Title: NATOS VALUES AND THE IMPORTANCE OF TRANSPARENT AND EFFICIENT DEFENCE PROCUREMENT1
1NATOS VALUES AND THE IMPORTANCE OF TRANSPARENT
AND EFFICIENT DEFENCE PROCUREMENT1
- Adrian Kendry
- Senior Defence Economist and Acting Deputy
Director - Defence and Security Economics Directorate
- Political Affairs and Security Policy Division
- NATO HQ
- 1 This presentation reflects personal and not
NATO official views
2NATOS VALUES
- NATOs Values support
- Democratic governance and the protection of human
rights constitute the cornerstone of sustainable
political progress - the recruitment of competent and credible
professionals to public service on the basis of
merit - establish a more effective, accountable and
transparent administration at all levels of
Government - and implement measurable improvements in fighting
corruption, upholding justice and the rule of law
and promoting respect for the human rights
3BUILDING EFFECTIVE INSTITUTIONS
- Reforming the justice system is a priority
- Legislative reforms for the public as well as the
private sector - Building the capacity of judicial institutions
and personnel - Promoting human rights and legal awareness
- Developing judicial infrastructure.
4COMBATTING CORRUPTION AND IMPROVING GOVERNANCE
- The Costs of Corruption
- According to the World Bank, 1 trillion was paid
in bribes globally during the period 2001-2002.
The size of the world economy was approximately
30 trillion at this time - Countries that tackle corruption and improve the
rule of law can increase their national income by
400 in the long-term and can experience a 75
decline if corruption is not tackled and the rule
of law is not implemented - The World Bank Recommendations
- Corruption must be understood in the context of
governance - Data and Information Collection and Use must be
transparent - Globalisation helps to control corruption through
increased transparency and competition - Anti-corruption agencies are not sufficient.
There must be systemic institutional and
regulatory reform with incentives for prevention
5NATO AND TRANSPARENCY INTERNATIONAL
- NATOs values (democracy, the rule of law,
transparent and effective governance) in the
development and deepening of Euro-Atlantic
security and stability, are entirely consistent
with, and supportive of, the aims and values of
Transparency International - NATO supports the vital contributions to be made
by democratically based NGOs in the building of
effective and accountable institutions in the
Euro-Atlantic area
6NATO AND THE FUTURE OF CROATIA
- We will see the day in which Croatia reaches the
end of the road, which is at the same time
stepping on the threshhold and oast the
threshold of NATO membership - Jaap de Hoop Scheffer, Secretary General, NATO
(December 2006)
7NATO AND THE FUTURE OF CROATIA
- Membership Action Plan countries (Croatia,
Albania, the former Yugoslav Republic of
Macedonia1 may be invited to join the NATO
Alliance in 2008 - Meeting NATOs performance-based standards and
contributing to Euro-atlantic security and
stability are critical requirements for
membership - During this decade, Croatia has become a security
provider - NATO and Croatia continue to address key issues
such as public support for membership, judicial
and defence reform - 1Turkey recognises the Republic of Macedonia with
its constitutional name
8NATOs RESOURCE REQUIREMENTS
- For Crisis Response Operations
- For Capabilities necessary to meet objectives and
priorities - For operating and maintaining civil and military
headquarters - For sustaining its activities and programmes
(partnership for peace, research and development,
science, education and training)
9THE FUNDING OF NATO
- Resources of the Alliance come from nations
- 95 or more of national defence budgets remain
under exclusive national control - National spending is the norm NATO is not a
supranational organisation - Multinational forms of allocating defence
resources remain the exception and not the rule
10TYPES OF NATO FUNDING
- Multinational Funding
- Bilateral/Multilateral arrangements substantially
under national control - Joint Funding
- Structured form of multinational funding within
terms of agreed NATO Charter and with NATO
oversight - Common Funding
- Allies provide the funding and NATO authorities
determine priorities and requirements for the
Civil (181 mill. Euros) Military (954 mil. Euros)
and NATO Security Investment programme (640.5
mill.euros) budgets - NSIP has a main elements Air C2, NATO-wide C3
support, Deployability/mobility and Sustainability
11THE CHALLENGE OF DEFENCE BUDGETS AND DEFENCE
REFORM
- Need to redirect savings from restructuring back
into investment in transformational capabilities - Need to stabilise defence budgets by creating
separate funds for operations and developing
defence planning on a multiyear rather than
yearly cycle - Challenges confronting the Euro-Atlantic area in
defence procurement and defence sustainability - Challenges confronting Croatia in its defence
procurement plans during the remainder of this
decade - 25 of annual budget directed toward RD and
procurement? - 40 of budget allocated to personnel?
12DEFENCE BUDGETS
- Budgets Too much money in individual defense
ministries to promote international defence
cooperation? - The quest for interoperability and
standardisation reduce divergence if not
convergence - Transformation, Information Exchange and
Obstacles to Coordination
13THE REVOLUTION IN DEFENCE RESOURCE MANAGEMENT
14MAJOR INFLUENCES ON THE PROCUREMENT FROM DEFENCE
INDUSTRY I
- The Revolution in Military Affairs and Changing
Threat Perceptions - Network Centric Warfare
- Battlefield Digitization
- Jointness in C4ISR
- The Revolution in Industry/Technology Affairs
- Platforms, Software and Systems Integration
- Traditional and New Firms entering the Defence
Supply Chain - Consolidation and Reorganization within the
Defence Industrial Base
15MAJOR INFLUENCES ON THE PROCUREMENT FROM DEFENCE
INDUSTRY II
- The Revolution in Business Affairs
- Modernization in Acquisition
- Competitive Sourcing
- Outsourcing
- Public-Private Partnerships and PFI
- The Revolution in Procurement Affairs
- Multi-sourced environment
- Incentives for timely delivery with quality
assurance - Promoting Interoperability
- Increasing competitiveness in the supplier base
16 WHAT ARE THE EURO-ATLANTIC CHALLENGES?
- SECURITY
- Globalisation of Insecurity
- Terrorism
- Resource Conflicts
- Nuclear Proliferation and CBRN
- Borders
- Trafficking of Instability
- ECONOMIC
- Economic Integration and Globalisation
- Employment Sustainability
- Aging and Demography
- Pensions and Health Care
- Energy Sustainability
- Resilience
17THE ECONOMIC AND SECURITY CHALLENGES OF THE
ANTI-TERRORISM ERA
- The paradox of defence and security in the new
Euro-Atlantic area. - Borders and security and the desirable/undesirable
flow of financial capital,goods and people - Strengthening of defence and security
capabilities without weakening commitment to
globalisation and democracy - Structural economic and social change the
decline in traditional economic activity and the
growth of the information economy
18THE GLOBAL SECURITY CHALLENGES OF THE
ANTI-TERRORISM ERA
- The transatlantic consensus global terrorism,
proliferation of WMD, regional conflicts, failed
states and organised crime - The transatlantic remedy wide engagement of
states to manage regional conflicts and tackle
root problems by improving governance and
implementing economic reforms - The transatlantic divergence Catastrophic
terrorism necessitates vigorous prevention of WMD
proliferation and pre-emptive, offensive military
attacks VERSUS Persistent terrorism requires
security policies and structures directed toward
the amelioration of WMD proliferation and state
failure
19 THE SOCIAL AND RISK MANAGEMENT CHALLENGESOF THE
ANTI-TERRORISM ERA
- Removal of obstacles and barriers to expression,
trade and mobility and the consequences for
meeting disparate and unpredictable threats - Social transformation and the importance and
complexity of systems, networks and pervasive
uncertainty - Risk Management and the role and responsibilities
of International Organisations, the State,
Individuals, Businesses, Science and Technology
Community, Defence and Security forces
20 ? Renew Strategic Concept? ? Revitalize
US-European Dialogue ? Streamline
Decision-making in NATO ? Re-investment
Common funding
US
NATO
EU
Expeditionary Forces
Forward Deployed
Constabulary Forces
European Rapid Reaction Force
Battle Groups
SR Force
Other High Readiness Forces
Spec Ops Response Force
Use US forward forces and exercises for
transformation
Improve institutional ties. Coordinate NRF and
Battle Groups
SR Capability
Civilian Nation Building
Civilian Nation Building
Defense Sector Reform
21DEFENCE PROCUREMENT AND THE DIVISION OF DEFENCE
SPENDING
OF DEFENCE EXPENDITURES 2003
22THE FINANCING OF PERSONNEL
- Incentives for military recruitment
- Contract forces and competitive wages
- Funding the reduction and re-organisation of
military personnel - Realistic assessment of the funding of personnel
in the context of the overall budget
23FINANCING OPERATIONS AND MAINTENANCE
- Improving the supply chains
- National and trans-national consolidation of
industry - Improving the armaments regulatory framework
- Continuous improvement strategy for ensuring that
the tail does not undermine the teeth
24 FINANCING RD AND DEFENCE TRANSFORMATION
OFF-THE-SHELF No Indigenous Development or
Production
LICENSED PRODUCTION / CO-OPERATION No
Indigenous RD Indigenous Manufacture
COLLABORATION Joint Research, Development and Pr
oduction
25TRANSATLANTIC CO-OPERATION AND DEFENCE INDUSTRIAL
INTEGRATION
- Accelerate Technology Transfer Policy and Export
Licensing Reforms - The US should implement modest reforms while
embracing the comprehensive and fundamental
restructuring of arms export controls - The entire Munitions List should be reviewed
every year following 9/11 with the goal to
modernize NATO capabilities - Greater priority and faster processing of
licenses or technical assistance agreements for
NATO Agencies
26TRANSATLANTIC CO-OPERATION AND DEFENCE INDUSTRIAL
INTEGRATION
- Highest priority to be accorded to the Prague
Capabilities Commitment package - Global project license authorization on e.g. AGS
and SEAD - Complete ITAR exemption negotiations with UK and
other allies - Recognize multilateral basis of US arms
cooperation through NATO - Develop framework agreement with LoI countries
27EUROPEAN NATIONAL SECURITY
- Italys defense spending in 2006 projected to be
0.84 of GDP (Personnel Costs at 63 of Budget) - Resurgence of French protectionism? (Thales and
Atlas Elektronik) - Role of the EDA and Article 296
- Europe spends some 60 of US defense budget
(440bn) and derives some 20 of effectiveness - US RD some 5x greater than Europe
- NATO-EU Relations
- US-EU Relations and Export and Technology
Controls
28US NATIONAL SECURITY
- Andy Marshall report to Gordon England and senior
military leaders - Cut tactical air forces by 30 (JSF/F-35)
- Cancel Navy DDC future destroyer
- Delay Army FCS
- Develop conventional theater ballistic missiles
- Build more fast sealift ships and nuclear subs
- Develop new long-range bomber
- QDR and the 4 threat areas how to fund
capabilities for irregular threats
29ASIAN NATIONAL SECURITY
- Asian defense spending projected to grow 4.5
p.a. from 2006-2010. China 20.8, Japan 27.7,
India 12.3, South Korea 11.6 - By 2040, US procurement will be some 1.01
trillion (36 of global demand) China 295bn
(2005 120bn) - Chinese demand for European defense electronics,
avionics and helicopters future of the EU Export
ban on defense exports to China
30V. THE FUTURE OF COOPERATION
- Strategic and Holistic Approach to Cooperation
- Plugging the critical gaps
- Removing the obstacles to Cooperation
- Strengthening the Partnership of Common Interests
and Values