The Looming Costs of NATO Expansion in the 21st Century

Abstract

NOW THAT POLAND, HUNGARY, AND THE Czech Republic have been formally invited into the North Atlantic Treaty Organization (NATO) - and the prospect of a second round of expansion is on the horizon - the cost of NATO enlargement could become a heated security issue. Before it does, it would be prudent to consider how Canada might make a meaningful financial or organizational contribution to NATO that falls short of the massive new investments in kit and infrastructure posited by several studies of the costs of enlargement. What share of the defence burden should Canada be willing to shoulder? And what are some alternative, and less costly, options for fulfilling Canada's NATO commitments?THE COST OF NATO ENLARGEMENTEstimates of the cost of NATO enlargement vary widely,(f.1) in part because they depend on a host of different assumptions: the nature of the projected threat environment (most estimates assume the overall Russian threat will remain low), the number of new members that should be admitted (three to five, five to seven?), and the strategy NATO adopts to carry out future article 5 missions and their associated force requirements (for example, the expected degree of interoperability and military preparedness). Estimates also differ depending on the time frame for assessing cost estimates (1 to 5 years, 10 to 13 years) and the criteria for allocating costs among members (40 per cent of enlargement costs to new members and 60 per cent commonly funded, or some other split?).Nevertheless, in 1997 many high-level American officials agreed that NATO expansion would cost somewhere between US$27 billion and US$35 billion over the next 13 years, nearly half of which would be paid by the new members. The United States share would be two billion dollars, while the rest, some us$16 billion dollars, would be the responsibility of other current members.(f.2) These widely quoted estimates stem from a congressional report released in February 1997 by the State Department on behalf of President Bill Clinton and the Department of Defense. The report assumed that new members would bear much of the cost of their own 'modernization' and 'restructuring' ($10 billion to $13 billion) and some of the costs of 'direct enlargement' ($3 billion to $4.5 billion). Current members, including Canada, would be expected to contribute $6 billion to $7.5 billion to direct enlargement and a fair share ($8 billion to $10 billion) to those NATO 'regional reinforcement capabilities' that are commonly funded.(f.3)In the autumn of 1997, NATO authorities examined the military requirements of the three invited states and the impact of enlargement on NATO's commonly funded budget. In the weeks prior to ratification of the enlargement decision in the United States Congress, the State Department concurred with NATO's revised assessment that enlargement could cost only $1.5 billion rather than $27-$35 billion. The department suggested, furthermore, that the American share of the costs of enlargement would be a mere $400 million over the coming decade.(f.4)The large discrepancy in these figures is attributable to the fact that the NATO study covered only one category of costs that analysts frequently link to enlargement, namely those directly related to NATO enlargement and eligible for common funding. The costs of upgrading new members' military forces would presumably have to be born by national governments and not by NATO. In addition, the guidance NATO used to identify necessary infrastructure improvements was based on minimal military requirements to fulfil article 5 commitments. It did not, for instance, cover the cost component of endowing current NATO member forces with the capability and resources to extend article 5 guarantees eastward.(f.5)These wide variations in estimates among such reputable analysts as the United States Congressional Budget Office, the Pentagon, the State Department, NATO headquarters, and NATO's North Atlantic Assembly should concern us, if for no other reason than that economic statistics can be fudged, depending on the issue at hand and the political interests at stake. …