Report on Allied Contributions to the Common Defense
A Report to the United States Congress by the Secretary of Defense

U.S. Department of Defense

U.S. Government

March 1997

 

II. Regional Overview and Contributions of Key Allies

 

This chapter places the Administration’s responsibility sharing policy in strategic perspective, and describes differences in U.S. security objectives, security frameworks, and forward presence in the three regions most important to vital U.S. security interests: Europe, East Asia–Pacific, and Southwest Asia.

 

NATO

Responsibility sharing in Europe cannot be understood without reference to NATO, the most successful security alliance in history. It is through and in connection with this unique enterprise that our transatlantic security partnership is given form and content, and allied responsibilities are defined, allocated, and shared.

NATO has guaranteed transatlantic peace and security for 50 years. It has played a pivotal role in terminating the Cold War on terms favorable to the United States and our allies, ensuring security in the Mediterranean, and projecting Western power and influence into the Middle East and North Africa. The Alliance has also served as a useful forum for coordinating policies with respect to other parts of the world. Today, NATO remains a unique instrument for guiding change, deterring and managing crises, and applying military force where necessary.

The Alliance continues to serve as an irreplaceable mechanism for the exercise of U.S. leadership in international security affairs, and for the projection of American power and influence across the Atlantic and beyond. NATO provides the single most important vehicle for the coordination of national security policies and actions, both within and outside of Europe. An integrated political and military enterprise, the Alliance is the forum where the 16 member states work out arrangements for shouldering political and military risks and economic costs, and for assigning and coordinating military roles and responsibilities.

Unique habits and patterns of cooperation have evolved in NATO over the past half–century. Our European allies do not offset the same percentage of U.S. stationing costs as do Japan and the Republic of Korea, but they do contribute significantly more in sharing military roles, risks and responsibilities, as well as the overall political and economic costs, of protecting shared interests.

NATO’s common–funded budgets have long been unique instruments for achieving defense objectives while reducing each country’s costs through economies of scale and the development of joint projects. Common funding is among the oldest and most effective means of achieving U.S. responsibility sharing objectives. The United States, in view of its global commitments, participates in NATO’s common funded projects at a “discount”—i.e., the U.S. cost share is proportionately smaller than its share of NATO’s collective GDP. The common–funded budgets are a dramatic example, at the level of finances and resources, of the multiplier effect provided by NATO membership, which allows us to achieve cost–saving, coordinated actions among the 16 member states.

The successful defense of our international security interests depends fundamentally on effective American leadership of NATO. The presence of significant numbers of U.S. forces in Europe underpins that leadership and the military effectiveness of the Alliance. Forward basing strengthens peace and stability within the region and provides a platform for the projection of power and influence beyond Europe that is more immediate, credible, and cost–effective than basing in the continental United States.

The vast majority of the approximately 100,000 U.S. forces based in Europe are stationed in three countries: 70,000 in Germany, and approximately 12,000 each in the U.K. and Italy. These countries have for many years shouldered a broad range of political, military, and financial responsibilities vital to the achievement of shared security objectives, by working effectively in concert with the United States diplomatically; hosting U.S. nuclear and conventional forces, maintaining substantial, modern armed forces of their own; participating in combined operations within Europe and beyond in support of defense and deterrence; and extending significant foreign assistance to promote peace and security. The following sections describe the principal contributions of these key NATO allies.

Germany

Germany’s geographical location, economic strength, military capabilities and political influence make it a vital European ally. Germany is gradually assuming a role more in keeping with its power and influence, and is becoming increasingly influential in international security affairs. The Germans maintain one of the largest NATO armed forces (337,000) in Europe, and remain the only NATO ally whose entire military falls under NATO command. German military forces are modern, and well–equipped, trained, and led, and are a major component of NATO military capabilities.

Reflecting growing German readiness to participate in crisis management and peacekeeping operations, Bonn is increasingly involved in providing forces for multilateral military missions. In 1996, Germany contributed troops to both NATO and UN missions in the former Yugoslavia, Africa, and Asia. Germany provided 4,000 troops to IFOR, and a total of $871 million for all German deployments to the former Yugoslavia. Beginning in January 1997, Germany has taken the unprecedented step of placing a contingent of 3,000 combat troops on the ground as part of SFOR in the former Yugoslavia. Germany’s military presence in the former Yugoslavia represents a qualitative change in Bonn’s approach to crisis management and a welcome strengthening of our political–security partnership. In addition to its financial contributions to UN missions, Germany actively participates in peacekeeping operations in Iraq, Georgia, Rwanda, and the Western Sahara.

German defense spending in 1996 was 1.7 percent of GDP, down from a level of 2.8 percent in 1990. Pressure on the German defense budget remains strong, particularly in view of the country’s difficult economic situation, European Monetary Union imperatives, and continuing financial investments in eastern Germany and assistance to former Soviet bloc countries. We are concerned about current and projected German defense budget trends, and are urging the German government to give close attention to this matter.

Financially, Germany continues to play a unique role in supporting the successful democratization of central and eastern Europe, advancing security and stability as a result. Bonn estimates that it has provided $11 billion to facilitate the withdrawal of Soviet forces from eastern Germany, and thus contributed significantly to the orderly disengagement of Soviet forces and facilitated the massive drawdown of U.S. military forces in Germany.

From 1990 to 1995, Germany pledged approximately $30 billion (more than any other nation) to the Newly Independent States of the former Soviet Union. During this period, Bonn also contributed $33 billion to other Central and East European countries. Germany has also provided billions in aid to the former Yugoslavia (including bilateral aid for reconstruction projects), and has spent billions to host some 1.4 million refugees—most of whom fled from the former Yugoslavia. During 1996, Germany contributed nearly $13 million to aid nuclear and chemical weapons dismantlement in the former Soviet Union, $4.3 million for the destruction of missile silos in Ukraine, $1 million to the Korean Energy Development Organization (KEDO), and $14 million for de–mining operations worldwide.

Typical of NATO allies generally, Germany contributes more to our partnership in areas of military roles and missions, political cooperation, and economic assistance in support of shared interests, than in the form of cost sharing for U.S. stationed forces. Nevertheless, German cost sharing was estimated at approximately $1.1 billion in 1995, almost all of which was in the form of indirect contributions. Over the past year we have worked closely with the German government to resolve a number of tax issues affecting U.S. forces. The German government now absorbs all landing fees for U.S. military aircraft, which—according to German estimates—saved the United States some $21 million in 1996. Germany has also expanded host nation support for U.S. bases from which American soldiers have been deployed to Bosnia. This included additional police coverage in housing areas, social services for families, and security and logistical support for deploying forces.

United Kingdom

The U.K. remains one of our closest and most important allies, working in concert with the United States across a broad range of political and military activities both within NATO and bilaterally. A nuclear state with significant power projection capabilities, the U.K. brings to our security relationship not just a regional but also a global orientation. British forces are deployed to some 30 locations outside the U.K.

The British defense budget has declined, but defense spending as a share of GDP, equal to 2.9 percent in 1996, has remained more robust than most and among the highest in NATO. The U.K. provides substantial host nation support for stationed U.S. forces, almost entirely in the form of indirect contributions. British forces constitute the backbone of the Allied Command Europe (ACE) Rapid Reaction Corps (ARRC), and play a significant role not only in NATO military missions but also in peacekeeping operations under the auspices of the United Nations.

The British IFOR contingent in 1996 numbered some 12,500, including 9,000 ground troops, second only to the U.S. contribution. British aircraft and ships have also been engaged in NATO operations Sharp Guard and Deny Flight. Nonreimbursable costs borne by the British during their participation in IFOR were $545 million. Additionally, British forces participate in coalition operations in Southwest Asia, including Southern Watch and Provide Comfort—and are also involved in UN–mandated operations in Cyprus, Angola, and Georgia. The U.K. is also one of the largest contributors to the UN effort in Iraq. The RAF provides two Tornado squadrons to help enforce the no–fly zones over the country and Royal Navy vessels maintain a continuous presence in the Gulf. In 1995, nonreimbursable costs to the U.K. for all UN missions was $176 million.

The United Kingdom provides bilateral assistance for reconstruction projects in the former Yugoslavia, as well as its share of the European Union aid commitment. The U.K. was the first European country to support KEDO, with a $1 million contribution, and was among the leaders of the successful effort to secure an EU contribution to KEDO. The British have also provided, at a cost of some $58 million, twenty nuclear weapons transport vehicles and 250 supercontainers to assist Russia in carrying out its arms reduction obligations under the terms of the START II Treaty.

The U.K. provided nearly $3.5 billion in foreign assistance in 1995, a level roughly triple that of the United States in terms of ability to contribute.

Italy

Italy, which like Germany and the U.K. hosted U.S. GLCM bases in the 1980’s, contributes actively to our security partnership both through NATO and bilaterally. Italy is a major staging and logistics base for operations in and beyond the immediate region. Relative to Europe’s central region, Italy has always possessed the military advantage of strategic depth, while at the same time providing a key front–line presence in the Mediterranean region. Italy hosts U.S. forces and contributes significantly to U.S. power projection capability to and through the region. NATO air bases in Italy, for example, have provided essential staging and transportation points for IFOR operations in Bosnia.

Italian defense spending relative to GDP was just under 2 percent in 1996. This represented an increase in this ratio of 10 percent over 1995, and largely reverses the 11 percent decline from 1994. Italy’s host nation support for U.S. forces during 1995 was estimated at more than $500 million, consisting almost entirely of indirect contributions.

In addition to its NATO missions, during 1996 Italy participated in UN missions in Jerusalem, India and Pakistan, Lebanon, Iraq, the Western Sahara, Guatemala, and Angola. Nonreimbursable contributions to these operations are expected to total $72 million. Italy committed 2,200 military personnel to IFOR missions and provided nearly $260 million in funding. In July 1995, Italy pledged to donate $2.2 million to KEDO over the course of three years.

Italy has also contributed to emergency humanitarian and reconstruction assistance to the former Yugoslavia. Although Italy’s total foreign assistance in 1996 remained above $2 billion, this represents a drop of 37 percent from 1995 levels, and 50 percent from 1992—the largest declines registered by any NATO ally.

 

Pacific Allies

Our key security relationships in Asia are with Japan and the Republic of Korea. As is the case with NATO in Europe, these alliances grew out of the experience of World War II and the early years of the Cold War. Like NATO, these two bilateral relationships were instrumental in helping to manage Cold War realities and are now adapting not just to a fundamentally altered global geopolitical situation, but to emerging challenges and opportunities on the Korean peninsula and in the region as a whole.

At the heart of both alliances is the continued presence of significant numbers of U.S. troops: 47,000 in Japan and almost 37,000 in Korea. These forces play a vital role in contributing to peace and security in the region, and are a tangible expression of vital American interests in Asia, and of U.S. will and capability to defend those interests in concert with our allies.

In view of the constraints that influence the policies and capabilities of both countries—in Korea the division of the peninsula and the threat of conflict, and in Japan the complex legacy of World War II—their responsibility sharing has focused more on assuming a substantial share of U.S. stationing costs and less on other aspects, such as active participation in shared regional and global military roles and missions.

In late 1995, the United States concluded new multi–year cost–sharing agreements with both countries. These accords build effectively on past arrangements and provide for significant and increasing host country participation in cost sharing. The level of host nation support provided by Japan and Korea continues to be substantial. This welcome contribution is critical not only to maintaining the military readiness of our deployed forces, but also for sustaining the political support that is essential to forward stationing, and thus to our ability to project U.S. power and influence in defense of shared interests.

Japan

Our bilateral alliance with Japan is fundamental to both our Pacific security policy and our global strategic objectives. It is seen not just by our two countries, but throughout the region, as a major element of stability and security. As Japan becomes more deeply involved in international security affairs and related institutions, its role is becoming increasingly active, and areas of cooperation with the United States are expanding. Nevertheless, cost sharing in support of stationed U.S. forces remains Japan’s most significant responsibility sharing contribution.

Although Japan spends less on defense as a share of their GDP than any other major ally (1 percent), Tokyo contributes generously to defray stationing costs for U.S. forces. In October 1995, we concluded a new five–year (1996–2001) cost sharing accord with Japan, the Special Measures Agreement (SMA). Under this agreement, Japan absorbs almost all local national labor and utility costs associated with U.S. military presence there. Additionally, Tokyo will assume almost all the cost of U.S. training activities relocated at Japanese request.

We estimate that under the new SMA, the value of Japan’s direct cost sharing (including cash payments and in–kind contributions, such as the actual provision of supplies and materials) will approximate $1.7 billion per year through 2001, or $8.5 billion over the life of the agreement. Over these same five years, Japan’s combined direct and indirect cost sharing (i.e., including foregone taxes, rents, and revenues) will be approximately $5 billion per year—for a total of $25 billion.

In addition to its contribution under the SMA, Japan also provides substantial funding for quality–of–life projects under the separate Facilities Improvement Program (FIP). These projects include bachelor and family housing, community support and recreation facilities, and utilities upgrades. In recent years Japan has also shown increased flexibility under the FIP in constructing direct operational support facilities such as hangars and hardened aircraft shelters.

Beyond its cost sharing contributions, Japan’s evolving worldwide role means greater involvement in international efforts to promote regional and global stability. The Japanese have actively supported crisis management and nation–building efforts in Asia, Africa, and the Middle East. Japan is the world’s largest provider of foreign assistance, with contributions in 1995 of over $13 billion—substantially higher than those of the United States, both in absolute terms and as a share of GDP. Japan has also increased its involvement in humanitarian and peacekeeping efforts around the world, including in Cambodia, Mozambique, and Zaire. In 1996, Japan pledged $210 million for assistance to Bosnia. Tokyo also contributed over $22 million to KEDO in support of our mutual nuclear nonproliferation efforts. This matched the U.S. contribution.

On April 17, 1996, President Clinton and Prime Minister Hashimoto signed a bilateral security declaration which reaffirmed both countries’ continuing commitment to our defense partnership. The declaration also committed Japan to assuming an increased role in regional security matters, and promises to advance U.S.–Japan consensus–building on increased defense collaboration in the future.

The Republic of Korea

Our security relationship with the Republic of Korea remains central to the stability of the Korean Peninsula and Northeast Asia. U.S. forces stationed in the ROK contribute significantly to the security and territorial integrity of the country, and are a tangible manifestation of U.S. support for peaceful change and democratic evolution in the region. The ROK has for some years contributed significantly to the costs of stationing U.S. forces in the country, and that contribution is growing.

In November 1995, we concluded the first multi–year Special Measures Agreement (SMA) with the Republic of Korea, covering the period 1996–1998. Under the SMA, the Koreans agreed to increase their direct cost sharing contribution, which stood at $300 million for 1995, by 10 percent each year, to approximately $400 million in 1998. Over the life of the agreement, this direct support will exceed $1 billion. Moreover, the cash component of this contribution, which in 1996 made up two–thirds of the total, will increase to three–fourths of the total in 1998, with a corresponding decrease of the in–kind component.

With the first year of the SMA now behind us, and in view of implementation issues that have arisen over that time, a formal implementation review will be conducted in April 1997 in order to identify and address problem areas. One of these concerns is with ROK taxation of its own in–kind contribution, which resulted in a shortfall in the ROK’s cost sharing effort amounting to over $11 million in 1995 (with similar results expected in 1996). We will also review with the ROK the methodology for calculating the value of Seoul’s indirect cost sharing contribution. This effort, which will take some months to complete, may result in revised estimates of the level of ROK’s indirect cost sharing in next year’s report.

Apart from cost sharing, the ROK makes major contributions to regional security, and in 1996 devoted 3.1 percent of its GDP to defense. ROK annual defense spending has grown by 24 percent since 1990, compared to a decline of 13 percent for all other allies (Pacific and NATO), and a reduction of 25 percent for the United States over this period.

Because of the security situation on the peninsula, Seoul’s defense effort continues to focus on the maintenance and improvement of military readiness. As such, the ROK does not participate extensively in roles and missions, including combined operations, elsewhere in the region and beyond. Economic constraints limit the ROK’s ability to make large contributions to foreign assistance. In 1996, however, Seoul contributed approximately $8.7 million to KEDO in support of shared nuclear nonproliferation goals under the U.S.–North Korea Agreed Framework. Moreover, the ROK has committed to fund the lion’s share of the multi–billion dollar cost of the light water reactors to be constructed in North Korea.

 

Gulf Cooperation Council

The U.S. strategy toward Southwest Asia remains one of engagement, forward presence, and rapid response. We seek to sustain and adapt security partnerships with key states throughout this critical region, broaden the economic and cultural underpinnings of these relationships, and promote peaceful settlement of regional disputes before they erupt into conflicts that could threaten our interests. Acting alone, neither the United States nor its partners in the region can ensure the security of Southwest Asia. Collective efforts are essential.

The security framework in which we operate in Southwest Asia is strikingly different from those in other regions of vital interest to the United States. Here we have no formal bilateral or multilateral defense treaties, but instead rely on a range of executive agreements for military access, prepositioning, status of forces, and security assistance.

Our principal security partners in this region are the member states of the Gulf Cooperation Council (GCC): Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE). These nations carry a substantial proportion of the defense load—each having a lower (and in some cases, substantially lower) per capita GDP than the average of all nations addressed in this Report, yet spending more (to substantially more) of their GDP on defense than the average. In spite of these laudable efforts, there remains a substantial disparity between the military forces of the GCC states and those of their principal antagonists in the region.

It is because of this imbalance that the United States continues to urge the Gulf countries to work closely with other moderate Arab states to enhance their common ability to defend the region. The first step in this direction was taken immediately following the Gulf War, when the six GCC members plus Egypt and Syria (the so–called “GCC+2”) pledged to enhance their common defense capabilities in the 1991 Damascus Declaration. The United States welcomes further efforts to establish and improve cooperation with the armed forces of moderate Arab states such as Jordan and Morocco—both of which have been constructively involved in Gulf security in the past.

Our GCC partners also contribute to regional security by providing U.S. forces the use of facilities, transit rights, and other forms of access. Bahrain, for example, has provided port facilities for U.S. naval forces for nearly 50 years; it also hosts the headquarters for U.S. Naval Forces Central Command, furnishes facilities for prepositioned equipment, and has granted rapid access for U.S. military aircraft when needed. Oman has permitted the United States to preposition equipment on its territory, and to have emergency access to Omani bases since 1980. Since the Gulf War, defense cooperation agreements permitting access and prepositioning have been signed with Kuwait, Bahrain, Qatar, and the UAE. Under the agreement with Kuwait, that nation has agreed to offset U.S. prepositioning and exercise costs. Saudi Arabia also provides access to U.S. forces and has made substantial contributions to offset the cost of U.S. military operations in the region. Furthermore, in the past 18 months, Bahrain and Qatar have hosted an Air Expeditionary Force for two–month rotations in support of Operation Southern Watch.