Delivered April 7, 2008

As we sit comfortably here in Washington today, young men and women in NATO forces across Afghan­istan are fighting, perhaps being injured or even dying. They are committed to a struggle that ensures the security we enjoy back home and the improve­ment of the average Afghan's life. Their success or fail­ure in this far-away place may also be part of a struggle for the future of the North Atlantic Treaty Organization alliance itself.

I want to deal with two topics today: the practical difficulties afflicting NATO and how we might deal with them, and the implications for NATO-and, by extension, the United States-of current develop­ments within the European Union.

It is entirely understandable that the U.S. would like to see European countries shoulder more of their defense burden. But there has been a mistaken assumption in some quarters that EU developments are necessarily benign from an American perspective. Indeed, we may be seeing signs of life in both of the forces that could prove most damaging to the Anglo- American Special Relationship. They are American isolationism and European integrationism.

European Defense Capabilities
Ten years ago, British Prime Minister Tony Blair and French President Jacques Chirac signed an agreement on defense at St. Malo, on board the HMS Birmingham. It got them the short-term headlines they wanted, but it opened a Pandora's box of issues regarding the future of EU defense integration and paved the way for further integration in the defense arena.

The advancement of defense integration in the Lisbon Treaty is a result of the green light given to integrationists by Tony Blair and Jacques Chirac at St. Malo. If one considers the amount of EU defense integration since St. Malo compared to prior to that point (when the very mention of EU defense was a taboo), one can clearly see that there is justification for concern.

Many Eurocrats like to boast that, because Europe is integrated so deeply in most other sec­tors, defense has now become one of the top areas of EU integration. EU member states have slowly been constructing institutions to build an EU defense identity by duplicating NATO institu­tions: planning cells, an EU military staff, and a European Defense Agency concerned with issues such as procurement. A European Security and Defense Identity became a European Security and Defense Policy (ESDP)-an arcane change in the nomenclature, you might think, but in the detail lay the mark of the EU integrationists turning away from NATO.

There are those who say that duplication of mil­itary effort doesn't matter because of the current lev­el of military overstretch. They are missing the point. To implement a flawed system because it doesn't immediately provide us with problems is building up trouble for the future. It is essential to deal with the contradictions now rather than hop­ing they will not come back to bite us later.

Some like to advance the argument that more and deeper EU integration in the area of defense will automatically lead to increased capability. This argu­ment is simply false and misleading. For example:

• None of the elements of integration have  expanded European military capabilities, led to increased military spending, or given the EU more "teeth" when it comes to executing policy decisions.
• Thirteen EU member states maintain militar­ies that are smaller than the London Metro­politan Police.
• Fifteen NATO members spend less than the suggested 2 percent of gross domestic product (GDP) on defense. Britain's own defense spend­ing is only 2.3 percent of GDP-the lowest since the 1930s.
• Even with the large American and Turkish con­tribution, NATO members collectively spend only 2.1 percent of GDP on defense.

Using the year 1998 (the year the St. Malo agree­ment was concluded) as a baseline, look what has happened to troop numbers across Europe.

• Germany's Armed Forces have shrunk from 333,000 in 1998 to 247,000 in 2007.
• France's Armed Forces have been reduced from 449,000 in 1998 to 354,000 in 2007.
• And the same is true for the Italian Armed Forces. Its size has been reduced from 402,000 in 1998 to 298,000 in 2007.[1]

Far from increasing military capability, European militaries have decreased in size, and military bud­gets have shrunk at a time when the global security situation has seen an increased demand for more U.N. and NATO peacekeeping or combat opera­tions in many of the world's trouble spots.

The Dangers of the Lisbon Treaty
Now, there are those in Europe calling for even more defense integration in the Lisbon Treaty. Many believe that the Lisbon Treaty is reshaping our Euro­pean defense and security policy by stealth away from NATO and toward the EU.

The controversy around the Lisbon Treaty should be viewed as a warning to the Americans and Canadians, as well as Atlanticists across Europe. There is little doubt that with all the election excite­ment in America, the credit crisis, immigration, and, of course, Iraq and Afghanistan, there is little interest or appetite in what is viewed by many Americans to be dull, confusing, and internal Euro­pean matters.

As a result, the Lisbon Treaty doesn't even show up on the radar.

For those of you who are not that familiar with it, the Lisbon Treaty is virtually the same document as the previous EU Constitutional Treaty that was reject­ed in referenda by voters in France and the Nether­lands and subsequently killed. Or so we thought!

European integrationists decided to resurrect the failed Constitutional Treaty by waiting a cou­ple of years and then calling it the Lisbon Treaty. Many analysts have noted that around 90 percent of the Constitutional Treaty can be found in the Lisbon Treaty.

The Chancellor of Germany, Angela Merkel, said about the Lisbon Treaty: "The substance of the Con­stitution is preserved. That is a fact."[2]

Even though all three major political parties in the United Kingdom promised a referendum on the Constitutional Treaty during the last general elec­tion, the Labour Government has now backed away and refused the referendum as promised.

I appreciate that many on this side of the Atlan­tic-both in the United States and Canada-are thinking to themselves, "So what? This sounds like a U.K. problem."In many ways you are right. But there are aspects of the Lisbon Treaty that will have profound implications on transatlantic security as we know it today.

This treaty proposes giving the EU a defense capability that will duplicate many of the functions of NATO. Worse, it will potentially compete with, rather than complement, NATO. Why does that matter? It matters because we believe that NATO, which has been the cornerstone of our defense for 60 years, should continue to have primacy.

I believe that the transatlantic bonds with the United States and Canada should not be weakened. It is the Americans and Canadians who are fighting alongside British troops on the front line in Afghan­istan while-with a few honorable exceptions, most notably the Dutch-it is not the majority of our EU partners.

So let me set out in more detail the aspects of the Lisbon Treaty I believe will undermine the NATO alliance and should be questioned by Amer­ican and Canadian decision makers on this side of the Atlantic.

Duplication. Under the Lisbon Treaty, there is duplication of NATO's Article V with the solidarity clause. In other words, the U.K. will have to give a security guarantee to every other EU country. That will be the political justification for creating EU defense structures that were never meant to be a role for the EU. Under the Treaty, there is no change to the duplication of NATO structures that already exist with the EU military staff, EU battlegroups, the ATHENA mechanism, and certain aspects of the European Defense Agency.

Right of First Refusal. There is no mention of NATO's right of first refusal for all military missions pertaining to European security.
NATO Primacy. There is no mention of NATO's primacy.

Discrimination. There is no change to the dis­criminatory attitude that the EU takes against non- European Union NATO member states, such as Norway and Turkey. That is especially true regard­ing the financing of EU military operations and Turkey's "administrative agreement" with the European Defense Agency, which has been contin­ually blocked by Cyprus-which is not a member of NATO.

Legitimacy. On more of a U.K. domestic level, but still worth mentioning here, there is also cause for concern regarding the democratic legitimacy of the EU under the Lisbon Treaty.

Supra-Nationalism. The newly created High Representative, better known as the EU's proto- foreign minister, will also serve as a vice-president in the EU Commission, the Head of the European Defense Agency, and have a right of initiative for proposing military operations.
This will bring supra-nationalism into EU defense planning for the first time. Foreign and defense policy in the EU will no longer be strictly intergovernmental.

An EU Pillar in NATO. Perhaps the least dis­cussed part of the Lisbon Treaty which could have the most damaging effect on NATO is the so-called Permanent Structured Cooperation provision.

Permanent Structured Cooperation will allow EU members to "opt-out" of any further defense integration and will create an "inner-core" of EU members interested in furthering military integra­tion. Furthermore, decisions on membership into Permanent Structured Cooperation are decided by Qualified Majority Voting. Consequently, Britain will not have a national veto.

Permanent Structured Cooperation is defense integration by stealth and will be anathema to improving NATO's military capabilities. Permanent Structured Cooperation will discourage small EU members, of which 19 are also members of NATO, from increasing their military capabilities by further shifting the burden onto the larger EU members such as the United Kingdom, France, and Germany.

Worryingly, while French integration into NATO's Integrated Command Structure is to be welcomed, there are those whose ambitions have a different destination.

Pierre Lellouche, French MP, former president of the NATO Parliamentary Assembly, and long-time commentator on defense issues, has made it clear that France will push the limits of Permanent Struc­tured Cooperation to the maximum and create a six-nation hard core of EU members who want to further EU defense integration, create a common procurement market for defense, and ultimately to establish an EU pillar in NATO. That is absolutely unacceptable.

A more Atlanticist France under President Nico­las Sarkozy would be a positive step forward and more French troops in Afghanistan will be warmly welcomed. But if the price is the establishment of sub-structures within the NATO structure we must ask ourselves questions about the potential cost.

A separate European pillar within NATO devel­oped and based on Permanent Structured Coopera­tion is extraordinarily dangerous to the future integrity of NATO as we now understand it.

Challenges for NATO
As it stands, NATO is encountering many prob­lems, especially in Afghanistan. It is time for Euro­pean countries to get their priorities right and focus on improving their military capabilities.

Since the close of the Cold War, there has been a lot of talk and debate as to what NATO's new role is. NATO's involvement in the Balkans gave it new life in the late 1990s, but its current role in Afghanistan since the U.S.-led invasion has been an awakening for many in the alliance.
Now we have a situation where NATO is chal­lenged with a different type of warfare in a theater of operations that is more than 3,200 miles (5,200 km) from its headquarters in Brussels.

As my colleague and leader of the Conservative Party, David Cameron, said in a speech on NATO at Chatham House last week, the mission NATO is currently conducting in Afghanistan would have been out of the realm of possibility 50 years ago. In fact, 10 years ago no one would have guessed this would have happened.

Consequently, NATO's mission in Afghanistan has created further debate on NATO's role in Euro­pean security and lately, of NATO's survival as a defense alliance. But why haven't these debates turned into actions?

To address some of the recent shortcomings of NATO we must get back to the basics. The first question is, "What is NATO for?"

During the Cold War, NATO's two primary roles- political and military-were easily defined and sepa­rable. During the Cold War, the military role of NATO was to provide continental defense against the War­saw Pact and the spread of Communism. There was a clear military objective on order: Defeat the Soviet Union on the battlefields of central Europe.

At the same time, NATO's political role provided Western democratic countries with a platform on which they could stand and confront the USSR and Communism in Europe. Here the objective was also clear: Prevent the spread of Communism into West­ern Europe.

The luxury of the bi-polar world during the Cold War allowed us to make clear and distinct dif­ferences between these two roles. However, times have changed. The post-Cold War world is a world where our economic and security interests are so interlinked into a larger global interdependent net­work that we have an unavoidable shared set of interests with a multitude of actors in all parts of the globe.

Consequently, we now have the unavoidable importation of strategic risk. It is under these terms that NATO's raison d'être is just as relevant now as it was during the Cold War. Leaders in NATO must demonstrate a degree of political clarity in resolving political issues that underline military operations in the face of determined threats.

However, this will not be enough. The agree­ment of political aims by the various members in NATO must be equally matched with military capability to follow through. Leaders in NATO must work together to identify future threats that are in all our security interests. Strong arguments can be made that Article V needs to be expanded to cover new 21st century threats such as energy secu­rity or cyber terrorism.

A Post-Cold War NATO
These threats are not going away. In fact, they are proliferating, and something will have to be done. For NATO to work properly as a security alli­ance in the post-Cold War world, NATO members must have:

• The willingness to take equal risks with regard to supplying troops and equipment within the alliance in support of NATO-led military opera­tions; and
• The willingness to financially fund and sustain these operations until the mission is completed.

Currently, there are certain members who are doing a disproportionate amount of the fighting, funding, and, consequently, the dying. This is sim­ply not sustainable in the longer term.

NATO members need to understand that mem­bership brings implicit and explicit responsibilities to ensure that their militaries have the capability to fight and win on the modern-day battlefield.

One of the areas that I believe needs to be addressed is the "fighting/funding gap" we cur­rently have in NATO. At the moment, those who do the fighting also do the funding. Put simply, the current mechanism of "costs lie where they fall" is not working, and the alliance needs to look at ways to create a common fund for all NATO-led military operations.

Last week, David Cameron set out why we should set up a real operational fund for expeditionary mis­sions with every member nation being required to contribute. It would allow some reimbursement for those carrying a disproportionate cost and offer potential funding to those who might deploy forces but face short-term financial difficulties. Why should the few carry the many? Common security implies common commitment. It is quite wrong for every­one in the street to get the same insurance policy when only a few pay the premiums.

Many member states are willing to fight but can­not fund the cost of deploying and supporting com­bat troops in long distance theaters of operation such as Afghanistan.

On a recent trip to Ankara, I found strong sup­port for the creation of a common fund in order to pay for NATO military operations.

During a meeting with the Turkish Defense Min­ister, I was told of how Turkey offered to provide helicopters for the International Security Assistance Force if someone else would pay the $2.5 million to transport them into theatre, but no one was willing to pay. Finally, months later, Luxembourg paid.

Furthermore, the Turkish Defense Minister said that there was "no doubt" Turkey could help out much more in Afghanistan if given help on fund­ing-and this, from one of our most valued NATO allies. This problem will not go away, and the more NATO undertakes robust military operations in out-of-area theatres like Afghanistan, the more the ques­tion of funding will create divisions in the alliance.

The formula by which common funding will operate should be based on a fair and frank assess­ment of the ability of each member state to pay and the ability of each member state to fight. This should have been addressed at Bucharest, but it wasn't.

Conclusion
What policymakers on both sides of the Atlantic have to understand is that the NATO alliance is based on a give-take relationship. Europeans and North Americans may have competing security needs and visions of NATO's role in the 21st century, but this shouldn't be the beginning of the end for the alliance.

As a result of a resurgence of Russian national­ism, many in Europe view NATO's main role as still providing continental security. To them, what NATO's mission should be has changed little since the Cold War.

Conversely, on this side of the Atlantic, especially in the United States, NATO is now viewed as an alli­ance for expeditionary warfare-just one of several multilateral tools the U.S. has at its disposal in the fight against terrorism.

Paradoxically, far from being diverging interests, both views can be, and have to be, reconciled. Oth­erwise, America's view of NATO will make it irrele­vant to many in Europe, and Europe's view of NATO will leave the Americans looking elsewhere for secu­rity alliances.

The members of NATO still have the same shared values we had in the Cold War, but there are now diverging views in the assessment of what con­stitutes an external threat and how the alliance should respond.

NATO's future depends on the support of its members. It must be very clear on both sides of the Atlantic that NATO must maintain its primacy in European defense and must have the right of first refusal over the ESDP for all military operations involving European countries.

I believe that any EU military capability must supplement-and not supplant-NATO. The ESDP must be one of many delivery tools of NATO policy and objectives. If the requirement for the mission at hand calls for a civilian capability, the ESDP will deliver for NATO-not the other way round.

With the current struggle in Afghanistan, the tin­derbox that is the Balkans, the threat of global ter­rorism, problems with energy security, and a resurgent Russia, the stakes are too high. Americans must realize that NATO has to maintain its primacy in European security, and that any advancement of EU military capabilities must be done wholly inte­grated, not as a pillar, into the current framework of NATO-in support of NATO's aims and objectives.

In order to successfully face the threats of the 21st century, this is the only way forward.

Dr. Liam Fox, MP, is the UK Shadow Secretary of State for Defense. These remarks were delivered at The Heritage Foundation on April 7, 2008.