KIM R. HOLMES: I am Kim Holmes, Vice President of the Heritage Foundation and Director of the Kathryn and Shelby Cullom Davis Institute for International Studies at Heritage. It's a pleasure to have all of you here this afternoon.

One of the emerging key issues in the NATO alliance over the past few weeks has been the issue of ballistic missile defense. The argument is made, not only in Europe but also in the United States, that one of the chief obstacles to the deployment of missile defense is that the European allies either won't go along with it or will do so only reluctantly. Missile defense supposedly will create instability both in the alliance and in the strategic relationship between Russia and the United States.

A week and a half ago, however, at a defense conference in Munich, Germany, it looked as if a different picture was emerging. Even though some concern was expressed about national missile defense, there was a growing and clear consensus among the NATO defense ministers that the United States will proceed with the deployment of ballistic missile defense that will protect both the United States and its allies. It's not a question of whether this will proceed, but when and how.

One of the clearest and most intelligent voices in Europe on missile defense is our special guest today, Iain Duncan Smith, who is the Shadow Secretary of State for Defense in the United Kingdom. In a book due out in a few weeks, he will explore in some detail his views on ballistic missile defense and the implications for the United Kingdom and for NATO and relationships with the United States.

Iain Duncan Smith joined the shadow cabinet in 1997 after five years in the Parliament, which started with his opposition to the Maastricht Treaty. He was Shadow Secretary of State for Social Security, where he played a crucial role in dealing with the Conservative Party's policies on pensions and also about protecting married families and their children.

He has been an effective and high-profile critic of the Labor government's defense policies and their efforts to cut the British armed forces. And he has been an outspoken and intelligent critic of the Blair government's position on ballistic missile defense.

We are indeed honored to have Mr. Smith with us today. Please welcome him to the Heritage Foundation.

IAIN DUNCAN SMITH: What I'd like to do today is to lay down the grounds for what I consider to be the rationale for the nations of Europe to look seriously at ballistic missile defense and one of the major reasons why, for the moment, some of them are reluctant to do so.

From 1946 until 1989, a clear, even static threat, easily defined in both political and military terms, shaped all of our thinking in the NATO alliance. The need to defend against the threat was paramount, and the terms of our political debate were set by this for some 43 years. So Western Europe, if you look back, really has come a long way in the past few years since the end of the Cold War. Together with the United States and Canada, under the umbrella of NATO, we have faced down a very severe threat from the Soviet Union. And under NATO's protective shield, we have managed to establish democratic and stable nations, which arguably are less likely now to go to war with each other than at any other time in their history.

It is not surprising that, conditioned by this battle-free war, the West let out a collective sigh of relief when the Berlin Wall came down. Peoples, it was assumed (I thought rather loosely at the time), freed from the oppressive yoke of the Cold War, would become benign and peaceful--even grateful, it could be said. It was, many believed, no longer likely that the European nations would be troubled by the specter of war again.

But in the intervening years, even though this belief was challenged more and more from the Gulf to the Balkans, politicians were reluctant, I felt, to sit down and focus on the development of this post-Soviet threat. It seemed often, when you looked to them, they were far too busy cashing in on the peace dividend and did not want to be bothered by something as inconvenient as a threat assessment.

The Emerging Threat
So perhaps today I could start with what I think we should have dealt with a long time ago but somehow didn't: the emerging threat. History teaches us that threats to world stability are geographically diffused and can emerge far quicker than anticipated. The proliferation of ballistic missiles and the weapons of mass destruction with which they are armed is the most daunting threat, I believe, of modern times. It appears that between 35 to 40 countries now have some missile capability, and according to a report from Britain's own Lancaster University, up to 18 have nuclear, chemical, or biological warheads with which to arm them.

Recent developments confirm these previous estimates and, in fact, may even be underestimates. North Korea and Iran are among the countries currently seeking to develop long-range ballistic missiles and weapons of mass destruction; others have followed them. The ex-head of UNSCOM, Richard Butler, makes it clear that despite the sanctions regime, Saddam Hussein has developed biological and nuclear agents. Furthermore, his effort to develop missiles has progressed at a great pace as well.

So over the past year, a number of countries have successfully tested missiles. For example,

• Iran test-fired its first solid-liquid-fuel missile. The Shahab-3D has a range of close on 900 miles, which is a quantum leap in capability.

• Syria has also successfully tested the first North Korean ground-to-ground Scud missile with a maximum range of about 600 kilometers, and like the earlier models, it's worth saying that the Scud-D is capable of being armed with chemical and biological warheads, as are currently being manufactured in that region and also in Syria.

• Libya has taken delivery of a consignment of North Korean ballistic missiles capable of hitting targets in Israel and NATO states in Southern Europe as well.

• Syria's recent flight tests of the new Chinese Dong Feng-31 road-mobile intercontinental ballistic missile with a range of 8,000 to 10,000 kilometers has shown that that capability and that program are being speeded up.

The grim facts of the proliferation of missiles and weapons of mass destruction were soberly set out, as you all know, in the Rumsfeld Commission report, but also most recently in the U.S. Defense Department report published at the beginning of January and entitled Proliferation: Threat and Response. It said: "At least 25 countries now possess--or are in the process of acquiring and developing--capabilities to inflict mass casualties and destruction: nuclear, biological and chemical (NBC) weapons or the means to deliver them."

The Impact on Opinion: U.S. vs. Europe
These reports have clearly had a significant impact on attitudes here in the U.S., particularly in Washington. But surprisingly, they've had little impact on opinion in Europe. About one and a half years ago, I spoke here in Washington and called for Europe to take this threat seriously, but I'm sad to say that far too many European leaders are still resisting any calls for cooperation with the United States to even engage in countering this threat. Such weapons capability is in itself a cause of great concern. Yet when one considers to what degree that capability is linked to areas of great political instability and tension, one can see how quickly these threats could develop.

These weapons are weapons, frankly, as much of terror as of war-fighting. The possession of this capability would change, I believe, the whole approach of the West in handling threats both to themselves and, perhaps in the interim at least, to their interests. Some argue that our massive nuclear deterrents would be sufficient defense. (It's ironic actually, that these are often the same people who opposed our possession of that deterrence back in the 1960s, 1970s, and 1980s.) Not even a Saddam Hussein, they point out, would risk such overwhelming retaliation.

Yet just imagine that that threat from, let's say, Saddam Hussein has been made. The country threatened, perhaps in the same region, may not be much reassured, for they will realize they will have to suffer the consequences perhaps of an initial strike. They may then also question whether the U.K. particularly, or the USA, would retaliate in overwhelming force if their homeland is not targeted.

Furthermore, what if the threat was a chemical threat or a biological one, but not a nuclear one? Are we certain that we would strike back with a massive nuclear warhead? It's that sort of marginal judgment which makes the threat alone so destabilizing to our allies and friends.

Perhaps I could illustrate this by asking you to imagine what would have happened had Slobodan Milosevic possessed such a weapon, or at least had we believed that there was the high probability that he possessed such a weapon. Who would then have laid money on the alliance holding together had, let's say, Athens or Rome been targeted or threatened to be targeted? And would we have engaged with Iraq and Saddam Hussein if he had had this capability and threatened, or been able to threaten, his neighbors at the time of the Gulf War?

This is not too farfetched. Remember, Yugoslavia had a well-developed nuclear program under Tito, and Serbia still possesses up to 48 kilograms of enriched uranium. Furthermore, links between North Korea, Iraq, and Serbia were developing rapidly at about the time of the conflict in Kosovo and certainly after, and one of the things that the Iraqis were clearly after was this enriched uranium. So there were possibilities of deals even then.

The Lessons of History
History teaches us that those who are not prepared to change in response to new threats will soon find themselves overwhelmed, and although there are often dangers in overusing historical analysis, I nonetheless think it's quite relevant here. For example, in the 1930s, the British government persuaded itself through an official policy that it would have up to 10 years to be able to foresee and have warning of emerging threats to both its interests and its homeland. That would enable them, they believed, to be able to wind down their forces and have time to build them up in advance of such a threat developing.

I think many of you here will remember that the events of 1939-1940 demonstrate altogether too clearly how such complacency almost ended in our defeat. It's also worth remembering that it was Stanley Baldwin in the mid-1930s who said the bomber will always get through. Had we followed exactly that policy, the sight of Spitfires and Hurricanes defending during the Battle of Britain would not have been a picture that we hold so vividly today because there would have been none. The bombers certainly would have got through, only I think they would have been getting through in advance of soldiers on the ground as well.

History teaches us that very simple lesson. And given the nature of this growing threat that we, I believe, need to understand, it is surely an ideal opportunity to remodel the NATO alliance to better counter these threats rather than create new and duplicating structures.

I want to return to the reasons why the U.K. and others need to come onto ballistic missile defense and work in support of the USA--not just for the USA's benefit, but for ours. But I want also to dwell briefly on one of the reasons I think there is a problem with the response from Europe.

Recognizing and Understanding the Threat
I believe it is absolutely vital that the nations of Europe recognize the threat and admit that the threat exists. Then, having admitted and accepted and understood the threat, they should join with the United States in development of the relevant defenses. That is a logical sequence. In short, to create a NATO-based program for the alternative is to hope that the problem will go away, and sadly, we all know where that sort of complacency leads. The word "appeasement" springs to mind, and history tells me it's not unfair to see it there.

Yet, confronted by these threats, the past few years show that Europe, it appears, is not prepared to face this problem. Across the European Union as a whole, military spending is down by some 20 percent compared to the mid-1990s. Germany, for example, has cut its budget by some £7.5 billion since 1995--a reduction, I understand, of about 30 percent. They're not alone; it has happened all over Europe. It has even happened within the U.K. budget and, to some degree obviously, also here in the USA. The question is: How long does this go on, and when do we start to ask questions about that sort of reduction?

"Ah," I anticipate one or two of you may want to say, "but isn't the European security and defense policy (or as I prefer to call it, the Euro-army) the way to deal with this to create more capability?" Regrettably, as I intend to show briefly, this will become part of the problem, not part of the solution.

You see, there is a risk that competing priorities may come into play if this process continues. Every European member of NATO will have only one set of forces and one defense budget, not one force and one budget for NATO and another force and another budget for the EU. If European nations, through the EU, are seen as having autonomous and competing institutions rather than integrated, transparent, and complementary ones, then NATO's collective security is bound to suffer, and that will leave both North America and Europe relying on uncoordinated, inefficient, and ad hoc responses to the sort of destabilizing threats that we see emerging under the umbrella of the ballistic missile.

There's also the risk that the dual planning institutions now being set up will create new bureaucracies. Sir John Weston, Britain's former ambassador to NATO, described the new structure in this defense program for Europe as being excruciatingly bureaucratic. But then again, isn't everything that it does over there always excruciatingly bureaucratic?

Potential Fragmentation of the NATO Alliance
Nor is this by any means an inclusive process. I've just been talking about meeting the threat collectively, and yet this process of European defense excludes a large number of NATO European members: Turkey, Norway, Poland, Hungary, the Czech Republic, and even Denmark are outside. So you could argue that they are being discriminated against, and this risks a division that could lead to fragmentation and a loss of cohesion in the alliance.

But above all, this new European force does not extend Western Europe's collective defense capability one iota. It doesn't provide for a single new soldier, a single new bullet. All it does is transfer the chain of command from national capitals to the EU and armed forces from NATO to the EU. All of this is restated in the Nice Treaty.

This comes back to the point that I was making at the beginning. We are faced by a threat. When faced by a threat and you agree that you're faced by a threat, you then want to do something about it. General Sir Charles Guthrie, the retiring U.K. Chief of the Defense Staff, was asked a few days ago whether he thought an EU rapid reaction force could ever be an effective fighting force. He replied: "Not within my lifetime, quite honestly." So it does seem to me strange that so much effort is being vested in this.

For those that may think that this scaremongering is all untrue, the Nice summit makes it absolutely clear. There are four main points that are set out there in black and white: The EU military forces are independent and autonomous from NATO; the planning for many operations can and will be done outside of NATO; it is the EU that will make the decision whether to conduct an operation and only then might consult NATO; and the EU will retain full political and strategic control throughout any operation whether NATO is involved or not.

We've already heard the language of some who see this as a process of setting up some sort of counterbalance to the USA. You already know that these words have been used in the past by both the minister for Europe and also President Chirac in France; but also, Germany's defense minister, Rudolf Scharping, recently described this defense policy as an important step in a new field of European integration.

So the importance of this project for the political leaders of the EU cannot be overestimated. The reason for my raising it today is to illustrate to you one of the hurdles that has to be overcome if we are to bring NATO back together to face this overwhelming threat as I described earlier on.

A New Approach
There is, it appears now that the new Administration has arrived over here in Washington, a new sort of approach. As Mr. Javier Solana, the former Secretary General of NATO and current head of the EU's Common Foreign and Security Policy, said, the United States has a right to deploy missile defense, and the ABM Treaty is not a bible and could, therefore, be changed.

But whatever happened to those European concerns that the U.S. deployment of BMD would be wrong? Are they now converts, or are we seeing something else happening? My answer to that lies in what has already been floated, it appears, in Europe, what I consider to be a potential and dangerous tradeoff with which you should have no part. It is a grand strategy whereby the Europeans would agree to no longer complain about the U.S. plans for ballistic missile defense, but in return the United States should no longer raise concerns over the European army.

I must tell you today that that sort of trade-off is both cynical and destructive, for if one analyzes what is proposed, one quickly realizes that it is the worst of all solutions. We would be left with a Euro defense project separate from NATO, dividing the alliance and weakening its political as well as military resolve. At the same time, the USA could go ahead and would go ahead and deploy a defense system perhaps solely for itself without any involvement of the European nations, its NATO allies, and in turn rendering them more vulnerable than they might have been otherwise, and to cover this sort of vulnerability in Europe, different policy objectives would then start to be pursued and would emerge rapidly. They would be separate to and divergent from the USA.

A strand of this can already be seen in some of the rhetoric being used: for example, the French foreign minister's comment that the USA is a hyperpower that needs to be counterbalanced. The German defense minister recently said as much when he noted: "As the European Union develops its security and defense policy and becomes an independent actor, we must determine our security policy with Russia, our biggest neighbor."

Progressively, European Union members of NATO will be under pressure to arrive at a common position with the EU prior to NATO meetings, a form of caucusing. This would develop into a dangerous America versus Europe confrontation, rendering NATO impotent. That, as I said earlier on, in the face of a threat not just to the United States but to those very same nations of Europe whose pursuit of a policy separate to that from the U.S. would make matters completely worse even if, at the same time, the U.S. itself is pursuing a policy to protect itself from that threat.

But there's another way, and it's not too late to pursue it. It's not too late for leadership to come in this matter, I hope, from the present Administration here.

The Test for NATO: Ballistic Missile Defense
The test for NATO in the 21st century is the way in which the alliance responds to the proliferation of the weapons of mass destruction and the means to deliver them. The issue has the ability to unite NATO or to divide it. The first requirement is that the growing threat from these rogue nations armed with weapons of mass destruction needs to be recognized.

Here in the United States, you have already made the decision to develop and deploy some form of ballistic missile defense to deal with this threat. With the evidence now available to us all, it seems implausible that similar conclusions cannot be reached in the capitals of Europe as well. I think it would be dishonest, even reckless, for the political leaders of Europe to do otherwise. In U.K. criminal law, recklessness implies consciously knowing of risk and ignoring that risk. Yet such recklessness at present appears to be the chosen course, so properly accounting for the risks points to a U.S.-led system of global missile defense to which America's allies might contribute.

• First, it would provide protection, in our case specifically, for the U.K. civilian population from the growing dangers posed by missile proliferation, thereby providing insurance against the failure of our nuclear and conventional deterrents.

• Two, it would provide protection for U.K. expeditionary forces in a much-changed security landscape, thus strengthening the war-fighting and deterrence capabilities of our conventional forces.

• Three, it would provide similar assurance to our American ally. If Europeans wish the U.S. to be committed to international engagement, then it's in Europe's interest for America to feel secure as well. But it is important--and I stress this over here in the USA--that this must be accomplished in a way that doesn't at the same time make Europeans feel less secure.

• Four, such a system provides the most promising element in a new approach to arms control. The potential of BMD in this regard has been almost entirely overlooked in a U.K. debate which has often been parochial and poorly informed. Ballistic missile defense has a major contribution, yet a still largely unrecognized contribution, to make to international stability, for the developments that threaten U.S. security also threaten U.K. security and, thus, also European security. And that threat is emerging more rapidly for us over in Europe, I believe, even than perhaps here for you in America.

So it is for us to examine if and how a BMD system can enhance our security. It is dangerous and irresponsible in the extreme to go on ignoring this opportunity to help shape and influence a debate and, ultimately, a program on which British lives and interests, I believe, may come to depend. It is here, really, that I have some comments from my own country.

Traditionally, the United Kingdom would have acted here as the bridge to cover that current gap in opinions on each side of the alliance. I don't believe I'm alone here in calling for an engagement. There are other politicians outside--they're in Europe as well--doing the same. The other day, William Hague said so, and I gather also there are politicians in Italy now talking about such an engagement. But the debate must begin, and I believe it is my country's responsibility to lead that debate from the perspective of Europe.

Stepping Up to the Mark
Sadly, I believe, as was our traditional role, as was back in the 1980s over cruise and Pershing missiles, we don't seem quite to be stepping up to that mark, possibly because of the support for the Euro-army. The present government's equivocal stance on this subject maybe has seen us abrogate this role for the present, but I think we need to pick up the mantle again and give that leadership. In short, the EU members have not just embarked on a defense policy which will undermine the alliance, but are failing now, I think, to engage and work with our American allies in endeavoring to respond to the very real and growing threats.

In conclusion, faced by this developing threat, it should be in the interests of European nations to work with the USA to create a NATO-based defense. The basis of such a program would be accepting the need for ballistic missile defense in the first instance. We must not allow any form of Euro-defense or any other idea to divide the Europeans from the Americans in this process. With such a clear threat emerging, one would assume that this Euro-defense project would be driven by an analysis, first of all, of that threat. Yet when I read all the treaties that have been signed, from St. Malo to Nice, I cannot help asking myself: If this is the answer, what was the question?

Some, it appears, obsessed by this European political structure, have spoken of their ambitions for Europe as a superpower; others, as a superstate. Both ignore the pressing need for ballistic missile defense in the pursuit of this obsession. However, future generations will have harsh words for those whose grand designs of European integration become a substitute for defense of their peoples. They would, of course, have good reason. But by then, it may be too late.

Iain Duncan Smith is the Shadow Secretary of State for Defense in the United Kingdom.