In the coming decade, NATO faces growing fiscal austerity and declining defense budgets. This study analyzes the impact of planned defense budget cuts on the capabilities of seven European members of NATO: the United Kingdom, France, Germany, Italy, Spain, the Netherlands, and Poland. The authors assess the implications of the cuts for NATO capabilities and strategy and for U.S. policy.

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NATO and the Challenges of Austerity

by F. Stephen Larrabee, Stuart Johnson, John Gordon IV, Peter A. Wilson, Caroline Baxter, Deborah Lai, Calin Trenkov-Wermuth

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Research Questions

  1. What reductions in defense spending have the United Kingdom, France, Germany, Italy, Spain, the Netherlands, and Poland made, and what future cuts are planned?
  2. What impact will the cuts have on NATO capabilities in general and each country's ability to contribute to the defense of NATO territory, missions in NATO's immediate neighborhood, and long-range operations?
  3. How are these changes likely to affect the challenges the Alliance faces in the coming decade?
  4. What are the lessons for NATO of the Libyan intervention?
  5. How should the United States respond to these new challenges?

In the coming decade, NATO faces growing fiscal austerity and declining defense budgets. This study analyzes the impact of planned defense budget cuts on the capabilities of seven European members of NATO — the United Kingdom, France, Germany, Italy, Spain, the Netherlands, and Poland — that together represent more than 80 percent of NATO Europe's defense spending. The result of the anticipated cuts and future financial constraints is that the capacity of the major European powers to project military power will be highly constrained: The air, land, and sea forces of key U.S. European allies are rapidly reaching the point at which they can perform only one moderate-sized operation at a time and will be hard-pressed to meet the rotation requirements of a protracted, small-scale irregular warfare mission. Power projection and sustainment of significant forces outside Europe's immediate neighborhood will be particularly difficult. The authors discuss these challenges in a strategic context, including the operational and planning weaknesses exposed by NATO's intervention in Libya in 2011, and make recommendations for U.S. policy with regard to NATO.

Key Findings

European Allies Are Significantly Reducing the Size of Their Armed Forces

  • All seven countries studied are reducing the size of their armies, navies, and air forces. Several nations are eliminating important capabilities entirely.
  • The United Kingdom is undertaking a draconian downsizing of its forces.
  • The French military has been stretched dangerously thin by recent engagements, and budgetary pressures will force it to further limit its capabilities.
  • Germany is dramatically reducing the size of its armed forces and is likely to remain hesitant about using military force in a multinational context.

European Allies' Capacity to Project Military Power Will Be Highly Constrained

  • The air, land, and sea forces of key European allies are reaching the point at which they can perform only one moderate-sized operation at a time and will be hard-pressed to meet the rotation requirements of a protracted, small-scale irregular warfare mission.
  • The units of account for European ground forces will be battalion battle groups and brigade combat teams and not full-strength divisions and corps.

NATO Europe Faces New Security Challenges

  • If the European Union fails to manage the sovereign debt crisis more decisively, the Eurozone could collapse, hindering the global economic recovery and creating further pressures for defense cuts.
  • NATO's intervention in Libya in 2011 exposed a number of operational and planning weaknesses that need to be addressed.
  • The greater attention in U.S. strategy on the Asia Pacific region will mean that European allies will need to take greater responsibility for managing crises in Europe and parts of its periphery.

Recommendations

  • European allies should pool and share resources to help mitigate the impact of defense budget cuts. However, such agreements cannot make up for sustained drops in defense spending. Bilateral partnerships, such as the British-French Defense Co-operation Treaty, may provide a more effective way of reducing costs and producing synergies and should be encouraged.
  • European allies should consider the strategy of "leapfrogging" — cutting defense expenditures heavily today while investing in new types of capabilities — as a way to cope with changing technological realities, emerging new threats, and declining defense budgets.
  • European allies, especially Britain and France, need to put greater procurement emphasis on intelligence, surveillance, and reconnaissance; suppression of enemy air defenses; aerial refueling; and increased stocks of precision-guided munitions.
  • NATO members should sustain interoperability among U.S. forces and the forces of individual NATO allies.
  • The United States should encourage NATO Europe to take lead responsibility for managing crises in the Maghreb.
  • The United States should encourage Britain and France to intensify their defense cooperation.
  • Germany should be encouraged to take on greater responsibility for ensuring security and stability in Eastern Europe.
  • As the United States focuses more on Asia in the coming decade, it should keep in mind the many important security functions that NATO serves.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    The Impact of Defense Cuts on Key NATO Allies

  • Chapter Three

    NATO Europe's Capability for Defense and Power Projection in the Coming Decade

  • Chapter Four

    The Broader Strategic Context

  • Chapter Five

    Implications and Recommendations for U.S. Policy

Research conducted by

The research described in this report was prepared for the Office of the Secretary of Defense (OSD). The research was conducted within the RAND National Defense Research Institute, a federally funded research and development center sponsored by OSD, the Joint Staff, the Unified Combatant Commands, the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community.

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