. United States General Accounting Office I- GiO Report to Chgressional Committees April 1990 NAm-WARSAW PACT Issues Related to Implementation of a Conventional Forces Treaty GAO/NSIAD-90430 united states GAO General Accounting Office Washington, D.C. 20648 National Security and International Mfairs Division B-230646 April 16,199O The Honorable Robert C. Byrd Chairman, Committee on Appropriations United States Senate The Honorable Sam Nunn Chairman, Committee on Armed Services United States Senate The Honorable Claiborne Pell Chairman, Committee on Foreign Relations United States Senate The Honorable Jamie L. Whitten Chairman, Committee on Appropriations House of Representatives The Honorable Les Aspin Chairman, Committee on kmed Services House of Representatives l The Honorable Dante B. Fascell Chairman, Committee on Foreign Affairs House of Representatives The proposals to reduce conventional forces and equipment in Europe, if adopted, will greatly affect relations between the North Atlantic Treaty Organization (NA?D) and the Warsaw Pact by moving each party to more balanced levels of military forces. The proposed massive Soviet cuts have prompted the question: what “peace dividend,” or defensesavings, will the United States and its NATU allies be able to reap? Although pre cise cost estimates are not yet available, in this report we discusspoten- tial cost and savings issuesassociatedwith a conventional forces reduction treaty and raise a number of other alliance-wide issuesrelated to its implementation. Becauseof the rapid pace at which treaty negotia- tions are proceeding and becauseno final agreement has been reached on a number of treaty-related issues,someof the information in this report, in particular that related to equipment inventory estimates and limits, is subject to change. Plrge 1 GAO/N8IAD90-180 CF’ETrerrty ImPlemmmtion In terms of defensesavings, only a limited NAP peacedividend will Resuks in Brief result directly from the treaty proposals. This dividend will not be shared equally among all NAPI allies. Under the treaty, only the United States and the Soviet Union are required to make troop reductions. U.S. savings would result from the Department of Defense(DOD) decision to reduce the total number of its forces rather than simply relocate person- nel removed from Europe. Implementing a Conventional Armed Forcesin Europe (CFE)treaty will be a complex task that will result in certain costs to be incurred by all NAID allies. For example, verifying compliance with the treaty may require extensive NAKIinspection and monitoring of Warsaw Pact force levels and treaty-limited equipment.’ NAVIwill incur additional costs in complying with treaty provisions that require the destruction of numer- ous conventional weapons. The United States and its NA?Dallies are cur- rently discussing how best to ensure the equitable distribution of both the costs and benefits of implementing a conventional forces treaty. The United States will likely achieve savings through the proposal to Many Issues Involved limit U.S.-stationedground and air forces in Europe to 226,000. To com- in Assessing CFE ply with this limit, the United States will have to reduce the number of Impact on NATlo ground and air forces stationed in Europe by about 80,000. According to DOD officials, while the treaty requires removal of these forces from Europe, it doesnot require that total U.S. forces be reduced by 80,000; that is, these forces could be removed from Europe and placed in the United States or other theaters where U.S. forces are stationed.2These officials pointed out, however, that total U.S. forces will be reduced by 80,000 personnel even though not required by the CFEtreaty proposals. DODnoted that its decision was driven by defensebudget cuts, not CFE. Such budget cuts will require DOD to reduce its military personnel. Although other NATO allies are not required to make troop reductions under the treaty, DODofficials told us that NATOallies will make some troop reductions to accommodaterequired equipment reductions. Neither the required equipment reductions nor the resulting troop ‘Treaty-limited equipment refers to numerical restrictions placed on the five m*r categories of equipment-tanks, artillery, armored combat vehicles, aircraft, and helicopters-that are being nege tiated under CFE. 2The President, in his original troop reduction proposal, noted that troops removed from Europe would be demobilized. According to State Department officials, the term “demobilized” has not yet been defied. Pnge 2 GAO/NSWlSO CFE Treaty Implementhion reductions are likely to produce savings for the other NATO allies compar- able to those which the United States is expected to experience from its decision to reduce total U.S. military personnel. CFEproposals made by NATO and the Warsaw Pact (as of April 1990) would require massive equipment cuts by the Warsaw Pact. NATO force cuts are significantly less (seetable I. 1 in app. I). While NATO may realize someoperations and maintenance savings associatedwith cuts of treaty-limited equipment, those potential savings will be at least par- tially offset by the costs of implementing the treaty. NAIU hopes to achieve the most capable forces possible within treaty lim- itations by transferring modern equipment from someNATO countries to other alliance membersthat would destroy older equipment to meet treaty requirements. U.S. participation in a transfer program is cur- rently limited by legislative restrictions on the transfer of equipment that is excessto U.S. worldwide requirements. Other benefits could be realized if alliance memberswere allowed to use their excessequipment to meet non-NA’IDrequirements or to sell it to other non-NAmallies. Under the proposed terms of the treaty, however, this would not be permitted. The issuesrelated to implementation of a conventional forces treaty are discussedin appendix I. According to DOD officials, becauseproposals for further reductions are Impact of a Reduced still being made and becausepolitical developments affecting the cohe- Soviet Threat sion of Eastern Europe continue to unfold, NATO has not completed a reassessmentof the Warsaw Pact threat. Even so, it is clear that the conventional threat to NATD has already decreasedas a result of changes in Eastern Europe and the unilateral Soviet reductions that are now in progress. If agreementis reachedon most of the proposals being dis- cussed,the Soviets’ required force reductions will decreasethe threat to NA?D even further. Most of the NATO allies, including the United States, face domestic bud- getary problems and are examining defenseas an area in which spend- ing cuts could be made. SomeNATO allies have announcedprojected uni- lateral reductions in their defenseforces to be made after the CFE agreementis signed. Although the fiscal year 1991 budget proposed by the President reducesreal defensespending by 2 percent, even deeper cuts appear inevitable. Page3 The United States and its NATO allies will be addressing a number of issuesthat will affect the level of future defensespending. Among those issuesare . the extent to which U.S. and allied commitments to NATO are maintained or modified, l the extent to which NATO nations make unilateral budget cuts in defense either as a result of reassessingthe threat or in concert with further Warsaw Pact reductions, and . the extent to which the defenseestablishments within allied countries can persuade their governments that it is necessaryto keep pace with Soviet modernization efforts. Regarding the first issue-maintenance of commitments-although the United States has proposed withdrawing 80,000 ground and air forces stationed in Europe, it has not changed its commitment to provide 10 divisions to Europe within 10 days from the time mobilization is called. Unless the United States modifies its commitment by decreasingthe number of U.S. troops promised and/or the time period promised for their delivery, the decreaseof U.S. forces in Europe could result in much greater requirements for U.S. strategic lift and prepositioning capabilities. The level of future defenseexpenditures may also depend on whether NATO allies believe that the Warsaw Pact’s force reductions would change the threat so dramatically that substantial unilateral reductions are also possible. Individual nations might take the position that the alliance will-by maintaining the maximum level of forces proposed in the CFE talks-finally reach an asymmetrical advantage over Soviet forces in the Central Region and might therefore argue that further cuts should be made even if there are no further cuts in Soviet forces. It also seems highly probable that other NATO allies would like a greater share of the “peace dividend” in the form of decreaseddefenseexpenditures. According to U.S. officials at the U.S. Mission to NATO and several Euro- pean embassies,after NATO and the Warsaw Pact forces are reduced, both sideswill emphasizemodernization and technological advance- ments. If more significant equipment reductions are not agreedto during the CFEtalks and if NATO and the Warsaw Pact move to an arms moderni- zation competition, other NAmcountries may realize few benefits from the CFEtreaty, and the United States may realize significantly lessthan expected. Past defensespending trends of many NATO allies, coupled with the decreasedWarsaw Pact threat, indicate that NATO’S defense Page 4 GAO/NSL4DBO-13O CPJ3Treaty Implementation ministers may find it difficult to convince their governments to maintain current force levels and devote greater resourcesto modernization programs. We discussedthe information in this report with Defenseand State Department officials and incorporated their comments, as appropriate. We plan to continue monitoring developments associatedwith CFEnego- tiations and the anticipated treaty implementation. Appendix II includes a discussionof our objectives, scope,and method- ology. We are sending copies of this report to the Secretariesof Defense and State; the Director, Office of Managementand Budget; and other interested parties. This report was prepared under the direction of Joseph E. Kelley, Direc- tor, Security and International Relations Issues,who can be reached on (202) 276-4128 should you or your staff have any questions. Other major contributors are listed in appendix III. Frank C. Conahan Assistant Comptroller General Page 6 GAO/NSIADBO-130CFE Treaty Implementation Contents Letter 1 Appendix I 8 IssuesRelated to CFE Implementation Will Entail Certain Costs Potential Cost SavingsFrom a CFE Treaty 10 16 Reducing Conventional Forces and Equipment in Europe Appendix II 19 Objectives, Scope,and Methodology Appendix III 20 Major Contributors to This Report Tables Table I. 1: NATOand Warsaw Pact Force Reductions 9 Proposedby NATO Table 1.2:Elements of the INF Treaty and ProposedCFE 11 Treaty Abbreviations CFE Conventional Armed Forces in Europe DOD Department of Defense INF Intermediate-RangeNuclear Forces NATO North Atlantic Treaty Organization Page0 GAO/NSIAD-!@130CPETreaty Implementation Page 7 GAO/N8IhD9olW Cl% Treaty Implementation IssuesRelatedto ReducingConventionalForces and Equipment in Europe In March 1989, the 23 nations in the North Atlantic Treaty Organization (NATO) and the Warsaw Pact began negotiations to reduce the level of conventional armed forces in Europe (CFE).During the NAIDsummit in May 1989, NAKI announcedits intention to acceleratethe timetable for implementing a treaty and expanded its original proposa1.lAt the Malta summit in December1989, President Bush and President Gorbachevcon- firmed their commitment to complete a CFE treaty during 1990. They also agreedto consider discussionsfor even further force reductions after the initial CFEtreaty is signed. In recognition of the dramatic politi- cal reforms in Eastern Europe and in responseto calIs to increase force reductions, in January 1990, President Bush proposed that U.S. and Soviet ground and air forces in Central Europe be reduced to 196,009. NATO and the Warsaw Pact agreedto this proposal in Ottawa in February 1090 and further allowed the United States to retain an additional 30,000 U.S. troops elsewhere in Europe while limiting the Soviet Union to 196,000 troops. The objectives of the CFEnegotiations, as mutually agreed upon by NAP and the Warsaw Pact, are to . establish a secure and stable balance of conventional forces at lower levels; . eliminate disparities in military capability that are prejudicial to stabil- ity and security; and . eliminate, as a matter of high priority, the capability for launching a surprise attack and for initiating large-scaleoffensive actions. The current CFEnegotiations include U.S. and Soviet ground and air forces stationed within the European zone and five major categoriesof conventional land-basedarmaments and equipment.2 To reach relative parity, the Warsaw Pact wilI have to make signifi- cantly greater reductions than NAITI. The Soviets would have to reduce their forces located west of the Ural Mountains by about 68 percent, while the United States would reduce its ground and air forces in Europe by about 26 percent. Similarly, NAPIreductions of treaty-limited equipment would be significantly less than those of the Warsaw Pact. ’ NATO’s expanded proposal is based on President Bush’s proposal to limit U.S. and Soviet air and ground forces to 276,000 for each party. The President’s proposal alsu set limits on two additional categories of weapons-helicopters and land-based combat akcraft. *The European zone refers to the land or territory within Europe that extends from the Atlantic Ocean to the Ural Mountains. Current CFE proposals identify conventional equipment and forces that will be subject to treaty limitations according to their bcation within the zone. Page 8 GAO/NSIhD90-130 CF’ETreaty h@ementation Appendix I Iames Related to Reducing Conventional Forceaand Equipment in Europe The treaty would not preclude modernization of the remaining equip- ment. Table I.1 illustrates the magnitude of equipment and troop reduc- tions currently proposed under CFE. Table 1.1: NATO and Warsaw Pact Force Reductions Proposed by NATO NATO estimate Number NATO of current to be Category Proposed limitsa forces eliminated Tanks NATO 20,000 22,224 2,224 Warsaw Pact 20,000 51,500 31,500 Artilleryb NATO 16,500 17,328 828 Warsaw Pact 16,500 43,400 26,900 Armored NATO 30,000 28,800 0 Combat Warsaw Pact 30,000 53,500 23,500 Vehicles AircraftC NATO 5,700 6,700 1,000 Warsaw Pact 5,700 13,500 7,800 Helicopters NATO 1,900 2,200 300 Warsaw Pact 1,900 3,500 1,600 Manpowerd U.S. and Soviet ground and air stationed manpower levels in Central Europe are to be limited to 195,000 K each. The United States is permitted up to an additional 30,000 outside this area. Note: Ftgures In the table will change as NATO and the Warsaw Pact contmue to negotiate equrpment defrnitrons and kmits. aNATO and the Warsaw Pact agree on limits for marn battle tanks and combat heltcopters. For the remainrng equipment categories, the Warsaw Pact has proposed the followrng lrmits for each srde: artil- lery-20,000; armored combat vehicles-28,000; and, aircraft-7,700 bArtillery is the only category for whtch a definition has been reached by both sides CAccording to the State Department, NATO and the Warsaw Pact are far apart in agreerng on aircraft definitions and limits Both srdes have recently offered alternatives on limits to be placed on thus cate- gory of equipment. dTo achieve these troop levels, the United States will have to reduce its European forces by 80,OCO;the Soviets by 405,ooO. Page 9 GAO/NSIAIMW130 CFE Treaty Implementation Appendix I I.WU~SRelated to Redudng Conventioxml Forceau\d Equipment in Jhuope US. and NATO officials note that, by any measurement, a CFEtreaty would be beneficial to the alliance, primarily becauseit is designedto eliminate the numerical imbalance of forces in Europe. In our view, the equitable distribution of both the costs and benefits of a CFXtreaty will be one of the major issuesfacing the United States and its NARIallies. U.S. officials acknowledge that implementing the proposed treaty wilI CFE Implementation be a complex task and will result in additional costs to the NATOallies. Will Entail Certain These costs are primarily related to verifying compliance with the costs treaty limits and destroying and transferring treaty-limited equipment. DODand State Department officials were not able to provide implementa- tion cost estimates becausesuch costs are dependent on the outcome of the negotiations. The costs to the United States will depend on intra- alliance agreementsto share the burden of implementation. Treaty Verification Costs The mandate for CFEnegotiations requires that any treaty contain “an effective and strict verification regime” to provide the means for moni- toring treaty obligations, including on-site inspections and exchangesof information. To this extent, CFEverification objectives are similar to those of the Intermediate-Range Nuclear Forces(INF)treaty. However, according to DODand State Department officials, verifying a CFE treaty will be much more complex and difficult than verifying the INFtreaty. The INFtreaty, signed in December1987, eliminated an entire class of nuclear weapons. The treaty required a variety of verification mecha- nisms, including . on-site inspections at missile sites and production facilities, . monitoring of missile destruction, and . National Technical Means (electronic/satellite surveillance techniques used to monitor compliance with the provisions of the treaty). CFEverification will be more demanding than that required for the INF treaty for a number of reasons.The INFtreaty requires verification of the complete elimination of one class of nuclear weapons. On the other hand, the CFEtreaty would require each side to inspect and monitor destruction of numerous classesand large numbers of conventional armaments until treaty equipment limits were met. After that, continued monitoring would be required to ensure that limitations placed on the various classesof equipment were being honored. According to a DOD Page 10 GAO/NSIAIMU%130CFE Treaty Implemenbtion Appendix I Issues Related to Reducing Conventional Forceaand Equipment in Europe official, more inspectors and greater numbers of sophisticated monitor- ing equipment might be required. In addition, although the equipment destruction phase is 3 years for both the INF and CFEtreaties, the CFE treaty will require a greater degreeof post-destruction monitoring to ensure that, as newer equipment is added to countries’ inventories, there are offsetting reductions (through removal or destruction) to stay within the equipment limits. This monitoring requirement will exist for as long as the CFEtreaty remains in force. The annual cost of INF implementation is roughly estimated at about $160 million, including verification and destruction costs.Although detailed WEverification estimates have not yet been developed, U.S. officials stated that the greater scopeand complexity of the CFEtreaty could result in implementation costs greater than those of INF.Table I.2 summarizes the differences in scopebetween elements of the INF treaty and CFEproposals. Table 1.2: Elements of the INF Treaty and Proposed CFE Treaty Category INF CFE Treaty type Bilateral (United States and Multilateral (NATO and Soviet Union) Warsaw Pact nations) Destruction items 846 U.S. missiles to be NATO equipment to be destroyed destroyed-2,224 tanks, 1,000 aircraft, 800 armored combat vehicles, 828 artillery piece9 Inspection sites 133 Soviet sites requiring Approximately 3,000 declared U.S. inspection Warsaw Pact sites requiring NATO inspection Inspection period 13 years Undetermined Inspection personnel 200~3oob Unknown Destruction period 3 years 3 years Implementation costs Approximately $150 million No detailed estimates per year for the United States Personnel reductions None required US. reduction to 225,000 troops in Europe aAccording to a DOD offual, new data is being developed as treaty negotiations progress; therefore, these figures should be consldered preliminary. bPersonnel assigned to the On-Site inspection Agency only. According to DOD and State Department officials, the actual costs of CFT verification will depend on the extent of the verification effort that both sides believe is necessary.DOD officials stated that the objective of ver- ification should not be the detection of every piece of equipment that exceedsCFElimits. DOD and State Department officials noted that Page 11 GAO/?USIAD9@130 CPJ3Treaty Implementation InueaBehtedtoRedudng~nventionaI Forcea and Equipment in ihrope lOOpercent verification of numerical ceilings would be extremely diffi- cult and unpractical and would result in prohibitive costs.These offi- cials believe that verification should enable NAPIto detect violations that are “militarily significant” and could alter military parity or change warning times. NKIOhas proposed a specified number of ground on-site inspections that, in its opinion, are neededto ensure that militarily sig- nificant violations are detected. This proposal has not yet been accepted. NAKIis currently considering a U.S. proposal to coordinate monitoring efforts among alliance members.State Department officials favor this approach becauseit offers a means of sharing more equitably the costs of inspections and monitoring. In addition, it is hoped that this mecha- nism will provide a larger base from which to draw technical and for- eign language expertise. The alliance, however, has not yet reached a decision on how the monitoring responsibilities or the associatedcosts will be distributed among NKIOmembers. Equipment Destruction Although the CFEtreaty will impose total equipment limits for NA’IOand and Transfer Costs the Warsaw Pact, each side will individually determine how national allocations of equipment should be made and which alliance members’ equipment should be destroyed to meet treaty limitations. DODofficials noted that the intent of the CFEtreaty is to destroy all treaty-limited equipment that exceedsthe limits; that is, withdrawing this equipment east of the Ural Mountains or to the United States is not an option becausesuch action would violate the intent of the treaty. SomeNKIO allies have more modern equipment in their inventories, while others have older, less capable equipment. DODofficials expressedthe hope that members’ older equipment will be destroyed first and their inventories filled with the more modern equipment of other allies. The purpose of redistributing this modem equipment is to achieve a NAI’Oforce struc- ture, postax, that wiIl provide the NATO alliance with the most modem, capable fighting force within CFElimitations. According to DODofficials, NA’IOintends to incorporate the transfers of treaty-limited equipment into NKI0’sregular force planning process.Dur- ing this process,force goals are established for each country and tai- lored towards the accomplishment of defensemissions. To achieve CFE goals, for example, one country would be required to upgrade its equip- ment, while another country would reduce its total equipment holdings, thus permitting transfers to the country upgrading its inventory. Page 12 GA0/NsIAD9o-130 CPETreaty Implementation ImleaRelatedtoIkdudng~ventIonal Foxtea and Equipment in Europe US. officials are currently discussingwith the NMOallies how to dis- tribute c~&proposed equipment cuts equitably among the allied coun- tries.3 Decisionswill have to be made on country limits for each class of equipment, the older alliance equipment that should be destroyed, and the newer equipment that should be transferred to other NAXIcountries. Although there are currently no estimates of the equipment transfer costs to the United States, DODand State Department officials have iden- tified several cost-related issuesthat will have to be consideredby the United States and its NA~Dallies to make the processwork. According to a State Department official, the alliance would like to reach agreement on many of these issuesprior to signing the treaty. Who ShouldBe NAIOhas not yet dedded which alliance members’ equipment will be Responsiblefor destroyed and how the costs for equipment destruction will be distrib- uted among the allies, but U.S. officials note that destruction costs under Destruction Costs? CFEcould be high, depending on the destruction methods selected. Destruction costs may be significantly more for the Warsaw Pact than for NAXIbecauseof the much larger numbers of treaty-limited equip ment its memberswill have to destroy. The expenseinvolved will also be affected by the methods chosenfor equipment destruction. After CFEequipment limits have been reached, countries will not be required to destroy the equipment being replaced by more modem equipment. For example, the United States may field new aircraft in Europe-within CF+E limitations-but it will have the option of bringing the older aircraft back to the United States or moving it to other thea- ters rather than destroying it. Although destruction procedures have yet to be determined, U.S. and NAIDofficials are currently studying how to economically destroy treaty-limited equipment such as tanks and artillery pieces,which are designedto resist destruction. In addition, if NAXIis to destroy older, less capable equipment-most of which is held by aid-recipient countries with limited financial resources-the issue of who will pay for the destruction will have to be addressed. 3For example, the initially proposed limits would require that NA’KI reduce by 16 percent the current levels of land-based combat aircrak Tanks would be reduced by approximately 10 percent, and armored combat vehicles by about 6 percent. Page 13 ~o/NsuD9M90 CFEiTreaty Implfmemtation Appendix I IasueaRelated to Reducing Conventional Forces and JCquipmentin Europe DOD and State Many issuesconcerning the distribution of costs related to CFEhave not Considerations of cost been resolved within the alliance. For example, the degreeto which the United States and other countries will receive reimbursement in return Sharing for equipment transferred4 or the form which that reimbursement might take is uncertain. DODofficials said that they hope to transfer equipment to other NATO nations and, even if no cash reimbursement is made, receive somequid pro quo. These officials noted that other types of reimbursement might include, for example, allied agreementto assumea larger share of the NATO defenseburden, greater host nation support for U.S. forces, earmarking of additional civil assetsfor U.S. wartime use, or reduced U.S. cost shares in joint projects. Such indirect reimbursements or cost avoidance would be obtained, according to DOD,through bilateral agree- ments with individual allies in consideration of “the needsand abilities of the receiving nations.” Even if U.S. officials are permitted to engagein bilateral negotiations to obtain indirect benefits from recipient nations, the types of benefits sought, such as increasedburden sharing, are similar to what the Con- gresshas argued were rightfully other NATUnations’ responsibilities for the common defense.To gain acceptanceof its proposal, the administra- tion will have to persuade the Congressthat it is in the United States’ best interest to transfer its more modern equipment to obtain certain benefits that the Congresshas argued were the allies’ responsibility all along. SomeState and DefenseDepartment officials favor the establishment of a NATO common fund, such as the NATO infrastructure fund, to finance the costs of redistributing modern equipment to NATO countries and to pay for other cm-related expenses.A common funding approach, in their view, would serve to distribute equipment transfer costs more equitably throughout the alliance. Under this approach, countries with more mod- ern equipment, such as the United States, would be able to receive some direct reimbursement or credit toward their expected contributions to the common fund for the equipment they would transfer. In addition to questions of what will be received for equipment trans- ferred to NATO allies and what form that reimbursement might take, 4Transfer costs, as used in this report, refer to the costs of taking ownership of the defense article, that is, the value paid for the equipment. They do not include transportation costs, which are dis- cussed separately. Page 14 GAO/NSIADW-130 CFE Treaty Implementation IasueeRelated to Reducing Conventional Forces and J3quipmentin Europe there also remains the question of who will be responsible for associated costs,such as maintenance, spare parts, and training, once the equip- ment is in the recipients’ inventories. Under the bilateral approach, these costs will also be subject to negotiation between the United States and the recipient of the more modern U.S. equipment. Under the infra- structure approach, these related costs would be considered for inclu- sion in the common fund. The common funding approach raises a number of questions that need to be addressed.For example, will additional funds for NATD’S infrastruc- ture fund be required to compensatethose nations transferring their more modern equipment? According to State officials, one possibility is to have the other NAP nations make extra contributions to the infra- structure fund to cover all remaining -related implementation costs, including transfer of equipment, transportation, spare parts, training, equipment destruction, and treaty inspection. Countries’ contributions would be in the sameproportion as their normal infrastructure pay- ments, and the additional contributions would be used to pay for treaty implementation costs.Countries that transfer equipment and spare parts would receive credits equal to the equipment’s value, and those credits would be to be applied against their contribution to the common fund. It may prove difficult to convince many NAP allies to accept a common funding approach becausemost treaty implementation costswould likely be shifted to those countries that are not transferring large amounts of modern-and presumably highly valued-equipment. Coun- tries with the most extensive inventories of modern equipment- France, West Germany, the United Kingdom, and the United States-are also responsible for making the largest infrastructure contributions. Together, these nations account for over 70 percent of the current NATO infrastructure fund. If the equipment they transfer is valued at 70 per- cent of the CFEcommon fund, the remaining NAVI nations will be required to pay for all other CFEimplementation costs (this includes costs related to equipment destruction, equipment transportation, treaty monitoring, and inspection). Legal Questions Will Have The United States will have to addresscertain legal issuesrelated to the to Be Addressed transfer of equipment to other NATO allies. As previously discussed,both DOD and State hope to be able to transfer equipment to other NATO allies without necessarily receiving direct compensation.They also hope to be able to transfer equipment that, while required to be destroyed by the Page 16 GAO/NSIAD~l9o CFE Treaty Implementation Appendix I Issuea Related to Reducing Conventional Forces and Equipment in Europe CFEtreaty, is not excessto US. needsworldwide. These objectives will require legislative relief becauseU.S. law only allows transfer of equip- ment that is excessto all DODcomponents,not just excessto Europe. Further, U.S. law currently permits equipment transfers without direct compensation only to NATO countries that are eligible for U.S. security assistance(Greece,Portugal, and Turkey). The current legislation, which authorizes defensearticles to be trans- ferred without direct compensationto Greece,Portugal, and Turkey, requires that no funds available to DOD for the procurement of such defensearticles be expended in connection with the transfer. DOD offi- cials explained that, as a practical matter, this means that receiving nations must pay for equipment transportation costs.Furthermore, since the legislation is limited to defense articles, receiving countries must also pay for the provision of training on their use and the acquisi- tion of spare parts. Thus, it appears that, depending on the terms of the treaty, legislative revisions will be required to permit either the DOD or State proposal to support NATD'S equipment transfer objectives. Most near-term CFEcost savings will result from troop level reductions; Potential Cost Savings limited savings are anticipated from lower equipment levels in the near From a CFE Treaty term, although, according to DOD officials, there may be somelonger- term savings associatedwith equipment operations and maintenance. Among the NATO allies, only the United States will achieve significant benefits in the form of defensesavings due to its decision to reduce total U.S. forces. It is expected, however, that other NATO allies will eventually make someunilateral personnel reductions to correspond with equip ment cuts they make to implement WE.Neither the required equipment reductions nor the resulting troop reductions, however, are likely to pro- duce for the other NATO allies savings comparable to those which the United States is expected to experience. U.S. Troop Reductions Under the most recent troop reduction proposal agreedto in Ottawa, the Offer Potential Savings United States and the Soviet Union would each have to limit their air and ground forces to 196,000 within the Central European zone.”In addition, the United States would be allowed to station 30,000 troops in Europe outside the Central zone.Currently, the United States has about 305,000 ground and air forces in Europe. The new proposal would result 6For personnel in CFJZ,the Central European zone includes West Germany, Belgium, Luxembourg, Denmark, the Netherlands, East Germany, Czechoslovakia, Poland, and Hungary. Page 16 GAO/NSIAD-9M30 CF’ETreaty Implementation IMU- IMated to Eedudng Conventional Forces and Equipment in Jhrope in a reduction of about 80,000 U.S. troops. According to DOD officials, while the CFEtreaty requires removal of these troops from Europe, it does not require that total U.S. forces be reduced by 80,000; that is, these forces could be removed from Europe and placed in the United States or in other theaters where U.S. forces are stationed. These offi- cials pointed out, however, that total U.S. forces will be reduced by the end of fiscal year 1991 by 80,000 personnel or more regardlessof a CF+E treaty. DOD noted that its decision was driven by defensebudget cuts, not cm. DOD and the State Department could not provide estimates on the poten- tial savings that might be achieved under current WE troop reduction proposals. However, the CongressionalBudget Office estimated that a 226,000 troop ceiling-a reduction of 80,000 U.S. personnel stationed in Europe-could result in annual savings of about $6.6 billion in person- nel, operating, and maintenance costs. Thesepotential savings will be at least partially offset by treaty implementation costs. The CongressionalBudget Office assumed that the reductions would take place by removing two heavy Army divisions and two tactical fighter wings. A critical assumption being made, however, is that the 80,000 military personnel would be removed from Europe and the U.S. force structure reduced accordingly. As noted above, according to DOD, while a reduction in total U.S. military personnel is likely to take place, it is not required by the treaty. Limited Savings Expected NA?Dequipment in Europe would be cut 6 to 16 percent in certain major From ReducedEquipment weapons categories.In terms of equipment procurement fund savings, 1 ,..,l” the CongressionalBudget Office estimated that CFEcould save the lATVC13 United States, in the long-term, about $2 billion annuaIly. The Office basedits estimate on the elimination of two of the Army’s 28 divisions and two of the Air Force’s 36 wings. The CongressionalBudget Office then reduced the forces’ procurement budgets proportionately (i.e., the Army procurement budget was reduced by 2/28 to correspond to the elimination of 2 of its 28 divisions). According to DOD, personnel reductions in Europe will probably not result in proportionate equipment reductions. DOD officials indicated that someequipment that is made available as a result of personnel cuts may be stored in Europe to meet U.S. reinforcement and resupply requirements. Therefore, procurement funds may not be reduced in direct proportion to personnel cuts. Page 17 GAO/NSIADBO-130CFE Treaty Implementation Appendix I Issues Related to Reducing Conventional Forces and Equipment in Europe Other procurement fund savings might have been available to alliance membersif they had been allowed to use their excessequipment to meet non-NA’IDrequirements or permitted to sell it to other non-NATO allies. Under the proposed terms of the treaty, however, this option would not be permitted. Page 18 GAO/NSIAINO-130 CFE Treaty Implementation Ppe &&kves, Scope,and Methodology Our objectives were to identify (1) areas in which potential costs and savings might result from implementing the CFEtreaty between NAIKI and the Warsaw Pact and (2) alliancewide issuesrelated to implementation of the treaty, such as how costs and savings would be distributed among the NA?D allies. We consideredonly those proposals currently being dis- cussedin the CFEnegotiations in Vienna. We interviewed officials and reviewed records at DOD, the State Department, and the Arms Control and Disarmament Agency. We also reviewed reports issued by the Con- gressional Budget Office. In addition, we interviewed officials at the U.S. Mission and Military Delegation to NATOin Brussels, Belgium; the U.S. embassiesin Bonn, West Germany; Paris, Prance; London, England; Brussels, Belgium; the U.S. European Command Headquarters in Stutt- gart, West Germany; and the U.S. Mission to the European Community in Brussels,Belgium. Our review was conducted from October 1989 to March 1990 in accordancewith generally acceptedgovernment auditing standards. This report is basedon information available as of April 1990. Page 19 Appendix III Major Contributors to This Report Louis H. Zanardi, Assistant Director Nationa1 SecUfitY and H. C. Young, Project Adviser International Affairs Elena L. Boshier, Evaluator-in-Charge Division, W~h~gton, Beth A. Hoffman, Evaluator D.C. (467347) Page 20 GA0/N8IhD9o-120 CPE‘he&y Implement&on
NATO-Warsaw Pact: Issues Related to Implementation of a Conventional Forces Treaty
Published by the Government Accountability Office on 1990-04-16.
Below is a raw (and likely hideous) rendition of the original report. (PDF)