This chapter places U.S. responsibility sharing policy in strategic perspective, and describes U.S. security objectives, mutual security arrangements, and forward presence in the three regions most important to vital U.S. security interests: Europe, East Asia-Pacific, and Southwest Asia. The overview of Alliance and country contributions presented in this chapter is given further elaboration in Chapter III.





A fundamental objective of U.S. strategy is to maintain NATO as the preeminent organization for ensuring transatlantic security and the anchor of American engagement in Europe. Over the past decade, the threat of direct invasion of NATO territory has decreased significantly, while other types of threats (including regional conflicts on the periphery of NATO, proliferation of nuclear, biological and chemical weapons, and terrorist attack) have increased significantly. The Alliance is now pursuing numerous initiatives that will permit it to function more effectively as it moves into the 21st century.

Specifically, at the Washington Summit in April 1999, NATO’s 19 heads of state and government adopted a new Strategic Concept intended to adapt and prepare the Alliance for current and future challenges. The Strategic Concept envisages a larger, more capable and more flexible Alliance. It reaffirms NATO’s core function of collective defense, even as it expresses the Alliance’s willingness to respond to crises that arise from regional or ethnic conflicts. In an effort to better prepare NATO internally to meet these challenges, the Strategic Concept provides guidance to NATO military authorities and tasks them to develop, through the Defense Capabilities Initiative (see below), the military capabilities necessary to carry out new missions and improve interoperability among NATO forces. The Strategic Concept also recognizes the importance of the European Security and Defense Identity (ESDI) as an essential element of Alliance adaptation that would foster a more effective European contribution to regional security.

The Defense Capabilities Initiative (DCI)

The United States introduced the concept of focused improvement of defense capabilities at the June 1998 NATO Defense Ministerial in Brussels. Calling attention to lessons learned from NATO's experience in Bosnia, the United States suggested that future conflicts in Europe would place a premium on the ability to deploy troops and equipment to a crisis rapidly, often outside NATO territory, with little or no preexisting support. We also emphasized that, in the face of NATO's conventional superiority, hostile states are looking to nuclear, biological and chemical (NBC) weapons and increasingly long-range and accurate ballistic and cruise missiles to offset that superiority. NATO, therefore, needed to develop and field the capabilities, doctrine, and plans to deal effectively with these current and emerging threats. As described in greater detail in the Report to the Congress on NATO’s Defense Capabilities Initiative submitted in January 2001, this concept – which was validated soon thereafter by NATO's experience during Operation Allied Force (the 1999 Kosovo air campaign) – became the foundation for the decision by NATO Heads of State and Government, at the Washington Summit, to launch the DCI.

Specifically, the Allies endorsed "decision sheets" in five functional areas: deployability and mobility; sustainability and logistics; consultation, command and control (C3); effective engagement; and survivability of forces and infrastructure. These decision sheets include 58 short- and long-term objectives. In addition, in line with an earlier U.S. suggestion, the Allies established a High Level Steering Group (HLSG) to oversee implementation of the DCI and to coordinate, prioritize and harmonize the work of NATO’s defense-related committees.

During the past year, the United States continued to exercise a leadership role in urging our Allies to achieve a real increase in their capabilities. Our goal is not to develop similar capabilities for every NATO member, since not every member needs or can afford the newest or best fighter aircraft, long-range tanker aircraft or surveillance systems. Rather, our goal is to provide NATO forces with compatible and complementary capabilities that meet our collective requirements.

Mixed Results Thus Far

The Alliance has made modest progress in some DCI areas, albeit with an uneven level of effort by its 19 members. For example, Allies such as the Netherlands, Norway, Denmark, Belgium and Portugal have made concerted efforts to increase their day/night, all-weather capabilities by starting aircraft upgrades. The major European allies are set to acquire advanced fighters, long range cruise missiles, medium lift transport aircraft, and attack and transport helicopters, but most of these systems will not become available in sufficient numbers until the latter part of the decade. These efforts could be complemented, in the future, by the continuation of recent, promising trends toward greater emphasis on cooperative programs, to include possible joint procurements of capabilities. Such efforts are reflected, for example, in the seven-nation European Air Group work to set up a common management mechanism for military aerial transport and the use of civilian assets that might be used for military contingencies. They are reflected, as well, in the Dutch-led initiative, involving five other European allies, to explore the collective procurement of precision-guided munitions. Joint procurement holds out the very real potential for cost savings and interoperability improvements when Allies pool scarce resources.

Nevertheless, in many other respects, progress toward DCI objectives has been disappointingly slow. The Alliance will continue to suffer from a substantial shortage in strategic and oversized cargo airlift capability beyond its current planning period, notwithstanding the United Kingdom's decision in 2000 to lease four C-17 aircraft from the United States. While seven European allies have announced their intention to develop and procure a new cargo aircraft, the A400M, their level of financial commitment to the multi-billion dollar project is not clear, and current estimates are that the aircraft will not begin to be fielded before 2008. Similarly, the Alliance’s need for improved, secure, and deployable C3 capabilities remains unmet, and serious deficiencies remain in the area of NBC defense.

Key Role of Resources

The success of the DCI continues to depend, to a large extent, upon the provision of sufficient resources. Without making the necessary investments to field a 21st Century force, the Alliance and its member nations will not meet the DCI goals. Defense budgets will always be a function of national priorities, but they also must be a function of both international challenges and the capabilities needed to address those challenges as an Alliance. In too many cases, unresponsive defense budgets pose a risk of stagnating or, even worse, eroding Alliance capabilities. Ten of 17 Allies increased defense spending over the past year, but for the most part these increases were relatively modest – notwithstanding the fact that the gross domestic product of every Ally except Turkey increased between 1998 and 2000. European defense outlays currently are projected to remain fairly constant over the next few years. Even where some budgetary increases are projected, weapons procurement funds will continue to be squeezed by domestic political constraints, current operations and maintenance expenses, and rising personnel costs associated with the trends toward increasing professionalization of European militaries.

These trends will have to be improved if the Alliance is to remain healthy, both politically and militarily. The DCI, to its credit, has shone a spotlight on Alliance capability shortfalls, and has helped its members chart a course toward their remediation. Allies have begun the demanding journey to turn their DCI rhetoric into deeds, but continued pressure – from the United States and, even more importantly, from within their respective governments and political constituencies – will be necessary for years to come.

European Security and Defense Identity (ESDI)

The 1994 NATO Summit in Brussels established a European Security and Defense Identity (ESDI) to "strengthen the European Pillar of the Alliance while reinforcing the trans-atlantic link and enable the European allies to take greater responsibility for their common security and defense." In 1996, NATO ministers pledged that ESDI will be "grounded on sound military principles ... and permit the creation of militarily coherent and effective forces," and tasked NATO to identify assets and capabilities available for operations led by the Western European Union.

Prior to the 1997 European Union (EU) Treaty of Amsterdam, which called for the establishment of a European Security and Defense Policy (ESDP), the EU dealt with economic, monetary and social issues. The EU has also agreed upon a Common Foreign and Security Policy, which it presented through international organizations. In 1998, U.K. Prime Minister Blair decided that the United Kingdom could now support the introduction of a defense dimension into the EU. Heretofore, the United Kingdom had focused on the Western European Union (WEU) as the locus of European defense cooperation because of the WEU’s institutional ties to NATO. The United Kingdom and France agreed, at their December 1998 St. Malo Summit, that the EU "must have the capacity for autonomous action, backed up by credible military forces" and the capability "to take decisions and approve military action where the Alliance as a whole is not engaged." This progress on the EU’s ESDP influenced decisions taken at NATO’s April 1999 Washington Summit, where leaders agreed to work with the EU and reinforce NATO’s ESDI with four specific steps (called "Berlin Plus"):

   (1) Assured EU access to NATO operational planning. Such access would prevent creation of an EU counterpart to Supreme Headquarters Allied Powers Europe (SHAPE) and ensure that EU operations are conducted in accordance with NATO doctrine.

   (2) Presumption of availability to the EU of pre-identified NATO capabilities and common assets. For larger operations, the EU will need NATO assets, such as the command structure. The modalities for providing such assets need to be worked out, including a framework agreement for the release, monitoring, recall, and financial liability of such assets. The contribution of any national assets (e.g., U.S. C-17’s) to an EU operation would remain a national decision.

   (3) Further develop DSACEUR’s role. NATO and the EU will draw from the same pool of forces. There will not be any separate "EU army." Thus, it is essential that a single individual – the Deputy Supreme Allied Commander Europe (DSACEUR) – be responsible for activities like force generation for NATO and EU operations. He would be "dual-hatted," serving as the operational commander of an EU-led operation and retaining his NATO "hat" as ESDI strategic coordinator.

   (4) Adaptation of NATO’s defense planning system to incorporate the availability of forces for EU-led operations. A common, coherent, transparent defense planning process would achieve the vital goals of eliminating competing priorities and preventing unnecessary duplication.

The EU’s December 1999 Helsinki Summit established an EU Headline Goal to develop the capability, by 2003, to deploy a force of up to 60,000 troops within 60 days and sustain that deployment for at least one year. The November 2000 EU Capabilities Commitment Conference resulted in pledges by EU members toward meeting the Headline Goal. Several non-EU states, like Turkey and Poland, also offered some of their forces. The Conference identified capability shortfalls, such as strategic lift, aerial refueling, suppression of enemy air defense, and theater ballistic missile defense, that are consistent with NATO’s Defense Capabilities Initiative. However, the Conference neither set realistic milestones for rectifying identified shortfalls nor identified additional funding sources.

The December 2000 NATO ministerials and EU Nice Summit saw limited progress on resolving differences between NATO and the EU. The United States is engaged in a variety of efforts to develop a cooperative, coherent, and transparent relationship between NATO and the EU. This goal, which is widely shared by NATO and EU members alike, should avoid unnecessary and costly duplication of the military assets and capabilities required by both organizations. The right kind of links will serve the mutual interests of all NATO and EU members, since they will ensure that decisions about future military operations will meet the security objectives of both organizations without infringing on their respective, independent decision-making prerogatives. In the end, the improved European military capabilities that Allies seek to achieve in NATO through the DCI and ESDI, and which EU members seek to reinforce through ESDP, will strengthen the Alliance as a whole and the European pillar of transatlantic security in particular.

Cost Sharing in the Alliance

The NATO Alliance has evolved unique ways and means of cooperation over the past fifty years. Thus, although most NATO allies do not offset the same percentage of U.S. stationing costs as do Japan and the Republic of Korea, they contribute significantly more toward sharing the military roles, as well as the overall political and economic costs, of protecting shared interests.

Under long-standing cost sharing agreements, our NATO allies collectively pay three-quarters of the NATO common-funded budgets, which totaled $1.1 billion in 2000. The United States’ one-quarter share of the NATO common-funded budgets (in which all 19 members participate) provides significant leverage in Alliance decision-making, and access to facilities and programs that the United States would otherwise not be able to use without a much greater national investment. Common budgets are also a cost-efficient means of dealing with large expenditures which, if funded unilaterally, would create a heavy burden for any one nation. Within NATO, Allies consult on the goals and priorities for their national defense programs, and engage in a regular process of candid peer review with the aim of increasing effectiveness, improving burdensharing, and anticipating future challenges to the Alliance.

Forward Presence: Essential for U.S. Power Projection and Alliance Leadership

The successful defense of U.S. security interests in Europe depends fundamentally on an effective American leadership role within NATO. The presence of significant numbers of U.S. forces in Europe underpins the U.S. commitment to transatlantic security and the military effectiveness of the Alliance. Forward basing strengthens peace and stability within the region and provides a platform for the projection of power and influence well beyond Europe that is more immediate, credible, and cost-effective than basing in the continental United States.

Contributions of Selected NATO Allies

The remainder of this section describes notable responsibility sharing contributions by the United Kingdom, France, Germany, and Italy. These nations collectively host over 90 percent of the U.S. military personnel stationed in Europe, and account for nearly three-fourths of the defense spending of all our European-NATO allies.

Note: the following paragraphs do not specifically address Allies’ performance in the core DCI objectives. See Part IV, Actions Taken By Each Member of the Alliance Other Than the United States to Improve the Capabilities of its Forces in Certain Areas, of the classified section of the Report to the Congress on NATO Defense Capabilities Initiative (January 2001), required by section 1039 of the National Defense Authorization Act for Fiscal Year 2000.

United Kingdom

The United Kingdom remains one of our closest and most important allies, working in concert with the United States across a broad range of political and military issues both within NATO and bilaterally. As a nuclear state with significant power projection capabilities, the United Kingdom brings not just a regional, but also a global orientation to our security relationship, with approximately 25,000 troops stationed abroad.

The British defense budget declined slightly in real terms between 1999 and 2000, but defense spending relative to GDP (2.4 percent in 2000) remains among the highest in NATO. The United Kingdom provides substantial host nation support for U.S. forces, almost entirely in the form of indirect contributions. British forces form the backbone of the Allied Command Europe (ACE) Rapid Reaction Corps (ARRC), and play a significant role both in NATO military missions and in peacekeeping operations under the auspices of the United Nations. The United Kingdom provides the second largest share of total allied naval tonnage, after the United States, and the third largest share of total allied tactical combat aircraft, trailing only the United States and France. The United Kingdom continues to implement structural and doctrinal changes called for in the 1998 Strategic Defense Review, creating a more deployable, sustainable, and flexible force.

The United Kingdom has almost 6,600 personnel supporting operations in the Balkans, including aircrews in Italy and personnel afloat in the Adriatic. It contributes about 3,400 troops to KFOR, and is the lead nation in the Multinational Brigade Center (MNB-C) sector of Kosovo. Another 1,100 troops serve with NATO’s Stabilization Force (SFOR) in Bosnia. Additionally, British forces participate in coalition operations in Southwest Asia, including the enforcement of no-fly zones over Iraq, and serve in UN peace operations in Bosnia, Cyprus, on the Iraq-Kuwait border, Georgia, Sierra Leone, Kosovo, the Democratic Republic of the Congo, and East Timor. The United Kingdom also assists in enforcing the UN Security Council maritime sanctions against Iraq.

The United Kingdom also played the leading role in rescuing UNAMSIL – the UN peacekeeping mission in Sierra Leone – after Revolutionary United Front (RUF) insurgents violated the Lome peace accord and began attacking UN troops. Operation PALLISER was launched in May 2000 with a parachute battalion, a marine battalion, the aircraft carrier HMS Illustrious, the helicopter carrier HMS Ocean, and six other naval vessels. The British forestalled an attack on Sierra Leone’s capital, Freetown, and helped release hundreds of UN troops who were being held hostage, allowing a reinforced and revitalized UNAMSIL to regain the initiative. The bulk of the British forces were withdrawn within a few months, but the commitment continues under a brigade-level headquarters, with a series of short-term training teams providing instruction for Sierra Leonean government troops, and a longer-term military assistance and training team supporting re-formation of the Sierra Leonean Ministry of Defense.

The United Kingdom provided over $3.6 billion in foreign assistance in 1999, and aims to continue increasing foreign aid in absolute terms to a level 25 percent higher than that of 1997. Foreign assistance contributions for 2000 are estimated at $4 billion. The United Kingdom was the first European country to support the Korean Energy Development Organization (KEDO), an international body dedicated to replacing North Korea's existing nuclear facilities with light-water reactors, with a $1 million contribution in 1995, and a $2.6 million contribution in 2000. The 1996 KEDO agreement expired at the end of last year, and in negotiations for the second draft agreement, the European Union has thus far agreed to only a small increase in its annual contributions to $16.0 million (the United Kingdom would provide its apportioned share of about $3.1 million). However, it is possible that EU contributions may rise to $27.4 million per year.

The United Kingdom contributes to proliferation prevention efforts through a program to help control fissile material in countries of the former Soviet Union. In its past fiscal year, the United Kingdom spent $9.4 million on bilateral and multilateral nuclear non-proliferation efforts. Nuclear issues in the former Soviet Union are of top concern in the United Kingdom, and an increase in spending to $37.3 million is planned for next year. Over the course of the next three years, a total of $126.4 million will be spent on nuclear non-proliferation efforts. Additionally, in July 2000, the United Kingdom committed $18.7 million over three years to assist Russia in chemical weapons destruction. A small initiative has also been adopted on biological weapons demilitarization, but no firm decisions have yet been made.


France compares favorably with other European allies both in terms of defense spending and policies that support genuinely increased European defense capabilities. Like the United States, France advocates European defense spending levels sufficient both to maintain credible self-defense forces, and to develop the capability to lead crisis response operations where NATO as a whole is not engaged. France possesses considerable nuclear and conventional forces, including the largest and most capable reaction forces of any NATO nation except the United States. Strong French views on American "hegemony" occasionally complicate the pursuit of shared security interests around the world. Nonetheless, France has demonstrated political and military commitment in standing with its allies in such places as Bosnia and Kosovo, and earlier in Rwanda, Haiti, Somalia, Cambodia, and the Persian Gulf. France is currently trimming its armed forces and reducing its overseas military presence (particularly in Africa), but shall remain a major military power.

France registered a modest (1.1 percent) increase in real defense spending during 2000 (2.6 percent of GDP), continuing a post-Cold war pattern of relatively consistent and strong defense budgets. However, the French armed forces are still in the midst of a major restructuring that was launched during 1996 in response to rapidly rising defense acquisition program costs, growing budget deficits, and the need to comply with European Monetary Union requirements for the introduction of the Euro. Military budgets and manpower will be reduced, though the remaining force structure shall be extensively realigned in order to yield greater efficiencies and dramatically improve power projection capabilities.

France is the second largest contributor of peacekeeping personnel in the world after the United States. During 2000, French troops and civilian police participated in UN missions in Sierra Leone, Lebanon, the Republic of Georgia, Bosnia, Kosovo, the Western Sahara, the Democratic Republic of the Congo, and on the Iraq/Kuwait border. Over 5,400 French troops served in Kosovo (where France is the lead nation for Multi-National Brigade (North)), while another 2,400 were responsible for the sensitive Multi-National Division (Southeast) sector of Bosnia under the authority of SFOR. In addition to the troops serving in multinational peacekeeping operations, France had over 26,000 military personnel stationed abroad in 2000, including some 6,500 in Africa.

Of all the Group of Seven (G-7) nations, France consistently spends the largest share of its GDP on official development assistance. Between 1997 and 1999, its foreign assistance outlays averaged nearly half a percent of GDP (0.46 percent). However, absolute contributions have been declining in recent years, and the trend continued in 1999, when they fell to a new low of just over $5.4 billion.


Germany’s geographical location, economic strength, military capabilities and political influence make it a vital European ally. Its armed forces are among the largest, most modern and best-trained in NATO, and form a major component of Alliance military capabilities. In May 2000, Defense Minister Rudolf Scharping unveiled plans for a major restructuring of the German armed forces. Active-duty military strength is to be reduced from the current 335,000 personnel to 277,000 in 2006. Despite these cuts, the future force will be both more professional, as conscript strength will be trimmed to about 80,000, and more capable of conducting crisis response operations, since the "readiness forces" configured for rapid deployment shall be tripled to about 150,000 personnel.

Although Germany’s rate of economic growth increased markedly in 2000 (to 3 percent), the government remains committed to fiscal austerity measures designed to trim the budget deficit, reduce public debt levels, and lighten the burden of interest payments. Real defense spending declined by one percent between 1999 and 2000, and in June 2000, the German government announced that further cuts would be made in each of the next three years. The 2001 defense budget will actually be larger than that of 2000, but the "increase" is attributable to the incorporation of funds for Balkan operations that had been provided from outside the defense budget in past years. The effects of current and projected German defense budget trends on German readiness and capabilities is a source of concern, and the United States is urging the German government to give close attention to this matter.

Germany’s total contribution of military training and support for NATO and Partnership for Peace (PfP) countries was valued at some $3.5 billion in 2000. This included PfP training, language training, and technical and military advisors.

During 2000, Germany contributed troops and materiel support valued at over $500 million to UN peace missions, including in the Republic of Georgia and East Timor, and large contingents of civilian police to the UN missions in Bosnia and Kosovo. There are also over 5,000 German troops serving in NATO’s KFOR peacekeeping mission in Kosovo, where a German headquarters commands the Multi-National Brigade South (MNB-S) sector, and over 2,000 more personnel are deployed with SFOR in Bosnia.

German foreign assistance contributions totaled nearly $5.5 billion for 1999, ranking third among all Allies covered in this Report. Yet, due to fiscal austerity measures, German foreign assistance contributions were expected to decline by over seven percent in the year 2000, with further cuts possible in subsequent years.

Germany also provides extensive financial assistance (beyond the foreign assistance contributions listed above) for the pursuit of shared security objectives in the Balkans. It is allocating a total of approximately one billion dollars to support military activities necessary for implementation of the Southeastern European Stability Pact in 2000 and 2001. Furthermore, Germany spent or committed approximately $144 million for reconstruction in Southeast Europe in 2000, and intends to continue to commit this amount annually until 2004.

Germany contributed $7.2 million to Russia and Ukraine for counterproliferation and nuclear threat reduction in 2000, including chemical weapons destruction, nuclear waste disposal, SS-24 missile silo closure, and nuclear incident emergency planning programs. Under the auspices of the EU, it also contributed $4.6 million to KEDO.

As is generally true of our NATO allies, Germany contributes more to achieving shared interests in the areas of military roles and missions, political cooperation, and economic assistance than in cost sharing for forward deployed U.S. forces. Nevertheless, German cost sharing was estimated at over $1.3 billion in 2000, almost all in the form of indirect contributions. The German Ministry of Defense provides support services for U.S. forces both within Germany and in the Balkans, including substantial tax and customs exemptions for forces in Germany, and materials transport, meals, accommodation, and security escorts for U.S. soldiers deployed in the Balkans.


Italy contributes actively to our security partnership, both through NATO and bilaterally. Italy is a major staging and logistics base for operations in and beyond the immediate region. Relative to Europe’s central region, Italy possesses the advantage of strategic depth, while at the same time providing a key front-line presence in the Mediterranean region. Italy hosts U.S. forces and contributes significantly to United States power projection capability into and throughout the region. NATO air bases in Italy, for example, were essential for the prosecution of the bombing campaign against Yugoslavia during the Kosovo air campaign of 1999, and continue to provide essential staging and transportation points for NATO peacekeeping missions in the Balkans.

Italian real defense spending shrank by 1.8 percent from 1999 to 2000. During the same period, the proportion of Italy’s GDP spent on defense declined slightly from 2.0 to 1.9 percent. The ongoing transition from an all-conscript military to one that includes large numbers of professional troops promises to create more proficient and deployable forces, but places additional pressure on the defense budget, and greatly complicates efforts to find more funding for vital modernization programs. Nevertheless, in November 2000, the Italian government presented a 2001 defense budget that calls for a real increase of 2.5 percent compared to 1999 – including a nearly 50 percent increase in funding for research and development.

Of all the nations covered in this Report, Italy ranks third (after the United States and France) in personnel contributions to multinational peace support operations. At the end of 2000, Italy had roughly 6,400 Army and Carabinieri troops serving with KFOR (including about 1,000 in Albania), and was the lead nation in Multi-National Brigade (West). Another 1,500 Italian troops were serving with SFOR in Bosnia. During 2000, Italy also participated in UN operations in Jerusalem, East Timor, Bosnia, Kosovo, Lebanon, the Western Sahara, Guatemala, and on the Iraq/ Kuwait, India/Pakistan and Eritrea/Ethiopia borders. It also made the third largest financial contributions to UN peace support operations, relative to its share of total GDP, of all the nations in this Report (trailing only Japan and Qatar). Italy's total foreign assistance spending in 1999 was about $1.7 billion, including a recently launched $120 million program for poverty reduction.

Italy is active in a number of initiatives that complement U.S. efforts to strengthen collective security arrangements both in Europe and globally. The Army’s Julia Mountain Brigade forms the framework of the Multinational Land Force, a brigade-sized tri-national formation incorporating Italian, Hungarian, and Slovenian units. Italy also contributes signals and C3I assets, and an infantry battalion to the Multinational Peace Force South-Eastern Europe, which is dedicated to enhancing regional security in the Balkans (Albania, Bulgaria, Greece, Romania, Turkey and the Former Yugoslav Republic of Macedonia also contribute). Finally, Italy contributes troops to the 14-nation UN Stand-by Forces High Readiness Brigade (SHIRBRIG), which gives the United Nations a rapid-reaction peacekeeping capability. When SHIRBRIG deployed for the first time ever in November 2000 (as the core peacekeeping element of the UN Mission to Ethiopia and Eritrea (UNMEE)), Italy contributed four transport and reconnaissance aircraft, two helicopters, and 200 personnel.





The United States has important security relationships in Asia with Japan and the Republic of Korea. As is the case with NATO in Europe, these alliances grew out of the experiences of World War II and the early years of the Cold War. Like NATO, these two bilateral relationships were instrumental in helping to manage Cold War realities and are now adapting not just to a fundamentally altered global geopolitical situation, but also to emerging challenges and opportunities in the region.

At the heart of both alliances is the continued presence of significant numbers of forward-stationed U.S. troops: 40,000 in Japan and over 36,000 in Korea. In addition, Japan serves as the forward deployment site for approximately 14,000 United States naval personnel and the U.S.S. Kitty Hawk carrier battlegroup. These forces play a vital role in contributing to peace and security in the region, and are a tangible expression of vital American interests in Asia, and of U.S. will and capability to defend those interests in concert with our allies.

In view of the constraints that influence the policies and capabilities of both countries – in Korea the division of the peninsula and the threat of conflict, and in Japan the constitutional restrictions that strictly limit the scope of its military activities – their responsibility sharing has focused more on offsetting U.S. stationing costs, and less on other aspects, such as active participation in shared regional and global military roles and missions.

The United States maintains multi-year cost sharing agreements with both countries. These accords build effectively on past arrangements and provide for significant and increasing host country participation in cost sharing. This welcome contribution is critical not only to maintaining the military readiness of our deployed forces, but also for sustaining the political support that is essential to forward stationing, and thus to our ability to project U.S. power and influence in defense of shared interests.


Our bilateral alliance with Japan (the 1960 Treaty of Mutual Cooperation and Security Between the United States of America and Japan) is the key to our security strategy in the Asia-Pacific region, and is crucial to the forward deployment of U.S. forces there. Countries throughout the region view the alliance as a major factor helping maintain stability and security. Japan is expanding its cooperation with the United States and is taking an increasingly active role in international affairs. Although Japan spends a smaller proportion of GDP on defense (1 percent), than any other ally except Luxembourg, the size of its economy is such that it nonetheless ranks second in absolute defense expenditures among all the countries in this Report.

Cost sharing in support of U.S. forces stationed on its territory remains Japan’s most significant responsibility sharing contribution. Indeed, its host nation support is the most generous of any U.S. ally, and consists of funding covered under both the Special Measures Agreement (SMA) and the Facilities Improvement Program (FIP). The Department’s estimate of Japan’s cost sharing support for U.S. forces in 1999 was $5.2 billion, covering 78.8 percent of U.S. basing costs.

A new five year (2001-2006) bilateral SMA goes into effect on 1 April 2001. The new SMA will provide approximately $7.3 billion over five years. Under its terms, Japan pays virtually all of the costs of local national labor employed by U.S. forces, as well as the costs of public utilities on U.S. bases. In addition, the SMA covers the costs of transferring U.S. training activities from U.S. bases to other facilities in Japan when the Government of Japan requests such transfers. United States Forces Japan (USFJ) reports that in 1999 Japan provided over $1.6 billion under the SMA.

Under the separate FIP, Japan voluntarily provides substantial funding for quality-of-life projects, including housing, community support and recreation facilities, and utilities upgrades. In recent years Japan has also shown increased flexibility under the FIP in constructing direct operational facilities, such as hangars and hardened aircraft shelters. In 1999, Japan provided $820 million for construction, restoration, and maintenance of facilities under the FIP. In addition, in 1999 Japan also provided $740 million in rents, $415 million in noise abatement measures, and $140 million for other vicinity improvements.

The Department estimates that under the new SMA and other labor cost sharing arrangements, the value of Japan's direct labor cost sharing (using 2000 exchange rates) will approximate $1.3 billion per year through 2006, or $6.5 billion of the $7.3 billion SMA total. Over the same five-year period, Japan’s direct and indirect cost sharing, including forgone taxes, rents, and revenues, will continue to be $4 to $5 billion per year.

In addition to its cost sharing contributions, Japan’s evolving international role means greater involvement in multinational efforts to promote regional and global stability. Japan contributed more funding ($252 million) for UN peace operations in 1999 than any other nation -- including the United States. It also has the largest foreign assistance budget of any nation in this Report. In 1999, Japan provided $16 billion (0.35 percent of its GDP) in foreign assistance, the largest ever figure in absolute terms of any single donor for a single year. Japanese aid focuses on poverty reduction programs and emergency situation assistance. Contributions in 1999 included three billion dollars for the Asian Currency Crisis Support Facility, and substantial increases in bilateral aid to Indonesia, Thailand, and Vietnam. However, concern over government deficit spending has resulted in a planned three percent reduction in foreign assistance for 2001.

In 2000, Japan provided $10 million for poverty reduction and social development projects in Asian countries; pledged $1.5 billion in concessional loans to help support operations of the Indonesian government; and made a $127 million contribution to the United Nations to help implement the new Group of Eight (G-8) prohibition on exporting small arms and light weapons to conflict areas.

In August 1999, the United States and Japan signed a Memorandum of Understanding to begin Joint Theater Missile Defense (TMD) technical research focusing on sea-based TMD. During 2000, Japan issued $20.4 million in contracts in support of ballistic missile defense efforts. Seven cooperative research programs, valued at $243.5 million, continued to show progress during the year 2000.

The Republic of Korea (ROK)

Our security relationship with the Republic of Korea (formally known as the Mutual Defense Treaty between the United States of America and the Republic of Korea) remains central to the stability of the Korean Peninsula and Northeast Asia. United States forces stationed in the Republic of Korea contribute significantly to the security and territorial integrity of the country, and are a tangible manifestation of U.S. support for peaceful change and democratic evolution in the region.

In December 1998, United States Forces Korea (USFK), the United States Embassy, and the ROK Ministry of National Defense reached a new multi-year Special Measures Agreement (SMA) covering 1999-2002. This calls for a ROK direct cost sharing contribution of $325 million for 1999, with increases in 2000 and 2001 to be based on ROK GNP growth and inflation.

In an effort to validate the Republic of Korea’s methodology for calculating its indirect cost sharing contribution, USFK conducted a valuation estimate and analysis of forgone land rents for U.S.-controlled exclusive-use land, based on recommendations made during the 1997 SMA Implementation Review. USFK estimates total indirect cost sharing for 1999 at $397 million.

Apart from cost sharing, the Republic of Korea makes major contributions to regional security by maintaining strong, modern, and proficient armed forces. In 2000, the Republic of Korea devoted 2.7 percent of its GDP to defense, a decline of nearly four percent from 1999. Yet, ROK annual defense spending has grown by over 27 percent since 1990, compared to a decline of almost 25 percent for the United States, and nearly 20 percent for all nations covered in this Report combined during the same period.

Because of the security situation on the Korean Peninsula, Seoul’s defense effort continues to focus on the maintenance of and improvements to military readiness. As such, the Republic of Korea does not participate extensively in global military roles and missions, including combined operations, elsewhere in the region and beyond. However, during 2000, the Republic of Korea provided 444 troops to serve with the UN Transitional Administration in East Timor (UNTAET), the follow on to the International Force for East Timor (INTERFET), in which the Republic of Korea also participated. The Republic of Korea provided an additional 32 personnel in support of peace operations in Georgia, the Western Sahara, and along the India/Pakistan border.

Economic constraints limit the Republic of Korea’s ability to make large foreign assistance contributions. However, the Republic of Korea is making a major investment in support of shared nonproliferation goals under the United States-North Korea Agreed Framework. It is committed to playing a central role in funding the cost of the light water reactors to be constructed in North Korea by the Korean Peninsula Energy Development Organization (KEDO).





United States’ security strategy in Southwest Asia remains one of engagement, forward presence, and rapid response. The United States seeks to sustain and adapt security partnerships with key states throughout this critical region, broaden the economic and cultural underpinnings of these relationships, and promote peaceful settlement of regional disputes before they erupt into conflicts that could threaten our interests. Acting alone, neither the United States nor its partners in the region can ensure the security of Southwest Asia. Collective efforts are essential.

Our principal security partners in this region are the member states of the Gulf Cooperation Council (GCC): Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. The GCC recently (December 30, 2000) signed its first defense pact against potential external attacks. This pact calls for the GCC’s defense resources to be pooled, and stipulates that an attack on any member would be considered an attack against all the states. Furthermore, the ‘Cooperative Belt’ early warning network, which has been under development since 1997, was inaugurated in late February 2001. The network provides radar, early warning and secure communications links between the six GCC nations.

The security framework in Southwest Asia is strikingly different from those in other regions of vital interest to the United States. Here the United States has no formal bilateral or multilateral defense treaties, and instead relies upon a range of executive agreements for military access, status of forces, and prepositioning of equipment and supplies. The United States has no military bases of its own in the region. However, the six GCC nations are looking to expand their relationship with the United States. In March 2000, the United Arab Emirates decided to purchase 80 F-16 aircraft which represents a strengthening of its strategic partnership with the United States, and a further step toward increased interoperability with the GCC.

With the exception of Qatar, all of the GCC nations have per capita GDPs that are lower (and in some cases, much lower) than the average for all the nations in this Report. Yet, without exception, all of them continue to spend above-average (and often considerably above-average) percentages of GDP on defense. Due to increasing oil production and revenues, Saudi Arabia enjoyed its highest budget revenues since 1981, but domestic debt and over dependence on oil limits its options. Qatar continues to follow a conservative fiscal policy focused on paying down government debt. In 2000, Qatar undertook a significant downsizing of its military forces to reduce defense outlays. It reduced its defense spending by 25 percent and its defense forces by 8-12 percent, primarily by cutting third-country national staff. Although there were no major arms purchases in 2000, bilateral co-operation with the United States was extended to include a wide range of exercises and deployments. Rising oil prices have erased Bahrain’s budget deficit, and enabled it to increase its defense spending (22 percent), but there is still little discretionary income available for foreign assistance and UN peace operations funding contributions. Kuwait and the United Arab Emirates both increased defense spending by about 14 percent in 2000, and Oman’s defense spending rose by about 30 percent after declines in 1998 and 1999.

The GCC nations’ shares of active-duty military personnel and standing forces continue to far exceed their corresponding shares of total GDP. Qatar and Oman provide the largest shares of active- duty military as a percentage of labor force of all the countries in this Report. Relative to its share of total GDP, Bahrain contributes the largest share of ground combat capability; the second largest share of combat aircraft; and the third largest share of naval tonnage of all the nations addressed in this Report. Kuwait’s 1999 foreign assistance contributions exceeded one percent of GDP, the second highest of all the nations covered in this Report. Kuwait provides significant grant aid and humanitarian assistance to lesser-developed countries, primarily in the Arab world, but also including nations in Southeast Asia, Africa and the Balkans. The United Arab Emirates also provided significant amounts of aid, primarily to Arab and Islamic countries through the Shabir Fund for Development.

In spite of these laudable efforts, there remains a substantial disparity between the military forces of the GCC states and those of their principal antagonists in the Persian Gulf. Due to this imbalance, the United States continues to urge the Gulf countries to work closely with other moderate Arab states to enhance their collective ability to defend the region.

The GCC nations also contribute to regional security by providing U.S. forces the use of military facilities, transit rights, and other forms of access. Bahrain has provided port facilities to U.S. naval forces for 50 years, hosts the headquarters for U.S. Naval Forces Central Command (USCOMNAVCENT), furnishes facilities for prepositioned equipment, and has granted rapid access for U.S. military aircraft when needed. It has also recently accepted home-porting of four US minesweepers with 200 sailors, and has facilitated naval support activity upgrades. Bahrain also provided host government support to the U.N. Special Commission on Iraq (UNSCOM) and is currently finalizing arrangements with the U.N. for hosting The United Nations Monitoring, Verification and Inspection Commission (UNMOVIC). Oman likewise allows the United States to preposition equipment on its territory, and has granted access to its military bases since 1980.

Since the 1991 Gulf War, defense cooperation agreements permitting access and prepositioning have been signed with Kuwait, Bahrain, Qatar, and the United Arab Emirates. Under the agreement with Kuwait, that nation has agreed to offset U.S. prepositioning and exercise costs. At the end of 2000, Kuwait continued to house the bulk of U.S. ground troops (Operation Desert Spring) in the region and much of our air power assigned to two Air Expeditionary Groups (AEG). Saudi Arabia also provides access to U.S. forces, and contributes substantially to offset the costs of U.S. military operations enforcing the no-fly zone over southern Iraq (Operation SOUTHERN WATCH). Since November 1995, Bahrain and Qatar have both hosted several Air Expeditionary Force deployments in support of Operation SOUTHERN WATCH, and the United States Air Force recently established a limited prepositioning facility at Qatar’s Al-Udeid Airbase and is investigating moving to the airfield. Qatar also hosts prepositioned U.S. Army assets at As-Saliyah.

The United Arab Emirates provide access to U.S. forces and hosts more U.S. Navy ships than any port outside the United States. The United Arab Emirates has also contributed over a thousand personnel to the NATO-led peacekeeping force in Kosovo – its first ever out-of-area deployment. The United Arab Emirates also provides most of the fuel for U.S. naval vessels in the Persian Gulf and, other than Bahrain, has the only suitable liberty ports in the Gulf. Furthermore, the United Arab Emirates accepts by far the largest number of ships diverted by the multinational interception force for attempting to smuggle Iraqi oil through the Gulf.





The United States plays a leading role in promoting and defending shared security interests worldwide. Our armed forces are sized, equipped, and trained for the full range of conflict, from global warfare to regional contingencies and special operations – on land and sea, in the air and in space. Their capabilities are unsurpassed across nearly the entire spectrum of military power, and are particularly notable in the areas of strategic intelligence, power projection, and nuclear deterrence.

The United States spent about $296 billion on defense during 2000. This represented a real increase of 3.3 percent over 1999, although the percentage of GDP devoted to defense remained stable at approximately three percent.

United States military personnel served in six UN peacekeeping operations during 2000, and also participated with SFOR in Bosnia (4,300 personnel at the end of 2000), Kosovo Force (KFOR) (6,000 personnel at the end of 2000), and in the Multinational Force and Observers (MFO) on the Sinai Peninsula. Furthermore, the United States Support Group East Timor (USGET) provided humanitarian and civic assistance support for East Timor’s transition to independence in coordination with the UN Transitional Administration in East Timor (UNTAET). At peak strength, approximately 14,000 U.S. military personnel were serving in peace operations during 2000.

The United States provided over $12.9 billion in foreign assistance during 1999 – the second largest contribution after Japan’s, and just under a quarter of the total contributed by all the nations covered in this Report combined.

The United States hosts the training of NATO forces in the United States, including the Euro-NATO Joint Jet Pilot Training program, German F-4/Tornado training at Holloman Air Force Base, and German air defense missile training at Fort Bliss. The United States also facilitates extensive officer and some unit exchanges with NATO allies and partner nations at locations such as Fort Leavenworth and the Combat Maneuver Training Center in Germany.

The United States offers the Defense Resource Management Study (DRMS) Program to Central European and CIS governments interested in acquiring the analytical methodologies necessary to improve the allocation of scarce defense resources. This program also encourages greater transparency in defense planning and increased democratic control of the military.

The United States has also established five Regional Centers for Security Studies: The George C. Marshall European Center for Security Studies, the Asian-Pacific Center for Security Studies, the Center for Hemispheric Defense Studies, the Africa Center for Strategic Studies, and the Near East – South Asia Center for Security Studies. These are designed to study security issues in a specific geographic region, and to serve as fora for bilateral and multilateral communications and military-civilian exchanges with nations in those regions. The Regional Centers thereby allow the Secretary of Defense and the theater Commanders-in-Chief (CINCs) to reach out actively and comprehensively to militaries and defense establishments around the world to lower regional tensions, strengthen civil-military relations in developing nations, and address critical regional challenges.



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