How will European debt crisis impact NATO?

Though military issue is a permanent topic of the North Atlantic Treaty Organization (NATO), leaders from the world's biggest military alliance are bothered much by economic problems at Chicago summit, which was kicked with full swing on Sunday.

Post-NATO depression [By Jiao Haiyang/China.org.cn]

Against the backdrop of the ongoing debt crisis in Europe, the NATO leaders and observers raised concerns that the bloc's capabilities would be weaken by massive fiscal austerity in European countries. Moreover, unbalanced defense spending among NATO members may split the alliance from within.

To cope with heavy pressure on defense budgets, the NATO highlighted the importance of "smart defense", urging for sharing defense resources together with limited money. But experts pointed out that there would be many difficulties and great uncertainty in implementing this strategy.

Defense spending declining

European countries are still at the center of this unprecedented sovereign debt crisis even though it has evolved for more than two years. In 2011, European Union's deficit/GDP ratio remained at a high level of 4.5 percent, according to the European Commission.

Under heavy pressure from sovereign risks, European nations have been experiencing large-scale fiscal austerity, which has been causing many NATO member countries to slash defense spending.

Hence, defense budget shortfall becomes a focus of the current NATO summit and is being discussed widely by participants, who are challenged by this predicament.

The impact of the European debt crisis to defense and security was expected to be the theme of the first discussions at the Chicago summit, said the bloc's Secretary General Anders Fogh Rasmussen Saturday.

During the period from 2008 to 2011, twenty out of twenty-eight NATO members cut their defense spending, with reduction even in giant players such as France, Britain and German, said the NATO.

Due to sovereign debt crisis, military expenditures in central and west Europe declined 1.9 percent in 2011, with Greece, Spain, Italy and Ireland seeing the largest cuts, according to the latest data from the Stockholm International Peace and Research Institute (SIPRI), which has considerable influence on NATO's policy.

The United State, NATO's biggest military provider, also cut its military expenditure by 1.2 percent to 711 billion U.S. dollars.

With fiscal reduction continuing, a further cut in military spending in Europe and the U.S. is expected, noted SIPRI.

In addition, analysts said that opposition from voters against reduction in welfare might cause some European governments to cut more defense spending to realize austerity goal.

Mixed negative impacts

As fiscal austerity is underway, the NATO summit participants and analysts are increasingly concerned about its negative impacts on the bloc.

On one hand, NATO's military capabilities would be weakened by European countries' constant defense spending reduction.

Since economy and security are interlinked, a weak economy suggested fewer resources for security, Rasmussen said Sunday in a doorstep statement, adding that how to provide security in a time of economic austerity would be a challenge NATO has to face in the future.

The budgets reduction in many European states could adversely affect military readiness, NATO Supreme Allied Commander for Europe James Stavridis cautioned.

The reduction of defense spending in some European countries would limit their defense and security purchase and affect NATO's whole allying system, Hung Q. Tran, Deputy Managing Director of Institute of International Finance, told Xinhua.

Debt crisis consumed a huge amount of time and energy on the part of European leaders, so they're always "preoccupied" at every European meeting on the debt crisis, Steven Pifer, a senior fellow at Brookings Institution, told Xinhua.

"It gives them less time and attention to think about some of challenges Europe, NATO and the United States face together," he added.

On the other hand, unbalanced defense spending among NATO countries might divide the alliance.

Due to severe debt problems, the gap between the United States and its European allies is steadily growing, with America accounting for about 75 percent of all NATO military spending, up from less than 50 percent before 2010.

Vast numbers of NATO member are not able to sustain benchmark of 2 percent of GDP allocated to defense needs, signaling the majority of NATO members will not be able to reach further defense transformation and modernization levels.

Experts estimated that the military budget and military capabilities gap between the United States and European members of NATO would increase to an unacceptable level.

Is "smart defense" effective?

To deal with the defense budget shortfall, NATO has introduced an ambitious "smart defense" initiative, urging for better spending and better investment for money available to help allies to preserve capabilities and to deliver new ones.

"Smart defense" encourages NATO members to share defense burden by multinational approaches and solutions to undertake the alliance's essential core tasks agreed at the Lisbon summit in 2010, including ballistic missile defense, intelligence, surveillance and reconnaissance, maintenance of readiness, training and force preparation, effective engagement and force protection, and so on.

The new strategy, recommended strongly by Rasmussen, was welcomed by many NATO countries. "The Chicago summit will be a first but essential step in implementing this 'smart defense' concept, with possible agreement between the allies on a series of concrete multinational projects," said the NATO in its website.

European allies need to continue investing in security, otherwise it will risk losing its relevance, asserted Rasmussen. " This is also about the role we want Europe to play in the world."

There is need for the NATO member nations to invest in new technology to support their goals in an era of budget constraints, U.S. President Obama said Sunday afternoon in his opening remarks at the summit. "We can work together and pool our resources. NATO is a force multiplier."

Debt crisis is one of the big drivers for 'smart defense', said Pifer, adding that NATO has to focus on more effective ways in using defense budget to produce more capabilities.

To avoid an alliance divided into first- and second-class armies, NATO plans to launch more than 20 joint projects to share costs of military hardware and promote a new mindset on weapons buying.

However, analysts hold that there are still many difficulties and great uncertainty in achieving "smart defense" goal, with Pifer questioning whether NATO could pool enough resources.

In addition, sharing defense means some NATO nations have to sacrifice a degree of sovereign control in return for a less lopsided military bloc, which may face resistance from opposition politicians and public.

Under the "smart defense" framework, European nations are required to bear more defense burden as the United States is shifting more defense tasks to them. But Europe's weaker economic growth can't afford it.

Since Europe has no enough money to invest in defense, European leaders should increase growth potential and lay the basis for new growth, said Tran.

"It's very important for Europe to get out of the crisis, and then the economic growth can contribute more to defense spending in the NATO," Tran added.