting. The fact is that there 
are very few crises where the Europeans will want to act without the 
U.S. if the U.S. wants to be involved. Moreover, some of the nightmare 
scenarios that worry U.S. defense planners--such as that France might 
block a NAC decision for NATO to act in a crisis--are implausible. 
France needs the support of its EU allies and it knows that it would 
not get this support if it consciously sought to prevent NATO from 
acting in a crisis in which the Alliance as a whole wanted to act.
    However, the Europeans fear that there will be circumstances where 
the U.S. will not want to be involved--and, quite frankly, looking at 
U.S. policy in Bosnia, they have some justification for their concern. 
If the U.S. wants a healthy Transatlantic Alliance, then we need to be 
willing to share the risks with our European allies, including putting 
troops on the ground if necessary.
    Second, some members of the Senate have suggested that we should 
develop a new division of labor in which the European allies look after 
European security and the U.S. looks after security beyond Europe. In 
my view, this idea is wrong-headed and dangerous. It would seriously 
erode the sense of common purpose that is at the heart of the 
Transatlantic relationship and lead to a weakening of the U.S. role in 
Europe. Instead, we should be striving for a new Transatlantic Bargain 
in which we remain engaged in Europe while encouraging our allies to 
assume more responsibility for security in Europe--but also outside of 
it.
    ESDI could contribute to such a new Transatlantic Bargain--but only 
if it is well managed.
    Thank you.

    Senator Smith. Dr. Larrabee, I wonder if you look at that 
new bargain could the division be between a Kosovo or a 
conventional type of operation versus a nuclear umbrella?
    Dr. Larrabee. Well, what we are talking about here is 
essentially have the Europeans develop more capabilities in the 
conventional area. I do not think that we would want to get 
into the question of having some sort of a European nuclear 
umbrella.
    Senator Smith. Well, I mean, that is what we have now, NATO 
has over Europe now.
    Dr. Larrabee. Right.
    Senator Smith. Is a nuclear shield.
    Dr. Larrabee. And I see no reason and no indication among 
the Europeans that they want to change that.
    Senator Smith. Dr. Hunter, Ambassador Hunter.

STATEMENT OF AMBASSADOR ROBERT E. HUNTER, SENIOR ADVISOR, RAND 
                  CORPORATION, WASHINGTON, DC

    Ambassador Hunter. Thank you, Mr. Chairman.
    I recall talking with one of your colleagues years ago 
about a debate that went on at some length in the Senate, and I 
thought it was a little repetitive. I said to this Member of 
the Senate: Surely everything has been said. And he replied: 
``Yes, but not everybody has said it yet.'' So I will be 
echoing a lot of what has already been said, beginning with 
your own comments.
    First let me compliment you on your own personal leadership 
and say what an honor it is to be here. To pick up your phrase, 
the NATO-ESDP relationship can be ``win-win'' if we and the 
Europeans do it right. The European Security and Defense 
Policy, along with what we are doing, is something we Americans 
have strived for for a long time. If it is done right, it will 
be reinforcing, not divisive. It will help the Europeans deal 
with some of the comments that we heard from Mr. Gedmin, about 
concern over where the United States is going. And we will have 
a stronger transatlantic relationship.
    This debate has already helped. I testified in the other 
House last fall, and there was a good deal more trepidation at 
that time than there is now. I think there is a lot more 
understanding across the Atlantic and, frankly, a lot more 
light and less heat than we had then, and I compliment you for 
your leadership on helping to bring this about.
    The relationship across the Atlantic, at least in the 
security area, is fundamentally sound. NATO has reinvented 
itself. It did so in the 1990's. There are common goals. There 
is a series of interlocking steps that were agreed and steps 
that were taken. The alliance was successful militarily both in 
Bosnia and in Kosovo--not an easy thing to do in Kosovo. But 
the 19 allies held together.
    Clearly, the United States is deeply and, I believe, 
permanently engaged in Europe. Everybody wants us there--
everybody, including the countries that are the most skeptical 
about the way NATO conducts itself and that most want to have 
an ESDP that has some separate qualities. They want us there. 
In fact, if there was some doubt about our willingness to be 
committed to European security, I suspect they would be running 
here and asking us to be re-engaged and not even worrying about 
having an ESDP.
    We should continue to talk about what the European Union is 
trying to do with its Common Foreign and Security Policy, of 
which ESDP is a part, for a variety of reasons.
    First, U.S. interests in Europe, as well as our values, are 
fundamentally compatible with those of our allies. Not 
everywhere are they identical, but they are compatible. This is 
remarkable, given the fundamental redefinitions that have taken 
place in global politics in the last 10 years; but this 
compatibility of interests and values is partly evidence of why 
we went to Europe in the first place, and partly evidence of 
our shared success over the last 50 years.
    Second, a large part of the purpose behind ESDP is to 
further European integration. We Americans have supported that 
goal more strongly than a lot of European countries, right from 
the beginning. ESDP is also an added incentive for some 
European governments to take defense seriously. If they do that 
for purposes of integration, as well as to meet particular 
challenges, that is a good thing.
    We would like to see better burden sharing within the 
alliance. In part, of course this is a response to the 
perceived imbalance during the Kosovo war, though I do not 
think we should exaggerate this. Even with the 50,000 to 60,000 
person force that the Europeans want to put together by 2003, I 
doubt they would be able to handle a Kosovo conflict on their 
own, especially with the strategy that we collectively adopted, 
one critical element of which was to try to have minimal allied 
casualties. That requires the kind of high technology in which 
the United States excels and, frankly, none of the allies, with 
the possible exception of Britain, will be with us even in the 
foreseeable future.
    Senator Smith. Mr. Ambassador, I wonder if they could 
handle the peacekeeping of Kosovo on their own.
    Ambassador Hunter. We have had a fundamental principle 
within the alliance, that has sustained us very well for 50 
years, which is the sharing of risks and the sharing of 
burdens. Bosnia was almost a disaster for the alliance, until 
we Americans found a way to show to the allies that we were 
sharing some of the risks that they faced on the ground with 
the UNPROFOR. This sharing of risks helped lead to the 
conclusion of the war, the Dayton peace accords, and the 
relatively-peaceful Bosnia we have today.
    My judgment is the overwhelming bulk of the engagement in 
Kosovo should be done by the European allies. In fact, most of 
it is. They have about 85 percent of the forces. The 
overwhelming bulk of the financial contribution both in Bosnia 
and Kosovo should be done by them--and it is. But I think it is 
important for us also to be engaged, so it does not look as 
though, somehow, we are creating a two-tier alliance in terms 
of who does what. But the European allies ought to be 
responsible for most of the combined effort in Kosovo.
    [The prepared statement of Ambassador Hunter follows:]

           Prepared Statement of Ambassador Robert E. Hunter

    Mr. Chairman: Thank you for this opportunity to testify before the 
Subcommittee on European Affairs of the Senate Foreign Relations 
Committee on ``NATO and the EU's European Security and Defense Policy 
(ESDP)''--what, until recently, was generally called ESDI, for 
``Identity.'' Before dealing directly with that topic, the related 
issue of the European Union's Common Foreign and Security Policy 
(CFSP), and their impact on NATO, it would be useful to put the 
relationship in a somewhat broader context.
    The fact is that both institutions--the EU and NATO--find 
themselves deeply engaged in a series of important parallel efforts 
that relate to many of the most critical issues in European security, 
in its broadest sense, for the years ahead. Both institutions are in 
the midst of taking in new members, from among aspirants in Central 
Europe, which will give the new entrants a more solid sense of 
belonging fully to the West. Both EU and NATO have programs designed to 
bolster the domestic efforts of countries in Central Europe and beyond, 
including those that have not yet been accorded full membership. Both 
are trying to support positive internal reform within Russia--the 
country whose development is probably most consequential to the long-
term future of European security--and to draw it out of its 70-year 
self-imposed isolation. And both are involved in the former Yugoslavia, 
especially Bosnia and Kosovo, helping to give people there a chance to 
build new lives and to move beyond old divisions and hatreds that have 
caused so much suffering for so many in recent years. When added 
together, the actions of the EU and NATO are testimony to the idea that 
security in today's Europe is a complex phenomenon--a compound of 
military reform, defense arrangements, political change and 
democratization, social progress, and economic advance. Thus, in order 
for either the EU or NATO to succeed in what they are trying to do with 
the countries that emerged from the wreckage of the Warsaw Pact, 
Yugoslavia, and the Soviet Union, both must succeed.
    Yet it is remarkable that there is still virtually no formal 
relationship between NATO and the EU. While headquartered in the same 
city, except for some informal discussions they act as though they 
existed in different worlds. This is largely a product of how the two 
institutions have developed, and in particular the desire of some 
members of the European Union to keep its activities separate, both 
from the strictly military dimensions of NATO and from engaging the 
United States, even indirectly, in EU deliberations. In addition, there 
has been concern in some EU countries that a regularized EU-NATO 
relationship would strengthen the European Commission at the expense of 
the European Council in foreign affairs.
    These attitudes, along with the lines of separation between the EU 
and NATO which they engender, are anachronisms. They lead to a 
lessening of the full impact that Western states can have in promoting 
what are clearly complementary if not identical interests in Central 
Europe and beyond. This has been especially noticeable in Bosnia and 
Kosovo, where the overall impact of Western efforts has not been as 
great as it could be if the EU and NATO more closely coordinated what 
they do there. It was for this reason that, when I was U.S. Ambassador 
to NATO, I arranged for former Swedish Prime Minister Carl Bildt, then 
the High Representative for implementation of the Dayton peace 
agreement--in practice an emissary of the European Union--to brief the 
North Atlantic Council at regular intervals; but even this has not been 
enough to bring the two institutions together in pursuing parallel 
goals.
    It is time for everyone to recognize the positive value in a 
formal, institutionalized relationship between the EU and NATO, to 
enable them better to coordinate and reinforce one another's efforts, 
to ensure that their overall strategic perspectives are compatible, 
and--in the process--to reassure people in this country, including the 
Congress, that our European allies are fully pulling their weight in 
places like the Balkans. At the same time, of course, having a closer 
relationship between the EU and NATO could also help our European 
friends and allies get full credit for what they are doing in the 
common interest--something that is not now happening, especially with 
their contribution to the economic rehabilitation of Bosnia and Kosovo.
    I also believe that creating such a formal relationship would also 
help to underscore something central to our current debate about CFSP 
and ESDP--that, essentially, the strategic goals of the United States 
and our European allies are compatible, even where they are not 
identical. This we need to bear constantly in mind as we assess what 
the EU is now doing in developing its foreign and security policy 
process. Whatever growing pains will be involved, whatever issues we 
and the countries of the European Union have yet to get right, however 
the practical relationship between the EU and NATO develops in the 
specific area of military activity, we are unlikely to find ourselves 
in any fundamental disagreement with the security goals if not always 
with the means adopted by the European Union.
    Dealing with the overall relationship between the EU and NATO is 
also important for a specific reason connected with the topic of 
today's hearing. In the near future, perhaps as soon as the end of this 
year, the Western European Union (WEU)--in effect, the executive agent 
for ESDP--will go out of existence, its functions and activities being 
folded into the European Union. This is an understandable development 
as part of overall progress toward full European integration. But at 
least in the short term, this is a mixed blessing for everyone. The 
WEU, with its 10 full members and a variety of associate members, 
associate partners, and observers--28 countries in all--has acted as a 
buffer between the EU and NATO. This has meant that, should WEU choose 
to act, only those countries in the EU that are also members of NATO 
would be engaged in the process of making decisions.
    The existence of WEU has also meant that, in developing its 
relationship with ESDP, NATO has been dealing with people who have a 
significant understanding of military security issues. But with the 
folding of WEU into the full European Union, NATO's interlocutors at 
the other end of Brussels will include a significant percentage of EU 
officials who do not have the requisite experience with military 
matters. Even in our State Department, we tend to separate out those 
officers who deal with economic issues from those who deal with 
politico-military issues in regard to European institutions. This 
separation is maintained even more rigorously in Europe. This means 
that, for at least the early period of this new EU-NATO relationship, 
speaking a common language about military and defense issues will not 
be easy.
    At the same time, folding WEU into the European Union will put into 
the same mix a wide range of issues in transatlantic relations that 
have heretofore been kept separate. Thus there is risk that the EU will 
try to trade security and economic issues off against one another in 
its dealings with us. This would become a recipe for trouble across the 
Atlantic.
    Fortunately, the EU has appointed Javier Solana, until last year 
Secretary General of NATO, to the triple functions of Secretary General 
of the European Council, High Representative for CFSP (``Mr. CFSP''), 
and Secretary General of WEU. This can help to smooth the path of 
relations between NATO and the EU, especially in this complex time when 
those relations are still in the process of being defined, both in 
theory and in practice.
    Mr. Chairman: With regard to the immediate issue of the European 
Security and Defense Policy and its implications for NATO, it is my 
judgment that some of the tension and misunderstanding about these 
matters, on both sides of the Atlantic, has begun to dissipate. Partly 
this reflects intelligent compromise; also important, it reflects 
fuller understanding of what has already been agreed by NATO on the one 
hand and the Western European Union on the other. Open conversation 
among allies is always useful.
    The basic relationship so far between NATO and ESDP-WEU can be 
summarized fairly simply. In the mid-1990s, the United States took the 
lead in working out new relations between these institutions. We 
recognized the value of a strong European pillar in the Alliance: to 
help shift the common burden of defense toward the allies; to provide 
and added incentive for European governments to take defense seriously, 
as part of a broader process of European integration that we have 
always supported; and to enable the European allies to act even if 
NATO, as an institution, chose not to be engaged in meeting a 
particular military challenge.
    At the same time, both we and the European allies recognized that 
it would make no sense to create a truly separate European institution, 
in effect a second set of military capabilities and command structures, 
with significant associated costs. Thus it was agreed that what was 
then called ESDI would be created within NATO, to be ``separable but 
not separate'' from it. This would enable Western European Union (as 
agent for ESDI) to act, but without wasting resources through 
unnecessary duplication--resources that were, in any event, unlikely to 
be committed by European governments.
    In effect, WEU would be able to avail itself of NATO ``assets'' in 
circumstances when NATO chose not to act. In addition to NATO's taking 
chief responsibility for the military planning for both institutions, 
these assets could include WEU's use of NATO's new Combined Joint Task 
Force (CJTF) headquarters, selected NATO staff officers, the Deputy 
Supreme Allied Commander Europe--who could serve as the WEU's strategic 
commander--and some equipment in short supply in Europe, including 
large transport aircraft, satellite-based security communications, and 
sophisticated intelligence--these last three belonging in the main to 
the U.S. military.
    These arrangements between NATO and WEU were agreed in June 1996, 
at North Atlantic Council ministerial meetings at Berlin and Brussels. 
I had the honor to negotiate these agreements on behalf of the United 
States. Several important qualifiers were also agreed, then and later. 
Among the most important, NATO would have the right of ``first 
refusal,'' both to undertake a military operation and to have access to 
all European multinational forces, such as those in the EUROCORPS. NATO 
assets could only be transferred to WEU on unanimous decision within 
the North Atlantic Council; and, once transferred, their use would be 
monitored and they could be recalled by NATO at any time. Also, the 
transfer of NATO assets must not interfere with the ability of the NATO 
integrated military structure to function effectively--in technical 
terms, there must be ``respect for the principle of unity of command.'' 
And all members of NATO, even if not members of WEU (or the EU) would 
have the right to take part in any WEU military operation, beginning 
with the planning phase. This provision was designed, in particular, 
with Turkey in mind; but it also applies to Denmark, Norway, Iceland, 
Canada, and even the United States--although in the last-named case, 
U.S. engagement would of course mean that a military operation would be 
undertaken by NATO, not the WEU.
    These arrangements provided for a perfectly satisfactory set of 
arrangements in the eyes of almost all the allies. But since about 
December 1998, a different perspective has emerged. That was when the 
British and French governments, at St. Malo, agreed on some additional 
propositions with regard to ESDP. Subsequent meetings of the European 
Council have taken further decisions. Most important from our 
perspective were decisions taken at the EU's Helsinki summit last 
December. Most important, the EU decided that ``Member States must be 
able, by 2003, to deploy within 60 days and sustain for at least 1 year 
military forces of up to 50,000-60,000 persons'' able to carry out 
military tasks that had been identified earlier, from search and rescue 
up through peacemaking. At the same time, however, in deference to 
concerns expressed by the United States, the EU agreed that this force 
would only be employed ``where NATO as a whole is not engaged.'' If 
honored, this last phrase assures that NATO, with all of its inherent 
capabilities, would be the alliance of choice.
    On the face of it, we should welcome this EU ambition to create a 
deployable 50-60,000-person force. If it actually comes into being, it 
would help meet the long-standing U.S. demand that the Europeans 
shoulder a greater share of the common defense burden. The capabilities 
thus created would at the same time bolster European contributions to 
NATO. This new capacity for military action could potentially help the 
Europeans be able to do more in situations like that we collectively 
faced last year in Kosovo--although we should be clear that, in case of 
another Kosovo, the interests involved, the magnitude of effort, and 
the value of employing high technology forces would very likely mean 
that NATO would again have to assume principal responsibility, and 
properly so.
    Mr. Chairman: Let me set out in shorthand form some of the concerns 
that have been expressed in the United States about developments in the 
EU's European Security and Defense Policy, and try to assess the status 
and importance of each one. I will single out seven areas:

    1. Duplication. One of the key concerns expressed in the United 
States has been that the ESDP will result in unnecessary duplication of 
military assets and instruments, going well beyond what the Europeans 
would need for taking decisions and exercising command and control. 
This was a central reason that, in 1996, NATO agreed to make its own 
assets available to WEU, as I have outlined. The upshot of too much 
duplication could be to divert resources that are needed to increase 
military capabilities. Most of the Europeans deny that this would 
happen; they argue, for example, that the 50-60,000 men and women 
earmarked for the new European force, along with whatever other troops 
would be needed for logistics and rotation, would also be available to 
NATO, and that the cost of command and control and the like would be 
relatively small. They have also formally committed themselves to 
``avoid unnecessary duplication'' and said that what they are doing 
``does not imply the creation of a European army.'' Obviously, this is 
a development we will want to watch carefully. That includes seeing 
whether the ESDP nations are prepared to draw upon NATO assets in 
relatively high-cost areas like satellites and large transport 
aircraft, rather than buying more of their own beyond a number that 
could make a useful contribution to fulfilling NATO's military 
requirements.
    2. Military Capabilities. The issue of duplication also relates to 
a central, agreed goal of the NATO Alliance, encapsulated in the 
Defense Capabilities Initiative that was adopted at last year's 
Washington Summit. As I noted above, one reason the U.S. has supported 
the ESDP is the added incentive it can give to Europeans to take 
defense seriously and to commit added resources. It is clearly 
important that creating ESDP not lead to the diversion of scarce 
resources away from improving defense capabilities in order simply to 
build new bureaucratic structures. At the same time, it is important 
that the Europeans increase their spending on capabilities that will 
enable their forces to be interoperable with those of other NATO 
nations, and especially the United States. Whatever capabilities the 
Europeans create for ESDP must therefore be fully compatible with NATO 
requirements and characteristics. With the rapid advances in defense 
technologies, and especially with the strides being made by the U.S. 
military as part of the Revolution in Military Affairs (RMA), it is 
both critical and urgent that the allies take all measures necessary to 
ensure that their forces can all work together, rather than see NATO 
risk becoming a two-tier or three-tier alliance. We gained a foretaste 
of that during the Kosovo conflict last year.
    Indeed, from the U.S. perspective--and I would also say that of the 
NATO Alliance--the major test of ESDP will be the degree to which our 
European allies will increase their actual military capabilities, in 
terms of those threats, challenges, and tasks that are most likely to 
face us all in the years ahead. If this is done, then I suspect we will 
have far less concern about the way in which the EU states approach the 
mechanisms of providing for defense.
    3. Autonomous Capacity. The European Union nations have agreed on 
their ``determination to develop an autonomous capacity to take 
decisions.'' Throughout most of last year, this concept caused 
significant concern in Washington because of what it might imply. 
However, at last December's summit in Helsinki, the European Union 
added the critical qualifier that it would act militarily only ``where 
NATO as a whole is not engaged.''
    If the emphasis on the word ``autonomous'' proves simply to be a 
term of art, for political purposes, we should have no quarrel. 
Problems would arise if this concept led to exaggerated efforts to 
distance ESDP from NATO; if there were efforts to create a fully 
functioning European integrated military command structure that would 
actively compete with the NATO integrated military command structure; 
or if there were delay in working out practical arrangements between EU 
and NATO regarding their respective roles, resistance to implementing 
agreed principles of cooperation, or any back-tracking on the European 
commitment to the principle of ``NATO first.''
    On all of these points, in recent months there has been some reason 
for U.S. doubts. With France in the lead, there has been some 
resistance to working out practical EU-NATO relations, and some 
assertion that, in terms of which institution would undertake which 
military tasks, the EU and NATO must each reach a decision on its own. 
If such a process yielded the right outcome--namely, the continued 
primacy of NATO--it might prove cumbersome but not crippling. Here, 
too, we need to watch carefully what the ESDP nations actually do.
    4. Discrimination. In developing NATO's relations with ESDP, 
another cardinal point for the United States has been to insure that 
there is no discrimination against NATO allies that are not also 
members of the European Union. This is not just a technical point, but 
goes to the heart of the day-to-day patterns of defense cooperation and 
integration that have been a hallmark of success for the Western 
Alliance since it was created a half-century ago. As I noted above, the 
principle of non-discrimination was part of the NATO-WEU agreement 
negotiated in 1996. We must continue to insist that this agreement be 
applied; and, of course, we have the capacity to ensure that that 
happens, whenever NATO assets are sought by ESDP, simply through 
vetoing their transfer unless this agreement is honored.
    In recent months, however, the issue has been reintroduced, in 
regard to situations in which ESDP would not seek the use of NATO 
assets--in which case neither we nor the other affected NATO nations 
would have a role to play in the EU's decision-making. On this point, 
we should commend to the European Union a ``rule of reason:'' it would 
gain little in stressing the integrity of EU decision-making and 
perhaps even military action, if in the process it contributed to 
corrosion of the cooperative relations that the EU must have with non-
EU states, on a day-to-day basis, in a host of areas. This is doubly so 
since it is not clear that ESDP military capabilities will actually be 
employed; whereas the effects of discrimination against other European 
states would have to be faced by the EU all the time.
    5. European Caucus. A further, practical issue must attract our 
attention. At NATO, the 19 allies sit together in the North Atlantic 
Council. Each nation brings its own ideas and positions to the common 
debate; each works with the others to arrive at workable policies for 
the Alliance. But under the European Union's Common Foreign and 
Security Policy, each member state is pledged to defend in 
international bodies the positions that the EU has agreed upon. If this 
practice were applied to NATO--that is, if the EU members of NATO all 
took the same, instructed positions on issues that come before the 
North Atlantic Council--that body would lose a good deal of its 
effectiveness. Such a ``European caucus'' in NATO might satisfy the 
EU's internal requirements; but it could reduce substantially the 
Council's ability to function effectively--certainly everything would 
be that much harder to do, especially in a crisis; and it would also 
likely produce ``least common denominator'' policies from the 
Europeans. We need to make our views clear on this point.
    6. Defense Industries. It is also important that the development of 
ESDP not lead to a ``Fortress Europe'' in defense production and 
procurement--just as, by the same token, we must not permit the 
development of a ``Fortress America.'' Of course, in the post-Cold War 
environment, consolidation of European defense companies is necessary 
in order for them to reap economies of scale, and much has already 
taken place, largely grouped around BAE Systems and the new European 
Aeronautics Defence and Space Company (EADS). This consolidation should 
be welcome to us, provided that it does not turn inward and 
protectionist, thus making it more difficult to develop and deploy 
military forces that can work together within NATO. Here, however, much 
of the burden rests with the United States. If we want European defense 
markets to be open and to see cooperation among defense companies, in 
one form or another, to be possible across the Atlantic, we need to 
respond. This means more rapid and flexible decisions on high 
technology licensing by the State Department--with the blessing of the 
Congress; more transfers to European allies of military high 
technology--the contents of the ``black boxes''--provided, of course, 
that allies can give guarantees that these contents will not be 
diverted or divulged to third parties; and greater willingness to buy 
European military goods. I am pleased that Secretary of Defense Cohen 
at the Munich Security Conference in February took a major step on the 
second of these three issues in the agreement he signed with the 
British Secretary of State for Defence. Success in this area of defense 
industry cooperation is critical if NATO is to remain militarily 
effective and to implement its Defense Capabilities Initiative, even if 
there were no ESDP.
    7. Decoupling. Administration officials at times have expressed 
concern that what the Europeans are doing with ESDP could lead to a 
``decoupling'' of the relationship across the Atlantic. In basic 
strategic terms, I do not rate that risk as very high: our interests 
and values are very much compatible. But there could still be some 
weakening of bonds across the Atlantic in the area of defense, almost 
by inadvertence. This could happen because of one or more of the 
concerns I have listed above. It could also happen either if the 
Europeans prove to be insensitive to expressed U.S. concerns or if we 
overreact to what they are doing and thus give the impression that, in 
fact, we oppose the overall ESDP concept or are fearful of losing 
influence or leadership. Also, some weakening of bonds could take place 
if the Europeans put so much energy into developing ESDP that they do 
not meet commitments under the Defense Capabilities Initiative or 
provide sufficient resources in other areas of NATO's agenda--including 
the Partnership for Peace and the Balkans, especially Bosnia and 
Kosovo. And a weakening of bonds could take place if the European Union 
states talk about their new capabilities more than they can actually 
deliver. Not only could this distract political attention from NATO 
requirements, it might convince some observers in the United States 
that we can do less in European security, without the Europeans' 
actually being able to take up the slack. Already, we are seeing major 
defense cuts in Germany; and we are seeing both the British and French 
hard-pressed to keep up their force contributions to the peacekeeping 
force in Kosovo (KFOR).
    Again, a critical test of what the EU nations are proposing to do 
in defense will be the resources they actually devote and the extent to 
which the use of these resources will also help improve NATO's 
capabilities.

    Mr. Chairman: In summary, I believe that a good basis does in fact 
exist for the United States and the European Union states to resolve 
the issues and concerns that I have outlined, above. So, too, there is 
a solid basis for working out productive relations between NATO and the 
EU--as future executive agent for ESDP. A good deal of effort will be 
required: that means leadership on both sides, good sense on both 
sides, wisdom on both sides. I am pleased that the necessary 
consultations and dialogue are now well under way; this hearing is an 
important part of that process, and it is an honor to be able to share 
my views with you, today.
    Thank you.

    Senator Smith. All our witnesses, because you have been 
there in an administrative capacity, I wonder if there is 
anything, as these relations NATO-EU develop, if there are some 
structures that you are concerned about how they are evolving 
or some recommendations that you would have as to ways they 
should evolve.
    Ambassador Hunter. ESDP is one of those developments, Mr. 
Chairman, in which the fundamentals are right; but if they get 
the structures wrong, we could have a lot of problems that 
nobody bargained for and that nobody wants to have. One of the 
remarkable things I discovered in my service in Brussels for 
4\1/2\ years, that you have two great institutions there, the 
European Union and NATO. They are both engaged in Central 
Europe, they are engaged with the Russians, they are engaged in 
the former Yugoslavia, but they have no formal relationship 
with one another.
    It is like two institutions in the same town living on 
different planets. This is ludicrous. It is largely because 
some of the Europeans do not want the United States to 
interfere in their decision process. It is in part because they 
have not straightened out who is really in charge of foreign 
affairs, whether it is the nation states in the European 
Council or the supra-national European Commission.
    But that does mean that NATO and the EU walk past one 
another like two ships passing in the night. Clearly, that has 
to change in a whole host of areas. One of the most important 
things right now is to get down to business on the detailed 
planning of exactly how NATO and ESDP will work together. I 
think that can be worked out, but unless that is done, we will 
have trouble.
    Mr. Chairman, might I mention one area that has not come up 
here today, which is defense production. We have a serious risk 
that, this issue is not dealt with intelligently on both sides 
of the Atlantic, we could end up with a Fortress Europe in 
defense production and a Fortress America. It is very important 
that there be European defense consolidation. They cannot 
handle all the firms that they have. They will have to 
integrate across borders in order to produce defense goods in 
the high technology area.
    There are now primarily two great firms in Europe: BAE 
Systems and the new European Aeronautics Defense and Space 
Company (EADS), based on the Germans, the French, and the 
Spanish at the moment. That is all well and good, but if they 
go and do their thing, by themselves, and we go and do our 
thing, by ourselves, not only will we continue to have a NATO 
where the allies find it more and more difficult to work 
together, but we could find that the Europeans building defense 
goods that simply drive NATO apart.
    Part of solving this problem is up to the Europeans, but a 
large part is up to us. The Europeans are concerned about the 
pace at which licenses are approved by the State Department, so 
that they can have access to the high technology they need so 
that their forces can be compatible with ours. They are 
concerned that we are prepared to sell them defense equipment, 
but not show them what is inside the ``black box.'' They are 
also concerned that we are not prepared to buy much defense 
equipment that they produce.
    This is an area where I think we can take the lead to 
ensure that European defense industry is outward-looking and 
that, frankly, 10 years from now we will have a NATO which can 
actually fight together.
    Senator Smith. How do you make that coordination? Do their 
companies have to buy some of ours and vice versa?
    Ambassador Hunter. I think you will find that, right now, 
the defense trade across the Atlantic is largely in the 
direction of United States production being purchased in 
Europe. Defense companies on both sides of the Atlantic have 
got the message that there has to be further integration, that 
there has to be compatible technology, that what is produced in 
the various countries has to be able to work together if we are 
going to have an alliance.
    It is a case I think in which the governments need to catch 
up with industry in order to make this possible. In some cases 
it is going to be acquisitions, in some cases it is going to be 
mergers, in some cases it is going to be teaming. But in the 
main, on both sides of the Atlantic there needs to be a 
recognition that the market in NATO defense has to be on a 
transatlantic basis, not just one that is American and one that 
is European.
    Senator Smith. It is a theoretical question, but I wonder 
if any of you have any concern because of what you have just 
said, that in 10 years, 15 years from now, there will be a 
European foreign policy interest that is different than that of 
the United States and there is weaponry on hand. I mean, I 
cannot even comprehend such a thing, but----
    Ambassador Hunter. Mr. Chairman, I think----
    Senator Smith [continuing]. Are we going in different 
directions in foreign policy?
    Ambassador Hunter. I think it is remarkable, Mr. Chairman, 
that even 10 years after the cold war, having achieved the 
original purposes for which we came together--to contain Soviet 
power and communism, as well as to preserving common values, 
for which we also fought the First and Second World War--the 
fundamental strategic interests across the Atlantic are so 
similar.
    It may well be that when we look beyond Europe--this is 
something we have not talked about today--there will be 
occasions when we would like allies to be engaged militarily 
with us, but they will not want to do so. There could be a real 
problem here. Will we get to a circumstance in which the United 
States is taking responsibility for the Persian Gulf, for the 
Caucasus, for dealing with weapons of mass destruction, for 
dealing with terrorism, but a lot of the allies will not 
prepared to share their part of the burden?
    That would be a problem, but it is not the same as their 
wanting to do something so fundamentally different from us that 
we would find ourselves on opposite sides and maybe even 
worrying about whether there is an alliance to be sustained. I 
do not worry about that. But I do worry, will we be able to 
work together beyond Europe?
    Senator Smith. It is a fair question, a fair question.
    Dr. Larrabee, do you have any final comments?
    Dr. Larrabee. No, I think I have said most of what I wanted 
to say in my testimony.
    Senator Smith. Well, gentlemen, thank you both for being 
here and for sharing this with us. I think it has been 
important, and again a good record has been laid on this issue 
and I think we have kicked it around pretty darn well. 
Hopefully, our interests with Europe will forever remain 
compatible, friendly competitors in a commercial sense and 
allies in every other sense.
    Ambassador Hunter. Thank you very much.
    Dr. Larrabee. Thank you very much.
    Senator Smith. Thank you so much.
    We are adjourned.
    [Whereupon, at 4:08 p.m., the subcommittee was adjourned.]

                                   
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