The political economy of NATO in theory and practice

Table of Contents

Abbreviations

Figures

Tables

1. Introduction

2. The Atlantic Alliance in Theory
2.1 The Structure of NATO
Treaty Analysis
Civilian Organization and Structures
Military Organization and Military Command Structure
Decision-Making Process and National Engagement
2.2 The Political Economy of Security and Alliance
General Assumptions
Economics of Security and Defense
Cooperation under Security Dilemma
Economic Theory of Alliances
Domestic Issues and Foreign Policy
Armaments and Defense Industry
National Interest and Sovereignty

3. The Atlantic Alliance in Practice
Coalitions of the Willing
Asymmetric Threats and Terrorism
Cooperation with the European Union

4. Instead of a Conclusion

Appendix
The North Atlantic Treaty
NATO Structure and Decision-Making Procedure
Domestic Issues and Foreign Policy

Bibliography

Abbreviations

illustration not visible in this excerpt

Figures

Figure 1: NATO Structure and Decision-Making Procedure prior to the Prague Summit

Figure 2: NATO Structure and Decision-Making Procedure after the Prague Summit

Figure 3: Cooperation under Security Dilemma (Iterated Prisoner’s Dilemma)

Figure 4: Economic Theory of Alliances (Olsen and Zeckhauser (1966): Indifference Map)

Figure 5: Economic Theory of Alliances (Olson and Zeckhauser (1966): Reaction Curve)

Figure 6: Economic Theory of Alliances (Sandler and Hartley (1999): Income and Substitution Effects)

Figure 7: Relationship between inflation and unemployment rate (Mankiw (2000): Philips curve) in the United States 1948 to 2003

Figure 8: National Interest and Sovereignty (Morrow (1991): Security and Autonomy Trade-Off for Minor Powers)

Figure 9: National Interest and Sovereignty (Morrow (1991): Security and Autonomy Trade-Off for Major Powers)

Figure 10: National Interest and Sovereignty (Morrow (1991): Three Changes That Could Break an Alliance)

Figure 11: National Interest and Sovereignty (Morrow (1991): Utility “Surplus”)

Figure 12: Military Balance of NATO countries and other regional groups of states

Figure 13: Coalitions of the Willing (Sandler and Hartley (1999): Optimal majority)

Figure 14: Coalitions of the Willing (Sandler and Hartley (1999): Coalitions Unanimity as an optimal decision rule

Figure 15: Coalitions of the Willing (Buchanan (1965): Club theoretical approach)

Tables

Table 1: Domestic Issues and Foreign Policy 120

illustration not visible in this excerpt

“Denn das bloße Anblicken einer Sache kann uns nicht fördern. Jedes Ansehen geht über in ein Betrachten, jedes Betrachten in ein Sinnen und jedes Sinnes in ein Verknüpfen, und so kann man sagen, daß wir schon bei jedem aufmerksamen Blick in die Welt theoretisieren.”

Goethe · Farbenlehre

1. Introduction

The Atlantic Alliance, as a scientific subject, could be and is the primary matter of concern for representatives within the fields of political science and history. Conversely, this paper shall describe, explain and evaluate the Alliance from the perspective of the political economy. This contribution aims to enhance the understanding of the Alliance as an institution, historically tested and proven to be the main guarantor of the Western hemisphere’s freedom and prosperity.

The philosophies of the old strategists taught us that the mechanisms, which are still the predominant instruments to secure Western wealth and security, are the components of any great strategy. As Peter Paret put it: “Strategic thought is inevitably highly pragmatic. It is dependent on the realities of geography, society, economics, and politics, as well as on other, often fleeting factors that give rise to the issues and conflicts war is meant to resolve” (Paret 1986, 3). In a similar pragmatic manner, this paper shall deal with several present and future issues of NATO.

To put it in the words of Mark Twain: “There is something fascinating about science. One gets such wholesale returns of conjecture out of such a trifling investment of fact” (Twain 1982, 208). This approach will be adhered to subsequently in this paper.

In a similar vein, Jaime Shea posed the question: “Where is the debate about the future of NATO?”^[1] Admittedly, the debate on the shape and progress of future Europe gains much more audience and public attention than those devoted to the Alliance’s future. This paper could also be conceived of as a contribution to this discussion. Since it originates from a thesis in economics, the following analyses and examinations ought respectively apply and focus on a theoretical framework, which independently combines economic as well as methods from political science.

Right before the Washington Summit in 1999, Todd Sandler and Keith Hartley published a book, which drew significant attention throughout the scientific community in the areas of security and economic problems. Their work, ‘ The Political Economy of NATO ’, dealt with several issues concerning political and economic considerations of security in general and in particular the Alliance (Sandler/Hartley 1999; see also Eland 2000; Webber 2000; Clarke 2000; Gates 2000). This publication actually initiated the motivation for personal research in the field, which finally led to this paper.

However, this paper shall be more than a re-written and updated version of the mentioned monograph. In fact, the referred book appears to be an assemblage of older articles from both authors. Despite its publishing date it could not take in to consideration any of the results from the summits in Washington and Prague. The events following September 11th could not, in any case, be discussed in their respective probability, magnitude and occurrence. The only similarity with Sandler and Hartley’s work may ensue from the title of this thesis, whereas the discussion from this paper springs from a distinctly different approach.

Michael Ward stated that “little work has probed the black boxes of decision making within either nations or alliances … Nor has there been very much work which has sought to examine, understand, or predict which alliance groupings were likely to form” (Ward 1982, 26). Accordingly, this paper is deemed to take a much closer look at (the Atlantic) Alliance and tries to create a deeper comprehension of the issues. For this purpose, it is necessary first to characterize the organizational structure and decision-making process of the Atlantic Alliance. The diagramed explanations and interpretations will provide a firm ground for some hypothesis, which shall subsequently be discussed. The conclusions may than be utilized to deliberately establish a theoretical framework to analyze several issues, such as armament co-operation, the interaction of NATO with the European Union, the future enlargement process but also seemingly old-fashioned question of deterrence and nuclear strategies, as well as their practical implications.

Political science and economics are disciplines of social science. Both could be regarded as the ‘theory of the best means of the state’s authorities to achieve its objectives’ (Conrad 1915, 6). Accordingly, it is worthwhile to maintain Karl Popper’s plea in regards to the proper application of scientific methods and thinking. Sciences describe, explain and interpret occurring phenomena, which finally enables to draw realistic predictions and assumptions for future endeavors (Popper 1935, 26-7; Mols 1996, 45).

In that vein, to establish a firm theoretical framework, the author does not hesitate to combine a set of equally important ideas and approaches from both political science and economics. Assumptions of the Realist school of thought of political science will be merged with economic approaches of public choice and other theoretical concepts. Yet, none of the respective viewpoints shall be given priority over the others. Instead, the aim of this paper is to provide a comprehensive view of the political and economical dimensions in the Alliance arena.

Robert Gilpin argued accordingly that “on the one hand, politics largely determines the framework of economic activities and channels it in directions intended to serve the interests of dominant groups; the exercise of power in all its forms is a major determinant of the nature of an economic system. On the other hand, the economic process itself tends to redistribute power and wealth; it transforms the power relationship among groups. This in turn leads to a transformation of the political system, thereby giving rise to a new structure of economic relationships. Thus, the dynamics of international relations in the modern world is largely a function of the reciprocal interaction between economics and politics” (Gilpin 1992, 238; see also Waltz 2000).

2. The Atlantic Alliance in Theory

2.1 The Structure of NATO

The North Atlantic Treaty Organization originates from an association of several European states, established immediately after World War II, which was formalized with the Brussels Treaty, a precursor of the WEU, by Belgium, France, Luxembourg, The Netherlands and The United Kingdom in March 1948. In the course of the rising tensions in Europe and the looming conflict, which would become the long-lasting Cold War confrontation, the Washington Treaty established the Atlantic Alliance in April 1949 (NATO 2001, 29). The intentions of the signatory nations of those days could best be described by the enduring desire of the participating states ‘ to keep America in, Russia out, and Germany down’, which also followed The Truman Doctrine of Containment (see Issacs/Downing 2001, 80). Of course, this had never been spoken aloud or formulated otherwise by anybody in higher positions. However, it proved to be the clue that served to maintain the transatlantic security and Europe’s balance-of-power, for nearly five decades.

The initial twelve contracting partners were subsequently joint by Germany in 1955, Portugal and Spain in 1982, and The Czech Republic, Hungary and Poland in 1999. During the five decades of its existence the Alliance managed successfully to cope with several problems and crises – both among its members as well as its initial objectives. Nevertheless, the ambivalence and ambiguities facing the internal political workings of the Atlantic Alliance since the September 11th events are unprecedented in the 55 years of cooperation. To accentuate this fact it is necessary to take a closer look at the Alliance’s internal structure, its decision-making processes, and its mechanisms to adapt to and cope with particular challenges to the security of the Atlantic area.

Treaty Analysis

The Washington Treaty was so sophistically crafted, that more than 50 years after the initial 14 Articles were agreed upon, the security framework established by the Treaty is still in existence. This is due to the fact that the legalistic framework was sufficiently designed to accommodate all eventualities. This is even more impressive considering the objectives which the Alliance has dealt with.

NATO’s first and foremost objective, “is to safeguard the freedom and security of all its members by political and military means”, in direct opposition of the Warsaw Treaty Organization. Despite the enduring debate following the end of the Cold War, which challenged the very existence of the Alliance’s initial objective, ceased to exist, NATO is still the very lynchpin of the Western Hemisphere’s security even more so to that of Europe’s. Moreover, it still serves as a firm basis for transatlantic cooperation (NATO 2001, 30; Varwick/Woyke 2000, 13). Despite the increasing need and subsequent debate for internal multilateral cooperation and communication between the participating states, the turmoil in the Balkans gave the Alliance’s initial objective a renewed relevance. However, September 11th cemented that relevance into the debate.

The North Atlantic Treaty constitutes a community of fully independent and sovereign states as defined within the framework of Article 51 of the Charter of the United Nations. The Article provides for the establishment of coalition of states in favor of local cooperation which includes the right of individual or collective defense. Hence, the North Atlantic Treaty Organization is “an intergovernmental organization in which member countries retain their full sovereignty and independence. The Organization provides the forum in which they consult together on any military matters affecting security. It provides the structures needed to facilitate consultations and cooperation between them, in political, military and economic as well as scientific and other non-military fields”. This statement may lead to a partial misperception and misinterpretation of the nature of NATO, but instead, the sequence of the used terms indicates the priorities. Accordingly, the “means by which the Alliance carries out its security policies include the maintenance of sufficient military capability to prevent war and to provide for effective defense; an overall capability to manage crises affecting the security of its members; and active promotion of dialogue with other nations and of cooperative approach to European security, including measures to bring about further progress in the field of arms control and disarmament”. With the obvious rise of international terrorism this list had to be extended by the respective means to counter this serious threat to the member states’ security. This had been acknowledged and found its way into the Alliance’s policies at the Prague Summit as an “agreed military concept for defense against terrorism” (NATO 2001, 31; NATO 2002a).

The North Atlantic Treaty entails a preamble and 14 rather short articles. The treaty includes not only matters purely of defense, but also considers more general issues of security. This two-fold character of the Organization will subsequently be discussed. Article 1 determines the general code of conduct for the peaceful settlement of any disputes of and among the signatories. This also applies to Article 2, which lays the foundation for the cooperation of the contracting parties in non-military areas. Article 3 urges the Allies to maintain and develop the instrumentality for individual as well as collective defense while simultaneously enabling the Allies to cope independently yet with solidarity if an armed attack occurred. Article 4, the procedural precursor to Article 5, provides for consolations among the Allies, if and when a partner perceives a general threat to its or the territorial integrity, population, and political independence of an Ally.

Yet, the first time this article had been activated the Alliance proved to be not as strong as it was supposed to be. Condoleezza Rice, though, acknowledged it had been a worrisome event that the Allies could not agree in consultations on such a serious issue like the defense of Turkey. However, the relatively loose state of organizational integration, which grants opportunities for bilateral actions, provides for the survival of the organization even in tumultuous times. Accordingly, George Robertson argued that the “measure of any organization is not how it performs when everything is going well, but how it responds when the going gets rough” (Rice 2003; Robertson 2003).

Article 5 constitutes the core of the Alliance’s commitment: an armed attack at one or several signatories will be assumed as an attack at the Alliance in general. Accordingly, and complying with the provisions of the United Nations Charter, the entire Alliance will have to respond. Contrary to other defense coalitions like the WEU, the Treaty does not imply an automatic obligation for its members to respond proportionally. There is no compulsory action determined either in the Treaty or any other policy paper. Potential responses may vary from a sympathy card to nuclear strikes, as deemed appropriate. Moreover, military activities are solely an alternative among many. Contrary to general perception and public opinion concerning the character of the Organization, the Treaty established a rather loose assemblage of sovereign nations without any legal entitlement for proportional defense actions. This notion, however, is found across the entire institutional structure of the Organization. Its particular implications will subsequently be subject to further discussion.

Another issue, which needs also to be investigated in greater detail, is the matter of applicable territory and the tendency for actions beyond the treaty area, which is defined in Article 6. The treaty area is limited to the territory of the signatories, to their respective possessions north of the tropic, and to airplanes or vessels belonging to a contracting party. Referring to the provisions of Article 4, it could be assumed that the organization perceives a threat also from outside the treaty territory. An Assessment of NATO’s Long-Term Capability Requirements by the so-called Bi-SC Integrated Project Team, for example, estimates that, by 2010, NATO operations will expand beyond the NATO Area of Responsibility. It is anticipated that capabilities will increasingly be driven by expeditionary requirements. Alliance’s activities are likely to emanate in regions like the Middle East or Sub-Sahara and Central Africa.

If agreed among the Allies, activities of NATO may take place as well outside the initial treaty area, as long as the Alliance’s security is perceived to be threatened. Thus, George W. Bush announced that “NATO must show resolve and foresight to act beyond Europe, and it has begun to do so” (Bush 2003b). This goes along with an implied power, which some commentators of international law deem to be derived from the Treaty’s provisions (Nolte 1994, 102-4). On the other side, the rather vague determination of the Alliance’s area of responsibility and commitment, which frankly speaking was more important in the days of Cold War than today, brings about several problems, which affect more than just legalities.

Article 7 emphasizes the Treaty’s compliance with the Charter of the United Nations. In addition to this, Article 8 determines that any individual agreement in future, made by the respective member states, must not contradict the Washington treaty and its provisions.

The sole provision directing the organization is Article 9. It provides for the legal foundation of the North Atlantic Council (NAC), which is entitled by the same Article to establish a subordinated structure of committees and working groups as it deems appropriate and necessary. This open character of the organization provides for a flexible approach to any arising challenge or threat to the Alliance’s security. Simultaneously, it establishes a firm basis for a considerable number of cooperative activities among the Allies.

Until recently, the number of major working groups and committees has grown to a total of 467. The implied restrictions on and obstacles for any attempt to efficiently manage such a vast bureaucratic organization have failed frequently for various reasons. Only with the Prague Summit an agreement had been reached to reduce the number of these bodies by about 30% (Robertson 2002a).

Article 10 opens the door for the Alliance to invite any state, which complies with the principles of NATO and its member states, to join the Alliance. Finally, Articles 11 to 14 deal with the ratification procedure, and the possibility for the signatories to leave the Alliance with one-year notice. The latter provision had been implemented in the Treaty in 1969 at the occasion of its 20th anniversary – and in times of serious tensions among the Allies. Contrary to other military coalitions, the North Atlantic Treaty had been established without a limitation of the period of validity (Varwick/Woyke 2000, 24-31).

Civilian Organization and Structures

In spite of its open and relatively loose institutional character, which Article 9 provides for, NATO remained more than fifty years in a fixed institutional form. Although several incidents, including the end of The Cold War and NATO’s Kosovo campaign, could have provoked a significant shift within the institutional patterns, the Alliance had hardly changed its shape.

This was even more true for the civilian part of the Organization, even though, a number of commentators identified some epochal breaks in NATO’s evolution over the course of the 1990s. Yet, if circumstances related to the end of Cold War and the Kosovo campaign really had shaken and affected the Organization, it would be doubted whether these had in fact had such a strong impact on the Alliance, since the institutional setting was not significantly altered. Where it was deemed appropriate, some new committees and working groups had been established to cover these new phenomena in the Alliance’s sphere of influence.

On the contrary, the events of September 11th impacted the community of member states seriously enough that, finally, at the Prague Summit, a fundamental re-organization was agreed upon. This, however, elaborates both the civilian and the military structure of NATO to such an extent, that the old and the would-be new structures ought to be illuminated in a receptively limited manner (see also the illustrations in the Appendix).

The civilian element of the institutional arrangement of NATO far outnumbers that of the military component. Yet, it is the most visible one, though it does not have the authority to make decisions on its own. Rather, it provides and facilitates the cooperation and consultation between the Allies within an established institutional setting. In the course of the institutional reform following the Prague Summit, the International Staff (IS) will undergo a fundamental reorganization. For illustration purposes, figure 1 and figure 2 in the Appendix explain the organization of the IS.

Among the roughly 3.150 employees of the IS, there are international civil servants either seconded by their respective nation or contracted directly (NATO 2001, 219). They are supposed to take off their national head and serve the Organization as impartial officers. This shall guarantee the intergovernmental character of the Alliance. The IS serves as the main body for inter-Ally consultations. It alone provides an appropriate framework for the needs of the Allies. Accordingly, the IS does not make its own policy, but rather supports the member states and its military to implement a common position.

The executive head of the IS is the Secretary General (SecGen), which is named by the Allied nations by consensus. At the same time, the SecGen is chairman of the NAC which is the main decision-making body and has the highest committees. Though the SecGen may have a personal agenda – to increase, for example, the Alliance’s workability – the position is solely eligible to promote and facilitate the consultation and decision-making procedures among the Allies. Simultaneously, the SecGen serves as “Mr. NATO”. Thus, the position is usually filled with a known, high-ranking politician.

Under direct supervision of the SecGen emerges a remarkable number of committees and working groups to support and facilitate consultation among the Allies in various fields of defense and security related issues. These committees are accommodated within the IS. Over the course of several decades the IS itself was structured in five main Divisions, as indicated in figure 1. The present organization basically reflected the needs of the Alliance within the Cold War scenario. In the 1990’s this structure persisted, but several new tasks – accompanied by a number of new working groups – were added to the Divisions which were deemed most appropriate for this particular issue. During the last decade, this procedure let to some peculiar organizational arrangements.

Due to the relative static structure, some commentators argue that workability of the IS is affected negatively. The latest and new challenges to the Allies’ security, which emerged at latest with the events of September 11th, pushed the member states to adopt a completely revised structure along with a significant reorganization of the subordinated committees of the IS. At the Prague Summit, the reorganization was agreed upon and inaugurated. Yet, up to this date there is only a general scheme for this process, without being further detailed. Nonetheless, it could be assumed, that the new structure will meet the demands of the approaching years more appropriately. Since the new structure is not yet well-known throughout the public, a general overview shall be presented subsequently.

Along with several improvements of the superior decision-making process, the revised IS’s structure shall provide the basis for a smooth and workable institutional environment for the years and challenges to come. The Division for Political Affairs and Security Policy has the lead role in the political aspects of NATO’s fundamental security tasks. The Operations Division leads the operational capability required to meet NATO’s responsibilities for deterrence, defense and crisis management. This also includes cooperation with other international organizations, peacekeeping operations, and the civil emergency planning. The Division for Defense Policy and Planning has the lead role in the defense policy aspects of NATO’s fundamental security tasks. In other words, this Division will maintain NATO’s traditional objectives of hard defense and the respective means to achieve them. The Division for Public Diplomacy was formed from several parts of former Divisions in order to establish a coherent public appearance of the Organization. It will provide public information support across the headquarters and manage the Alliance’s Science program, a significant entity. Finally, the Division for Defense Investment will accommodate the development of and investment in future assets and capabilities to enhance the Alliance’s defense capacity (NATO 2002b).

In comparison to the current and well-established (Cold War) institutional structure, the new framework does not differ that dramatically. However, the re-arrangements might indeed improve the Organization’s capability to cope with future challenges to the security of the Atlantic area.

Military Organization and Military Command Structure

Simultaneously to the re-shuffling of the International Staff of NATO, which will allow it to adapt to potential future challenges, the International Military Staff (IMS) of NATO had to undergo a revision as well. Though military structures need to have relatively stable hierarchical patterns to fulfill their objectives, NATO’s twofold command structure did not any longer corresponded to the likely scenarios of future threats and operations.

Thus, the command structure is going to be reorganized significantly in future, while the initial task of the IMS within NATO headquarters will remain unchanged. Following the considerations in the course of the Prague Summit to adapt the Alliance to a post-Cold War and post-September 11th world, heads of states and governments agreed on a new command structure, as shown in figure 2 too. As many things within the Alliance, there was first established a theoretical roof, while the walls of the new building will still have to be discussed in some detail among the Allies.

The Military Committee (MC) is subordinated to the NAC and provides assistance and advice to this highest body within the Alliance as well as to the Nuclear Planning Group and the Defense Planning Committee. The MC, as the “military” counterpart to the “civilian” NAC, is constituted by the Chiefs of Defense from all member nations, except France. The Chairman of the MC is selected among Allies’ Chiefs of Defense for a three-year period. To reiterate the Alliance’s intergovernmental character, it is important to note that the Chairman of the MC “acts exclusively in an international capacity and his authority stems from the Military Committee”. The IMS supports the MC to the extent of implementing the respective decisions made by the NAC. The MC, in contrast, and hence the IMS, is “responsible for recommending to NATO’s political authorities those measures considered necessary for the common defense of the NATO area”. Moreover, its ”principal role is to provide direction and advice on military policy and strategy”. To put it in other words, the MC and its subordinate IMS are “responsible for the overall conduct of the military affairs of the Alliance under the authority of the Council [NAC]”. Furthermore, the Strategic Commands, SHAPE and SACLANT, are responsible to the MC for the overall direction and conduct of all Alliance military matters within their areas of command. Simultaneously, they provide the actual military advice to the MC (NATO 2001, 240-1).

The vast majority of conventional military forces, however, which appear to be at the disposal of the Alliance’s integrated military structure, are under national direction. There are two distinct groups of military forces. If need occurs, the former will be assigned to the operative command or operative control of a Supreme NATO Commander (either SACEUR or SACLANT). When Allies decide to assign forces to NATO it will assign the transfer of the national operative command or operative control to a NATO command.

This does not mean to convey full authority over the concerned force to NATO supremacy. Instead the lead of this particular force will remain under national responsibility and control. In times of peace, the command solely rests under national responsibility, apart from some few exceptions. The exceptions are some integrated military staffs and headquarters, some parts of NATO’s integrated Air Defense System, a number of communications infrastructure scattered among the member nations, and the Standing Naval Fleet (Varwick/Woyke 2000, 80-1).

Amendments to these arrangements, especially regarding the command structure, were initiated during the course of the Prague Summit. However, this does not apply to the fact, that NATO does not have its own forces. Indeed, the only small force operated and financed by the Alliance is the integrated Air Defense System along with its AWACS fleet (17 air planes over all) and some communication infrastructure. The rest of the coalition’s military forces, however, are national contributions as need occurs. To put it in other words: Despite the multi-nationality in all Alliance affairs, Alliance military forces are not as integrated as it would deem appropriate to consider them as a coherent NATO force. All member states posses fully developed armed forces, including Navies, Armies, and Air Forces. A truly integrated military structure with a trusted division of responsibility and accountability among the Allies does not exist.

Moreover, the initiation of any NATO action implies a consensual vote. It could thus be assumed that single-handed-efforts by a particular nation might prove to be nearly impossible, despite the increasing number of multi-national links and interdependencies among the Allies. Thus, a hegemonic abuse is hardly perceivable (Karádi 1994, 61; Nolte 1994, 121).

These facts are reflected by the respective budgets at the disposal of the Organization. As made visible with table 1-3 in the Appendix, the financial means for NATO institutions constitute only a fraction of the expenditures that nations devote to their defense and security: “With few exceptions, NATO funding does not therefore cover the procurement of military forces of physical military assets … Military manpower and material are assigned to the Alliance by member countries, which remain fully financially responsible for their provision. An important exception is the NATO Airborne Early Warning and Control Force [AWACS] … NATO also finances investments directed towards collective requirements, such as air defense, command and control systems, or Alliance-wide communications systems which cannot be designated as being within the responsibility of any single nation to provide”. Apart from this funding, member countries usually only contribute to expenditures to finance the IS, IMS and subordinates bodies and agencies. The cost-sharing formula is agreed among the Allies and ought to reflect the economic abilities of the respective nation. The Civil Budget, which had an amount of 133 million US $ in 2000, is divided among all Allies, whereas contributions to the Military Budget, which had a proportion of 751,1 million US $ in 2000, covering general expenditures along with the ongoing peacekeeping missions, is divided only among 18 Allies (France is not part of the integrated military structure of NATO) (NATO 2001, 202-5).

Decision-Making Process and National Engagement

The elaboration of the military structure, however, brings us to the very heart of the Alliance. The strong intergovernmental constitution of the Organization is characterized by its decision-making procedure, reflecting the influence of national interests and respective domestic agendas in the Alliance’s affairs^[2]. Additionally, the following elaboration will provide the basis for further modeling and the application of the particular theories from economics as well as from political science.

As shown with figure 1 and figure 2, the decision-making process within NATO depends upon many actors. The main decision-making body of NATO, which derives its authority directly from the North Atlantic Treaty, is the North Atlantic Council (NAC or Council). It convenes on a weekly basis. If need be, consultations can also be undertaken more frequently. The NAC has “effective political authority and power of decision”. Usually it consists of Permanent Representatives of all member nations. At least twice a year, the Council convenes at the level of Foreign Ministers, Defense Ministers or Heads of Government.

In whatever composition it meets, the Council’s decisions have the same status and validity. Each government is represented in the Council by a Permanent Representative with an ambassadorial rank. He or she is supported by a political and military staff or delegation, which also meet with their counterparts and representatives from IS or IMS in the respective working groups or committees on a subordinate level.

As indicated earlier, the SecGen chairs the Council. The Council is called Permanent Council, due to the permanent representation of all member nations within NATO headquarters. Items discussed and decisions taken at the meeting of the Council may cover all aspects of the Alliance’s activities. Issues dealt with during Council meetings are often based on reports and recommendations prepared by subordinate committees at the Council’s request. Equally, subjects may also be raised by any of the national representations as well as through the initiative of the SecGen (NATO 2001, 149-50).

However, it is crucial to note, that “Permanent Representatives [or Ambassadors with their military pendants in the subordinated MC] act [solely] on instructions from their capitals, informing and explaining the view and policy decisions of their governments to their colleagues round the table. Conversely they report back to their national authorities on the views expressed and positions taken by other governments, informing them of new developments and keeping them abreast of movement towards consensus on important issues or areas where national positions diverge”.

This, however, seems to be a fact, which enjoys only little attention throughout the public, press and academia. Frankly speaking, NATO ambassadors do act and function predominately as “post-boxes”^[3] between their governments and the Council as the forum for consultation between the member countries. In the same vein, it would be a fallacy to assume that the actual decisions for any activities of the Alliance are taken independently within the framework of the North Atlantic Council. Indeed, it provides solely a location to express the national decision of the respective governments^[4].

The regulations regarding the decision-making procedures even emphasize these patterns of so-called allied policy-making: “Policy formulation and implementation, in an Alliance of independent sovereign countries, depends on all member governments being fully informed of each other’s overall policies and intentions and the underlying considerations which give rise to them. This calls for regular political consultation, whenever possible during the policy-making stage of deliberations before national decisions have been taken” (NATO 2001, 152).

Thus, it could be assumed that the major achievement in forming a sustaining forum for consultation, which was made by establishing NATO more than fifty years ago, is still the predominant guarantor among the international community, tackling security and defense challenges. The initial objective to establish a firm but flexible framework among several nations still proves to be extremely valuable. Nonetheless, “political consultation among the members of the Alliance is not limited to events taking place within the NATO Treaty area. Increasingly, events outside the geographical area covered by the Treaty have implications for the Alliance and therefore feature on the agenda of the Council … The consultation machinery of NATO is readily available and extensively used by the member nations in such circumstances, even if NATO as an Alliance may not be directly involved. By consulting together they are able to identify at an early stage areas where, in the interests of security and stability, coordinated action may be taken. Neither is the need for consultation limited to political subjects … The process is continuous and takes place on an informal as well as formal basis with a minimum of delay and inconvenience, as a result of the collocation of national delegations to NATO within the same headquarters”. Doing so, NATO “helps to provide strong political links among the Atlantic allies and thereby contributes to the maintenance of a firm political bridge between the nations of Western Europe and North America” (NATO 2001, 153; Hill 1978, 9) – both in pleasant and bothersome times.

The need for joint decision-making and the consensus-rule, as delineated in the Treaty, underlines the patterns of limited cooperation among the Allies. Only issues, which deem to seriously affect the security, stability, and wealth of the North Atlantic area, may move all member nations to come to a consensual vote in order to take common action. Any attempts to negotiate or persuade a nation, which does not agree on a particular issue or have at least a distinct conviction, will inevitably result in a failure. To put it in a more convenient form, the NATO Handbook states: “In making their joint decision-making process dependent on consensus and common consent, the members of the Alliance safeguard the role of each country’s individual experience and outlook while at the same time availing rapidly and decisively if circumstances require them to do so” (NATO 2001, 154).

Accordingly, the Alliance will only raise its flag if every single member is in consent. It thus could be assumed that it takes some efforts to move this Organization anywhere. Further, the Organization moves only to a very limited extent by itself – in other words, it does not make its own policy or takes decisions by its own. Instead, it can only and has to be moved by the consent of all member nations. In that vein, it could occasionally be noticed that, among the public, contributors from academia, and even politicians, the nature of the Alliance, its capabilities and shortfalls are perceived in the wrong manner. So, for example, Stanley Sloan provides some evidence for this hypothesis (Sloan 2003, especially Chap. 2, 10 and 11). Recent evidence was provided by the disturbances, which the Organization along with governments of its member nations encountered not only during the Kosovo crisis (see, for example, Scharping 1999), but also prior to and during the Gulf War 2003.

In order to understand and evaluate deeds and omissions of the Alliance in the past, present, and future, it is thus inevitable to take a much closer look examining the formation of national positions and national standpoints in the capitals of the respective Alliance members. It is not, as commonly perceived, the North Atlantic Council, the Organization, or parts of it, which determine the conduct of the Alliance. Or, to illustrate it with a well-known example, the Organization did not fight a war against Yugoslavia in 1999, but it facilitated the Alliance of several nations to do so. NATO did not harass Iraq and the Alliance did not break over some decisions, but some member states took actions which deemed appropriate to them while the Alliance as such was only limitedly involved and towards another extent and objective.

Contrary to many contributors in media and academia, the author argues in a significantly distinct manner. In fact, security and all entangled issues will be elaborated from the national viewpoint. Identifying national interest – and disinterest – and the driving forces behind these considerations will then allow to take a closer look at the outcome within the Alliance as a result of the assemblage of several such determinates within the strict intergovernmental institutional framework of NATO. Doing so, the resulting reflections will consequently show several corresponding parallels of theories of International Relations and of Economics, which will have to be applied hereafter.

2.2 The Political Economy of Security and Alliance

General Assumptions

Milton Friedman argues that “truly important and significant hypotheses will be found to have ‘assumptions’ that are widely inaccurate descriptive representations of reality, and, in general, the more significant the theory, the more unrealistic the assumptions” (Friedman 1966, 14).

Bearing this in mind, there is an equal set of assumptions among the various facets of the Realist school of thought. It includes “(1) that the international system is based on states as key actors; (2) that international politics is essentially conflictual, a struggle for power [or political influence] in an anarchic setting in which nation-states inevitably rely on their own capabilities to ensure their survival [or at least a decent wealth]; (3) that states exist in a condition of legal sovereignty in which nevertheless there are gradations of capabilities, with greater and lesser states as actors; (4) that states are unitary actors and that domestic politics can be separated from foreign policy; (5) that states are rational actors characterized by a decision-making process leading to choices based on national interest; and (6) that power is the most important concept in explaining and predicting state behavior” (Dougherty/Pfaltzgraff 2001, 63-4; see also Dunne/Schmidt 2001; Waltz 1959, Chap. 4 and 6).

These assumptions, along with the implications of the Realist theory, had been subject to grave discussion throughout the period of Cold War, where they originated. After the Cold War conflict perished, the theory was heavily challenged. Over the course of the past decade, it gained attention again, as it appeared to explain certain phenomena and developments in international relations. Simultaneously, a number of variations of the basic theory were shaped, which, nonetheless, take reference to the general assumptions as indicated above. In that vein, a Realist approach shall provide the basis for further discussion, too.

Some of the assumptions need further clarification: An ultimate means to guarantee the survival of state is commonly found in armaments. If each state in the arena arms against one or more other states, the result could easily be a security dilemma (Herz 1950). The point of contention, then, is at what point the efforts of one state to ensure its security, and hence its survival, comes to be perceived by another state as a threat to its own security. Given this dilemma, it could further be anticipated that the general level of trust among the actors is low. It could be assumed that the motivation for cooperation is low, too. Yet, this runs counter to some observations especially in the field of defense and security issues and particularly the experience of European integration. This contradiction shall be part of later discussion.

Further, the concept of power ought not to be seen too narrowly. It constitutes the principle force, which, in the view of Realists, makes the world spin around. To use the words of Thomas Hobbes: Man has a “perpetual and restless desire of power after power that ceases only in death” (Hobbes 1990, 64).

Max Weber provides a definition of power as the “possibility of imposing one’s own will upon the behavior of other persons“. The power element of political life is especially evident at the international level due to the fact that “every political structure naturally prefers to have weak rather than strong neighbors. Furthermore, as every big political community is a potential aspirant to prestige, it is also a potential threat to all its neighbors; hence, the big political community, which is simply big and strong, is latently and constantly endangered” (Weber 1972, 542, 520).

Though difficult to define, the power of a state is said to consist of capabilities, some of which are economic in nature, such as the degree of industrialization and productivity, gross national product, national income, and income on a per capita basis. To put it in other words, power is “strength capable of being used efficiently”, which means “strength plus the capacity to use it effectively” when in support of a specified objective (Kindleberger 1970, 56, 65).

The assumable tendency of states to increase the potential to influence one’s own environment and the desire for prestige was identified as a driving force behind all state activities by Hans J. Morgenthau, an important contributor to the classical Realist school of thought. Yet, Adam Smith argued in a similar manner for a distinct example: “Without regarding the danger, young volunteers never enlist so readily as at the beginning of a new war; and though they have scarce any chance of preferment, they figure to themselves, in their youthful fancies, a thousand occasions of acquiring honour and distinction which never occur” (Smith 1937, 109). For Morgenthau, prestige correspondingly serves states “in support of a policy of the status qou”. And, “prestige is at most the pleasant by-product of foreign policies whose ultimate objectives are not the reputation for power but the substance of power”. Accordingly, the “foreign policy of a nation is always the result of an estimate of the power relations as they exist among different nations at a certain moment. The result of such conduct of statecraft is evident.

As Morgenthau recognized: “The Cold War … was fought primarily with the weapons of prestige. The United States and the Soviet Union endeavored to impress each other with their military might, technological achievements, economic potential, and political principles in order to weaken each other’s morale and deter each other from taking an irrevocable step toward war” (Morgenthau/Thompson 2001, 94).

The purpose of foreign policy and the estimation of either of the concerned actors’ power focus on well-known patterns in history and international relations – the concept of Balance-of-Power. Despite the many meanings of the term and in spite the difficulties to grasp it, “it is theoretically possible to conceive of the balance of power as a situation or condition, as a universal tendency or law of state behavior, as a guide for state leadership, and as a mode of system maintenance that is characteristic of certain types of international systems”. The purpose and functions of such a system could be assumed “to (1) prevent the establishment of a universal hegemony, (2) preserve the constituent elements of the system and the system itself, (3) ensure stability and mutual security in the international system, and (4) strengthen and prolong the peace by deterring war – that is by confronting an aggressor with the likelihood that a policy of expansion [through whatever means] would meet with the formation of countercoalition” (Dougherty/Pfalzgraff 2001, 41-2).

The source of such a difficult and potentially dangerous environment for the existence and well-being of states springs from the more or less obvious anarchy in the international system. This should be understood by the meaning of the term. Anarchy in the meaning of international relations theory illustrates the absence of a higher order (Schmidt 1995, 36). The lack or shortfall of a structured international system urges states to establish procedures to secure their existence and well-being. Kenneth Oye, accordingly, argues that “for no central authority imposes limits on the pursuit of sovereign interests … Relations among states are marked by war and concert, arms races and arms control, trade wars and tariff truces, financial panics and rescues, competitive devaluation and monetary stabilization … The possibility of a breach of promise can impede cooperation even when cooperation would leave all better off.

Yet, at other times, states do realize common goals through cooperation”. Anarchy is “therefore said to constitute a state of war: When all else fails, force is the ultima ratio – the final and legitimate arbiter of disputes among states. The state of war does not mean that every nation is constantly at the brink of war or actually at war with other nations” (Oye 1992, 36; Art/Jervis 1992, 1).

Though the international community achieved to establish the United Nations after World War II. But developments after September 11th made the relative weaknesses of the institution increasingly apparent. Hence, Kenneth Waltz’s remarks again seem to be valid that “wars occur because there is nothing to prevent them” (Waltz 1959, 232). In other words, the assumption of anarchy among the international system reflects the age-old patterns of homo homini lupus (“Man is men’s wolf”).

Some authors argue that anarchy is not the reason for the assumed state behavior, but a competition in power and self-interest, the consequence of such an arrangement generally leads to the establishment of certain institutional patterns. To ensure mutual security and stability, states tend to fall back on traditional methods and techniques of maintaining and restoring the balance-of-power. These are “(1) the policy of divide and rule (working to diminish the weight of the heavier side by aligning, if necessary, with the weaker side), (2) territorial compensations after a war, (3) creation of buffer states, (4) formation of alliances, (5) spheres of influence, (6) intervention, (7) diplomatic bargaining, (8) legal and peaceful settlement of disputes, (9) reduction of armaments, (10) armaments competition or races, and (11) war itself, if necessary, to maintain or restore balance” (Dougherty/Pfaltzgraff 2001, 42; Wendt 1992). Out of this variety of strategies of retaliation, deterrence, or self-help, one issue shall be discussed in greater detail.

In fact, the pessimism of the illustrated school of thought’s worldview regarding the potentially violent aspects of a stateless international system is countered to a certain extent by the acknowledgment of an escape out of this disgraceful situation (Masters 1964). States actually do cooperate. They do it not necessarily voluntarily, but despite external forces. It is obviously more rewarding to cooperate than to be caught in a situation, which Waltz describes as following: “In a self-help system each of the units spends a portion of its efforts, not in forwarding its own good, but in providing the means of protecting itself against others” (Waltz 1979, 105).

Cooperation is thus commonly perceived as a means of self-help to approach a common interest. However, cooperation proves to be difficult because states tend to be very sensitive as to how cooperation affects their current and further capabilities, and if existing, their relative advantage to others. Furthermore, in accordance to David Ricardo’s approach of comparative advantages (see Ricardo 1895) Kenneth Waltz argues that, “specialization in a system of divided labor works to everyone’s advantage, though not equally so. Inequality in the expected distribution of the increased product works strongly against extension of the division of labor internationally” (Waltz 1979, 105).

Yet, this pessimistic notion of states’ behavior stems from assumptions, which exaggerates the emphasis of competitive character in the international system. This bias leads to several misinterpretations. As Charles Glaser points out, that cooperation is essentially a means of self-help, yet saving the state’s resources (Glaser 1995).

Economics of Security and Defense

Charles Kindleberger ascertains that in the “international sphere where there is no world government, the question remains how public goods [such as security] are produced” (Kindleberger 1986, 8). It ought to be assumed that goods, like defense and security, are nationally provided. If the provision of security and defense is determined so much locally, and there is enough evidence verifying this hypothesis, the actual character of these products of ultimate state objectives ought to be elaborated in more detail.

A few years after the North Atlantic Alliance had been founded, Arnold Wolfers alleged that problems might arise, which would quickly prove the intentions of states unsuitable to handle their security collectively, and they would hence return to unilateral attempts guaranteeing the concerned country’s security (Wolfers 1959, 49-52).

This notion prevailed over the last five decades of the existence of the Alliance. These patterns most likely originate from a divergence in terminology and meaning of collective defense and collective security, though often condensed improperly. In fact, these two policies differ fundamentally in respects of intention and conduct. Incidents in which they are complementary and supporting each other are most likely “a matter of happy coincidence”. Wolfers, argues that nations “enter into collective defense arrangements to ward off threats to their national security interests, as traditionally conceived, that emanate from some specific [opponents] regarded as the chief national enemy, actual or potential. The motive behind such arrangements is the conviction that the creation of military strength sufficient to ward off the specific threat would be beyond their national capacity or would prove excessively and unnecessarily costly in view of the opportunities for mutual support and common defense”. Given that nations are aware of who is the opponent, the geographical and strategic determinants define the size and duration of the military preparations as well as the attached costs to it. It could be assumed that actions deemed necessary to pursue collective defense are limited to a certain extent beforehand serving predominately the deterrence of an escalation of the confrontation. Accordingly, applied means will more or less correspond to resources devoted to it.

Collective security, in contrast, “belongs to a different and presumably better world”. It is, contrary to alliance policies, “directed against any and every [rival] anywhere that commits an act of aggression, allies and friends included”. Collective security has by definition a significantly different range in geographical as well as in strategic terms. Simultaneously, deeds of collective security require far bigger efforts and resources from the involved countries to shape reliable means, whereas the impact of actions to guarantee collective security will have wider and less definite effects, too.

[...]

---

^[1] Jaime Shea’s statement during a presentation for the New Parliamentarians Program conducted by the International Secretariat of NATO Parliamentary Assembly, July 12, 2002.

^[2] For a thorough discussion of the term of national interest see, for example, Pradetto (2002).

^[3] Comment made by Simon Lunn, Secretary General of NATO Parliamentary Assembly.

^[4] For a detailed elaboration of the consultation mechanisms see Hill (1978).