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Responsibility Sharing Report July 2003

Chapter II Header

This chapter presents the Department's assessment of U.S., NATO and Pacific allies' and Gulf Cooperation Council (GCC) countries' responsibility sharing contributions, with particular emphasis on defense spending, cost sharing, and the War on Terrorism. The assessments are based on the most recent, complete, and reliable data available. Notes on uses and sources of these figures, and a country-by-country summary of selected responsibility sharing statistics, can be found in the Annex, along with a compendium of supporting data.

This chapter also places U.S. responsibility sharing policy in strategic perspective, describing 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 chapter provides a discussion of Alliance and country responsibility sharing contributions, including contributions to the War on Terrorism. Contributions to Operation IRAQI FREEDOM (OIF) will be addressed in the 2004 report.

Defense Spending Header

Defense spending is one of the most important indicators of allied responsibility sharing efforts, since it offers the clearest evidence of allied nations' willingness to commit resources to the common defense. Chart II-1 depicts the wide variations in 2002 per capita GDP (a widely accepted indicator of prosperity and standard of living) among the nations addressed in this Report – from under $3,000 in Turkey to over $45,000 in Luxembourg.

Given such great disparities in standards of living, "equitable" defense spending among nations may not necessarily mean that each nation should devote the same proportion of its national wealth to defense. That is, it may be fairer for nations with the strongest economies and wealthiest populations to carry a proportionately larger share of the burden of providing for the common defense. Chart II-1 reveals that eight of the countries addressed in this Report that spent above-average percentages of GDP on defense had below-average per capita GDP: Turkey, Greece, the Republic of Korea, and all the GCC nations except Qatar. In contrast, with the exception of the United States and Qatar, all nations that had above-average standards of living spent a below-average percentage of their GDP on defense. France's defense spending as a percentage of GDP was just barely above-average, while its per-capita GDP was just barely below-average.

Chart II-2 depicts 1995-2002 defense spending trends for the United States, our NATO and Pacific allies, and our GCC partners. United States defense spending grew by about 6 percent over this period, while our NATO allies' overall defense spending grew by nearly 4 percent, and the Pacific allies and GCC partners both registered overall increases of better than 14 percent. However, whereas U.S. defense spending rose by nearly 9 percent between 2001 and 2002, Pacific allies' defense spending increased by less than 3 percent, and overall NATO allied and GCC partner defense spending both declined marginally (by less than 1 percent each). That being said, a dozen allied and partner nations nonetheless achieved real increases in defense spending between 2001 and 2002. The biggest gains were posted by Qatar (24 percent), the Republic of Korea (10 percent), Portugal (8 percent), Norway (7 percent), Luxembourg (6 percent) and Hungary (5 percent).  Refer to Table D-4 in the Annex for further information on defense spending trends.

Certain expenditures outside of defense budgets also promote shared security interests, and should be recognized – such as Germany's investments in the infrastructure of eastern Germany, and its financial support for economic and political reform in the new democracies of Central Europe. Nonetheless, it is essential that our allies maintain their defense budgets at appropriate levels, in order to ensure that they remain able to field effective military forces. In our discussions with allies and partners, the Department continues to urge sustained efforts in this area.

Defense Spending as a Percentage of GDP

Defense spending relative to GDP combines the most comprehensive indicator of defense effort (defense spending) with the most comprehensive indicator of ability to contribute (GDP). As a result, it is the most widely used indicator of burdensharing efforts. However, this indicator should not be viewed in isolation from other national contributions to shared security objectives. Also, this measure does not take into account efforts that are not directly reflected in defense budgets, nor does it give credit to those countries that are able to make more effective use of their defense resources.

Chart II-3 shows the percentage of GDP spent on defense by the United States and its allies in 2002. (Trend data since 1995 are found in the Annex in Table D-5). For 2002 and throughout the 1990s, the pattern has remained relatively constant: the GCC nations, along with Greece and Turkey, spent the highest percentages of GDP on defense, while Japan, and several of our NATO allies (Luxembourg, Canada, Spain, Belgium, Germany, Denmark, and the Netherlands) spent the smallest proportions of GDP on defense.

The average level of defense spending as a percentage of GDP for all the nations in this Report is 2.5 percent. France and those countries above it on the chart (i.e., the Republic of Korea, the United States, Greece, Turkey and the GCC countries) rank above average in defense spending as a percentage of GDP. Conversely, the United Kingdom and those countries appearing below it on this chart spent below average percentages of their GDP on defense. See Section C of the Annex for additional statistics relating countries' contributions relative to their ability to contribute.

Cost Sharing Header

The most familiar form of cost sharing is bilateral cost sharing between the United States and an ally or partner nation that either hosts U.S. troops and/or prepositioned equipment, or plans to do so in time of crisis. The Department of Defense distinguishes between two different types of bilateral cost sharing: the direct payment of certain U.S. stationing costs by the host nation (i.e., on-budget host country expenditures), and indirect cost deferrals or waivers of taxes, fees, rents, and other charges (i.e., off-budget, forgone revenues).

Cost Sharing Contributions

As shown in Chart II-4, in 2001 (the most recent year for which data are available) the United States received direct and indirect cost sharing assistance from our NATO, Pacific, and GCC allies estimated at about $7.5 billion.

Cost sharing has been a particularly prominent aspect of our bilateral defense relationships with Japan and the Republic of Korea. As Chart II-4 shows, Japan provides a greater level of direct cost sharing ($3.5 billion) than we receive from any other ally. Japan's emphasis on direct cost sharing reflects constitutional provisions and other factors that limit the scope of activities of Japan's own armed forces. The Republic of Korea first agreed to contribute the Combined Defense Improvement Projects (CDIP) construction program in 1979 – which marked the beginning of our present cost sharing relationship. In 1988, it agreed to a CDIP program funded at $40 million a year. Since that time, annual cost sharing negotiations have brought a gradual increase in ROK contributions. During 2001, it provided $420 million in direct cost sharing and nearly $385 million in additional indirect cost sharing.

Bilateral cost sharing by our GCC security partners during 2001 totaled nearly $465 million paid or pledged by Kuwait, the UAE, Saudi Arabia, Oman, Bahrain, and Qatar to offset U.S. incremental costs in the Persian Gulf region. Kuwait and Qatar both host a prepositioned U.S. Army heavy brigade equipment set, and share the land use, maintenance, and operating costs for U.S. forces stationed or exercising on their territory.

NATO countries have long provided indirect support for U.S. forces stationed on their territory. Our allies provide bases and facilities rent-free, various tax exemptions, and reduced-cost services. NATO allies with the largest cost sharing contributions to the United States in 2001 were Germany ($862 million) and Italy ($324 million).

In addition to bilateral cost sharing, our NATO allies also provide multilateral cost sharing, through common-and jointly-funded budgets. These include the NATO Security Investment Program (NSIP); the NATO Military Budget for the operations and maintenance (O&M) of NATO Military Headquarters, agencies, and common-use facilities; and the NATO Civil Budget for the O&M of NATO Headquarters and several non-military programs including civil preparedness. See Chart II-6 for additional detail.

In assessing cost sharing contributions, consideration needs to be given to the differences in the nature of our security relationships with various allies and partners.  For instance, our European allies have no tradition of providing the kind of direct cash and in-kind support provided by Japan and the Republic of Korea, since NATO has concentrated on strengthening participation in the military roles and missions of the Alliance. In contrast, due to the different security situation, and the unique defense capabilities of Japan and the Republic of Korea, our responsibility sharing policy with these nations has emphasized cost sharing rather than global military roles and missions.

Chart II- 5 shows the nations with the greatest U.S. cost offset percentages for 2001.  Oman, Japan, Spain, Saudi Arabia, and Kuwait covered over 50 percent of costs associated with the stationing of U.S. forces.  A cost offset percentage cannot be given for the UAE due to the lack of complete information regarding U.S. stationing costs there.

The War on Terrorism Header

Sixty-nine countries provided support to the War on Terrorism in 2002, and twenty of these actively supported Operation ENDURING FREEDOM (OEF),deploying more than 16,000 troops to the U.S. Central Command (CENTCOM) area of responsibility.

NATO Contributions to the War on Terrorism

Following the September 11, 2001 terror attacks on the United States, NATO invoked Article V of the 1949 Washington Treaty (which states that an armed attack on any ally is considered an attack against all) for the first time in its history. Allies continued to support OEF steadfastly throughout 2002 by enhancing intelligence sharing, providing access to ports and airfields, granting blanket overflight clearance, increasing security for U.S. bases on allied territory, ‘backfilling' selected U.S. and allied military assets withdrawn from NATO's area of responsibility, and providing assistance to allies and other states that were subject to increased threats due to their support of the war against terrorism. In addition, nearly all Alliance members have contributed directly to the War on Terrorism by participating in military operations in and around Afghanistan.

The United Kingdom supported OEF with a naval task force of a dozen warships built around the aircraft carrier Illustrious from September 2001 through early 2002, when it was relieved by the helicopter carrier Ocean. A pair of Royal Navy frigates continued to participate in maritime intercept operations in the Indian Ocean at year's end. The Royal Air Force contributed tanker, AWACS, reconnaissance and surveillance, and C-130 transport aircraft to operations in the region. A ground task force comprising 1,700 Royal Marine Commandos with artillery, helicopter and engineering support elements deployed into Afghanistan in the first half of 2002 to engage in offensive operations against Taliban and Al-Qaida forces.

France has made substantial contributions to OEF. At one point in 2002, it had over 4,200 military personnel serving in CENTCOM's area of responsibility. Its only aircraft carrier, the Charles de Gaulle, operated in the northern Arabian Sea for the first half of the year, flying 2,000 reconnaissance, strike and electronic warfare missions over Afghanistan. All told, twenty-five French naval vessels (including auxiliaries and two submarines) were deployed in the region during the year - representing a fifth of the entire French Navy, and a larger proportion of its combat ships. A detachment of six Mirage-2000 fighter-bombers were based at Manas Airbase, Kyrgyzstan from February to October, and provided close air support for U.S. and coalition ground forces during the Battle of Shah-I-Khot (Operation ANACONDA) in March 2002. French Air Force transport, tanker, reconnaissance and electronic warfare aircraft also supported OEF.

Italy actively supported coalition maritime surveillance/interdiction efforts in the Indian Ocean during 2002. It initially contributed the aircraft carrier Garibaldi, two frigates and a tanker, and continued to provide one frigate in the latter part of year after the carrier had been withdrawn. Furthermore, two Italian C-130 transport aircraft deployed to Manas Airbase in Kyrgyzstan in October 2002. Canada was also a major contributor, providing two frigates and a pair of naval patrol aircraft to participate in coalition maritime operations, three CC-130 transports for humanitarian relief flights, and deploying an infantry battalion into Afghanistan for six months. At their peak, these forces totaled about 3,000 personnel, making Canada the fourth largest contributor to OEF.

In April 2002, Denmark, the Netherlands, and Norway established a joint airlift detachment of three C-130s at Manas Airbase, Kyrgyzstan to support OEF. The three nations significantly increased their contributions in October 2002 when they deployed a total of eighteen F-16s fighter-bombers and one KDC-10 tanker aircraft to Manas Airbase, Kyrgyzstan to relieve the six French Mirage-2000 fighters that had been based there since February. This tri-national force, known as the European Participating Air Forces (EPAF) detachment, provides day and night air support for both coalition and International Security Assistance Force (ISAF) forces in Afghanistan.

The Spanish Navy commanded Task Force 150 from October 2002, a multinational maritime interdiction force based in Djibouti, to which it contributes a frigate, a support vessel and approximately 400 sailors and marines.  Germany commanded this task force from April to October 2002.  Spanish forces participating in this Task Force were responsible for the recent interdiction and search of the North Korean cargo ship So San, which was found to be carrying Scud missiles. There are also about 480 Spanish troops serving with coalition forces in Afghanistan, and a pair of Spanish search-and-rescue helicopters are deployed in Kyrgyzstan.

Germany, Greece and the Netherlands all participated in maritime intercept operations in support of OEF during 2002, and continued to provide five, one and two naval vessels (respectively) for this purpose at year's end. Furthermore, Denmark, Germany, Norway and the United Kingdom deployed elite special operations forces (SOF) to Afghanistan to join U.S. and other coalition SOF troops in hunting down elusive remnants of the Taliban and Al-Qaida. Germany and the Czech Republic have both sent specialized nuclear/biological/chemical (NBC) defense units to the region for prolonged deployments. Poland contributed a logistic support ship, and deployed about 90 ground troops into Afghanistan to conduct demining, convoy security and logistic support activities.

The NATO allies also contributed military assets to support humanitarian relief efforts in and around Afghanistan, and supplied the lion's share of the ISAF peacekeepers in Kabul. Thirteen NATO nations contributed ground troops and/or transport aircraft to ISAF during 2002. The United Kingdom commanded and provided the largest single national contingent (over 1,800 personnel) of ISAF-I. Turkey assumed command of ISAF-II in June 2002, and contributed about 1,400 personnel. Other participating nations were Belgium (40 troops), the Czech Republic (140 troops), Denmark (60 troops), France (550 troops), Germany (1,200 troops), Greece (130 troops) Italy (400 troops), the Netherlands (230 troops), Norway (15 demining experts), Portugal (23 personnel) and Spain (270 troops).

Finally, most NATO Allies increased force protection for American military bases located in their territory. Germany, which hosts the majority of U.S. bases in Europe, deployed over 2,000 troops for this purpose.

Pacific Allies' Contributions to the War on Terrorism

Following the terrorist attacks on New York and Washington, and recognizing the common threat they represented, Australia invoked the mutual security provisions of the Australia, New Zealand, and the United States Security Treaty (ANZUS) - for the first time in its 51-year history. Since then, Australia has provided practical support to the War on Terrorism in a number of ways, including law enforcement, customs, financial controls, intelligence-sharing, and military contributions to operations in Afghanistan and elsewhere. In 2002, Australia deployed Special Air Services contingents for combat operations in Afghanistan, and also contributed air-to-air refueling aircraft and F/A-18 fighter aircraft to the War on Terrorism (the latter deployed to Diego Garcia to back-fill U.S. combat aircraft that deployed in support of OEF). Australia also maintained a naval task group of two frigates in the Persian Gulf - representing a fifth of the Australian Navy's total major surface combatants.

Japan continued to provide significant support for the war against terrorism during 2002 in the realms of diplomacy, intelligence-sharing, financial and humanitarian contributions, military operations, and improved force protection for U.S. bases on Japanese territory. In March and November 2002, Japan extended for six months its 'Basic Plan,' for the Japan Self-Defense Force (JSDF) to provide rear-area logistic support for OEF (in accordance with the legislation passed by the Diet last year). Elements of the Japan Maritime Self-Defense Force conducted refueling operations in support of OEF throughout 2002, and in December 2002, one of Japan's four Aegis-class destroyers was dispatched to the region to provide additional protection for these operations. In addition, the Japan Air-Self Defense Force flew numerous transport missions both in support for U.S. forces within Japan and to Guam and Diego Garcia. In November 2002, the Japanese government decided that the JSDF could transport materials, including heavy construction equipment belonging to Thailand, for the maintenance of a U.S. air base in Afghanistan.

Since September 11, 2001, the Republic of Korea has supported the War on Terrorism by sharing intelligence data, providing substantial humanitarian assistance to Afghanistan and neighboring countries, and increasing force protection for Americans in-country. It also contributed military forces to OEF, providing C-130 transport aircraft and an amphibious landing ship (LST). Furthermore, a 120-man Korean medical unit was deployed at Manas Airbase, Kyrgyzstan throughout 2002.

GCC Contributions to the War on Terrorism

The Gulf Cooperation Council (GCC) member states provided immediate and robust support for the War on Terrorism and continue to serve as important coalition partners in support of OEF. Bahrain committed its only frigate to participate in coalition maritime surveillance and interception operations, but the other GCC states did not become directly involved in military operations. The GCC members have nonetheless provided critical support for OEF by allowing coalition aircraft to overfly their territory and permitting the deployment and storage of large numbers of U.S. aircraft, equipment and personnel at their military bases, civilian airports and other facilities. Most GCC nations are also providing troops and equipment to increase security, and expand air traffic control and fuel storage capacities at such facilities.

At the conclusion of the 21st Gulf Cooperation Council Interior Ministers' Summit in October 2001, the ministers issued the "Muscat Declaration on Combating Terrorism." Citing the events of 11 September 2001, the ministers reaffirmed their "permanent position condemning terrorism" and approved a strategy for combating extremist-linked terrorism that includes addressing its causes and freezing its financing. In keeping with this strategy, the GCC nations have been key partners in the effort to block terrorist financing, including the seizure of assets associated with al-Qaida's financial network.

The GCC nations have generously supported humanitarian operations associated with the War on Terrorism by establishing refugee camps in Pakistan, and contributing money and supplies for refugee relief and the reconstruction of Afghanistan. Kuwait also provided C-130 transport aircraft to help deliver humanitarian supplies. Finally, several GCC member states have provided substantial economic assistance packages to Pakistan.

The following table provides a more extensive, but not exhaustive, list of allied contributions to the War on Terrorism during 2002.

Allied Military Contributions to Combat, Maritime Surveillance, Humanitarian and Peacekeeping Operations in and Around Afghanistan

Country

Contributions

Australia 2 frigates
Special Air Service teams (150 personnel)
6 F-18 fighters (deployed to Diego Garcia)
2 Boeing 707 tanker aircraft
C-130 transport aircraft
Bahrain 1 frigate
Belgium C-130 transport aircraft
Canada 3 CC-130 transport aircraft
2 CP-140 maritime reconnaissance aircraft
Light infantry battlegroup (850 personnel)
Special operations personnel
2 Halifax-class frigates
Czech Republic 1 Tu-154 transport aircraft
NBC defense company (249 personnel)
Military field hospital (140 personnel declining to 50 in late 2002)
Denmark 1 C-130 transport aircraft (77 personnel)
100 special operations personnel
6 F-16 fighter bombers (150 personnel)
(ISAF) 60 infantrymen replaced 48 engineer/mineclearing troops
France 6 Mirage-2000 fighter-bombers (Kyrgyzstan)
5 KC-135 tanker aircraft
2 C-130s or C-160s transport aircraft Tajikistan)
7 Rafale combat aircraft
16 Super Entendard combat and reconnaissance aircraft
2 Mirage IV and 2 E-2C reconnaissance aircraft
2 Maritime Patrol Aircraft
2 KC-135 aerial tanker aircraft and DC-8, C-160, and Falcon 50 transport aircraft
Aircraft carrier Charles de Gaulle, 10 frigates, 4 corvettes, 1 tanker, 4 mine hunters, 3 replenishment ships, 2 tenders, 1 electronic intelligence ship, 2 submarines
Infantry and special forces personnel (225 troops) in OEF
(ISAF) Infantry company, recon company, engineer demining unit, and HQ and support elements at the end of 2002 (550 troops)
Medical facility in Djibouti
Germany 3 frigates, 1 intelligence ship, 1 supply ship
3 maritime patrol aircraft (Mombassa, Kenya)
100 special operations personnel
Infantry battalion task force (ISAF – 1200 troops)
1 Chemical reconnaissance unit (60 personnel in Kuwait with standby reinforcement in Europe)
Greece 1 frigate (includes S-70B6 helicopter)
2 C-130 transport aircraft (56 personnel)
(ISAF) Engineer company (136 troops)
Army and air force personnel deployed to Karachi airport, Pakistan (55 personnel)
Italy 3 C-130 transport aircraft
Leased 1 Boeing 707, 1 An-124, and 1 IL-76 transport aircraft to support ISAF
1 frigate
43-man engineering team for runway repair (Afghanistan)
(ISAF) 400 infantry, engineer, reconnaissance and carabinieri troops
Japan C-130 and C-1 transport aircraft (including for missions to Guam and Diego Garcia)
1 Aegis cruiser, 3 destroyers, 2 fast combat support ships, 1 minesweeper tender
Kuwait C-130 aircraft for humanitarian support missions
Netherlands 6 F-16 combat aircraft
1 KDC-10 tanker/transport aircraft and 1 C-130 transport aircraft
P-3 maritime patrol aircraft
2 frigates
(ISAF) Infantry company (228 troops)
Norway 6 F-16 combat aircraft
1 C-130 transport aircraft
Mineclearing vehicles and 15 personnel (at Qandahar airport)
Special operations forces (90 personnel)
Poland Logistics support, convoy security and demining units (95 personnel)
1 logistics support ship
Portugal (ISAF) 1 C-130 (15 personnel)
(ISAF) Medical team (8 personnel)
Republic of Korea C-130 transport aircraft
1 amphibious transport ship (LST)
Medical unit (140 personnel - Kyrgyzstan)
Spain 1 P-3 Orion maritime patrol aircraft
3 C-130 transport aircraft (70 personnel)
2 search and rescue helicopters (Kyrgyzstan)
1 frigate and 1 support vessel (preparing to deploy)
480 troops in Afghanistan for OEF, including field hospital (Bagram Airbase)
(ISAF) 260 personnel
Turkey 2 KC-135 tanker aircraft
Special operations unit (90 personnel)
(ISAF) 1400 personnel including infantry
United Kingdom VC-10 and Tristar aerial tanker aircraft and C-130 transport aircraft
Nimrod and Canberra PR9 reconnaissance aircraft
E-3 AWACS aircraft
Aircraft carrier Illustrious, 1 amphibious ship, 2 frigates, 3 submarines, 7 auxiliary ships
Special operations personnel
1,700 Royal Marine commandos
(ISAF) At peak strength 1,800 infantry, headquarters, engineer, medical, logistics, military police and air transport support troops - declining to 440 personnel by August 2002

NATO Allies Header

One of the fundamental objectives of U.S. national security 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 considerably. In 2002, NATO heads of state and government launched a fundamental transformation of the Alliance at the NATO Summit in Prague, the Czech Republic. The Alliance's new blueprint for the future focuses on new members, new capabilities, and new relationships. At the United State's request, the heads of state agreed to develop a NATO response force to project power "quickly to wherever needed." While promising to enhance NATO's military capabilities, they also invited seven new nations to join the Alliance and endorsed stronger relationships with Russia, Central Asia and the Caucasus, solidifying NATO's ever more important political role as the central organizing security body for allies and our partners.

New Members

The Czech Republic, Hungary and Poland joined NATO in 1999. At the November 2002 Prague Summit, NATO invited Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia and Slovenia to begin accession talks to join the Alliance. At the end of the accession process, the seven invited countries should formally become members of the Alliance, most likely by May 2004.  NATO membership for these seven will consolidate democracy over dictatorship and erase the last Cold War divisions in Europe. As stated in the Prague Summit Declaration, NATO's door will remain open to European democracies willing and able to assume the responsibilities and obligations of membership.

New Capabilities

At Prague, Allies made a series of political commitments on improving national and collective military capabilities necessary for the Alliance to be able to carry out the full range of its new missions and improve interoperability among NATO forces. Recognizing continuing shortfalls in Allied military capabilities, NATO leaders at Prague agreed to focus on a refined list of key operational capability areas. These areas are: defending against chemical, biological, radiological and nuclear (CBRN) attacks; ensuring command, communications and information superiority; improving interoperability of deployed forces and key aspects of combat effectiveness; and ensuring rapid deployment and sustainment of combat forces. This initiative is called the Prague Capabilities Commitment (PCC) and with it Allies have pledged to improve national and collective capabilities and rectify shortfalls through ‘multinational efforts, role specialization, and reprioritization.'  The flagship of NATO's capabilities improvement efforts is the NATO Response Force (NRF). The NRF, consisting of land, sea, and air elements will enhance NATO's ability to respond rapidly to future threats and speed the transformation of Alliance and national military capabilities.

New Relationships

NATO heads of state and government agreed to form the NATO-Russia Council (NRC) at the Rome Summit in May of 2002. The NRC provides NATO member states and Russia with a vehicle for consultation, consensus-building, cooperation, joint decision, and joint action on a wide range of security and defense issues in the Euro-Atlantic regions. Such issues include peacekeeping, defense reform, Weapons of Mass Destruction (WMD) proliferation, search and rescue, emergency planning, theater missile defense and terrorism.

The Euro-Atlantic Partnership Council (EAPC) and the Partnership for Peace (PfP) have greatly enhanced security and stability throughout the Euro-Atlantic area to include Central Asia and the Caucasus. At Prague, NATO leaders decided to strengthen political dialogue and increase involvement of EAPC and PfP partners in the ‘planning, conduct and oversight of those activities and projects in which they participate and to which they contribute with EAPC and PfP countries.'

Cost Sharing in the Alliance

Although most NATO Allies do not offset the same percentage of U.S. stationing costs as Japan, 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 NATO's common-funded budgets, which totaled $1.4 billion in 2002 (excluding contributions to the NATO Airborne Early Warning and Control Program). The U.S.' one-quarter share of the NATO common-funded budgets (in which all 19 members participate) provides it with significant leverage in Alliance decision-making, and access to NATO facilities that would cost the U.S. far more to build and maintain on its own. NATO's common budgets also provide a cost-effective means of dealing with large acquisitions, which, if funded separately, 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 peer review process with the aim of increasing effectiveness, improving burdensharing, and anticipating future challenges to the Alliance.

See Chart II-6 (Multilateral Cost Sharing: NATO's Common-Funded Budgets)

Contributions of Selected NATO Allies

This section describes notable responsibility sharing contributions by the United Kingdom, Germany, Italy, and Poland. These nations account for over half of the defense spending of all our European-NATO allies. The United Kingdom, Germany and Italy host over 90 percent of the U.S. military personnel stationed in Europe.  There are no U.S. forces permanently stationed in Poland.

United Kingdom

The United Kingdom is one of the United States' closest allies, as demonstrated by its participation in OEF, its command of the first ISAF rotation in Afghanistan, and its continuing strong support for the global War on Terrorism. UK-U.S. military-to-military cooperation has no parallel. The UK also participates actively in NATO and the Partnership for Peace, and is a Permanent Member of the UN Security Council. British forces play major roles in NATO's conventional and nuclear force structures, as well as deploying around the world in response to regional crises and national commitments.

While, the United Kingdom's defense budget declined by a marginal 1.9 percent in real terms during 2002, its defense spending relative to GDP (2.4 percent in 2002) was the fifth highest in NATO. The UK devoted the second highest percentage of defense spending (29 percent) to NATO modernization programs (i.e., procurement, and research and development). The UK provides substantial host nation support for U.S. forces (over $133 million), almost entirely in the form of indirect contributions (i.e., waived taxes, rents and other forgone revenues). British forces form the backbone of the Allied Command Europe (ACE) Rapid Reaction Corps (ARRC), and provide the second largest shares of total NATO naval combat and mine countermeasures tonnage, combat aircraft capability, naval supply, tender and transport tonnage, military transport aircraft capacity and tanker aircraft fuel offload capacity.

The UK continues to implement changes called for in the 1998 Strategic Defense Review (SDR), creating a more deployable, sustainable, and flexible force. In light of the events of September 11, 2001, the UK produced a ‘New Chapter' for the SDR to ensure that it possesses the right concepts, forces, and capabilities needed to confront the challenges of international terrorism and asymmetric threats. The ‘New Chapter,' published in July 2002, concluded that the UK should plan to undertake a wide range of activities against terrorists overseas, and called for increased defense spending in order to improve its capabilities to engage in such operations. As a result, the UK plans to increase its defense budget by 3.7-percent over the period 2002/2003 to 2005/2006 - the biggest sustained increase in defense spending in 20 years.

The UK also contributed about 5,500 personnel to NATO operations in the Balkans for most of 2002, declining to roughly 4,900 at year's end: 1,900 in Bosnia (SFOR) and 3,000 in Kosovo (KFOR). British forces also served in UN peace operations in Cyprus, on the Iraq-Kuwait and Eritrea-Ethiopia borders, Georgia, Sierra Leone, Kosovo, the Democratic Republic of the Congo, and East Timor. The UK is the only ally that joined the United States in using offensive air power to enforce the northern and southern no-fly zones over Iraq. Finally, it made the fifth largest financial and personnel contributions to UN peace operations in 2002, of all the nations covered in this Report.

The United Kingdom provided nearly $5.5 billion in foreign assistance in 2001 (0.3 percent of GDP). Furthermore, the UK works closely with the United States on countering the proliferation of weapons of mass destruction, focusing especially on compliance issues. It has pledged to contribute about $750 million to the G-8 Global Partnership Initiative, and, during 2002, established a comprehensive project implementation framework for a wide range of Soviet nuclear legacy issues, including: nuclear submarine dismantlement and management of spent fuel, re-employment of proliferation-sensitive skills in closed ‘nuclear cities,' improving the operational safety of nuclear power plants, addressing the social consequences of nuclear power plant closure, and physical security of facilities containing sensitive material of interest to terrorists. The UK has budgeted £32 million for these projects.

Germany

Over the past decade, Germany has steadily expanded its participation in peacekeeping and humanitarian operations, development assistance, and, most recently, the War on Terrorism. Germany's armed forces form a major component of Alliance military capabilities. Germany is in the process of a significant reform of its Armed Forces.  As part of this reform, and with the aim of creating a more professional and deployable force, Germany has reduced active-duty military strength from 338,000 to 282,000 (of whom 85,000 are conscripts). Dedication of adequate resources at a time of tight budgets will be crucial to the successful completion of this reform.

Germany's defense spending increased by a modest 0.6 percent in 2002 (to $29.4 billion), but relative to GDP, remained stable at 1.5 percent -- below the average of 1.9 percent of GDP for all non-U.S. NATO nations. Continuing economic difficulties make it doubtful that defense budgets will be increased in the near-term, and defense spending as a percentage of GDP is expected to remain flat through 2006. In December 2002, Defense Minister Struck accordingly announced deep cuts in most of Germany's major defense acquisition and modernization programs, including A-400M air transports, Eurofighter tactical aircraft, Tiger attack helicopters, Meteor and IRIS-T air-to-air missiles, and frigate, corvette and submarine construction projects. Germany provides the second largest share of total NATO ground combat capability and fourth largest shares of total NATO naval supply, tender and transport tonnage; combat aircraft capability; and military transport aircraft capacity.

Germany ranked first among all the nations covered in this Report in personnel contributions to multinational peace operations at the end of 2002.  There were about 3,800 German troops serving with KFOR in Kosovo, another 1,300 supporting SFOR in Bosnia, and 159 deployed with NATO's Operation ALLIED HARMONY in the Former Yugoslav Republic of Macedonia (FYROM). Moreover, Germany commanded NATO's Task Force Fox in FYROM from September 2001 to June 2002, supporting the international observers monitoring implementation of the peace settlement which resolved that nation's recent civil war. During 2002, Germany also contributed small military contingents to UN peace operations in Sierra Leone, the Republic of Georgia and along the Iraq-Kuwait border, and about 360 civilian police to the UN Interim Administration Mission in Kosovo (UNMIK). Germany also made very large financial contributions to UN peace operations, ranking fourth in absolute terms after the United States, Japan and France ($186 million).

German foreign development assistance contributions totaled almost $6 billion for 2001, ranking third among all the nations covered in this Report. Germany has pledged about $280 million over four years for Afghanistan reconstruction and humanitarian assistance, and has taken the lead in training and equipping the Afghan police. About $12 million was contributed to humanitarian assistance programs in the Balkans during 2002. Germany also contributed $5.1 million for counter proliferation and nuclear threat reduction efforts in 2002, mainly to programs for the destruction and physical protection of chemical and nuclear weapons stocks in Russia and the Ukraine.

Since September 11, 2001, German federal and local governments have allocated considerable resources to enhance force protection for U.S. military personnel and dependents. Bundeswehr troops have been deployed to protect U.S. military facilities and additional support provided by local police. Germany contributed over $861 million in 2001 to offset the costs of maintaining U.S. military forces on its soil, representing about 21 percent of U.S. non-personnel stationing costs in Germany. Almost all cost sharing was in the form of indirect contributions (i.e., waived taxes, rents and other forgone revenues).  Finally, Germany works diligently to assure that its airspace is available for both U.S. and NATO training needs, and has granted a blanket clearance for U.S. military aircraft transiting its territory.

Italy

Italy maintains a close security relationship with the United States, both through NATO and bilaterally, and is an active participant in efforts to protect shared security interests around the world. Italy is a major staging and logistics base for operations in and beyond the immediate region. Italy hosts American military forces at seven major and many minor bases that contribute significantly to the United States' power projection capability. NATO air bases in Italy, for example, were essential in the bombing campaign against Yugoslavia during the 1999 Kosovo crisis, and continue to provide essential staging and transportation points for NATO peacekeeping missions in the Balkans.

Italy's real defense spending declined by 3.0 percent between 2001 and 2002, and as a proportion of GDP, fell from 2.0 to 1.9 percent. The draft 2003 defense budget calls for a 3.1-percent increase in defense spending, but this represents only a modest increase over 2002 after projected inflation is taken into account. The ongoing transition to a smaller, fully professional military of 190,000 troops by the end of 2005 promises to create more proficient and deployable forces, but places additional pressure on the defense budget, and is being impeded by continuing shortfalls in recruiting regular personnel. However, Italy is nonetheless pursuing significant military acquisition and modernization programs, including procurement of Eurofighters and aerial refueling aircraft, leasing 34 ex-U.S. F-16 fighters, constructing a new class of submarines, and enhancing amphibious capabilities by refitting its two LPDs, buying new helicopters, and enlarging the San Marco marine group. Italy provides the fourth largest shares of total NATO naval combat and mine countermeasures tonnage and tanker aircraft fuel offload capacity.

Italy ranks third (after Germany and France) in personnel contributions to multinational peace support operations, with nearly 6,300 military and carabinieri troops deployed abroad in such operations (including in Afghanistan) at the end of 2002. There were 4,350 Italian troops deployed in Kosovo and Albania with KFOR, of which Italy took command for a six-month period starting in October 2002, and approximately 1,200 serving with SFOR in Bosnia. A further 200 personnel were deployed in Macedonia as part of NATO's Operation ALLIED HARMONY, and about 250 were serving in Albania under the auspices of bilateral military assistance programs. Finally, at year's end, Italy was contributing about 200 military and carabinieri personnel serving in UN operations in The West Bank, Congo, Kosovo, Lebanon, Western Sahara, and on the Iraq/Kuwait, India/Pakistan and Eritrea/Ethiopia borders.

Italy's foreign assistance spending in 2001 was about $2 billion, or 0.16 percent of GDP. This falls considerably short of the agreed OECD target of 0.24 percent of GDP, and of all the nations covered in this Report, Italy ranks sixth from last among the net aid donors.

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 Stand-by Forces High Readiness Brigade (SHIRBRIG), which gives the United Nations a rapid-reaction peacekeeping capability. It was deployed as the core peacekeeping element of the UN Mission to Ethiopia and Eritria (UNMEE) in 2000.

Italy contributed $324 million in 2001 to offset the costs of maintaining U.S. military forces on its soil, representing about 34 percent of U.S. non-personnel stationing costs in Italy. Almost all cost sharing was in the form of indirect contributions(i.e., waived taxes).

Poland

Since 1989, the cornerstone of the Polish Government's foreign and security policy has been the strong strategic relationship with the U.S. and robust participation in NATO.  Poland, a NATO member since 1999, is increasingly playing a larger role in defending international security and stability while continuing its internal process of military restructuring and transformation.  The Polish government's program to boost defense capabilities gained considerable momentum in 2002 as a major downsizing to reduce Polish military forces to 150,000 neared completion and modernization programs including the procurement of major new systems for land and air forces and upgrades to bring Soviet-era equipment up to NATO standards gained ground. The foremost military modernization issue is Poland's decision in 2002 to acquire 48 new multi-role fighter aircraft, namely Lockheed Martin's F-16 with delivery to take place by 2008. However, among all the NATO nations, Poland had the second lowest percentage of defense spending (10.3 percent) on modernization programs in 2002 - just over half the non-U.S. NATO average of 19 percent.

Poland's economic slump continued in 2002 and forced the Government to take government-wide austerity measures although defense spending was not affected. Poland's defense spending increased by a 3.2 percent in 2002 (to $3.6 billion), but relative to GDP, remained stable at 1.97 percent – slightly above the average of 1.9 percent of GDP for all non-U.S. NATO nations. Poland's GDP increased in 2002 by 1.2 percent in real terms, up marginally from 1 percent growth in 2001.  The large reduction in the annual inflation rate – from 28 percent in 1995 to 1.9 percent last year – represents a major accomplishment for both the Polish government and the National Bank of Poland (NBP).

Poland was an active contributor to NATO, UN, and OSCE peacekeeping operations and observer missions in 2002 with approximately 1,575 military and civilian personnel deployed in 15 peacekeeping operations and observer missions in Europe, Africa, and Asia.  Of note, Poland has shifted its participation toward NATO-led operations and away from its traditional focus of UN-led operations. Poland made no financial contributions to UN Peace Operations. In 2002, Poland maintained a 573-person force in KFOR and 297 in SFOR.

At the request of the U.S., Poland provided Soviet-era weapons and ammunition to the U.S.-sponsored Georgia Train and Equip Program and offered to provide military equipment to the Afghan National Army as well.  The Polish Ministry of Foreign Affairs disbursed approximately $42 million of humanitarian and developmental assistance in 2002. Assistance to Afghanistan included medicines, clothing, and educational scholarships for Afghan women at Warsaw University.

Poland continued in 2002 to conduct an active mentoring program for NATO aspirants. Poland spent roughly $500,000 in 2002 on Partnership for Peace related activities.  The Polish Ministry of Defense negotiated work plans with NATO aspirants to foster military reforms and adjustment to NATO standards, provided training to aspirant officers and NCOs at Polish military academies, and transferred excess Soviet-era equipment to a few aspirants with the idea of creating capabilities on which NATO could draw.

The U.S. and Poland continued in 2002 to develop the bilateral Defense Transformation Initiative, focusing on unit partnerships with the goal of increasing interoperability through training and joint exercises.  The bilateral Military Capabilities Initiative (MCI) focuses on cooperative activities that do not involve any increase in U.S. funding for the Polish military.

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The United States has important security relationships in the Asia-Pacific region with Australia, Japan and the Republic of Korea (ROK). As with NATO, these three bilateral relationships are instrumental in adapting both to a fundamentally altered global geopolitical situation and to emerging challenges and opportunities in the region.

For over sixty years, Australia has been one of the United States' closest and most trusted allies and security partners. This is demonstrated through Australia's consistent military contributions to coalition operations, close cooperation across the spectrum of defense and security activities, contributions to stability in the region, and its increasingly prominent role in global security issues.

At the heart of the alliances with Japan and the ROK is the continued presence of significant numbers of forward-stationed U.S. troops: 40,000 in Japan and over 37,000 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 battle group. 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. willingness and capability to defend those interests in concert with our allies.

In view of the constraints that influence the policies and capabilities of Japan and Korea, the division of the Korean peninsula and the threat of conflict, and in the constitutional restrictions that strictly limit the scope of Japan's military activities – their responsibility sharing efforts have historically focused on offsetting U.S. stationing costs. However, their active participation in shared regional and global military roles and missions has recently increased.

Australia

Australia makes major contributions to achieving common defense and policy goals with the United States. Australia places very strong emphasis on interoperability with the United States in the development of its weapons systems and platforms, as well as with its military doctrines and strategies, to be able to fight as an effective ally.  In addition, Australia provides extensive amounts of unique and vital information and analysis of the region that the U.S. depends upon.  Our military cooperation with Australia has both breadth and depth with joint operations and exercises, continual high-level joint planning and strategy efforts and joint facilities in Australia. In addition, there is extensive scientific cooperation between U.S. service laboratories and the Australian Defence Science and Technology Organisation.

The joint intelligence facility at Pine Gap, Australia is an example of the two nations' close partnership in pursuit of shared strategic interests. Australia provides more than 4,000 acres of land for this long-established facility at which Australian personnel work alongside their U.S. counterparts. The Australian Defense Force plays a significant role in U.S. Pacific Command's theater engagement plan through bilateral and multilateral exercises and regional exchanges. Australia maintains close diplomatic and defense ties with almost all the countries of East and Southeast Asia and, through its membership of the five power defense arrangements (with Malaysia, Singapore, New Zealand and the United Kingdom), helps ensure the security of maritime Southeast Asia.

In 2001-2002 (the Australian fiscal year runs from July to June) the Australian Department of Defense received its first installment of $262 million from the $14.7 billion in increased defense funding which the government has committed to spend over the next decade as laid out in Australian's 2000 White Paper on defense. In all, defense spending over the next ten years is expected to increase by an average of approximately 3.0 percent per year in real terms.

As a credible military power in its region, Australia makes important contributions to regional security in Southeast Asia and Oceania, including 200 military and security personnel deployed in 13 nations under a wide range of security assistance projects. Through its Defence Cooperation Program (DCP) with South Pacific nations, Australia has given assistance to regional security forces in the areas of strategic planning, command and control, infrastructure, communications and logistics support, and by transferring 22 naval vessels. Australia is also a major contributor to peacekeeping operations in the Asia-Pacific region. During 2002, it supplied 1,100 troops and 55 civilian police for the UN Mission in East Timor (UNMISET), 43 personnel to the four-nation Peace Monitoring Group on Bougainville and Papua New Guinea, and 72 personnel to the International Monitoring Team (IMT) in the Solomons Islands. Moreover, the Australian Defense Force also contributed to peacekeeping operations beyond the region in 2002, providing a total of 66 Australian troops to NATO peace operations in the Balkans, and UN operations in Cyprus, the Sinai Peninsula, the West Bank, and on the Ethiopia-Eritria border.

Australia also plays an important role in global security in the area of counter-proliferation and WMD threat reduction. For over fifteen years, Australia has organized and chaired annual meetings of the Australia Group (AG) - an informal group of 33 countries and the European Commission - to harmonize export control arrangements to counter the proliferation of chemical and biological weapons and agents.

Japan

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. 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 (1.0 percent), than any other ally except Luxembourg, the size of its economy is such that it ranks second in absolute defense expenditures among all the countries in this Report. Japan provides the second largest share of total naval combat and mine countermeasures tonnage and the fifth largest share of total combat aircraft capability.

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). Japan's cost sharing support for U.S. forces in 2001 was $4.6 billion, covering 75 percent of U.S. basing costs.

The current SMA, which has been in effect since April 2001, provides approximately $7.3 billion over five years. Under the SMA, Japan pays virtually all of the costs of local national labor employed by U.S. forces, as well as a portion of 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.

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 2001, Japan provided almost $660 million for the construction, restoration, and maintenance of facilities under the FIP. In addition, Japan also provided over $700 million in rents and $507 million for other vicinity improvements in 2001.

The Department estimates that the value of Japan's direct labor cost sharing (using 2000 exchange rates) will be approximately $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 $4.0 to $5.0 billion per year, depending on exchange rate fluctuations.

Japan's evolving international role means greater involvement in multinational efforts to promote regional and global stability. During 2002, Japan dramatically increased its commitment to multinational peacekeeping operations by deploying 650 troops to East Timor. Another 30 troops continued to serve in the United Nations Disengagement Observer Force (UNDOF) on the Golan Heights. Japan had the second largest foreign assistance budget of any nation in this Report during 2001 ($11 billion or 0.33 percent of its GDP). Japanese aid focuses on poverty reduction programs and emergency situation assistance and is primarily targeted to low-income and least developed countries. Japan's monetary contributions to UN peace operations during 2001 ($519 million) were greater than any other nation in this Report except the United States.

The formal U.S.-Japan cooperative research and development projects, valued at $303.5 million, continued to show progress during 2002. Two of the six formal cooperative projects were successfully completed, while the remaining programs are in various stages.

The Republic of Korea (ROK)

The Mutual Defense Treaty between the United States and the ROK remains central to the stability of the Korean Peninsula and Northeast Asia. U.S. forces stationed in the ROK contribute significantly to the security and territorial integrity of the country, and demonstrate U.S. support for peaceful change and democratic evolution in the region.

The ROK makes major contributions to regional security by maintaining strong, modern, and proficient armed forces. In 2002, the ROK devoted 2.8 percent of its GDP to defense, a 3.6 percent increase from 2001.  Furthermore, the Republic of Korea provided the second largest percentage of total allied ground combat capability, and in terms of GDP, made significant contributions to military combat forces including combat aircraft capability and naval combat and mine countermeasures tonnage.

The U.S. and ROK Special Measures Agreement (SMA) for 2002-2004 outlines the cost-sharing contributions of both nations. The baseline 2002 contribution is approximately $490 million. This is a 15 percent increase from 2001, the biggest single increase in the SMA in eight years. In addition, ROK contributions are to increase by 8.8 percent plus inflation in both 2003 and 2004.

While the ROK has begun a subtle but definite shift in its security focus from a North Korean view to a broader Northeast Asian and worldview, Seoul's defense efforts in 2002 continued to focus on military readiness. However, during 2002, the ROK provided 440 troops to serve with the UN Mission in East Timor (UNMISET), the successor to the UN Transitional Administration in East Timor, in which the ROK also participated. In addition, the ROK continued to post 20 medical officers in the Western Sahara, 9 military observers to India/Pakistan, and 3 military observers in Georgia. In 2002, it commanded the UN peacekeeping force in Cyprus, the first time the ROK has led a peacekeeping operation. Korea's total troop contribution to major multinational peace operations in 2002 numbered 473.

The ROK re-opened its chemical munitions destruction facility and resumed chemical weapons destruction in 2002. It hopes to destroy 45 percent of its chemical weapons stocks within the next 2-3 years.

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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. Collective efforts are essential, as neither the United States nor its partners in the region can ensure the security of Southwest Asia alone.  The security framework in Southwest Asia is strikingly different from those in other regions of vital interest to the United States. The U.S. 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.

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 (UAE). In December 2000, the six countries signed a joint defense pact that 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. Meeting in Oman at the end of 2001, the GCC nations reaffirmed this commitment, and announced plans to accelerate the formulation of an integrated defense policy. They also established a supreme defense council to oversee expansion of the Peninsula Shield Force from 5,000 to 20,000 troops. Construction of a new base for the force in northeastern Saudi Arabia began in 2002, and the target date for completing the expansion is mid-2003. The GCC nations continue to operate their multinational air defense command and control network, which became operational in early 2001, allowing the states to share air surveillance data.

Other Responsibility Sharing Contributions

The GCC nations continue to spend above-average percentages of GDP on defense, noting that many have per capita GDPs that are lower (and in some cases, much lower) than the average for all the nations in this Report. Strong oil prices in 2002 had, overall, a positive impact on GCC government budgets.  Qatar increased defense spending by 23.9 percent in 2002, while the United Arab Emirates and Saudi Arabia boosted their defense spending by 1.8 and 0.9 percent, respectively. Oman's defense spending decreased by 22.5 percent in 2002 and Kuwait's declined by 5.0 percent.

In general, the GCC nations shares of total allied ground and air combat capability continued to far exceed their corresponding shares of total GDP. Relative to its share of total GDP, Bahrain contributes the largest shares of naval combat and mine countermeasures tonnage and combat aircraft capability, and the second largest share of ground combat capability of all the nations addressed in this Report. Kuwait provides the largest share of ground combat capability, relative to GDP.  Saudi Arabia contributes the largest share of military tanker aircraft fuel offload capacity and the third largest share of military transport aircraft capacity, relative to its GDP, 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 to nations in Southeast Asia, Africa and the Balkans. In 2001, Kuwait contributed $73 million, a decline of over 53 percent over 2000 assistance levels. The UAE contributed $124 million, a decline of 11 percent over 2000 assistance levels. Saudi Arabia increased foreign assistance levels to $486 million in 2001. This represents a 70 percent increase over 2000 contributions.

The GCC nations provide a major contribution to regional security by allowing U.S. forces the use of military facilities, transit rights, and other forms of access. In 2002, the United States had defense cooperation agreements permitting access and prepositioning with Kuwait, Bahrain, Qatar, and the UAE. During the year, these nations and Oman collectively hosted greatly increased contingents of U.S. ground and air forces that were deployed both to support ongoing operations in Afghanistan and to prepare for possible operations against Iraq. Furthermore, Kuwait and Saudi Arabia continued to provide access to U.S. forces enforcing the no-fly zone over southern Iraq (Operation SOUTHERN WATCH). Since 1995, Bahrain and Qatar have also hosted several Air Expeditionary Force deployments in support of Operation SOUTHERN WATCH. 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. In 2002, an estimated 185 U.S. navy ships docked in Bahrain including four home-ported minesweepers.  Bahrain is currently the U.S. navy's busiest overseas port.

Qatar plays an important role in supporting the U.S. military presence in the region. The forward headquarters of CENTCOM Special Operations Command has been located at Al Sayliyah, Qatar since 2001. In 2002, CENTCOM's deployable forward headquarters was established at Al Sayliyah and supported Internal Look, a major U.S. exercise designed to test the deployable headquarter's ability to operate from Qatar.  Also in 2002, an implementing agreement was signed by Secretary Rumsfeld and Foreign Minister Hamad Bin Jassim Bin Jabr Al Thani to improve facilities available to the U.S. military at Al Udeid Air Base. Al Udeid played an important role in OEF, and is a vital link in the U.S. Air Force's prepositioning program in the Middle East. Qatar also hosts deployed U.S. forces that are participating in OEF at Doha Airbase ('Camp Snoopy').

The UAE provides access to U.S. forces and hosts more U.S. Navy ships than any port outside the United States. In 2002 the UAE provided hangar and ramp space for U.S. aircraft at al Dhafra Air Base. The UAE continued to provide the U.S. Navy with a highly valuable dedicated deepwater berthing space in the Jebel Ali port complex that can accommodate aircraft carriers. Oman likewise allows the United States to preposition equipment on its territory, and has granted access to its military bases since 1980.

Saudi Arabia covered approximately 54 percent of U.S non-personnel stationing costs in 2001 and contributed substantially to offset the costs of Operation SOUTHERN WATCH. Kuwait contributed 51 percent of non-personnel stationing costs in 2001 and also offset U.S. prepositioning and exercise costs. Oman and Qatar offset 79 and 41 percent of stationing costs respectively. Bahrain offset around 33 percent of non-personnel stationing costs.

In spite of the efforts described above, 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 U.S. continues to urge the Gulf countries to work closely with other moderate Arab states to enhance their collective ability to defend the region.

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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, air and in space. Our 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 defends shared security interests first and foremost by leading the global War on Terrorism, and likewise, international efforts to halt the proliferation of weapons of mass destruction (WMD). The United States also promotes shared security interests by continuing to maintain powerful military forces at bases in Europe, the Persian Gulf, and Northeast Asia. These forward-based units strengthen peace and stability within their respective regions, and enhance the ability to project U.S. influence and military power worldwide (particularly the forces permanently based in Europe).

The United States spent approximately $350 billion on defense during 2002. This represents a real increase of 8.7 percent from 2001 due to spending increases approved in the wake of the September 11 attacks. Likewise, the percentage of GDP devoted to defense increased from 3.2 to 3.4 percent.

The U.S. ranked fourth among all the nations covered in this Report in terms of personnel contributions to multinational peace operations during 2002. In December 2002, a total of 631 Americans were serving in UN peacekeeping operations in Kosovo, East Timor, the Republic of Georgia, the Western Sahara, and on the Israeli, Iraq-Kuwait and Ethiopia-Eritrea borders. In addition, U.S. personnel served with NATO's Stabilization Force (SFOR) in Bosnia (1,754 personnel at the end of 2002), Kosovo Force (KFOR) (2,927 personnel at the end of 2002), and in the Multinational Force and Observers (MFO) on the Sinai Peninsula. Furthermore, the U.S. contributed more funding for UN peace operations than any other nation during 2002 ($669.5 million).

The United States provided over $13.1 billion in foreign assistance during 2001 – the largest contribution of all nations covered in this Report, and just over a fifth of the total contributed by all the nations covered in this Report combined. Furthermore, the U.S. ranks first in all of the remaining responsibility sharing indicators including defense spending, NATO modernization spending, combat forces, and military mobility/logistic forces.  U.S. contributions in both naval tonnage categories, combat aircraft capability, military transport aircraft capacity, and tanker aircraft fuel offload capacity are greater than all other allies combined.

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As stated in previous years' Reports, the Department believes that our allies' and key security partners' efforts present a mixed, but generally positive picture in terms of shouldering responsibility for protecting shared security interests. As noted throughout this Report, there is no one set formula or strategy for increasing allied contributions to collective security that is appropriate for all allied nations. The United States will continue to encourage our allies and partners to assume a greater share of the burden of providing for the common defense using approaches tailored to the circumstances of particular nations or groups of nations.

The War on Terrorism, contingency operations arising from regional conflicts, ethnic strife, and humanitarian disasters will continue to challenge U.S. and allied budgets and armed forces. The Department believes that the nations addressed in this Report have developed a heightened awareness of these challenges, and thus recognize the importance of increasing their efforts to share the roles, risks, and responsibilities of defending shared security interests. The Department is committed to continuing its efforts to convince allied and partner nations to maintain and increase their responsibility sharing contributions.

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