The Road to Chaos and The Dutch Way



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The Road to Chaos

To The Point, Context n°50 (March-April 2002) -

Forty-eight billion dollars more for FY 2002, a $121 billion increase by FY 2002 -- these are figures that boggle the mind. The media effect was immediate and intense. In the International Herald Tribune of 5 February, Joseph Fitchett wrote: «Pentagon officials said that the armed forces' success -- essentially using sophisticated electronics and sensors to deliver high-precision bombs and missiles -- had already spurred nearly $50 billion in new, extra spending on high-tech weapons in the new US defense budget. 'At this rate, we won't even be able to communicate with you, much less fight alongside you,' a former German defense official said.» Amid the heady effects of this news from the Pentagon and the media treatment of the campaign in Afghanistan, Thomas Friedman noted the same day (5 February), that American military power, propelled by such Pharaonic budget forecasts, isolated the United States into a sort of «military apartheid» where the European countries would be unable to catch up. The reality, however, is different.

Although $48 billion represents an impressive sum, John Hendren, writing in the Los Angeles Times on 1 February, set the record straight in advance: «But the procurement budget, the portion that funds new equipment will get just $8 billion of the $48 billion budget increase, according to military strategists with knowledge of the budget that Defense Secretary Donald H. Rumsfeld plans to outline Monday. That brings spending on new weapons to $68 billion -- far short of the $103 billion the Pentagon says it needs to replace equipment that wears out each year, according to a July internal study for the Joint Chiefs of Staff.» What is important here is the perspective, i.e. the general trend. Since the end of the eighties, the Pentagon has been constantly under-financed in terms of the size of the forces and the missions assigned to those forces. That is a fact. The political evaluation of that fact does not affect the Pentagon, but the military policy and strategy of the United States and what that entails in terms of expenditures for the Pentagon.

Let us stick to the figures for now, however. The situation that we have outlined means that, if we had wanted to reestablish a normal situation for the operation of the forces as they exist, with the funding of all the current normal modernization plans, the increase for FY 2003 would have been somewhere between $90 billion and $150 billion. Hendren's analysis contains two estimates from other bodies on the subject of defense expenditures: «The Congressional Budget Office put the figure at $91 billion. The private Center for Strategic and International Studies came up with $123 billion.» That is the reality and not the «military apartheid» coined by Friedman.

Virtual reality vision and true reality vision

There are two presentations of this first budget of the new Bush Administration: one presentation that could be characterized as the virtual reality version, which seeks to point out the colossal defense effort; and the true reality version, which shows that the agreed increase barely manages to resolve a portion of the current problems, while leaving other problems unresolved and increasingly critical. This observation has implications that are extremely disturbing for the operation of the Pentagon, if one tries to evaluate the psychological effects for the bureaucracy.

The virtual reality presentation of the budgetary effort is a general one. It is intended for everybody, including the bureaucracy. It is a patriotic message, an obvious distortion of the true reality -- bloated, exaggerated. In the case of the public and of the allies, in measuring the effect from the Washington standpoint, it is possible to recognize that it is beneficial: it enlarges the stature of the US and affirms the determination of the Bush Administration. But what interests us here is another aspect of the message. For the Pentagon bureaucracy, for the individuals and the groups within that bureaucracy who reason first and foremost in terms of the interests of their service and of their program, there is only one message: the end of budgetary restrictions. The bureaucracy therefore understands the virtual reality presentation of the budgetary increase as a ''wake-up call'', a call for mobilization, the resurrection of the objective of national security as an absolute priority in their planning. The time of budgetary restrictions, the time of half-measures, the time of accounting niceties is over.

No Longer ''It's the Economy, Stupid!''

During his presidency, Clinton never enjoyed easy relations with the Pentagon. His failure to serve in the military during Vietnam, his initial Pentagon initiative (raising the issue of the status of homosexuals in the military) -- all of that combined to create an uneasy climate between Clinton and the military. For this reason, the Clinton Administration never conducted a frontal attack on the numerous problems confronting the Pentagon, and the experience of Les Aspin, Defense Secretary from January 1993 until his resignation in December 1993, effectively marks the limits of the Clinton Administration on the DoD bureaucracy. Despairing, Clinton gave up on any prospect of making a substantial dent on the DoD bureaucracy, relying upon William Perry (and subsequently William Cohen starting in 1996) to manage the development of DoD along conservative budgetary lines (continuation of development of Cold War structures, gradual reduction of modernization). Still, one essential item was imposed on the DoD, an item which constituted an aspect of the philosophy of the Clinton Administration: the idea that, henceforth, the fundamental factor of the national security of the United States should be and would be the economy -- corresponding to the well?worn slogan of the 1992 Clinton presidential campaign: ''It's the economy, stupid!''.

The bureaucracy was accordingly obliged to take the economic aspect into account as the top priority in all its activities, and especially at the level of R&D programs. It is not clear that the guidance in question produced any visible results (case in point: the escalation of the cost of the F-22 Raptor program from $37 million per copy in 1989 to $190 million in 2000). Still, various initiatives were launched in the interest of rationalization and savings. The main one was certainly the Joint Advanced Strike Technology (JAST) program for a fighter aircraft to replace the US Air Force's F-16 and A-10 and the US Navy's A-6, taking up the challenge to develop an airplane for the USAF and an airplane for the US Navy from a common core aircraft. In 1995, JAST absorbed the US Marine Corps and UK Royal Navy program for a vertical takeoff and landing (VTOL) fighter aircraft, and became the much-publicized JSF.

For the Bush Administration, particularly since 11 September, the priority is no longer the economy but rather all military and related matters; security is no longer defined first in economic terms but rather in terms of those strategic, operational and technological requirements which determine overall military readiness in the broadest sense. The FY 2003 budget with its increase of $48 billion compared to FY 2002 marks this shift in budgetary terms, especially because of the virtual reality presentation made as the first post-9/11 budget, with the need to again place primary emphasis on military readiness. For the bureaucracy, that has meant the total abandonment of the Clinton Administration's ''Economy First''. Now, the bureaucracy will once more find its modus operandi and its old Cold War priorities, with the top priority being, of course, military readiness.

Return to the Reagan Years

In more concrete historical terms, this means that the DoD bureaucracy is returning to the early eighties (1981-1985) of the Reagan presidency and what was known as the Reagan rearmament, until the Gramm-Rudman enactment of December 1985 imposed a limit on federal expenditures and made reduction of the federal deficit the government's top priority. And the eighties were the years when Pentagon expenditures spiraled out of control; the years when the major programs with substantial cost overruns were launched and integrated into Pentagon management -- or, more accurately, Pentagon mismanagement -- which led to budgetary catastrophe. The programs in question were the following:

* Starting with the B-1A, at a cost of $45 million per aircraft in 1974, the decision was made to develop a downgraded version (without variable geometry), the B-1B, directly under the control of the USAF. One hundred were produced at a total cost of over $30 billion and their electronic countermeasures (ECM) systems were dispensed with because of their price and because of technical problems.

* The ATA, which became the A-12, was launched in 1983 to replace the A?6 Intruder. The program was dropped in January 1991, after incurring costs of $5 billion.

* The ATB, which became the B-2, budgeted at $280 million for a production run of 132 units, ended up with 21 aircraft at a total cost of $44 billion.

* The ATF, which became the F-22, has gone from a unit cost of $37 million in 1987-89 to $190 million today, and is running about 10 years behind schedule.

There is, of course, no reason that the bureaucracy can be expected to control its expenditures better than it did in the eighties, and every reason to believe the contrary. The internal situation (waste, management anarchy) is bad, and no internal changes have transpired in the interim to modify the situation. The Rumsfeld reform plans, announced in his remarkable, but much overlooked, speech of 10 September 2001 (see Context , No. 48, To The Point ), have remained without effect. Analysis of the budget shows no major place accorded to such reform. What we do see is the resurrection of programs that are completely irrelevant to current conflicts; it is clear that the resurrection of those programs owes much to the satisfaction of special interests. A case in point is the Crusader 40-ton howitzer, abandoned in 2000, at a total cost of $12 billion, a program whose major profits accrue mainly to the Carlysle Group, closely linked to the Bush family (Bush senior is one of the Carlysle Group's major shareholders -- as was the bin Laden family until October 2001). The budgetary direction taken by the Bush Administration, far from being a meaningful step in the direction of sound management, is already seen as a step down the slippery slope toward management chaos in an already much-troubled Pentagon.

JSF and the New Way

To better measure what could be the effect of this new direction taken by the Pentagon, it is useful to consider a concrete example. The JSF comes to mind because of its importance in its own right (with forecast orders for 3,000 planes for the US military services alone); because of the role related above which it played in the Clinton Administration; and lastly, because of its importance for the allies, for its export prospects, justifying the importance constantly accorded this weapon system.

The tragedy of 11 September radically modified government priorities. This has been seen in the defense budget, but it has also been the case for general policy, as it appears in its new embodiment, especially in the light of this new budget. James Carroll explains this massive change in concept in the Boston Globe of 19 February: «For a generation, the massive US arsenal has been managed with the purpose of not being used. With the exceptions of the Gulf War and the NATO air war against Serbia, this purpose was achieved. It was rooted in the post-Vietnam assumption that war is a last resort, to be avoided if possible. [...] Now, a radically different assumption is undergirding American purpose, a repudiation of the experience of the last 55 years. With putative battlefields around the globe, war is all at once being defined as the essence of who we are, and nothing makes this clearer than the new Pentagon budget.» This reorientation strongly contributed to transforming the fate of the JSF. Until 11 September, it was a highly criticized program that was constantly on the defensive. Today, the contrary is the case, despite the military experience in Afghanistan which has shown the very serious limits to the employment of this type of aircraft -- the almost total absence of a USAF tactical component to allow for the strategic component -- because of the lack of in-theater ground bases. What is clear is that the very philosophy underlying what has become America's broad general policy totally favors the JSF, a program that is now clearly in the lead.

Even so, it cannot be said that every obstacle has been removed from the program's path. The obstacles are of an entirely new type. We must examine them because they effectively summarize the situation that is being created, with these massive increases in the DoD budget, increases which remain, however, inadequate. It is this point in particular, moreover, that circumscribes the limits of the JSF victory: the JSF may be in the lead; it is not in favor, however, from a budgetary standpoint, because it lacks the wherewithal and because there are other priorities. In other words, the order for 3,000 stands in principle, but it is more probable than ever that the realistic assessments calling for cuts in this figure must be given due weight. Following the success of the UCAVs in Afghanistan, the place given over to those aircraft in DoD programming will only augment the trend, since UCAVs will take on a portion of the missions identified until now as JSF missions.

The JSF future

With a view to these changes within the DoD, one can envisage new problems for the JSF in two areas: the cost aspect, because of the operational and technological evolution; and the status aspect, the reflection of inter-service rivalries.

* Afghanistan will strengthen the trend, within the USAF and even the US Navy, toward the need for the strictest possible central command and communications, to control the flow of information. That means, in the case of the JSF, strengthening its dependence on central systems, with a concomitant reduction in its autonomy. On the other hand, the need to take action against targets on the ground which are proving increasingly more difficult to identify, will lead to a greater degree of sophistication for the aircraft in the terminal aspect of its mission: sensors to identify targets and to guide on-board ordnance onto target. In both cases, the outlook is for a heightened level of sophistication and the resultant higher costs.

This has become possible, because, as we have seen above, the DoD bureaucracy is no longer bound by economic considerations. The bureaucracy is expected to have carte blanche in pursuing JSF enhancements that will result in a greater degree of sophistication. This can be expected to culminate in an explosion of costs, typical for DoD in this type of situation, at the end of the development phase and during the pre?production phase (roughly between now and 2007). We believe that the JSF, currently offered at an average price of $35 million for the USAF version, can be expected to attain between $70 million and $90 million per copy shortly before the start of production. The final price will exceed even that. These predictions are in accord with the general tendency of major US programs: the F-16, when it was under development as a candidate for the Light Fighter Program in 1973, was priced at $6?$8 million; it is currently sold for $25 million, despite a production run in excess of 3,000 units.

* A completely new aspect, also ascribable to loss of control by DoD, concerns inter?service rivalry, which has been relatively contained within the JSF program until now. The US Navy version of the JSF is intended to replace the A-6 Intruder, i.e. to give the Navy a long-distance tactical attack capability which it lost with the gradual withdrawal of the A-6 (starting in the early eighties). The ATA (A-12), a super?stealth aircraft, had been launched in 1983 to serve as a replacement for the A-6, but was abandoned in 1991. One of the key causes of the failure of the A-12 were the technical problems encountered in integrating stealth technology which the Navy lacked and which the Air Force refused to release to the Navy. In his book The $5 Billion Misunderstanding, which relates the history of the A-12, James P. Stevenson explains: «One reason the Navy spent so much money [on the A-12] and suffered development delays that postponed the A-12's first flight was the Air Force's complete unwillingness to share the lessons [in stealth technology] it had learned developing the F-117 and the B-2. Its obstinacy in refusing to share information was designed to fulfill its post-World War II claims that aircraft carriers were an unnecessary expense because bombers could perform the same mission. Because the Air Force, like all services, sees its mission primarily as achieving dominance through budget share, it was successful in taking the deep strike mission from the U.S. Navy and is not likely to return it.»

These observations are clearly more valid than ever: the Navy's JSF is a threat for the USAF that the Navy may be able to take back the ''deep strike'' mission which the USAF succeeded in taking over in large part through the downgrading of the A-6 and the abandonment of the A-12. This comment is all the more valid since the threat has been highlighted by Afghanistan, where the tactical battle missions were carried out almost exclusively by the Navy. In this context, we can only expect a bitter flare-up of the USAF-US Navy confrontation, possibly with renewed USAF balking at the transfer of certain aspects of stealth technology to the Navy version, or USAF control of the transfer of F-22 technology to the JSF. This will affect the cost and the development/production schedule, as well as program capabilities.

The Dutch Way

It was necessary to put the JSF in its true perspective, in the light of the events within the Pentagon, before taking up the Dutch procurement and the selection of the JSF -- the Dutch procurement, since on 8 February, the cabinet, chaired by Wim Kok, decided that the Netherlands will participate in Phase II of the JSF/F-35 program, with an investment approaching billions of dollars. The decision is considered as in principle opening the way to the acquisition, around 2010, of 85 JSF (F-35) aircraft to replace the 135 F?16s of the Royal Netherlands Air Force (RNAF).

The decision was to have been taken at the end of December (on the 21st), but was postponed until 25 January, then 1 February and finally 8 February. The decision was essentially on whether or not to participate in the JSF/F-35 program. The European offers (the Rafale and the Eurofighter Typhoon) did not require an immediate reply. In December 2001, a Dutch parliamentary source hostile to the choice of the JSF explained to us that action by his faction had succeeded in «postponing the decision with surprising ease. There is almost no resistance to our anti-JSF arguments.» This situation changed radically in early February, when, on the contrary, it appeared -- according to a European expert who followed the ebb and flow on the selection in the final days -- that «the challenge had become much more a question of a realignment of the Dutch political world in advance of upcoming elections that focused on a decision (entry into the JSF program) which seemed to have been made before being debated, and which was therefore not debated.» This seemed to finally confirm the remark by a Dutch journalist, made in private to a French industrialist, who had come to present the Rafale offer to the Netherlands: «You French, you seem to really believe in the process. You do not understand that the decision had been made at the outset. But you are good, your offer is really good.»

Such was the climate that prevailed in the days before the decision. One is free to draw one's own conclusions. But there is at least one fact that can be cited: the decision, primarily intended and financed by Philips, to make a $400 million industry contribution out of the $800 million required by the US for entry into Phase II; that decision -- followed on 6 February by an agreement by industry to come up with an additional $200 million -- was apparently decisive.

This state of affairs has left a certain malaise in the minds of certain participants and commentators, as seen from the European reactions. The same European expert observed that «the networks of US influence put in place in 1996-97 in the Netherlands, at the time of the selection of the Apache helicopter, were always there and they were effective.» After the cabinet decision, there remained the position of the Parliament, scheduled for 10 April at the latest. Here too, the malaise was palpable: although it appeared at the end of 2001 that the Parliament might take a carefully crafted position, with a strong chance that it would be hostile to the JSF, the atmosphere in early February was quite different and it seemed likely that the matter would be a simple formality.

Very strange conditions

We understand what is meant by: this procurement competition proceeded in a rather strange way. On the one hand, there was the negative aspect, with the two European competitors working mainly to prevent the Netherlands from taking an early decision (such action being favorable to the Americans, since they were the only ones placing a condition on their proposal that the selection be made prior to April 2002). On the other hand, on the contrary, indirectly but clearly, this procurement was the occasion for fundamental observations on the European side, in a climate which had suddenly become unhealthy. This is, indirectly, the political dimension of this matter.

A surprising and important detail had been made public: the technological and operational evaluation by the RNAF of the three candidates. According to the RNAF criteria, the JSF had been graded 6.97; the Rafale, 6.95; and the Eurofighter Typhoon, 5.85. This grading is surprising because it compares aircraft which seem only marginally comparable. The Rafale is beginning to enter into service; the Typhoon is in its terminal phase of development; and the JSF is a ''paper aircraft'', with only theoretical capabilities. The grading is also surprising because the JSF, placed on an almost equal footing with the Rafale, is far from being able to demonstrate the operational and technological superiority attributed to it. If one adds the fact that in the economic evaluation by the competent Dutch government body, the CPB, the JSF was deemed very problematic, it is fair to wonder on what factual basis the selection of the JSF was made. One is also led to wonder about the role of the RNAF, which made public the evaluation grades, which did not really facilitate the Dutch government's task.

In the face of these surprising elements (the RNAF evaluation was known a matter of days before the decision on the selection and the CPB assessment goes back to October 2001), and in the face of the fact that the American proposal seemed in no way superior and notwithstanding the fact that it was much more problematic (JSF development being at a much more preliminary or theoretical stage), the Europeans reacted as might be expected. Obviously, the political argument in favor of a European choice moved to the forefront. In turn, Chirac, Schröder and Chris Patten, EU Commissioner for External Relations all intervened with the Dutch government. EADS, which headed up the promotion of the Typhoon, rounded up the other concerned players from European industry to draft a letter dated 7 February to the Netherlands Aviation Industry Association (NIFARP) in particularly virulent terms: «But, since NIFARP has solely generated and maintained a biased evaluation process, directed exclusively at participating in the JSF development project, we have no other choice than to declare that our companies, including all its subsidiaries, will immediately stop all contacts with NIFARP members. In one sentence and with Dutch clarity: we will not continue to do business with you anymore.» Our sources were not in a position to tell us if this letter was in fact sent, but such a letter was in fact drafted on 7 February and it effectively states what the European aviation industry thinks of the Dutch selection process as regards the choice of the JSF. As our European expert put it: «This is not the triumph of pro-American Atlanticism; it is political racketeering, pure and simple. It is a sad spectacle, which does nothing to enhance the reputation of Dutch democracy.»

A Strategic Shift?

The best that can be said of the reactions to the Dutch decision in the specialized European press is that they were spineless, not to say totally lacking in moral courage. There were the platitudes about the JSF -- the putative order for 3,000 of them by the US services (in reality -- zero, to date); the extraordinary performance claimed for the aircraft; the structural supportiveness of the American proposal, all the well-worn hype trotted out as if factual, with little or no reference to the reality (more virtual reality). The Dutch procurement will not be remembered as a triumph for Western investigative journalism. The general conclusion drawn was that the Netherlands would carry with it a substantial portion of Nordic Europe and that the Dutch action sounded the death knell for Europe's aviation industry.

In reality, what is at stake is not ''Nordic Europe'' or some other exotic concept but indeed the F-16 consortium -- the four countries which, in June 1975, ordered the F?16: Belgium, Denmark, Norway and the Netherlands. Of this group, Denmark and Norway provide support forces -- according to plans approved by NATO, an organization of diminishing relevance. (Since Norway is not an EU member, it does not concern us in this analysis.) Aside from the Netherlands, the other key F-16 country is Belgium. Belgium has undertaken a process seeking to integrate its military forces with those of the Netherlands. As regards their navies, substantial integration has been achieved. Plans for merger of the two air forces -- with military transport aviation being left to Belgium and combat aviation being left to the Netherlands -- have been seriously compromised.

The episode of the selection of the JSF by the Netherlands, and the selection itself, have been followed with great interest by Belgium -- and deeply resented. As early as 31 January, the president of the Senate, the Liberal Armand De Decker, made a statement expressing his «concern» in the face of the rumors of a pro-JSF Dutch decision, and noting that «the Netherlands is confronting their European partners -- including Belgium -- with a 'fait accompli'» and is launching an initiative whose clear result is «the unraveling of the Benelux effort to achieve military integration». De Decker took the occasion to repeat his interest in a European solution for the renewal of military equipment. After the selection, on 10 February, it was the Minister of Defense, Socialist André Flahaut who rose to deplore the Dutch decision taken without consulting Belgium (thereby breaking what amounts to more than an unwritten law between the two countries) and who stated that «Belgium did not feel itself bound by the Dutch selection»; when the time comes (the Belgian F-16s are slated to remain operational until 2015), Belgium can be expected to select a new fighter aircraft ''off the shelf'' (with no industry participation in the process). Flahaut indicated that every preference would be given to «a European choice». The consequence of the Dutch selection was not therefore the death knell for Europe's aviation industry (that remains to be seen) but the fracture of European solidarity, with one of the continent's keystone political groupings (the Benelux) -- which had been profitably renewed by the Americans in 1975 with the selection of the F-16 -- smashed to pieces. The Dutch selection was perceived in Belgium as treasonous and will leave deep scars.

Our evaluation of the situation is that the Dutch selection will open the debate in Belgium on a future fighter aircraft much sooner than anticipated. The debate will be strongly influenced by both the coincidental efforts to construct a European Security and Defense Policy (ESDP) and by the trans-Atlantic malaise caused by America's unilateralist military policy. The Belgians have realized this essential fact: the selection of the JSF uncouples -- in terms of equipment and possibly procedures (the JSF being integrated into the US system) -- the small countries from the three key countries which will fly the Eurofighter and the Rafale. The crucial point of Belgian policy is that the small countries must do everything possible to avoid being separated from the big countries and from the pivotal UK-France-Germany alignment, especially as regards defense and security. This point will weigh heavily in the critical debate which is about to unfold in Europe.