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<HTML> <HEAD> <TITLE>2000 Book</TITLE> </HEAD> <BODY LINK="#0000ff" BGPROPERTIES="FIXED" BGCOLOR="#ffffff"> <BASEFONT SIZE="3"> <HR SIZE="2"><P ALIGN="CENTER"><FONT COLOR="#1f1a17" SIZE="7" FACE="Palatino"> Chapter 17 </FONT></P><HR SIZE="2"> <P ALIGN="CENTER"><FONT COLOR="#1f1a17" SIZE="5" FACE="Palatino"> Addressing the Disparity in Capabilities<BR> Across the Alliance </FONT></P> <P ALIGN="CENTER"><FONT COLOR="#1f1a17" SIZE="3" FACE="Palatino"> U.S. Deputy Secretary of Defense Rudy de Leon </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> <BR> </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> <FONT COLOR="#000000" FACE="Palatino" SIZE="7">J</FONT> ust before this Workshop began I visited some of the NATO forces maintaining peace in the Balkans who are stationed at Camp Able Sentry in Macedonia and Camps Bondsteel and Montieth in Kosovo. I don’t think anyone can see those men and women and not be inspired by all they have accomplished in the past year. Because of Operation Allied Force and the subsequent peacekeeping work, Serbian forces are out of Kosovo, the vast majority of refugees have returned, the region is largely stable, and there is hope for the future. While challenges remain in the Balkans, we should celebrate the very real achievements of these past 12 months. </FONT></P> <P ALIGN="CENTER"><FONT COLOR="#1f1a17" SIZE="3" FACE="Palatino"> <B>HOW CAN WE CLOSE THE GAP IN CAPABILITIES?</B> </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> Foremost among the remaining challenges is the need to ensure that the forces that prevailed in the Balkans a year ago remain prepared to prevail in the campaigns of the future. Indeed, the lessons from that operation, both for the Alliance generally and for our specifications, have been discussed and debated widely—especially the stark disparity in capabilities across the Alliance. We all know the causes. We all know the consequences. As U.S. Defense Secretary Cohen said, “There was no disparity in courage or will” in the Allied force, “but the disparity in capabilities, if not corrected, could in fact threaten the unity of this Alliance.” </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> Of course, such concerns, known since Alliance operations in Bosnia, are why NATO launched the Defense Capabilities Initiative at the Washington Summit. However, a year following its launch, those disparities remain as significant as they are troubling. As Secretary General Robertson wrote in a recent letter to all heads of state, “Only half of [the] Force Proposals [designed to improve NATO capabilities] are currently planned for full implementation.” So I want to use my time here to be as candid as I can on precisely how we can address these shortcomings. </FONT></P> <P ALIGN="CENTER"><FONT COLOR="#1f1a17" SIZE="3" FACE="Palatino"> <B>Investing More in Defense</B> </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> First, we know that America’s allies need to invest more in defense. No one suggests strict parity of spending or equal military capability, but every member-nation of the Alliance should use existing resources more wisely as well as devote more resources to improving the capabilities we agreed upon at the Summit. All of us should also ensure that our efforts are complementary in order to maximize our collective capability. Failure to make such investments will affect more than the Alliance’s defense capabilities. It will also affect whether the European Union achieves its Headline Goal of deploying, by 2003, and sustaining for up to a year, a force of 50-60,000. We must realize that the Defense Capabilities Initiative and the EU’s Security and Defense Policy are not mutually exclusive. On the contrary, they are mutually reinforcing. A year ago, we witnessed the tremendous political will to stop the slaughter in Kosovo. Today, we need political will and courage to back our rhetoric with resources. </FONT></P> <P ALIGN="CENTER"><FONT COLOR="#1f1a17" SIZE="3" FACE="Palatino"> <B>Increasing Transatlantic Defense Industrial Cooperation</B> </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> The second way we can address the gap in Alliance capabilities is through greater transatlantic defense-industrial cooperation. I think everyone here knows that if the Alliance is going to train and fight together, then we are going to have to build our military capabilities together. Indeed, the collaboration of the transatlantic defense industry is one of the critical pillars upon which the future cohesion of the Alliance rests. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> An America more open to European business, and a Europe more open to American business, means both more competition and more cooperation--which means more innovation and leads to more capable and interoperable systems for our men and women in uniform. And because of more competition and potentially larger buys, this means we will get that capability at lower cost. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> So as long as they increase efficiencies, as long as they ensure competition, and as long as they protect technology, we will need more transatlantic links between more firms on both sides of the Atlantic competing in markets on both sides of the Atlantic. The United States has much to learn from, and to share with, Europe. Europe has much to learn from, and to share with, the United States. </FONT></P> <P ALIGN="CENTER"><FONT COLOR="#1f1a17" SIZE="3" FACE="Palatino"> <B>Making Changes to Technology Sharing</B> </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> The third way we can address the gap in capabilities, and which is a prerequisite for improving both military capabilities and industrial cooperation, is to make changes to the American system for sharing technology. For a number of years now, many on my side of the Atlantic have been concerned about the emergence of a “Fortress Europe,” only to realize that American export controls in some cases support a “Fortress America” mentality. The United States has long urged our allies to tighten their export controls. But progress has been too slow. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> As I mentioned a moment ago, the United States has long pressed our NATO Allies to improve their defense capabilities, only to find that our own export control system has in some cases contributed to discouraging and making that difficult. For example, even with a Dutch request for expedited review, it still took almost three months to approve the export license for digital maps of Bosnia for use in the Dutch Chinook helicopters, which, as a result, were never deployed to Bosnia. During the air war over Kosovo it took more than two months to approve the sale of flares to the Italian Coast Guard for use in the potential rescue of downed Allied pilots, including Americans. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> For these and other reasons, in May the United States unveiled the first major reform to our export control system since the Cold War. The Defense Trade Security Initiative was designed to ensure two major goals: increased sharing of technologies with our Allies, and enhanced effectiveness of our export control system while encouraging our Allies to do the same. With these reforms in place, problems of getting the digital maps to the Dutch and the flares to the Italians would have been avoided. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> Our initiative includes a broad package of 17 specific reforms. The most significant reform is our proposal to no longer require licenses for trade of unclassified defense items with certain Allies. As we have for Canada, we are proposing to negotiate International Traffic in Arms Regulations (ITAR) exemptions from selected export rules. As with Canada, we will have to negotiate with each country to ensure that their export controls and technology security practices are as effective as those of the United States. These practices would include membership in relevant multilateral export control arrangements, such as the Missile Technology Control Regime and the Non-Proliferation Treaty, among others; harmonized control lists; controls comparable in effectiveness to those of the U.S.; requirements for U.S. government approval of re-transfer or re-export of defense articles and related technical data and defense services of U.S. origin; and rigorous screening and registration of eligible personnel and entities that would participate in defense manufacturing and trade. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> In addition, we would look for documentation and record keeping for compliance and enforcement; strong criminal and civil penalties for export control violations; provision for cooperative enforcement efforts; regular consultations on export control policies and practices; and, finally, a demonstrated track record over time of effective export controls. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> Of course, companies in countries we negotiate with will have to be reliable as well, with their own good records of security. By removing a number of licensing requirements, we hope to share more technology with—and share technology from—our Allies while we strengthen our collective protection of such technology through more effective export controls, including reciprocal, binding agreements regarding exports to third parties. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> For example, under current regulations, if an American and a foreign firm enter into joint development and production of an unclassified defense product, they typically need to obtain several licenses. Under our proposal, we would complete a government-to-government agreement allowing us to extend a broad exemption from the ITAR. Most unclassified defense projects handled by two reliable companies would then no longer require a license. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> The recent U.S.-U.K. Declaration of Principles is a road map for this kind of cooperation. We will soon have a similar document for cooperation with Australia. As a next step, we look forward to beginning negotiations with both the U.K. and Australia on an agreement allowing an exemption from ITAR. We see these two countries as the earliest candidates for such an exemption because of our long history of cooperation, because of our existing and very compatible export controls, and because of our significant industrial linkages that could, and should, be allowed to grow. We hope these efforts will create a strong incentive for other countries to strengthen their export control systems so that we can enter into similar arrangements and share similar benefits. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> Our initiative will also remove a whole host of barriers and irritants currently impeding transatlantic cooperation. This includes removing barriers between governments, thereby encouraging research and development. It also includes removing barriers between individual companies, thereby making it much easier and more affordable for companies to conduct business with counterparts in Allied nations. We want to make it easier for American and foreign firms to work together in the cooperative development and production of defense articles. So we are creating several types of umbrella licenses that will enable entire projects—projects that in the past have required dozens of separate licenses—to be covered by a single license that would be valid for an extended period. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> Our initiative also includes specific reforms to expedite procurements related to the Defense Capabilities Initiative. For example, DOD review processes will be shortened from 25 days to 10 days for items specifically identified as supporting the DCI. Additionally, we are prepared to authorize marketing approval—at the time of the U.S.’s agreement to a cooperative project—to certain third-country destinations. In other words, we are prepared to authorize a pre-approved sales territory. Although this is part of the ITAR already, it is rarely requested and infrequently used when U.S.-originated products are incorporated into foreign products. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> I should note that all these new procedures apply to all our transatlantic efforts, including the development of an Alliance ground surveillance capability. Our decision to share key technologies with our partners in this effort reflects our commitment to building a commonly funded NATO-owned and-operated ground surveillance system. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> Another area of our initiative falls under what we could call “good government” reforms designed to improve how this new system will work day to day. At the Defense Department we have already begun to reform our system. We have streamlined processes for review. We have reduced the amount of time it takes us to complete our reviews from 46 days to 18 days, with a realistic goal of 10 days. As a result, not only are we expediting our reviews, we are improving the protection of sensitive technology by focusing our finite resources on the most sensitive cases. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> Under our initiative, we will take a number of additional steps to streamline our regulatory procedures and speed up our decision-making even further. We are going to increase our licensing staff by 50 percent. We are also going to devote more resources and are going to computerize our processes. This includes spending some $30 million over three years for a new common computer system to expedite the review process. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> In short, the changes I have outlined are designed to achieve three fundamental goals: </FONT></P> <UL> <LI><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> They are going to improve the ability of industry on both sides of the Atlantic to share technology and to learn from each other. </FONT></LI> <LI><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> They are going to improve the security of these same technologies. </FONT></LI> <LI><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> Perhaps most importantly, they are going to improve the ability of NATO forces to operate together in the battles of the future, battles that will be won by militaries that harness the technologies and tools only industry can provide. </FONT></LI> </UL> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> There should be no doubt that these reforms are not simply about exporting American products to our Allies. They are about ensuring that American and foreign firms can work even more closely together in the future. Indeed, this is not the Defense Export Initiative. This is the Defense Trade Security Initiative, and we recognize that trade is a two-way bridge over the Atlantic. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> Put another way, we are committed to closing the “capability gap” with our Allies, widening the “technology gap” with our adversaries, and helping American and European industry to jump the “transatlantic gap” to form more cooperative ventures. </FONT></P> <P ALIGN="CENTER"><FONT COLOR="#1f1a17" SIZE="3" FACE="Palatino"> <B>Obtaining Commitment and Cooperation from Our Allies</B> </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> The fourth and final way we can increase both Alliance military capabilities and industrial cooperation is by help from our partners in Allied governments and in industry. I have spoken about what the United States will do. But if this new approach is going to succeed, we need something from you, from our Allies and from industry. We need your commitment and your cooperation. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> To date, security practices have largely been strong. In the future, we need them to be even stronger, and to keep up with changes in business practices, such as distributed design terms. We need you to commit the human and financial resources to properly administer this system within your nations and your companies. This includes training people better in what is required to obtain a license, when a license is necessary, in the most expeditious manner possible. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> So if we are going to share more of our technologies and strengthen their protection, we need to work together even more closely and cooperatively in the future. </FONT></P> <P ALIGN="CENTER"><FONT COLOR="#1f1a17" SIZE="3" FACE="Palatino"> <B>CHANGES THAT WILL BENEFIT US ALL</B> </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> In closing, let me say that the changes I have mentioned are good for all concerned. They are good for the security of the United States because they strengthen the protection of our most critical technologies. At the same time, they are good for those of you in industry because they allow you to respond even more quickly to a rapidly changing international market. They are also good for our Allies because they increase access to those technologies that are necessary to transform their forces. Finally, they are good for the Alliance because they contribute to a robust, competitive, and innovative industrial base and therefore improve the ability of our forces to operate together in the future. </FONT></P> <P ALIGN="LEFT"><FONT COLOR="#1f1a17" SIZE="2" FACE="Palatino"> Indeed, the ability of our forces to operate as coalition partners, in fact, the very lives of our men and women in uniform, remain absolutely and indispensably tied to a cooperative, rational, and viable transatlantic defense-industrial base. We cannot have a strong Alliance if we have a weak defense-industrial base. Ensuring both, now and in the future, is one of the great challenges we face as an Alliance. </FONT></P> <P> </P> <P ALIGN="CENTER"><A HREF="workshop2000-A.htm">Back to 2000 Workshop Index</a></P></BODY> </HTML>