NATO BUDGET SYSTEM

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NATO BUDGET SYSTEM RESOURCES MANAGEMENT

• NATIONAL DEFENCE ACADEMY
• 12 February 2003
• J. Ghesquiere
• Head Resource Policy Unit
• NATO HQ

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NATO BUDGET RESOURCES MANAGEMENT
- NATO resources - National, multinational,
joint common funding - Common funding Civil
Military Budget, NSIP - Resource planning,
management, implementation - Current resource
issues - Role of common funding within NATO
3
NATO BUDGET RESOURCES MANAGEMENT
- NATO resources - National, multinational,
joint common funding - Common funding Civil
Military Budget, NSIP - Resource planning,
management, implementation - Current resource
issues - Role of common funding within NATO
People Money Assets
4
NATO resources or resources of NATO
nations? 02

Population 805,800,000 Labour force
376,400,000 GDP (ppp) 22,022 Billion
US GDP/head 27,330 US
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NATO resources or resources of NATO
nations? 02

Population 805,800,000 Labour force
376,400,000 GDP (ppp) 22,022 Billion
US GDP/head 27,330 US
Armed forces 5,731,700 1.52 Defence
exp. 522 Billion US 2.37 Def.
Exp/Head 648 US
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NATO resources or resources of NATO
nations? 02

Population 805,800,000 Labour force
376,400,000 GDP (ppp) 22,022 Billion
US GDP/head 27,330 US
Armed forces 5,731,700 1.52 Defence
exp. 522 Billion US 2.37 Def.
Exp/Head 648 US
NATO joint 6.7 Billion US 1.3 of
defence funding expenditure NATO
common 1.7 Billion US 0.32 of
defence funding expenditure NATO
international 16,818 0.29 of
armed manpower forces
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NATO BUDGET RESOURCES MANAGEMENT
- NATO resources - National, multinational,
joint common funding - Common funding Civil
Military Budget, NSIP - Resource planning,
management, implementation - Current resource
issues - Role of common funding within NATO
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NATO FUNDING ARRANGEMENTS National defence
expenditure - the default option - 95 or
more of overall defence expenditure. Multinationa
l defence expenditure - funding outside formal
NATO structures - a multitude of bilateral and
multilateral arrangements - the substance of
the arrangement, the funding mechanisms and
the levels of funding remain entirely with the
nations concerned
But with NATO Defence Planning providing the
broader framework
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NATO RESOURCES? Joint funding - structured
forms of multinational funding within the terms
of an agreed NATO Charter - the participants
identify the requirements and the priorities
and agree the funding levels - NATO has
visibility and provides political and financial
oversight. Common funding - Allies
provide the funding - NATO Strategic Commands
identify the requirements and the priorities
1.3 of defence expenditure
0.32 of defence expenditure
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JOINT FUNDING NATO Production Logistics
Organisations
NAMSA 500 MUS
6.7 Billion 1.3
Logistics
CEPMA 100 MUS
BICES 1.5 MUS
Production
NAHEMA 100 MUS
NAMEADSMA 50 MUS
NAPMA 300 MUS
NETMA 5,600 MUS
Air Defence
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NATO BUDGET RESOURCES MANAGEMENT
- NATO resources - National, multinational,
joint common funding - Common funding Civil
Military Budget, and NATO Security
Investment Programme - Resource planning,
management, implementation - Current resource
issues - Role of common funding within NATO
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COMMON FUNDING THE 2003 CIVIL BUDGET Finances
the NATO HQ in Brussels - NATO
International Staff 110.3 Million - HQ
running costs 27.0 Million - Science
programme 20.6 Million - Other
programmes Information 12.5 Million
Total 170.4 Million Of this, around
32 Million Euro relate to Outreach and
Partnership for Peace activities Financed
from Foreign Ministry budgets, supervised by the
Civil Budget Committee, implemented by the NATO
International Staff.
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NATO MILITARY COMMON FUNDING Military Budget
NATO Security Investment Programme - a visible
sign of the willingness of nations to share
roles, risks and responsibilities - activities
linked to the NATO defence planning process
and to Alliance priorities - aimed at the
provision of core capabilities outside the
reach of individual nations
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MILITARY BUDGET - in fact some 50
separate budgets - finances the operation and
maintenance cost of the NATO Command Structure
(including the IMS), the NAEW force, command
structure C3 support (including most of the
NC3A), exercise programmes, the NATO Defense
College and some research elements (RTA and
SACLANTCEN) - 2003 budget ceiling of 773.8
million Euro including 51.8 million Euro for
Peace Support Operations - financed from
Defence budgets, supervised by the Military
Budget Committee, implemented by the various
commands and agencies under the control of the
respective Financial Controllers.
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Military Budget allocations for 2003
Pensions 2.5
PfP 0.8
CRO 6.9
Command Structure 24.5
Other Air C2 6.9
TEE 3.6
NAEWC 32.6
C3 Support 18.6
RD 3.6
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NATO SECURITY INVESTMENT PROGRAMME
- funds investment projects in support of
Alliance requirements - total identified
requirements amount to some 9.9 Billion Euro
to be implemented over the next 10 to 15 years -
main components are - Air C2 (including
ACCS) 3,300 million - NATO-wide C3
Support 2,052 million -
Deployability/mobility 1,576 million -
Sustainability 1,518 million - 2003
contribution ceiling at 640 million Euro -
financed from Defence budgets, supervised by the
Infrastructure Committee, implemented by host
nations and agencies
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NATO SECURITY INVESTMENT PROGRAMME
- funds investment projects in support of
Alliance requirements - total identified
requirements amount to some 9.9 Billion Euro
to be implemented over the next 10 to 15 years -
main components are - Air C2 (including
ACCS) 3,300 million - NATO-wide C3
Support 2,052 million -
Deployability/mobility 1,576 million -
Sustainability 1,518 million - 2003
contribution ceiling at 640 million Euro -
financed from Defence budgets, supervised by the
Infrastructure Committee, implemented by host
nations and agencies
Under review in line with changing security enviro
nment
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NSIP expenditure estimates for 2003
Sustainability 13.2
Command Structure 8.5
C3 Support 10.7
TEE 1.1
Mobility 23.8
Air C2 37.3
CRO 4.4
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International Manpower requirements for 2002
Air C2 14.1
CRO 10.9
RD 1.4
Mobility 1
C3 Support 28.8
TEE 1.4
Command Structure 41.7
For a total of some 16,818 (14,735 military
2083 civilians)
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NATO BUDGET RESOURCES MANAGEMENT
- NATO resources - National, multinational,
joint common funding - Common funding Civil
Military Budget, NSIP - Resource planning,
management, implementation - Current resource
issues - Role of common funding within NATO
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Common funded resource planning, management
implementation
- part of Alliance overall defence planning -
requirement identification, prioritisation and
overall resource management centralised role
of Strategic Commander, capability package
process, Medium Term Resource Plan and NATO
auditing - budget execution, project
development and project execution
decentralised role of budget holder, host
nations and agencies - NATO resource
management in full evolution.
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Eligibility for common funding
Resource limitations necessitate a more selective
approach to common funding than hitherto.
Therefore, in principle, NATO common funding
eligibility will focus on the provision of
requirements which are over and above those
which could reasonably be expected to be made
available from national resources
C-M(93)38(Final)
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NATO COMMON- FUNDED BUDGETS COST SHARE
ARRANGEMENTS
Civil Budget at 19 2.76 5.35 0.90 1.47 15.35 15.
54 0.38 0.65 0.05 5.75 0.08 2.75 1.11 2.48 0.63 3.
50 1.59 17.25 22.41
Military Budget at 19 at
18
NSIP at 19 at 18
Nation Belgium Canada Czech Republic Denmark Franc
e Germany Greece Hungary Iceland Italy Luxembourg
Netherlands Norway Poland Portugal Spain Turkey Un
ited Kingdom United States
3.3474 4.0745 0.9000 2.4655 13.8543 18.3450 0.3800
0.6500 0.0400 6.8609 0.1422 3.6135 2.0169 2.4800
0.4604 3.3760 1.2627 12.5807 23.1500
3.7779 4.9713 1.0563 2.7026 0 20.7090 0.4600 0.762
9 0.0500 7.3856 0.1508 4.0223 2.1404 2.9077 0.5680
3.9812 1.5085 15.3555 27.4900
3.3474 4.0745 0.9000 2.4655 13.8543 18.3450 1.0000
0.6500 0 7.0979 0.1422 3.6135 2.0169 2.4800 0.460
4 3.3760 1.2627 12.5807 22.3330
3.7779 4.9713 1.0563 2.7026 0 20.7090 1.0500 0.762
9 0 8.8045 0.1508 4.0223 2.1404 2.9077 0.5680 3.98
12 1.5085 15.3555 25.5311
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NATO COMMON- FUNDED BUDGETS COST SHARE
ARRANGEMENTS
Civil Budget at 19 2.76 5.35 0.90 1.47 15.35 15.
54 0.38 0.65 0.05 5.75 0.08 2.75 1.11 2.48 0.63 3.
50 1.59 17.25 22.41
Military Budget at 19 at
18
NSIP at 19 at 18
Nation Belgium Canada Czech Republic Denmark Franc
e Germany Greece Hungary Iceland Italy Luxembourg
Netherlands Norway Poland Portugal Spain Turkey Un
ited Kingdom United States
19 18 Bulgaria 0.35
0.4063 Estonia 0.11 0.1277 Latvia
0.14 0.1625 Lithuania 0.21
0.2438 Romania 1.14 1.3233 Slovakia
0.46 0.5340 Slovenia 0.26 0.3018
3.3474 4.0745 0.9000 2.4655 13.8543 18.3450 0.3800
0.6500 0.0400 6.8609 0.1422 3.6135 2.0169 2.4800
0.4604 3.3760 1.2627 12.5807 23.1500
3.7779 4.9713 1.0563 2.7026 0 20.7090 0.4600 0.762
9 0.0500 7.3856 0.1508 4.0223 2.1404 2.9077 0.5680
3.9812 1.5085 15.3555 27.4900
3.3474 4.0745 0.9000 2.4655 13.8543 18.3450 1.0000
0.6500 0 7.0979 0.1422 3.6135 2.0169 2.4800 0.460
4 3.3760 1.2627 12.5807 22.3330
3.7779 4.9713 1.0563 2.7026 0 20.7090 1.0500 0.762
9 0 8.8045 0.1508 4.0223 2.1404 2.9077 0.5680 3.98
12 1.5085 15.3555 25.5311
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NATO BUDGET RESOURCES MANAGEMENT
- NATO resources - National, multinational,
joint common funding - Common funding Civil
Military Budget, NSIP - Resource planning,
management, implementation - Current resource
issues - Role of common funding within NATO
26
THE CURRENT RESOURCE ISSUETRANSFORM THE
ALLIANCE TO MEET NEW CHALLENGES
Increased pressure on resources
- Enlargement - Command Structure Review NCS,
FS, CJTF - Crisis Response Operations -
NATO-Russia and Partnership for Peace - New
capabilities CBRN, TMD, AGS, SEAD - European
Security Defence Initiative
Review existing resources?
Maintain Alliance cohesion !
but
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ENLARGEMENT
- Differentiate between defence restructuring
costs and costs directly resulting from
enlargement - For new members enlargement
related costs include representation at NATO
HQ, NATO Command facilities and NATO Agencies
as well as contributions to Civil Budget,
Military Budget and NSIP - For NATOs military
common-funded programmes, enlargement related
costs cover the integration of new members in
NATOs communications and air defence
structures and the upgrading of selected
mobility and sustainability assets - The cost
of enlarging to 19 was estimated at 1.5 Billion
US over a 10 year period.
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ENLARGEMENT
Resource timelines - Dec 2002 - March 2003
Discuss participation and modalities of
participation with prospective new
members as part of the
Accession Talks. - Jan 2003 - June 2003
Analyse the implications of the Prague
Summit decisions for NATO common
funding as part of the Medium Term Planning
process. - Sept. 2003 onwards Develop
Capability Packages, prepare for accession. -
May 2004 Participate in military common
funding.
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ENLARGEMENT
Cost share arrangements - methodology Based
on relative Gross National Income (GNI)
expressed in purchasing power parities,
extrapolated to the date of accession and
taking into account the effect of the
constrained US cost share. - calculation
post-Prague (done) - discuss with invited
nations as part of accession talks (done) -
adaptation of existing cost shares
post-accession protocols - introduction
post-accession
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COMMAND STRUCTURE REVIEW
- Reorient Alliance forces towards flexibility
and deployability - Need to adapt NATOs
Command Structure - eliminate structural
redundancies - focus on deployability and
sustainability requirements - free resources
and personnel - Find agreement on how the
integrated Command Structure, the Force
Structure and the Combined Joint Task Force
(CJTF) Headquarters work together. - On
current arrangements, integrated HQs are commonly
funded, while Force Structure HQs are
multi-nationally funded.
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COMMAND STRUCTURE REVIEW
Timelines - Nov. 2003 Heads of State and
Government approved the structural outline for
the NATO Command and force structure and to
set implementation dates - June 2003 Defence
Ministers to approve new structure and task
implementation to meet completion deadlines -
March - December 2003 Assess the resource
implications of the review for incorporation
into the Medium Term Resource Plan for the
period 2005-2009 impacts on investments, OM
and manpower
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CRISIS RESPONSE OPERATIONS
Costs lie where they fall
- Only costs not attributable to a specific
nation and agreed as eligible for common
funding will be assumed by NATO -
investment and OM of designated theatre HQ
elements (including theatre HQ CIS and
local connectivity) - shortfall strategic
communications - critical strategic theatre
infrastructure - IFOR/SFOR/KFOR common funding
to date some 600 Million shared by all NATO
nations - Crisis response operations are
mainly funded from national defence budgets
military salaries, equipment, logistics support
in theatre, locally hired staff at the national
commands, etc.
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CRISIS RESPONSE OPERATIONS
Costs lie where they fall
Resource challenges - long-term sustainment
- pressure to outsource specialist
capabilities - funding of integrated support
activities fuel, medical services, airport
facilities, transport - future operations
Support to EU-led operations
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NATO-RUSSIA PARTNERSHIP FOR PEACE
- Military common funding in PfP has been very
limited - PfP activities largely rely on
national sources - key elements such as C3,
CJTF and CAX capabilities are essentially
provided as part of overall Alliance
requirements - normal rules apply OA,
Alliance military requirement - The need to
give more substance to these partnerships may
require a rethink of the approach so far -
participation in crisis response operations -
joint exercises - airspace management
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NATO-RUSSIA PARTNERSHIP FOR PEACE
NATO-Russia Council is adding new dimension -
cooperation at 20 in areas such as crisis
management, theatre missile defence, air
transport and air refuelling, training and
airspace management - need to think through the
resource approach - mixture of national and
multinational funding - also joint and
common funding? - so far costs have been
limited and have been absorbed within
existing arrangements
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NEW CAPABILITIES
Realisation that more needs to be done in
common
- find the right balance between national,
multinational, joint and common funding -
some capabilities are beyond the means of most
nations - Alliance cohesion requires the
sharing of roles, risks and responsibilities
- strategic commands need core capabilities -
part of the Defence Capabilities Initiative and
now of the Prague Capabilities Commitments
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NEW CAPABILITIES
Specific areas of interest include
Suppression of Enemy Air Defence incl. Support
Jamming
Alliance Ground Surveillance
A minimum essential NATO-owned and operated core
capability supplemented by interoperable national
assets as part of a system of systems
Theatre Missile Defence
Commonly funded Feasibility Study
Deployable C3 capabilities for all deployable
NATO HQs chemical, biological, radiological and
nuclear defence capabilities for all deployable
forces
Precision Guided Munitions Large air transport
capacity Additional air tanker capacity Increased
deployable combat service support
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NEW CAPABILITIES
Funding approaches - traditionally most of it
would have been national - much of it now
posted for multinational funding approaches
- equipment stocks - multinational units
- transport aircraft - UAVs - increasing
emphasis on joint funding - core Alliance
Ground Surveillance Capability - core stocks
of key equipment - support jamming
capability - common funding for the adaptation
of Alliance wide systems
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EUROPEAN SECURITY AND DEFENCE IDENTITY
Use of NATO assets and capabilities in the
framework of EU-led operations
- national assets and collective assets -
application of the costs lie where they fall
principle? - NATO likely to expect
reimbursement of common funded incremental
costs and compensation for collective assets lost
- NATO unlikely to expect reimbursement for
ongoing running costs or for normal wear and
tear of collective assets
Discussions on financial arrangements have just
started
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NATO BUDGET RESOURCES MANAGEMENT
- NATO resources - National, multinational,
joint common funding - Common funding Civil
Military Budget, NSIP - Resource planning,
management, implementation - Current resource
issues - Role of common funding within NATO
41
NATO COMMON FUNDING - complements national
activities and acts as a force multiplier -
is directly linked to Alliance requirements and
priorities - provides a ready-made
environment for the implementation of a wide
variety of requirements - agreed
eligibility criteria - agreed cost share
arrangements - agreed financial and
procurement mechanisms - reinforces Alliance
cohesion