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Report on Allied Contributions to the Common Defense

A Report to the United States Congress
by the Secretary of Defense
March 1997




This Report presents the Department of Defense assessment of the relative contributions toward common defense and mutual security made by the NATO nations (including the United States), our key allies in the Pacific (Japan and the Republic of Korea), and the countries of the Gulf Cooperation Council (GCC).

Under legislative provisions dating to the Defense Authorization Act of 1981 (P.L. 96-342, Section 1006), the Department of Defense is required to compare the defense burdens borne by the United States and our allies, explain disparities, and describe efforts to eliminate such disparities. The Defense Authorization Act of 1997 (P.L. 104-201, Section 1084) updates the earlier reporting requirement by recognizing that there are multiple and diverse ways in which allies may share the responsibility for mutual security objectives. This represents a major step toward embracing the Administration's policy on responsibility sharing, first articulated in the 1994 edition of this Report. We look forward to continuing to work with the Congress in structuring a comprehensive and balanced framework within which to evaluate allied contributions to common defense and mutual security.


This Report is organized into three chapters. The first chapter presents an executive summary, describing the goals of U.S. responsibility sharing policy and providing a brief assessment of country contributions for 1995-1996. Chapter II provides a regional perspective of U.S. security interests and highlights the contributions of our key allies. Chapter III follows with detailed assessments of country contributions in each of the categories stipulated by the FY 1997 Defense Authorization Act.

Additional information is provided in the annex, which contains data sources and notes, and provides summary information for responsibility sharing contributions on a country-by-country basis.

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A National Strategy of Engagement and Enlargement (February 1996) identifies major threats to U.S. security, including existing and potential regional aggressors; the spread of weapons of mass destruction; ethnic, religious, and national rivalries; and terrorism, drug trafficking, and international organized crime. To meet these challenges, the Administration's national security strategy establishes three principal security objectives: enhancing our security with military forces that are ready to fight and that maintain an effective forward presence; bolstering America's economic revitalization; and promoting democracy. The Administration's strategy for achieving these mutually supporting objectives is through U.S. world leadership and engagement, as well as through sharing collective security responsibilities.

To shape the international environment in ways favorable to U.S. and allied interests, and to promote U.S. security objectives tailored to different regions of the globe, we require a broad range of security arrangements worldwide. Our alliances, particularly NATO in Europe, our bilateral security relationships with Japan and the Republic of Korea (ROK), and our growing partnership with the nations of the Gulf Cooperation Council (GCC), are essential to the projection of American power and influence into areas where vital U.S. interests are at stake. These alliances reflect fundamental shared interests and embody close cooperation in both political and military affairs. They multiply our capability to achieve our international security objectives, undergird our global diplomacy, and protect vital economic interests. Our regional security arrangements enable the United States and our allies to provide the security and stability essential to democracy-building, peaceful political change, economic progress, the expansion of social justice, and the orderly resolution of international differences.

The cornerstone of effective alliance relationships is the fair and equitable sharing of mutual security responsibilities, and the proper balancing of costs and benefits. Accordingly, this is the basis of U.S. responsibility sharing policy. The Administration is pleased that in passing the FY 1997 Defense Authorization Act, Congress accepts this policy and recognizes the breadth and depth of U.S.-allied relationships. This broader understanding acknowledges that each country's contribution is a mix of political, military, and economic elements; that important forms of cooperation may not lend themselves to quantification; and that influencing and increasing allied efforts is a long-term endeavor heavily influenced by country-specific historical and geographical considerations, unique circumstances, and a diverse set of capabilities and limitations (especially economic realities). Congress further appreciates that the manner in which allies contribute is also defined by the very different multilateral (NATO Europe) and bilateral (East Asia-Pacific and Southwest Asia) frameworks within which those contributions are made.

The FY 1997 Defense Authorization Act urges U.S. allies to increase their efforts in one or more of the following areas:

This Report evaluates allied efforts in each of these four areas. As such it presents both a snapshot of a broad range of current contributions and a baseline for assessing allied performance in the future.

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Based on the most recent and reliable data available (1995-1996), Chart I-1 shows that virtually all our European and Pacific allies and Gulf partners meet at least one of the above responsibility sharing targets, and the majority meet two or more of them. National strengths are clearly evident, as are those areas of concern -- such as intense pressure on defense budgets -- where more clearly needs to be done. This chart also identifies which nations make contributions significantly in excess of their "fair share" (based on ability to contribute).

Chart I-1
Countries Achieving Congressional Targets and/or Making Above Average Contributions

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The short-term "pass/fail" targets suggested by the FY 1997 Defense Authorization Act do not permit a full appreciation of the substantial contributions made by U.S. allies.

For example, several nations shown on Chart I-1 as not meeting the Congressional target for defense spending as a share of GDP have nevertheless achieved significant real defense spending growth since 1990, including the Republic of Korea (24 percent), Japan (13 percent), Luxembourg (10 percent), and Portugal (6 percent). This during a period in which U.S. defense spending declined by 25 percent, and the average change for all allies combined fell by 17 percent. In addition, the Republic of Korea, France, and the United Kingdom are consistently among the top nations assessed in this Report in terms of defense spending as a share of GDP, and were right behind the United States in this measure for 1996.

Likewise, the United Kingdom, Norway, Denmark, France, and the Netherlands are among the nations shown on Chart I-1 as not meeting the Congressional target for increased contributions to multinational military activities. Yet the United Kingdom provides the backbone of the Allied Command Europe (ACE) Rapid Reaction Corps (ARRC), including deployable ARRC headquarters, two heavy combat divisions, an air mobile brigade contributed to one of the ARRC's multi-national divisions, and substantial combat support. The U.K. also provides disproportionately high funding and personnel to UN peacekeeping operations relative to its ability to contribute (GDP and labor force), as does Norway. In fact, Norway's contribution to UN operations, relative to ability to contribute, exceeds that of any other country represented in this Report by a wide margin. In addition, Denmark, France, and the Netherlands also contribute to UN operations at a level above or commensurate with their ability to do so.

Lastly, only Japan now meets the Congressional target to offset 75 percent of U.S. stationing costs by 2000. However, ROK, Italy, Spain, Turkey, Germany, Kuwait, Qatar, and Saudi Arabia all provide above average cost sharing relative to their ability to contribute.

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This is a mixed, but we believe on balance, a positive picture and a solid base from which to work on further strengthening performance. Our posts and commands in the field and senior Washington officials have maintained a close and systematic dialogue with allied governments over the past year concerning responsibility sharing strengths and weaknesses. Communication and understanding have greatly improved and there is a growing awareness of the importance of these issues to the management and ultimate effectiveness of our alliances.

We will continue to engage the allies in this manner, focusing on the political and material importance, in very constrained circumstances, of due attention to defense budgets and host nation support, and further strengthening of foreign assistance and participation in both bilateral and multilateral efforts to enhance our collective security. This is an evolutionary effort, and we will continue to press for progress across the board. Finally, it is important -- if we are to arrive at a balanced assessment of nations' efforts -- that we complement short-term pass/fail objectives with a review of longer-term trends, and that countries' contributions are evaluated relative to their ability to contribute.

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This chapter places the Administration's responsibility sharing policy in strategic perspective, and describes differences in U.S. security objectives, security frameworks, and forward presence in the three regions most important to vital U.S. security interests: Europe, East Asia-Pacific, and Southwest Asia.


Responsibility sharing in Europe cannot be understood without reference to NATO, the most successful security alliance in history. It is through and in connection with this unique enterprise that our transatlantic security partnership is given form and content, and allied responsibilities are defined, allocated, and shared.

NATO has guaranteed transatlantic peace and security for 50 years. It has played a pivotal role in terminating the Cold War on terms favorable to the United States and our allies, ensuring security in the Mediterranean, and projecting Western power and influence into the Middle East and North Africa. The Alliance has also served as a useful forum for coordinating policies with respect to other parts of the world. Today, NATO remains a unique instrument for guiding change, deterring and managing crises, and applying military force where necessary.

The Alliance continues to serve as an irreplaceable mechanism for the exercise of U.S. leadership in international security affairs, and for the projection of American power and influence across the Atlantic and beyond. NATO provides the single most important vehicle for the coordination of national security policies and actions, both within and outside of Europe. An integrated political and military enterprise, the Alliance is the forum where the 16 member states work out arrangements for shouldering political and military risks and economic costs, and for assigning and coordinating military roles and responsibilities.

Unique habits and patterns of cooperation have evolved in NATO over the past half-century. Our European allies do not offset the same percentage of U.S. stationing costs as do Japan and the Republic of Korea, but they do contribute significantly more in sharing military roles, risks and responsibilities, as well as the overall political and economic costs, of protecting shared interests.

NATO's common-funded budgets have long been unique instruments for achieving defense objectives while reducing each country's costs through economies of scale and the development of joint projects. Common funding is among the oldest and most effective means of achieving U.S. responsibility sharing objectives. The United States, in view of its global commitments, participates in NATO's common funded projects at a "discount" -- i.e., the U.S. cost share is proportionately smaller than its share of NATO's collective GDP. The common-funded budgets are a dramatic example, at the level of finances and resources, of the multiplier effect provided by NATO membership, which allows us to achieve cost-saving, coordinated actions among the 16 member states.

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

The vast majority of the approximately 100,000 U.S. forces based in Europe are stationed in three countries: 70,000 in Germany, and approximately 12,000 each in the U.K. and Italy. These countries have for many years shouldered a broad range of political, military, and financial responsibilities vital to the achievement of shared security objectives, by working effectively in concert with the United States diplomatically; hosting U.S. nuclear and conventional forces, maintaining substantial, modern armed forces of their own; participating in combined operations within Europe and beyond in support of defense and deterrence; and extending significant foreign assistance to promote peace and security. The following sections describe the principal contributions of these key NATO allies.


Germany's geographical location, economic strength, military capabilities and political influence make it a vital European ally. Germany is gradually assuming a role more in keeping with its power and influence, and is becoming increasingly influential in international security affairs. The Germans maintain one of the largest NATO armed forces (337,000) in Europe, and remain the only NATO ally whose entire military falls under NATO command. German military forces are modern, and well-equipped, trained, and led, and are a major component of NATO military capabilities.

Reflecting growing German readiness to participate in crisis management and peacekeeping operations, Bonn is increasingly involved in providing forces for multilateral military missions. In 1996, Germany contributed troops to both NATO and UN missions in the former Yugoslavia, Africa, and Asia. Germany provided 4,000 troops to IFOR, and a total of $871 million for all German deployments to the former Yugoslavia. Beginning in January 1997, Germany has taken the unprecedented step of placing a contingent of 3,000 combat troops on the ground as part of SFOR in the former Yugoslavia. Germany's military presence in the former Yugoslavia represents a qualitative change in Bonn's approach to crisis management and a welcome strengthening of our political-security partnership. In addition to its financial contributions to UN missions, Germany actively participates in peacekeeping operations in Iraq, Georgia, Rwanda, and the Western Sahara.

German defense spending in 1996 was 1.7 percent of GDP, down from a level of 2.8 percent in 1990. Pressure on the German defense budget remains strong, particularly in view of the country's difficult economic situation, European Monetary Union imperatives, and continuing financial investments in eastern Germany and assistance to former Soviet bloc countries. We are concerned about current and projected German defense budget trends, and are urging the German government to give close attention to this matter.

Financially, Germany continues to play a unique role in supporting the successful democratization of central and eastern Europe, advancing security and stability as a result. Bonn estimates that it has provided $11 billion to facilitate the withdrawal of Soviet forces from eastern Germany, and thus contributed significantly to the orderly disengagement of Soviet forces and facilitated the massive drawdown of U.S. military forces in Germany.

From 1990 to 1995, Germany pledged approximately $30 billion (more than any other nation) to the Newly Independent States of the former Soviet Union. During this period, Bonn also contributed $33 billion to other Central and East European countries. Germany has also provided billions in aid to the former Yugoslavia (including bilateral aid for reconstruction projects), and has spent billions to host some 1.4 million refugees -- most of whom fled from the former Yugoslavia. During 1996, Germany contributed nearly $13 million to aid nuclear and chemical weapons dismantlement in the former Soviet Union, $4.3 million for the destruction of missile silos in Ukraine, $1 million to the Korean Energy Development Organization (KEDO), and $14 million for de-mining operations worldwide.

Typical of NATO allies generally, Germany contributes more to our partnership in areas of military roles and missions, political cooperation, and economic assistance in support of shared interests, than in the form of cost sharing for U.S. stationed forces. Nevertheless, German cost sharing was estimated at approximately $1.1 billion in 1995, almost all of which was in the form of indirect contributions. Over the past year we have worked closely with the German government to resolve a number of tax issues affecting U.S. forces. The German government now absorbs all landing fees for U.S. military aircraft, which -- according to German estimates -- saved the United States some $21 million in 1996. Germany has also expanded host nation support for U.S. bases from which American soldiers have been deployed to Bosnia. This included additional police coverage in housing areas, social services for families, and security and logistical support for deploying forces.

United Kingdom

The U.K. remains one of our closest and most important allies, working in concert with the United States across a broad range of political and military activities both within NATO and bilaterally. A nuclear state with significant power projection capabilities, the U.K. brings to our security relationship not just a regional but also a global orientation. British forces are deployed to some 30 locations outside the U.K.

The British defense budget has declined, but defense spending as a share of GDP, equal to 2.9 percent in 1996, has remained more robust than most and among the highest in NATO. The U.K. provides substantial host nation support for stationed U.S. forces, almost entirely in the form of indirect contributions. British forces constitute the backbone of the Allied Command Europe (ACE) Rapid Reaction Corps (ARRC), and play a significant role not only in NATO military missions but also in peacekeeping operations under the auspices of the United Nations.

The British IFOR contingent in 1996 numbered some 12,500, including 9,000 ground troops, second only to the U.S. contribution. British aircraft and ships have also been engaged in NATO operations Sharp Guard and Deny Flight. Nonreimbursable costs borne by the British during their participation in IFOR were $545 million. Additionally, British forces participate in coalition operations in Southwest Asia, including Southern Watch and Provide Comfort -- and are also involved in UN-mandated operations in Cyprus, Angola, and Georgia. The U.K. is also one of the largest contributors to the UN effort in Iraq. The RAF provides two Tornado squadrons to help enforce the no-fly zones over the country and Royal Navy vessels maintain a continuous presence in the Gulf. In 1995, nonreimbursable costs to the U.K. for all UN missions was $176 million.

The United Kingdom provides bilateral assistance for reconstruction projects in the former Yugoslavia, as well as its share of the European Union aid commitment. The U.K. was the first European country to support KEDO, with a $1 million contribution, and was among the leaders of the successful effort to secure an EU contribution to KEDO. The British have also provided, at a cost of some $58 million, twenty nuclear weapons transport vehicles and 250 supercontainers to assist Russia in carrying out its arms reduction obligations under the terms of the START II Treaty.

The U.K. provided nearly $3.5 billion in foreign assistance in 1995, a level roughly triple that of the United States in terms of ability to contribute.


Italy, which like Germany and the U.K. hosted U.S. GLCM bases in the 1980's, contributes actively to our security partnership both through NATO and bilaterally. Italy is a major staging and logistics base for operations in and beyond the immediate region. Relative to Europe's central region, Italy has always possessed the military advantage of strategic depth, while at the same time providing a key front-line presence in the Mediterranean region. Italy hosts U.S. forces and contributes significantly to U.S. power projection capability to and through the region. NATO air bases in Italy, for example, have provided essential staging and transportation points for IFOR operations in Bosnia.

Italian defense spending relative to GDP was just under 2 percent in 1996. This represented an increase in this ratio of 10 percent over 1995, and largely reverses the 11 percent decline from 1994. Italy's host nation support for U.S. forces during 1995 was estimated at more than $500 million, consisting almost entirely of indirect contributions.

In addition to its NATO missions, during 1996 Italy participated in UN missions in Jerusalem, India and Pakistan, Lebanon, Iraq, the Western Sahara, Guatemala, and Angola. Nonreimbursable contributions to these operations are expected to total $72 million. Italy committed 2,200 military personnel to IFOR missions and provided nearly $260 million in funding. In July 1995, Italy pledged to donate $2.2 million to KEDO over the course of three years.

Italy has also contributed to emergency humanitarian and reconstruction assistance to the former Yugoslavia. Although Italy's total foreign assistance in 1996 remained above $2 billion, this represents a drop of 37 percent from 1995 levels, and 50 percent from 1992 -- the largest declines registered by any NATO ally.

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Our key security relationships in Asia are with Japan and the Republic of Korea. As is the case with NATO in Europe, these alliances grew out of the experience of World War II and the early years of the Cold War. Like NATO, these two bilateral relationships were instrumental in helping to manage Cold War realities and are now adapting not just to a fundamentally altered global geopolitical situation, but to emerging challenges and opportunities on the Korean peninsula and in the region as a whole.

At the heart of both alliances is the continued presence of significant numbers of U.S. troops: 47,000 in Japan and almost 37,000 in Korea. These forces play a vital role in contributing to peace and security in the region, and are a tangible expression of vital American interests in Asia, and of U.S. will and capability to defend those interests in concert with our allies.

In view of the constraints that influence the policies and capabilities of both countries -- in Korea the division of the peninsula and the threat of conflict, and in Japan the complex legacy of World War II -- their responsibility sharing has focused more on assuming a substantial share of U.S. stationing costs and less on other aspects, such as active participation in shared regional and global military roles and missions.

In late 1995, the United States concluded new multi-year cost-sharing agreements with both countries. These accords build effectively on past arrangements and provide for significant and increasing host country participation in cost sharing. The level of host nation support provided by Japan and Korea continues to be substantial. This welcome contribution is critical not only to maintaining the military readiness of our deployed forces, but also for sustaining the political support that is essential to forward stationing, and thus to our ability to project U.S. power and influence in defense of shared interests.


Our bilateral alliance with Japan is fundamental to both our Pacific security policy and our global strategic objectives. It is seen not just by our two countries, but throughout the region, as a major element of stability and security. As Japan becomes more deeply involved in international security affairs and related institutions, its role is becoming increasingly active, and areas of cooperation with the United States are expanding. Nevertheless, cost sharing in support of stationed U.S. forces remains Japan's most significant responsibility sharing contribution.

Although Japan spends less on defense as a share of their GDP than any other major ally (1 percent), Tokyo contributes generously to defray stationing costs for U.S. forces. In October 1995, we concluded a new five-year (1996-2001) cost sharing accord with Japan, the Special Measures Agreement (SMA). Under this agreement, Japan absorbs almost all local national labor and utility costs associated with U.S. military presence there. Additionally, Tokyo will assume almost all the cost of U.S. training activities relocated at Japanese request.

We estimate that under the new SMA, the value of Japan's direct cost sharing (including cash payments and in-kind contributions, such as the actual provision of supplies and materials) will approximate $1.7 billion per year through 2001, or $8.5 billion over the life of the agreement. Over these same five years, Japan's combined direct and indirect cost sharing (i.e., including foregone taxes, rents, and revenues) will be approximately $5 billion per year -- for a total of $25 billion.

In addition to its contribution under the SMA, Japan also provides substantial funding for quality-of-life projects under the separate Facilities Improvement Program (FIP). These projects include bachelor and family 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 support facilities such as hangars and hardened aircraft shelters.

Beyond its cost sharing contributions, Japan's evolving worldwide role means greater involvement in international efforts to promote regional and global stability. The Japanese have actively supported crisis management and nation-building efforts in Asia, Africa, and the Middle East. Japan is the world's largest provider of foreign assistance, with contributions in 1995 of over $13 billion -- substantially higher than those of the United States, both in absolute terms and as a share of GDP. Japan has also increased its involvement in humanitarian and peacekeeping efforts around the world, including in Cambodia, Mozambique, and Zaire. In 1996, Japan pledged $210 million for assistance to Bosnia. Tokyo also contributed over $22 million to KEDO in support of our mutual nuclear nonproliferation efforts. This matched the U.S. contribution.

On April 17, 1996, President Clinton and Prime Minister Hashimoto signed a bilateral security declaration which reaffirmed both countries' continuing commitment to our defense partnership. The declaration also committed Japan to assuming an increased role in regional security matters, and promises to advance U.S.-Japan consensus-building on increased defense collaboration in the future.

The Republic of Korea

Our security relationship with the Republic of Korea 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 are a tangible manifestation of U.S. support for peaceful change and democratic evolution in the region. The ROK has for some years contributed significantly to the costs of stationing U.S. forces in the country, and that contribution is growing.

In November 1995, we concluded the first multi-year Special Measures Agreement (SMA) with the Republic of Korea, covering the period 1996-1998. Under the SMA, the Koreans agreed to increase their direct cost sharing contribution, which stood at $300 million for 1995, by 10 percent each year, to approximately $400 million in 1998. Over the life of the agreement, this direct support will exceed $1 billion. Moreover, the cash component of this contribution, which in 1996 made up two-thirds of the total, will increase to three-fourths of the total in 1998, with a corresponding decrease of the in-kind component.

With the first year of the SMA now behind us, and in view of implementation issues that have arisen over that time, a formal implementation review will be conducted in April 1997 in order to identify and address problem areas. One of these concerns is with ROK taxation of its own in-kind contribution, which resulted in a shortfall in the ROK's cost sharing effort amounting to over $11 million in 1995 (with similar results expected in 1996). We will also review with the ROK the methodology for calculating the value of Seoul's indirect cost sharing contribution. This effort, which will take some months to complete, may result in revised estimates of the level of ROK's indirect cost sharing in next year's report.

Apart from cost sharing, the ROK makes major contributions to regional security, and in 1996 devoted 3.1 percent of its GDP to defense. ROK annual defense spending has grown by 24 percent since 1990, compared to a decline of 13 percent for all other allies (Pacific and NATO), and a reduction of 25 percent for the United States over this period.

Because of the security situation on the peninsula, Seoul's defense effort continues to focus on the maintenance and improvement of military readiness. As such, the ROK does not participate extensively in roles and missions, including combined operations, elsewhere in the region and beyond. Economic constraints limit the ROK's ability to make large contributions to foreign assistance. In 1996, however, Seoul contributed approximately $8.7 million to KEDO in support of shared nuclear nonproliferation goals under the U.S.-North Korea Agreed Framework. Moreover, the ROK has committed to fund the lion's share of the multi-billion dollar cost of the light water reactors to be constructed in North Korea.

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

The security framework in which we operate in Southwest Asia is strikingly different from those in other regions of vital interest to the United States. Here we have no formal bilateral or multilateral defense treaties, but instead rely on a range of executive agreements for military access, prepositioning, status of forces, and security assistance.

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). These nations carry a substantial proportion of the defense load -- each having a lower (and in some cases, substantially lower) per capita GDP than the average of all nations addressed in this Report, yet spending more (to substantially more) of their GDP on defense than the average. In spite of these laudable efforts, there remains a substantial disparity between the military forces of the GCC states and those of their principal antagonists in the region.

It is because of this imbalance that the United States continues to urge the Gulf countries to work closely with other moderate Arab states to enhance their common ability to defend the region. The first step in this direction was taken immediately following the Gulf War, when the six GCC members plus Egypt and Syria (the so-called "GCC+2") pledged to enhance their common defense capabilities in the 1991 Damascus Declaration. The United States welcomes further efforts to establish and improve cooperation with the armed forces of moderate Arab states such as Jordan and Morocco -- both of which have been constructively involved in Gulf security in the past.

Our GCC partners also contribute to regional security by providing U.S. forces the use of facilities, transit rights, and other forms of access. Bahrain, for example, has provided port facilities for U.S. naval forces for nearly 50 years; it also hosts the headquarters for U.S. Naval Forces Central Command, furnishes facilities for prepositioned equipment, and has granted rapid access for U.S. military aircraft when needed. Oman has permitted the United States to preposition equipment on its territory, and to have emergency access to Omani bases since 1980. Since the Gulf War, defense cooperation agreements permitting access and prepositioning have been signed with Kuwait, Bahrain, Qatar, and the UAE. Under the agreement with Kuwait, that nation has agreed to offset U.S. prepositioning and exercise costs. Saudi Arabia also provides access to U.S. forces and has made substantial contributions to offset the cost of U.S. military operations in the region. Furthermore, in the past 18 months, Bahrain and Qatar have hosted an Air Expeditionary Force for two-month rotations in support of Operation Southern Watch.

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This chapter presents the Department's assessment of allied and partner countries' contributions in the four areas specified in the FY 1997 Defense Authorization Act. The responsibility sharing targets established by this legislation are:

The following assessments are based on the latest and most complete unclassified data available. Notes on uses, limitations, and sources of these figures, and a country-by-country summary of selected responsibility sharing statistics, can be found in the annex.


Defense spending relative to GDP combines the most comprehensive indicator of defense effort with the most comprehensive indicator of ability to contribute. However, this indicator should not be viewed in isolation from other national contributions to shared security objectives, because it does not in itself resolve the issue of equity. One could argue, for example, that per capita GDP should be factored into the equation, on the logic that it is 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.

Any attempt to assess responsibility sharing must therefore consider nations' contributions to the common defense in terms of their ability to contribute. This is a sound principle made all the more important by large differences in economic performance, population, and standards of living that exist among our allies. Chart III-1 shows the wide range of per capita GDP among the nations addressed in this Report -- from $2,600 in Turkey to $37,000 in Japan. The chart also shows that many nations with below-average per capita GDP spend above-average shares of GDP on defense, including all of the GCC countries, Turkey, the Republic of Korea, Greece, and the United Kingdom. Conversely, some nations that have above-average standards of living spend below-average shares of their GDP for defense, including Japan, Luxembourg, Denmark, Germany, Belgium, and the Netherlands.

Chart III-1
1996 Per Capita GDP (In Thousands of Dollars)

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Current Defense Spending/GDP Ratios

Defense budgets around the world are generally in decline, due to competing post-Cold War priorities and tightening financial constraints. This is exacerbated in Europe by the pressure to meet rigorous European Monetary Union (EMU) budget criteria, as well as by country-specific economic difficulties (e.g., Germany's continuing unification costs -- estimated by Germany at over $100 billion per year -- and its unemployment rate in excess of 10 percent).

Chart III-2 depicts defense spending trends from 1990-1996 for the United States, our NATO and Pacific allies, and our GCC partners. Calculated on the basis of constant 1996 U.S. dollars and exchange rates, U.S. defense spending decreased by 25 percent from 1990 through 1996, while in comparison, Germany's decreased by 28 percent, the U.K.'s by 25 percent and France's by 10 percent. In contrast, four NATO nations registered notable real increases in their defense budgets -- Turkey (14 percent), Luxembourg (10 percent), Greece (10 percent), and Portugal (6 percent) -- over this period, as did the Republic of Korea (24 percent) and Japan (13 percent). Trends for our GCC partners during this time frame cannot be compared due to sharp distortions caused by the Gulf war.

Chart III-2
Defense Spending
(1996 Dollars in Billions - 1996 Exchange Rates)

(view full-size chart)

In some cases, expenditures outside of defense budgets promote shared security interests (for example, Germany's investments in the infrastructure of eastern Germany, its financial support for economic and political reform in the new democracies in Central Europe, and the costs it bears to absorb refugees from the former Yugoslavia). Nonetheless, we are concerned about current and prospective levels of defense spending in Europe, and continue to urge our allies to maintain defense budgets at appropriate levels and reverse negative trends in spending. Effective military capabilities are at issue here, as is the fact that our transatlantic partnership requires a more balanced level of investment in collective security.

Chart III-3 shows the percentage of GDP spent on defense by U.S. allies in 1996. Chart III-4 reveals that the overall pattern of U.S. and allied defense spending relative to GDP in 1996 remained much the same as it has been in recent years: the GCC nations, along with Greece and Turkey, spent the highest percentage of their GDP on defense, while Japan, and several of our NATO allies (Luxembourg, Canada, Spain, Belgium, Germany, and Denmark) spent the least.

Chart III-3
Chart III-4
Defense Spending as a Percent of GDP (1996)
Defense Spending as Percent of GDP

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Defense Spending/GDP Contributions Compared With Congressional Targets

In the FY 1997 Defense Authorization Act, Congress established two targets for our allies in the area of defense spending relative to GDP: increase this ratio by 10 percent compared to the preceding year, or achieve a level of defense spending as a percentage of GDP commensurate to or exceeding that of the United States. Based on the foregoing analysis, Chart III-5 lists those nations that achieved one or both of these targets in 1996.

Chart III-5

Defense Spending / GDP Ratio
Increased by 10%
Defense Spending / GDP Ratio
Exceeds or Commensurate to
U.S. Level

Saudi Arabia


Apart from the countries shown in Chart III-5, several other nations have also made notable efforts in the area of defense spending. As already mentioned, the Republic of Korea, Japan, Luxembourg, and Portugal have achieved real defense spending growth over the 1990-1996 period. In addition, ROK, France, and the United Kingdom continue to contribute shares of defense spending that substantially exceed their relative shares of GDP.

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A broad range of political, economic, and ethnic instabilities threatens areas of vital strategic interest to the United States and its allies. Efforts to defuse these potential challenges, or to manage them as necessary, have become increasingly important for the preservation of U.S. national security and fundamental Western values. Thus, in the years since the end of the Cold War, the United States and its allies have engaged in multinational peacekeeping and humanitarian relief operations on an unprecedented scale. During 1996, for example, U.S. and allied military personnel served in such operations in Bosnia, Croatia, Macedonia, Lebanon, Haiti, and Angola.

Current Multinational Military Contributions

The Department's assessment of countries' contributions to multinational military activities addresses the commitment of specialized forces to multinational defense missions, as well as participation in and funding for UN peace support operations.

In the area of specialized force commitments to multinational defense, by far the most substantial contributions are made by our NATO allies. In response to the post-Cold War security environment, NATO adopted a new strategic concept in 1991 which directed Alliance members to develop forces that can be rapidly transported to remote theaters of operations; function despite a lack of pre-established lines of communication and host nation support; and fight effectively in multinational formations at the corps and even division level. NATO nations are beginning to restructure their military forces accordingly, and have created Reaction Forces that are organized into multinational commands and formations such as the Allied Command Europe (ACE) Rapid Reaction Corps (ARRC) and the NATO Air Transport Pool. Most Alliance members provide ground Reaction Forces, and also make contributions to NATO's air and naval Reaction Forces. Nations' commitments to NATO's ground reaction forces, drawn from unclassified sources, are shown in Chart III-6.

Chart III-6
Country Contributions to NATO Reaction Forces (Ground)

NATO Member Combat Brigade Equivalents Support Brigade Equivalents
Belgium 4
Denmark 1 0.2
France 3
Germany 7
Greece 3
Italy 4 1.9
Netherlands 1 0.7
Portugal 1
Spain 7
Turkey 3 0.3
United Kingdom 7 7.0
United States 3 2.4
TOTAL 44 12.5

The experience gained by NATO's Reaction Forces in the former Yugoslavia, and the continuing development of the Combined Joint Task Force (CJTF) concept, clearly demonstrate that NATO's integrated planning and operational framework provides substantial multinational military capability for contingencies worldwide.

In contrast, due to the much different security situation in the Pacific and the unique defense capabilities of Japan and the Republic of Korea, our responsibility sharing policy in this region has emphasized cost sharing rather than global military roles and missions. Nevertheless, we are encouraged by Japan's 1995 agreement to increase its role in regional affairs, and by the Republic of Korea's steady force modernization and assumption of increased command responsibilities for combined U.S.-ROK forces.

With the encouragement of the United States, our GCC partners are taking steps to strengthen provisions for multilateral defense of their crucial region by expanding their standing Peninsula Shield force, and increasing the frequency of multinational exercises. The United States is also working with the GCC to overcome impediments to closer military cooperation with other Arab nations.

Chart III-7
Chart III-8
UN Peace Support Personnel Share
Relative to Labor Force Share (1996)

UN Peace Support Funding Share
Relative to GDP Share (1996)

(view full-size chart)

(view full-size chart)

These charts reveal that -- along with Norway -- Belgium, Portugal, Canada, and Denmark likewise provide disproportionately large shares of support in both peacekeeping personnel and peacekeeping funding. France, the U.K., and the Netherlands are average or above average in both categories, while Spain's contributions are well above average in the area of funding for UN peacekeeping missions. The contributions of our remaining NATO and Pacific allies are below par in both categories, while the level of support provided by the GCC nations is extremely low. The United States provides financial support for peace operations at a slightly higher level than its relative ability to contribute, but its personnel contribution is relatively much smaller than its share of the overall labor force.

Multinational Military Contributions Compared With Congressional Targets

One of the objectives established by Congress in the FY 1997 Defense Authorization Act was for U.S. allies to increase the assets (including personnel, equipment, logistics, and support) that they contribute, or are prepared to contribute, to multinational military activities worldwide.

The Department of Defense believes that accepting military roles and tasks as part of an alliance or coalition is the most meaningful measure of a country's willingness to participate in multinational military missions. Unfortunately, however, it is very difficult to assemble such information -- complete, comparable, and unclassified -- for all nations addressed in this Report. Therefore, for purposes of assessing contributions in terms of the Congressional target, we have compared nations' efforts in support of UN peace operations. Countries that increased their contributions to UN peace operations in 1996 from 1995 (relative to their ability to contribute) are shown in Chart III-9.

Chart III-9

Peace Support Personnel
Ratio Increased
Peace Support Funding
Ratio Increased

Turning to participation in UN peacekeeping missions, a number of our NATO allies make very substantial contributions relative to their ability to contribute, with Norway leading all other nations in both funding and personnel support for peacekeeping. This is shown in Chart III-7 (which depicts each nation's share of total manpower contributed to peacekeeping missions compared to its share of total labor force) and Chart III-8 (which shows each nation's share of total funding contributed for peacekeeping missions compared to its share of total GDP).

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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, foregone revenues).

Current Cost Sharing Contributions

As shown in Chart III-10, the Department estimates that in 1995 the United States received direct and indirect cost sharing assistance from our NATO, Pacific, and GCC allies totaling $8.3 billion. (Note: the latest available cost sharing figures are 1995 estimates, expressed in 1995 dollars).

Cost sharing has been a particularly prominent aspect of our bilateral defense relationships with Japan (since the late 1970s) and the Republic of Korea (since the late 1980s). As Chart III-10 shows, Japan provides a greater level of direct cost sharing than we receive from any other ally. This is due largely to the strict constitutional limits that apply to the Japanese armed forces, and concerns for regional stability shared by the United States, and Japan and its Asian neighbors. Refer to the previous chapter for additional details on Japanese cost sharing.

The Republic of Korea first agreed to contribute to a program for Combined Defense Improvement Projects (CDIP) construction in 1979 -- which marked the beginning of our present cost sharing relationship. In 1988, the Republic of Korea agreed to a CDIP program funded initially at $40 million a year. Since that time, annual cost sharing negotiations have brought a gradual increase in ROK cost sharing. During 1995, the ROK provided $300 million in direct cost sharing and $1.4 billion in indirect cost sharing. Further information on U.S.-ROK cost sharing is included in chapter II.

NATO countries have long provided substantial indirect support for U.S. forces stationed on their territory. Our allies provide rent-free bases and facilities, various tax exemptions, and reduced-cost services. Among allies with the largest cost sharing contributions to the United States in 1995 were Germany ($1.13 billion), Italy ($524 million), Spain ($90 million), and Turkey ($66 million). In addition, Norway has agreed to pay roughly $5 million (50 percent) of the cost of maintaining prepositioned U.S. Marine equipment.

We are continuing to work with our European allies to expand cost sharing support where appropriate. However, there is no tradition in Europe of providing the kind of direct cash and in-kind support provided by Japan and Korea, since the emphasis in NATO for many years has been on strengthening participation in the military roles and missions of the Alliance. Furthermore, our NATO allies make a variety of other responsibility sharing contributions, ranging from participation in peacekeeping operations to provision of substantial foreign assistance to enhance global stability.

Chart III-10
U.S. Stationed Military Personnel & Bilateral Cost Sharing -- 1995
1995 Dollars in Millions - 1995 Exchange Rates

U.S. Stationed Bilateral Cost Sharing
Military Direct Indirect
NATO Allies Personnel Support Support Total

Belgium 1689 * * *
Canada 214 NA NA NA
Denmark 37 0.01 0.03 0.04
France 67 NA NA NA
Germany 73280 60.22 1073.29 1133.51
Greece 489 0.07 13.49 13.56
Italy 12007 0.58 523.58 524.16
Luxembourg 6 0 0 0
Netherlands 687 0.07 3.8 3.87
Norway 57 0 0 0
Portugal 1066 0 0 0
Spain 2799 1.08 88.44 89.52
Turkey 3111 7.99 58.24 66.23
United Kingdom 12131 * * *

Pacific Allies
Japan 47000 3257.1 795.14 4052.24
Republic of Korea 36016 294.37 1429.15 1723.52

Gulf Cooperation Council
Bahrain 618 0 0 0
Kuwait 771 365.19 4.95 370.14
Oman 27 0 0 0
Qatar 2 * * *
Saudi Arabia 1077 * * *
United Arab Emirates 30 0.01 0.43 0.44

Grand Total 193181 4055.67 4234.17 8289.84

* Data classified
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 O&M of the NATO Headquarters, and several non-military programs including science and civil preparedness.

There have been several recent developments in collective NATO cost sharing that could prove favorable to the United States, including NSIP funding for certain projects in support of U.S. forces that would not normally be NSIP-eligible. In addition, the United States stands to benefit once NATO agreements to assume additional common funding are implemented, and as plans to increase French and Spanish cost shares to NATO common- and jointly-funded budgets are realized. On the other hand, NATO enlargement will place increased demands on common funds, and may require greater national contributions (including contributions from new NATO members) in the period following accession.

With respect to our security partners in Southwest Asia, bilateral cost sharing in 1995 included $370 million paid or pledged by Saudi Arabia, Kuwait, and Qatar to offset U.S. incremental costs incurred during Operation Vigilant Warrior. 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. Saudi Arabia likewise provides substantial cash and in-kind contributions to offset the costs of U.S. military operations in Southwest Asia, including Operation Southern Watch.

Cost Sharing Contributions Compared With Congressional Targets

One of the objectives Congress established in the FY 1997 Defense Authorization Act was for nations that host U.S. forces to offset 75 percent of U.S. stationing costs by September 2000. An increase in financial contributions by a host nation may include elimination of taxes, fees, or other charges levied on U.S. military personnel, equipment, or facilities in that nation. Chart III-11 shows what portion of U.S. costs was offset in 1995.

Currently, Japan is the only country to meet the Congressional target, although the cost sharing contributions of several other allies (Germany, Italy, Turkey, the Republic of Korea, Kuwait, Qatar, and Saudi Arabia) significantly exceed the average in terms of ability to contribute.

Over the next few years we expect the Japanese cost share percentage to remain around the 75 percent level due to the multi-year Special Measures Agreement (SMA) signed with Tokyo in 1995. Similarly, under the terms of the U.S.-ROK SMA, the share of U.S. costs offset by the ROK is also forecast to remain quite high. Lacking formal cost sharing agreements with our NATO allies, the United States will continue to seek increased European offsets as appropriate. Complete and unclassified data needed to calculate cost sharing ratios for our GCC partners are not available.

Chart III-11
Share of U.S. Overseas Stationing Costs Paid by Allies

(view full-size chart)


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Foreign assistance plays a prominent role in nations' overall responsibility sharing efforts. While economic aid does not directly increase U.S. and allied defense capabilities, it makes an important contribution to global peace and stability. Most industrialized NATO countries and Japan have for many years extended various types of assistance to developing countries. In addition, and of special significance in the post-Cold War era, NATO nations, Japan, and the Republic of Korea also provide important assistance to the emerging democracies in Central Europe and the New Independent States (NIS) of the former Soviet Union.

Current Foreign Assistance Contributions

As shown in Chart III-12, disbursements of foreign assistance by nations included in this Report exceeded $60 billion in 1995 (the latest year for which complete and reliable data are available). Of this sum, over $52 billion was provided by our allies and partners. This aid reflects a continuing commitment to promote democratization, economic stabilization, transparency arrangements, defense economic conversion, and respect for the rule of law and internationally-recognized human rights.

Chart III-12
Foreign Assistance
(1996 Dollars in Millions - 1996 Exchange Rates)

(view full-size chart)

In 1995, as in past years, the four nations with the largest foreign assistance contributions (in absolute terms) continued to be Japan, Germany, France, and the United States. This is the first time since this Report began including such statistics, however, that the United States has not ranked either first or second in this measure. At the other end of the spectrum are those nations that contribute very modest amounts of foreign aid, although this may be justified in the case of countries with relatively low standards of living (e.g., Turkey, the Republic of Korea, Greece, and Portugal).

Chart III-12 also shows that many nations experienced significant real increases or decreases in foreign aid contributions from 1994 to 1995, producing a real decline of 8 percent for all nations in this Report combined. Reductions in foreign aid were due in part to continuing efforts by donor countries to reduce their budget deficits, as well as to a decrease in the amount of peacekeeping expenditures that qualify as foreign assistance. The greatest percentage increases in foreign assistance from 1994 levels were reported for Greece (43 percent), Turkey (28 percent), Belgium (20 percent), the Netherlands (16 percent), Denmark (12 percent) and Germany (11 percent). Nations contributing substantially less in 1995 include Saudi Arabia (-41 percent), United Arab Emirates (-37 percent), Italy (-37 percent), Kuwait (-34 percent), the United States (-32 percent), Portugal (-25 percent), and the Republic of Korea (-21 percent).

To improve the comparability of foreign assistance contributions among nations, as well as to address the issue of equity, it is necessary to consider nationsí contributions relative to their ability to contribute. This is done in Chart III-13, which compares each nationís foreign assistance contributions to its GDP for 1995. From this perspective, the largest grant aid donors are Kuwait, Denmark, Norway, and the Netherlands (the only nations to meet or surpass UN assistance targets of 0.7 percent of GDP). Due to the dramatic reduction in U.S. foreign assistance in 1995, U.S. grant aid relative to GDP has fallen to its lowest level since such accounting was introduced in 1950. The U.S. percentage is the third lowest of all donor nations assessed in this Report, ahead of only Turkey and the Republic of Korea.

Chart III-13
Foreign Assistance as a Percent of GDP

(view full-size chart)

Foreign Assistance Contributions Compared With Congressional Targets In the FY 1997 Defense Authorization Act, Congress established two targets for our allies in the area of foreign assistance: increase foreign assistance by 10 percent compared to the preceding year, or achieve a level of foreign assistance at least commensurate to that of the United States. With the exception of the Republic of Korea, every country addressed in this Report for which data are available met one or both of these Congressional targets during 1995 -- as shown in the following chart.

Chart III-14

Foreign Assistance Increased by 10% Foreign Assistance as % GDP Exceeds
or Commensurate to U.S. Level
Saudi Arabia
United Arab Emirates
United Kingdom

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Virtually every nation addressed in this Report satisfies at least one of the responsibility sharing targets established in the FY 1997 Defense Authorization Act, and most satisfy more than one. We believe that this overall picture is positive, but we are committed to continued efforts to convince our allies and partners to achieve and maintain adequate defense budgets, and increase their ability to participate in multinational military activities. At the same time we will continue to emphasize the importance of increased host nation support and the critical role of foreign assistance in enhancing our collective security.

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This annex presents technical notes on the uses, sources, and limitations of the data presented in this Report, and provides a recap of selected responsibility sharing indicators on a country-by country basis.


The assessments presented in this Report are only as good as the data upon which they are based. The Department has every confidence that the data used for the assessments in this Report are as complete, current, and comprehensive as they can be, within the limits of the legislation.

Timing and Limitations

The FY 1997 Defense Authorization Act stipulates that allies should take certain actions or achieve certain results in their respective indicators of responsibility sharing by September 30, 1997. Due to unavoidable time lags in the collection and analysis of the necessary data, this Report relies on statistics for 1995 and 1996. Projected data for 1997 is either not available for many key elements necessary to the analysis, or where available, is generally unreliable. The Department is therefore unable to assess countries' performance against Congressional targets set for 1997, and -- due to these time lags in data collection and analysis -- will be unable to provide reliable measures of country contributions for 1997 for another one to two years.

Moreover, most if not all of the countries affected by section 1084 of the FY 1997 Defense Authorization Act were finalizing their 1997 defense and national budgets even as the Authorization Act was being drafted and enacted into law. Thus, due to the timing of the Congressional legislation, the Administration's ability to influence nations' performance against these targets was virtually foreclosed before the goals were established.

Data Sources

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The following charts provide summary information for responsibility sharing contributions on a country-by-country basis.

Note: with the exception of cost sharing estimates, all dollar figures shown in the country summary charts are in 1996 dollars, using 1996 exchange rates. Cost sharing figures are shown in 1995 dollars, using 1995 exchange rates, to facilitate comparison of Pacific allies' contributions with levels agreed to in agreements concluded in 1995.

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