''Offsets'' for NATO Procurement of the Airborne Warning and Control System

Opportunities and Implications

by Charles Wolf, Jr., Greg Carter, R. P. Castro, Dave J. Dreyfuss, John McCall

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From the standpoint of several of the participating NATO countries, the large expenditures associated with their potential procurement of the Airborne Warning and Control System (AWACS) warrant special measures by the United States to reduce or "offset" the resulting outflow of dollars in order to make procurement politically, as well as economically, more acceptable to the Europeans. This report summarizes a RAND study of ways of offsetting part of these large dollar costs connected with the planned NATO procurement of AWACS, assuming that the case for AWACS has been established on military grounds. Alternative offset strategies evaluated include: 0S1, which concentrates on internal offsets; 0S2, on external military offsets; 0S3, on external nonmilitary offsets; 0S4, on financial transfers; and 0S5, on a mixture of these several elements. The study concludes that the preferred alternatives lie either in 0S2, the external military offset strategy, or 0S5, the mixed strategy.

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