A fundamental principle in NATO is fair and equitable burden and risk sharing in the operations and missions the Alliance carries out. It is up to the nations to increase the usability of their forces and allocate the necessary resources to deploy those forces. One of the problems, however, is that the defence budgets of the majority of NATO’s nations do not meet the 2% of GDP target, making it very difficult for those nations to adequately fund operations, while at the same time limiting possibilities to invest in usable and deployable forces. The result is a continuously failing force generation process, both for the NRF and for operations like ISAF. Apart from the necessary political will to deploy forces, having the right capabilities and having adequate resources to do so is essential.

With the introduction of the Revised funding policy for non-Article 5 NATO-led operations in 2005 a first step was made to create incentives for nations to offer troops and, more specific, theatre level enabling capabilities, to improve the results of force generation. The positive effects of the revised funding policy in practice, however, are still limited. Extending the criteria for NATO common funding should improve the positive effect on force generation.

One of the possibilities would be to extend the eligibility criteria to cover the basic infrastructure needed by rotating forces. Moving materiel and constructing vital facilities for troops in theatre are major cost drivers for nations. The use of NATO common funding for this purpose would significantly reduce the threshold for nations to initiate an operation. Another possibility would be to extend eligibility criteria to cover the cost of strategic transport for the short notice deployment of reserve forces (both strategic and operational). This would act as an incentive for nations to offer troops and capabilities for reserve forces. This extension of eligibility has already been discussed between nations, but has lead to no results yet.

Extending the criteria for common funding would obviously increase the pressure on NATO’s Military Budget. To offset the increased funding of operations, savings would have to be found in increasing the efficiency of the NATO Command Structure and the Agencies. This would require strategic, political choices to set the right priorities. This depends largely on political will.
The result of extending the criteria for common funding would be that nations can participate more in operations while freeing resources from the deployment of troops. Those resources can then be used to actually increase the usability and deployability of their forces.

Another, more far reaching, possibility (by analogy with the UN system) would be to establish a separate common fund for non–article 5 operations, so that enough money could be raised to reimburse those nations that absorb front-end costs. This common fund would be based on annual contributions by nations (a certain percentage of the nations’ GNI). The use of this common fund would enhance the proportional distribution of the financial burden. Such a system that is based on obligatory rather than voluntary national contributions, would ensure sustainability and predictability. It would also underscore collective, financial, solidarity.

For the execution of non-article 5 NATO-led operations NATO depends on solidarity and equitable burden-sharing, based on voluntary national contributions. This would mean sharing the risks and the costs of operations. It is clear that this does not work very well. The continued rigid use of the policy of “Cost lie where they fall” should therefore be reconsidered.

Ambassador Herman Schaper, NATO Permanent Representative of the Netherlands