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NATO Enlargement: NATO and U.S. Actions Taken to Facilitate Enlargement (Letter Report, 05/06/96, GAO/NSIAD-96-92).

Pursuant to a congressional request, GAO reviewed the North Atlantic
Treaty Organization's (NATO) future enlargement and plans to include the
newly democratic states of the former communist bloc, focusing on: (1)
actions NATO plans to take to enlarge itself; (2) U.S. bilateral
assistance programs that enhance the military operations and
capabilities of aspiring NATO members; and (3) the potential costs of
enlargement to NATO and the new members.

GAO found that: (1) in accordance with its 1991 strategic concept, NATO
has implemented two outreach programs to former communist states to
enhance cooperation on issues of mutual interest, such as political
stability and crisis management; (2) NATO has not established a
timetable for its expansion or decided on the countries to which it will
extend membership; (3) NATO believes that enlargement would enhance
military interoperability, civilian control of militaries, commitment to
democratic values, and the resolution of ethnic and territorial disputes
in former communist states; (4) in 1995, five U.S. bilateral assistance
programs provided $54 million to Partnership for Peace (PFP) program
participants to improve their interoperational capabilities; (5) except
for PFP, the assistance programs predated NATO consideration of
expansion; (6) the United States plans to provide about $125 million in
fiscal year 1996 bilateral assistance; (7) because requirements have not
been defined, NATO and the United States do not know the total costs of
enlargement to existing and new members; (8) support for new members'
infrastructure would be limited to high-priority, eligible items to make
their militaries compatible; and (9) NATO members may have to increase
their assistance to new members because the new members are expected to
bear many of the expansion costs and normal membership costs as well as
the cost of making their militaries interoperational with NATO forces.

--------------------------- Indexing Terms -----------------------------

     TITLE:  NATO Enlargement: NATO and U.S. Actions Taken to Facilitate 
      DATE:  05/06/96
   SUBJECT:  International agreements
             NATO military agreements
             International cooperation
             NATO standardization
             Foreign military assistance
             Foreign governments
             Developing countries
             Military interoperability agreements
             NATO military forces
IDENTIFIER:  NATO Partnership for Peace Program
             NATO North Atlantic Cooperation Council Program
             DOD Warsaw Initiative
             DOD Foreign Military Financing Program
             International Military Education and Training Program
             JCS Joint Contact Team Program
             DOD Military-to-Military Contact Program
             DOD Excess Defense Articles Program
             Czech Federal Republic
             Slovak Federal Republic
             Georgia (Formerly Soviet Union)
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================================================================ COVER

Report to the Chairman, Committee on International Relations, House
of Representatives

May 1996



NATO Enlargement


=============================================================== ABBREV

  DOD - Department of Defense
  NACC - North Atlantic Cooperation Council
  NATO - North Atlantic Treaty Organization
  PFP - Partnership for Peace

=============================================================== LETTER


May 6, 1996

The Honorable Benjamin Gilman
Chairman, Committee on International Relations
House of Representatives

Dear Mr.  Chairman: 

In January 1994, the North Atlantic Treaty Organization (NATO)
committed itself to enlarging its membership to include newly
democratic states of the former Communist bloc.  According to the
Department of State, the U.S.  government has been the driving force
behind NATO's enlargement process.  In response to your request, we
examined issues involving this future enlargement.  Specifically, our
objectives were to identify (1) the nature of actions taken or
planned to facilitate the future enlargement of NATO, (2) the extent
of current and planned U.S.  bilateral assistance programs to enhance
the military operations and capabilities of NATO's aspiring members,
and (3) the potential costs of enlargement to NATO and the new

As you requested, we will continue our evaluation of NATO's
Partnership for Peace (PFP) program and bilateral programs that
complement and support it. 

------------------------------------------------------------ Letter :1

NATO was formed in 1949 to promote stability in the North Atlantic
area (see app.  I for NATO's North Atlantic Treaty) by uniting member
nations' efforts for collective defense and the preservation of peace
and security.  After expanding three times over the years, NATO
currently has 16 members.\1 With the collapse of the Soviet Union,
the dissolution of the Warsaw Pact, and German reunification, NATO
redefined its strategic concept at its Rome summit in 1991 to reflect
the post-Cold War geopolitical landscape.  The new strategic concept
articulated a new conventional military force structure for NATO,
greater emphasis on crisis management and conflict prevention, less
reliance on nuclear forces, and committed the Alliance to pursuing
greater cooperation with its former adversaries to the east. 

\1 Belgium, Canada, Denmark, France, Germany (1955), Greece (1952),
Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain
(1982), Turkey (1952), the United Kingdom, and the United States. 

------------------------------------------------------------ Letter :2

Since the 1991 Rome summit, in accordance with the new strategic
concept, NATO has initiated two programs designed to reach out to its
former adversaries to the east-- the North Atlantic Cooperation
Council (NACC) and the PFP program.  NACC, established in 1991,
provides a forum for dialogue between NATO and countries of the
former Communist bloc on such matters as defense planning; aspects of
strategy, force and command structures; democratic concepts of
civilian-military relations; nuclear disarmament; crisis management;
and peacekeeping.  PFP, established in 1994, is intended to promote
greater cooperation between NATO and PFP members in the areas of
defense budgeting, joint planning, joint military exercises, and
enabling PFP nations to operate with NATO forces in such areas as
peacekeeping, search and rescue, and humanitarian missions.  In
September 1995, NATO released an internal study examining the
rationale for enlarging NATO and how it might occur.  However, NATO
members have not yet established a timetable for enlargement or
decided who will be invited to join. 

The United States has five bilateral assistance programs that help to
improve the operational capabilities of potential NATO members and
other countries of Central and Eastern Europe and the Newly
Independent States.  These programs are bilateral PFP assistance (the
Warsaw Initiative), Foreign Military Financing,\2 the International
Military Education and Training program, the Joint Contact Team
Program,\3 and Excess Defense Articles transfers.  All but the
bilateral PFP assistance predate discussion of NATO's future

In fiscal year 1995, the United States provided about $54 million in
bilateral assistance to PFP member states through the five bilateral
assistance programs; in fiscal year 1996, the United States will
provide about $125 million.  This increase largely supports PFP
bilateral assistance for cooperative activities with these nations. 
Of the total $179 million, about $130 million (or 73 percent)
represents support for the PFP program. 

Neither NATO nor the United States knows what the total costs of
enlargement will be to NATO or individual members, both current and
new.  Increased membership will place new financial burdens on NATO's
commonly funded infrastructure programs and on the new members
themselves.  Many of the costs of enlargement would be expected to be
borne by the new members, some of whom may lack the ability to fund
the changes necessary for their militaries to become interoperable
with NATO forces.  The cost that each new member may incur cannot now
be fully determined because NATO has not yet defined country-specific
military requirements.  Nevertheless, U.S.  officials anticipate that
these nations may require bilateral or multilateral financial
assistance from the United States and other NATO members. 

\2 In fiscal year 1996, $60 million of Foreign Military Financing
funding is to be in support of the Warsaw Initiative.  This
represents the first time Foreign Military Financing funding has been
used in support of the Warsaw Initiative. 

\3 Formerly called the Military-to-Military Contacts program. 

------------------------------------------------------------ Letter :3

---------------------------------------------------------- Letter :3.1

NACC, which includes all 16 NATO nations, all former members of the
Warsaw Pact,\4 Albania, and four observer states,\5 held its first
formal meeting in December 1991, the same month that the Soviet Union
dissolved.  NACC holds at least one regular meeting per year with
consultations on such matters as political and security-related
issues, defense planning questions, key aspects of strategy, force
and command structures, democratic concepts of civilian-military
relations.  NACC work plans and discussions have broadened to include
such topics as nuclear disarmament, crisis management, cooperation in
peacekeeping, and progress on the PFP program. 

\4 Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania,
Poland, Romania, Slovakia, and all states of the Former Soviet Union
(Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan,
Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan). 
East Germany was united with the Federal Republic of Germany in 1990. 

\5 Austria, Finland, Slovenia, and Sweden. 

---------------------------------------------------------- Letter :3.2

NATO initiated PFP in January 1994 to (1) expand and intensify
political and military cooperation in Europe, (2) extend European
stability eastward, (3) diminish threats to peace, and (4) build
better relationships with former Communist countries through
practical cooperation and commitment to democratic principles. 
Participation in the program does not require an intention to become
a NATO member nor does it guarantee future membership in the
Alliance, although, according to the Secretary of Defense, PFP is
"the pathway to NATO membership for those partners that wish to join
the Alliance."\6

Currently, 27 countries have joined PFP,\7 and many have already
agreed to Individual Partnership Programs, which spell out specific
cooperative activity programs to take place between NATO and the
partner.  As of August 1995, NATO members and PFP partners had held
24 joint exercises providing practical military cooperation. 

NATO civil budget\8 funding pays for NATO's own administrative,
security, and communications costs related to NACC and PFP, and for
the construction of new facilities for partner countries at NATO
civilian and military headquarters.  Table 1 shows NATO civil budget
funding\9 for outreach activities from 1991 through 1996. 

                                Table 1
                NATO Civil Budget NACC and PFP Funding,
                         Calendar Years 1991-96

                         (Dollars in millions)

Calendar year                                                   Amount
----------------------------------------  ----------------------------
1991                                                              $1.6
1992                                                               5.4
1993                                                              10.7
1994\a                                                            13.5
1995                                                              17.1
1996 (estimated)                                                  18.5
Total                                                            $66.8
\a PFP began in January 1994.  NATO does not separate NACC and PFP

Source:  U.S.  Mission to NATO. 

\6 Testimony of the Secretary of Defense, before the Senate Committee
on Armed Services, March 5, 1996. 

\7 Albania, Armenia, Austria, Azerbaijan, Belarus, Bulgaria, Czech
Republic, Estonia, Finland, Former Yugoslav Republic of Macedonia,
Georgia, Hungary, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Malta,
Moldova, Poland, Romania, Russia, Slovakia, Slovenia, Sweden,
Turkmenistan, Ukraine, and Uzbekistan. 

\8 Most PFP and NACC program costs are paid from NATO's civil budget. 
Other costs, like exercises and infrastructure, are paid from the
NATO Military Budget and from NATO Security Investment Program funds. 
The U.S.  contribution to the NATO Civil Budget is funded through
State Department appropriations. 

\9 U.S.  portion is 23.35 percent. 

---------------------------------------------------------- Letter :3.3

In September 1995, NATO released an internal study of the rationale
behind the enlargement and the way it should occur.  In this study,
NATO identified the following goals:  (1) enhancing stability and
security in the Euro-Atlantic area, (2) eliminating the old Cold War
barriers without creating new ones between the East and West, (3)
encouraging democratic and economic reforms in aspiring NATO members,
(4) emphasizing common defense and extending its benefits and
increasing transparency in defense planning and military budgets, (5)
reinforcing the tendency towards integration and cooperation in
Europe, (6) strengthening the Alliance's ability to contribute to
international security through peacekeeping activities, and (7)
strengthening the trans-Atlantic partnership. 

The study defined the standards that aspiring members must be
committed to meet before membership is offered.  Militarily, these
nations must commit to meeting minimum NATO standards of
interoperability.  Politically, aspiring NATO members are expected to
establish civilian control over their militaries, a new concept for
most of the former Warsaw Pact states.  More subjectively, applicant
nations must demonstrate a commitment to democratic values, as
embodied in the NATO treaty.  Aspiring members must also strive to
peacefully eliminate internal ethnic disputes or territorial disputes
with neighbors.  Finally, new members must agree not to prevent other
aspiring nations from joining NATO. 

Although the study articulated enlargement goals and new member
entrance requirements, it did not assess any individual nation's
progress toward NATO membership.  In fact, NATO members have not yet
established a timetable for enlargement or who will be invited to

The enlargement study also discussed how an aspiring member will join
NATO.  According to the study and NATO and U.S.  Mission to NATO
officials, the steps to be taken will be as follows. 

  -- The process would begin with an informal invitation from NATO's
     North Atlantic Council to the prospective member to enter into
     accession negotiations with NATO.  Before this invitation is
     given, there must be unanimous consent among all of the current
     NATO members.  If even one disagrees, the invitation cannot be

  -- Once an invitation is made, the prospective member must make a
     formal commitment to join.  NATO and the prospective member
     would negotiate a protocol of accession that sets forth in
     detail what each party expects of the other and any special or
     unique circumstances pertaining to the prospective member's
     future membership.  An example of special circumstances could
     include the provision that no NATO nuclear weapons could be
     deployed on the country's territory during peacetime. 

  -- The North Atlantic Council must approve the accession protocol
     and if it does not, the protocol must be amended until it meets
     Council approval.  If it fails to do so, the process can be
     stopped and the prospective member's bid to join NATO is
     effectively ended. 

  -- Once the protocol is approved, it is signed by the North
     Atlantic Council and the prospective member.  The accession
     protocol must then by ratified by the governments of all the
     current members and the prospective member and then enters into
     force.  For example, in the United States, this will require a
     two-thirds majority in the Senate to amend and ratify the
     treaty.  If the protocol is ratified by all members and the
     aspiring member, a formal invitation is made to the prospective
     member to accede to the North Atlantic (or Washington) Treaty. 
     Once the aspiring member signs and gives the treaty to the U.S. 
     government, it is considered a full member of NATO.  If the
     accession protocol is not ratified by all 16 current members,
     the prospective member may not sign the Washington Treaty.  At
     this point, the accession protocol could be amended again and
     resubmitted or the process can be terminated. 

------------------------------------------------------------ Letter :4

In addition to its contribution through NATO common budgets, the
United States provided about $53 million in fiscal year 1995 to PFP
member countries through five bilateral programs that help to enhance
their military equipment and operations.  As table 2 shows, the
fiscal year 1996 amount for these programs increased to about $125
million.  This increase will largely support cooperative activities
with PFP member countries. 

                                Table 2
                U.S. Bilateral Assistance to PFP Member
                   States, Fiscal Years 1995 and 1996

                         (Dollars in millions)

                                            Fiscal year    Fiscal year
Program                                            1995           1996
----------------------------------------  -------------  -------------
PFP (Warsaw Initiative)                          $30.00       $100.00\
Joint Contact Team Program                        10.00          15.00
International Military Education and               5.97          10.22
Foreign Military Financing                         1.00             \a
Excess Defense Articles transfer                 6.63\b             \c
Total                                            $53.60        $125.22
\a In fiscal year 1996, $60 million of Foreign Military Financing
funding is in support of the Warsaw Initiative and has, therefore,
been included above in the PFP line. 

\b This represents the Department of Defense's (DOD) estimate of the
current value of the transferred articles. 

\c Not available. 

All of these programs, except PFP assistance, predate discussion of
NATO enlargement.  None were specifically designed to enhance the
prospects of NATO membership.  However, DOD believes it plays an
important role in enhancing prospective new members' capabilities,
and as indicated, the Secretary of Defense has described PFP as the
pathway to NATO membership. 

---------------------------------------------------------- Letter :4.1

The United States has provided $130 million in bilateral support to
the PFP program over 2 years.  This funding assists PFP member
countries to participate in NATO's PFP exercises and helps them to
obtain equipment through the Foreign Military Financing program.  In
addition, it is hoped that the program will foster stability in
Eastern Europe through the development of civilian-controlled
militaries and exposure to U.S.  and other NATO members' military
policies and procedures.  Further, DOD believes that U.S.  bilateral
funding of PFP lends credibility to the program and will encourage
other countries to put forth a portion of their small budgets for

Fiscal year 1995 bilateral funding for PFP assistance included $19.25
million for exercises and $10.75 million for interoperability
programs.  The $100 million of PFP assistance (under the Warsaw
Initiative) provided to member countries in fiscal year 1996
allocates $60 million to the State Department to fund Foreign
Military Financing in support of the Warsaw Initiative and $40
million to DOD to support individual partner participation in joint
exercises and programs to enhance NATO-PFP interoperability. 

Poland is expected to be the recipient of the largest amount of aid
in fiscal year 1996, $25 million.  The Czech Republic, Hungary,
Romania, and Ukraine are each expected to receive $10 million in U.S. 
bilateral PFP assistance, while Russia is expected to be offered $7
million in PFP assistance, including $5 million to help Russian
troops participate in PFP exercises.  Seventeen other nations may
also receive some U.S.  bilateral PFP assistance.  Table 3 shows
fiscal year 1996 bilateral PFP funding by country. 

                                Table 3
                   PFP Support Programs and Bilateral
                      Assistance, Fiscal Year 1996

                         (Dollars in thousands)

                             DOD Support      Bilateral
                                Programs   Assistance\a          Total
-------------------------  -------------  -------------  =============
Albania                             $725         $2,525         $3,250
Armenia                              250            250            500
Austria                                0              0              0
Azerbaijan                           250            250            500
Belarus                              500            500          1,000
Bulgaria                             725          4,275          5,000
Czech Republic                     1,100          8,900         10,000
Estonia                              500          1,250          1,750
Finland                                0              0              0
FYROM\b                              250            750          1,000
Georgia                              500            250            750
Hungary                            6,800          3,200         10,000
Kazakhstan                         1,125            500          1,625
Kyrgyzstan                           250            250            500
Latvia                               500          1,250          1,750
Lithuania                            500          1,250          1,750
Malta                                  0              0              0
Moldova                              600            400          1,000
Poland                             8,525         16,475         25,000
Romania                              725          9,275         10,000
Russia                             5,500          1,500          7,000
Slovakia                             950          3,550          4,500
Slovenia                             600            400          1,000
Sweden                                 0              0              0
Turkmenistan                         250            250            500
Ukraine                            7,500          2,500         10,000
Uzbekistan                         1,375            250          1,625
Total                            $40,000        $60,000       $100,000
\a Foreign Military Financing in support of the Warsaw Initiative. 

\b Former Yugoslav Republic of Macedonia. 

The fiscal year 1996 Foreign Operations appropriation includes
Foreign Military Financing funding, $60 million of which the State
Department intends to use to support the Warsaw Initiative.  Foreign
Military Financing is a grant and loan program that provides
financing for the acquisition of military articles, services, and
training through the Foreign Military Sales system.\10 This funding
is provided through the State Department to support transfers of
equipment to enhance the interoperability of partner forces with
NATO, such as tactical radios, night vision equipment, and command,
control, and communications upgrades.  In addition, this funding is
intended to support English language instruction and training to
familiarize partner defense officials with U.S.  and NATO defense
structure, doctrine, and operations. 

Of the $40 million of PFP funds provided through DOD in fiscal year
1996, some is intended to pay for PFP member nations' incremental
costs incurred as a result of participation in training exercises
U.S.  forces and PFP partner nations.  These funds are intended to be
a temporary measure to encourage partner governments to allocate a
share of their national budgets for participation in PFP.  For
example, according to U.S.  officials, Poland, Hungary, and the Czech
Republic included PFP funding in their 1995 budgets. 

Through August 1995, there were 24 PFP exercises hosted at various
locations in Europe and the United States.  The first of the
exercises, Cooperative Bridge, was held in Poland in mid-September
1994.  Cooperative Nugget, held August 11 through 26, 1995, at the
Joint Readiness Training Center at Fort Polk, Louisiana, was the
first PFP exercise hosted by the United States. 

In addition to exercises, the $40 million provided through DOD will
also fund (1) studies in support of the Regional Airspace Initiative,
(2) the Defense Resource Management Study, and (3) PFP Information
Management System.  The first two of these initiatives were
originally funded from other DOD accounts, but now are consolidated
into the PFP assistance program.  At this time, DOD officials are
uncertain as to what portion of the $40 million will be allocated to
each of these programs due to limitations prohibiting these funds
from being used to purchase equipment that will be transferred to a
foreign country. 

The Regional Airspace Initiative is intended to modernize civilian
and military air traffic control, air sovereignty, and airspace
management of Central and Eastern European nations.  According to DOD
officials, the initiative supports the U.S.  policy that advocates
peacetime control of national airspace by civil authorities, civil
and military cooperation, and information exchange throughout the
region to build regional confidence and security.  Regional Airspace
Initiative studies provide Central and Eastern European nations, as
well as the United States, with an architecture for system
modernization which will make air travel safer for all nations flying
in the region. 

The Defense Resource Management Study is an Office of the Secretary
of Defense-sponsored and -managed initiative to help emerging Eastern
European democracies develop defense planning, programming, and
budgeting systems compatible with those of NATO countries.  The
Office of the Secretary of Defense makes available teams of analysts
to advise their host country counterparts on compiling force
capability and cost data and analyzing alternative force structures. 
Fiscal year 1995 funding supported such studies in Bulgaria, Romania,
Hungary, and Albania. 

The PFP Information Management System is intended to develop basic
communications capabilities with cooperating nations and
international organizations.  It is intended to assist PFP members to
become more interoperable with NATO.  A processing center at Caserne
Daumerie, Belgium, will provide capabilities such as real-time
dial-up voice communications, data conferencing, imagery storage and
exchange, and electronic mail.  According to DOD, partner countries
must pay a share of the costs to participate in the PFP Information
Management System.  In fiscal year 1995, $4 million of Office of the
Secretary of Defense/Joint Staff funds supported DOD costs associated
with the PFP Information Management System. 

\10 All Foreign Military Financing funds provided for Central Europe
and the Newly Independent States in fiscal year 1996 are grants. 

---------------------------------------------------------- Letter :4.2

The Joint Contact Team Program is a bilateral effort, conducted by
the U.S.  European Command, in coordination with U.S.  embassy and
host nation military personnel, to ensure constructive military
activities and to model successful civil-military relations in a
democracy.  Rather than conducting formal training or supplying
equipment, military liaison teams exchange ideas, share concepts, and
demonstrate operational methods to host nation military personnel. 

The Joint Contact Team Program is executed by the Joint Chiefs of
Staff, in coordination with the Defense Security Assistance Agency. 
Funding for the Joint Contact Team Program in Europe increased from
$6 million in fiscal year 1993 to $10 million in fiscal year 1994. 
In fiscal year 1995, $10 million was provided through the Foreign
Operations appropriation.  For fiscal year 1996, $15 million was
allocated by DOD to support the Joint Contact Team Program as a
Traditional Commander-in-Chief Activity in the European theater (see
app.  II for a country-by-country breakdown of fiscal year 1995 Joint
Contact Team Program funding). 

---------------------------------------------------------- Letter :4.3

Established in the late 1950s, the International Military Education
and Training program provides military education and training on a
grant basis to allied and friendly nations' militaries for such
things as (1) increasing their exposure to the proper role of the
military in a democratic society, including human rights issues, and
to U.S.  professional military education and (2) helping to develop
the capability to teach English. 

In fiscal year 1991, DOD began implementation of the congressionally
directed Expanded International Military Education and Training
program, which addresses management of military establishments and
budgets, civilian control of military, and military justice and codes
of conduct.  It is available to civilian and military officials,
including nondefense agency civilians.  Also in 1991, Central and
Eastern European countries began to receive International Military
Education and Training funding. 

Program funds are largely used to transport, train, and provide a
supplemental living allowance for foreign students at military
training facilities in the United States, or to send training
instructors in-country.  Funds have also been used to purchase
English language laboratory equipment at in-country facilities. 

The International Military Education and Training program is funded
through the Foreign Operations appropriation.  Recipient nations are
selected by the State Department with input from the Joint Chiefs of
Staff and DOD.  DOD implements the program through the Defense
Security Assistance Agency. 

Total worldwide International Military Education and Training program
funding in fiscal year 1995 was $26.35 million.  Of this amount,
about $6 million went to PFP member countries.  The fiscal year 1996
appropriation for the program totals $39 million, of which $10.2
million is designated for PFP member countries (see app.  III for a
country-by-country breakdown of funding for fiscal years 1995 and
1996).  According to U.S.  European Command officials, some of the
fiscal year 1996 International Military Education and Training money
allocated to the U.S.  European Command is expected to be used for
the purchase of language laboratory equipment in Europe. 

---------------------------------------------------------- Letter :4.4

Excess Defense Articles are those items owned by the U.S.  government
that are in excess of approved retention levels.  These items may be
transferred to a foreign country through the Foreign Military Sales
program or by grant transfer.  The recipient nation is generally
responsible for the cost of transporting the items, upgrading them to
meet their needs, maintaining the articles, and disposing of them
when they have outlived their usefulness.  The fiscal year 1996
Foreign Operations Appropriations Act included authority for DOD
funds to be used to pay packing, crating, handling, and
transportation costs for nonlethal excess defense articles for PFP

In fiscal year 1995, $6.63 million worth of excess items was
authorized for transfer to PFP countries (see app.  IV for a
country-by-country breakdown of these transfers).  The types of items
transferred included surface vehicles, aircraft, and communications
equipment.  The total value of fiscal year 1996 transfers will not be
available from DOD until fiscal year 1997. 

------------------------------------------------------------ Letter :5

---------------------------------------------------------- Letter :5.1

If NATO increases its membership, it will likely have to provide an
undetermined amount of common funding to help the new member nations. 
Commonly funded programs receive money from one of three NATO common
budgets,\11 funded by NATO member contributions.  The largest of
these is the NATO Security Investment Program, formerly known as the
Infrastructure Program.  The United States provides 23.3 percent of
NATO infrastructure project funding, the highest of any member state. 

NATO funding for infrastructure projects in new member nations would
be limited to facilities and command, control, and communications
systems for those forces made available and accepted for NATO use. 
According to U.S.  officials, funding would also be limited to
providing only the infrastructure that (1) is required to meet NATO
interoperability standards, (2) qualifies under the strict
eligibility rules for common funding, and (3) is afforded a
high-priority by NATO military authorities.  According to U.S. 
officials, NATO funding for new members would probably be gradual,
would vary considerably, and would probably not exceed a total of $50
million for any individual nation during the first 3 to 5 years of
their membership in NATO.  Table 4 shows an illustrative example of
the costs of required systems that may be funded by NATO. 

                                Table 4
                 Illustrative Infrastructure Costs Per
                            New NATO Member

                         (Dollars in millions)

                                                      Approximate cost
System or facility                                      per new member
--------------------------------------------------  ------------------
Command and control information systems at                         $10
 headquarters facilities
Communications systems                                               5
Air defense radar\a                                                 30
Air defense control centers                                         25
Collocated operating base                                     50 to 75
Prepositioned material storage site                                 25
\a Some nations may receive more than one radar, thus increasing the
cost by an additional $30 million per radar. 

Source:  Compiled in 1995 by U.S.  Mission to NATO from NATO Planning

These are only some of the many potential costs.  NATO may also
consider funding the construction of fuel pipeline extensions,
reinforcement and mobilization facilities, ammunition and fuel
bunkers, port handling facilities, transportation infrastructure
(such as rail and road systems), and facilities for any forward
deployed forces in new members' territory, provided these projects
are afforded a high priority by NATO authorities.  Ultimately, NATO
will need to determine the systems and facilities to be provided to
new members.  However, neither NATO nor the United States know what
the total costs of enlargement will be to NATO or individual members,
both current and new.  NATO will make a case-by-case analysis of its
military needs and the requirements of new members as they join. 

NATO's commonly funded infrastructure program is capped at an
approximately $800-million annual ceiling.\12 This means that common
funding will be limited for new members, unless NATO removes the
ceiling or current members contribute more.  According to officials
at the U.S.  Mission to NATO, most NATO members have generally
reduced defense budgets in recent years, and it is unlikely that they
would make larger contributions to the infrastructure fund in the
near term.  However, according to these officials, most of NATO's
commonly funded projects will be completed by the end of 1997.  This
could allow common funds to be directed to projects in new member
states if the budget remained at $800 million.  In commenting on the
draft of this report, DOD indicated that the backlog of NATO commonly
funded projects will continue past the planning period.  We were
unable to verify which of these scenarios is accurate. 

\11 NATO's common budgets are the Security Investment Program, the
Military Budget, and the Civil Budget. 

\12 Within NATO, this cap is expressed in Infrastructure Accounting
Units.  While the exchange rate between the U.S.  dollar and the
Infrastructure Accounting Unit fluctuates over time, NATO generally
refers to the rate as $4 per Infrastructure Accounting Unit.  The
current actual exchange rate is $4.63 per Infrastructure Accounting

---------------------------------------------------------- Letter :5.2

Many of the costs resulting from NATO enlargement would be expected
to be borne by the new members themselves.  The total potential costs
that could be incurred by each new NATO member to upgrade its
military capabilities cannot be fully determined at this time because
NATO has yet to define country-specific military requirements. 

New member countries may have to spend millions of dollars teaching
English language skills, developing tactical communications systems
(other than those funded by NATO), and learning NATO military
doctrine.  In addition, some nations may need to change their force
structure or purchase new equipment to be compatible with those of
NATO.  Interoperability with NATO is a specific goal of PFP and its
joint exercises.  Interoperability is gaining increased importance
under NATO's Joint Combined Task Force concept, which envisions NATO
allies operating with non-NATO nations in military operations using
NATO forces and command and control assets. 

Most of the former Warsaw Pact nations may have to change from a
divisional structure to a brigade-based structure to make their
ground forces more compatible with NATO forces.  For example,
according to Polish and U.S.  officials, Poland is reducing the level
of its armed forces and transitioning to a brigade-based structure
for its army.  In addition, Poland is forming an airmobile brigade
that will have a rapid reaction capability, a capability called for
in NATO's new strategic concept.  Poland intends for this brigade to
be as interoperable with similar NATO forces as possible, whether
Poland is a member of NATO or not. 

New members will also be expected to bear the costs of participating
in NATO--such as maintaining a mission at NATO headquarters and
contributing to NATO's three commonly funded budgets.  Like current
NATO members, new member states' participation in NATO commonly
funded budgets will be on a cost-share basis negotiated with NATO. 

According to U.S.  officials, most of the aspiring NATO members are
facing financial constraints and can realistically expect to do very
little on their own in the next several years to make their military
systems compatible with NATO's systems.  For example, according to
U.S.  officials, the Czech defense budget is only about $1 billion. 
The most that may be expected of these nations is gradual movement
toward interoperability.  For example, the Czechs have a 10-year
modernization plan to upgrade their equipment and become
interoperable with NATO forces. 

------------------------------------------------------------ Letter :6

In commenting on the draft of this report, the State Department
emphasized the U.S.  leadership role in support of NATO's enlargement
process and the link between PFP membership and a partner state's
readiness for potential NATO membership.  We have made changes
reflecting these points in the report.  State Department officials
also indicated that estimates of the amount NATO may have to pay to
support new members are "extremely soft, unsubstantiated numbers,"
and characterized them as pure speculation.  The figures were
provided to us by officials at the U.S.  mission to NATO and
represent the best available information at this time. 

DOD indicated that our description of the purpose of DOD funding
support for the Warsaw Initiative needed to be changed and we have
modified the report in response to this concern.  Specifically in
regard to the Regional Airspace Program, DOD stated that the intent
of the Regional Airspace Program is to provide information to U.S. 
consumers.  However, DOD previously provided documents stating that
the purpose of the program is "for modernizing .  .  .  airspace
management for nations of the Central and Eastern European region."

DOD also indicated that our characterization of the Security
Investment Program funding is incorrect.  DOD contends that the
"backlog of NATO commonly funded projects will continue past the
planning period." Officials at DOD and at the U.S.  Mission to NATO
provided conflicting information.  We modified our report to clarify
that the information as presented was provided by officials at the
U.S.  Mission to NATO. 

DOD and the Department of State provided also technical corrections
that have been incorporated in the report where appropriate.  State
and DOD comments are presented in their entirety in appendixes V and
VI, respectively. 

------------------------------------------------------------ Letter :7

To develop the information in this report, we interviewed officials
and reviewed documents at the U.S.  Mission to NATO, the U.S. 
European Command, the Defense Intelligence Agency, DOD, and State. 
We also conducted field work in Prague and Warsaw, where we
interviewed and obtained information from U.S.  embassy officials and
Czech and Polish officials from the Ministries of Defense and Foreign

We performed our work from April 1995 to March 1996 in accordance
with generally accepted government auditing standards. 

---------------------------------------------------------- Letter :7.1

As arranged with your office, unless you publically announce its
contents earlier, we plan no further distriubution until 15 days
after its issue date.  At that time, copies of the report will be
sent to other appropriate congressional committees and the
Secretaries of Defense and State.  We will also make copies available
to other parties upon request. 

Please contact me at (202) 512-4128 if you or your staff have any
questions concerning this report.  Major contributors to this report
were F.  James Shafer, David J.  Black, Charnel F.  Harlow, and
Michelle F.  Kidd. 

Sincerely yours,

Harold J.  Johnson
Associate Director, International
 Relations and Trade Issues

=========================================================== Appendix I

The Parties to this Treaty reaffirm their faith in the purposes and
principles of the Charter of the United Nations and their desire to
live in peace with all peoples and all governments. 

They are determined to safeguard the freedom, common heritage and
civilization of their peoples, founded on the principles of
democracy, individual liberty and the rule of law. 

They seek to promote stability and well-being in the North Atlantic

They are resolved to unite their efforts for collective defense and
for the preservation of peace and security. 

They therefore agree to this North Atlantic Treaty: 

         ARTICLE 1
----------------------------------------------------- Appendix I:0.0.1

The Parties undertake, as set forth in the Charter of the United
Nations, to settle any international disputes in which they may be
involved by peaceful means in such a manner that international peace
and security, and justice, are not endangered, and to refrain in
their international relations from the threat or use of force in any
manner inconsistent with the purposes of the United Nations. 

         ARTICLE 2
----------------------------------------------------- Appendix I:0.0.2

The Parties will contribute toward the further development of
peaceful and friendly international relations by strengthening their
free institutions, by bringing about a better understanding of the
principles upon which these institutions are founded, and by
promoting conditions of stability and well-being.  They will seek to
eliminate conflict in their international economic policies and will
encourage economic collaboration between any or all of them. 

         ARTICLE 3
----------------------------------------------------- Appendix I:0.0.3

In order more effectively to achieve the objectives of this Treaty,
the Parties, separately and jointly, by means of continuous and
effective self-help and mutual aid, will maintain and develop their
individual and collective capacity to resist armed attack. 

         ARTICLE 4
----------------------------------------------------- Appendix I:0.0.4

The Parties will consult together whenever, in the opinion of any of
them, the territorial integrity, political independence or security
of any of the Parties is threatened. 

         ARTICLE 5
----------------------------------------------------- Appendix I:0.0.5

The Parties agree that an armed attack against one or more of them in
Europe or North America shall be considered an attack against them
all; and consequently they agree that, if such an armed attack
occurs, each of them, in exercise of the right of individual or
collective self-defence recognized by Article 51 of the Charter of
the United Nations, will assist the Party or Parties so attacked by
taking forthwith, individually and in concert with the other Parties,
such action as it deems necessary, including the use of armed force,
to restore and maintain the security of the North Atlantic area. 

Any such armed attack and all measures taken as a result thereof
shall immediately be reported to the Security Council.  Such measures
shall be terminated when the Security council has taken the measures
necessary to restore and maintain international peace and security. 

         ARTICLE 6\1
----------------------------------------------------- Appendix I:0.0.6

For the purposes of Article 5, an armed attack on one or more of the
Parties is deemed to include an armed attack: 

  -- on the territory of any of the Parties in Europe or North
     America, on the Algerian Departments of France,\2 on the
     territory of Turkey or on the islands under the jurisdiction of
     any of the Parties in the North Atlantic area north of the
     Tropic of Cancer;

  -- on the forces, vessels, or aircraft of any of the Parties, when
     in or over these territories or any other area in Europe in
     which occupation forces of any of the Parties were stationed on
     the date when the Treaty entered into force or the Mediterranean
     Sea or the North Atlantic area north of the Tropic of Cancer. 

\1 As amended by Article 2 of the Protocol to the North Atlantic
Treaty on the accession of Greece and Turkey. 

\2 On January 16, 1963, the Council noted that insofar as the former
Algerian Departments of France were concerned, the relevant clauses
of this Treaty had become inapplicable as from 3 July, 1962. 

         ARTICLE 7
----------------------------------------------------- Appendix I:0.0.7

The Treaty does not affect, and shall not be interpreted as
affecting, in any way the rights and obligations under the Charter of
the Parties which are members of the United Nations, or the primary
responsibility of the Security Council for the maintenance of
international peace and security. 

         ARTICLE 8
----------------------------------------------------- Appendix I:0.0.8

Each Party declares that none of the international engagements now in
force between it and any other of the Parties or any third state is
in conflict with the provisions of this Treaty, and undertakes not to
enter into any international engagement in conflict with this Treaty. 

         ARTICLE 9
----------------------------------------------------- Appendix I:0.0.9

The Parties hereby establish a council, on which each of them shall
be represented, to consider matters concerning the implementation of
this Treaty.  The council shall be so organized as to be able to meet
promptly at any time.  The council shall set up such subsidiary
bodies as may be necessary; in particular it shall establish
immediately a defense committee which shall recommend measures for
the implementation of Articles 3
and 5. 

         ARTICLE 10
---------------------------------------------------- Appendix I:0.0.10

The Parties may, by unanimous agreement, invite any other European
state in a position to further the principles of this Treaty and to
contribute to the security of the North Atlantic area to accede to
this Treaty.  Any state so invited may become a Party to the Treaty
by depositing its instrument of accession with the Government of the
United States of America.  The Government of the United States of
America will inform each of the Parties of the deposit of each such
instrument of accession. 

         ARTICLE 11
---------------------------------------------------- Appendix I:0.0.11

This Treaty shall be ratified and its provisions carried out by the
Parties in accordance with their respective constitutional processes. 
The instruments of ratification shall be deposited as soon as
possible with the Government of the United States of America, which
will notify all the other signatories of each deposit.  The Treaty
shall enter into force between the states which have ratified it as
soon as the ratification of the majority of the signatories,
including the ratification of Belgium, Canada, France, Luxembourg,
the Netherlands, the United Kingdom, and the United States, have been
deposited and shall come into effect with respect to other states on
the date of the deposit of their ratifications.\3

\3 The Treaty came into force on August 24, 1949, after the deposit
of the ratification of all signatory states. 

         ARTICLE 12
---------------------------------------------------- Appendix I:0.0.12

After the Treaty has been in force for 10 years, or at any time
thereafter, the Parties shall, if any of them so requests, consult
together for the purpose of reviewing the Treaty, having regard for
the factors then affecting peace and security in the North Atlantic
area, including the development of universal as well as regional
arrangements under the Charter of the United Nations for the
maintenance of international peace and security. 

         ARTICLE 13
---------------------------------------------------- Appendix I:0.0.13

After the Treaty has been in force for 20 years, any Party may cease
to be a Party 1 year after its notice of denunciation has been given
to the Government of the United States of America, which shall inform
the Governments of the other Parties of the deposit of each such
notice of denunciation. 

         ARTICLE 14
---------------------------------------------------- Appendix I:0.0.14

This Treaty, of which the English and French texts are equally
authentic, shall be deposited in the archives of the Government of
the United States of America.  Duly certified copies thereof will be
transmitted by that Government to the Governments of the other

========================================================== Appendix II

                         (Dollars in thousands)

Recipient                                                      Funding
----------------------------------------  ----------------------------
Albania                                                           $553
Armenia                                                              0
Austria                                                              0
Azerbaijan                                                           0
Belarus                                                              0
Bulgaria                                                           632
Czech Republic                                                     632
Estonia                                                            790
Finland                                                              0
Georgia                                                              0
Hungary                                                            553
Kazakhstan                                                           0
Kyrgyzstan                                                           0
Latvia                                                             948
Lithuania                                                        1,027
Malta                                                                0
Moldova                                                              0
Poland                                                             553
Romania                                                            711
Russia                                                               0
Slovakia                                                           395
Slovenia                                                           553
Sweden                                                               0
Turkmenistan                                                         0
Ukraine                                                              0
Uzbekistan                                                           0
Headquarters Support                                               553
TTAD\a                                                           2,100
Total                                                          $10,000
\a Temporary tours of active duty (staffing for reserve component

1995 AND 1996
========================================================= Appendix III

                         (Dollars in thousands)

Recipient                                       FY 1995        FY 1996
----------------------------------------  -------------  -------------
Albania                                            $226           $400
Armenia                                               0              0
Austria                                              15             15
Azerbaijan                                            0              0
Belarus                                              94            275
Bulgaria                                            400            700
Czech Republic                                      500            750
Estonia                                             180            410
Finland                                              15             15
FYROM\a                                               0              0
Georgia                                              82            250
Hungary                                             796           1000
Kazakhstan                                           97            375
Kyrgyzstan                                           60            225
Latvia                                              197            410
Lithuania                                           196            410
Malta                                                58             75
Moldova                                             106            225
Poland                                              747           1000
Romania                                             460            700
Russia                                              413            750
Slovakia                                            253            530
Slovenia                                            150            300
Sweden                                                0              0
Turkmenistan                                        118            225
Ukraine                                             707            950
Uzbekistan                                           95            225
Total                                            $5,965        $10,215
\a Former Yugoslav Republic of Macendonia. 

========================================================== Appendix IV

                           (In U.S. dollars)

Recipient                                                      FY 1996
----------------------------------------  ----------------------------
Albania                                                       $609,164
Armenia                                                              0
Austria                                                              0
Azerbaijan                                                           0
Belarus                                                              0
Bulgaria                                                       452,818
Czech Republic                                                       0
Estonia                                                        658,994
Finland                                                              0
FYROM\a                                                              0
Georgia                                                              0
Hungary                                                             80
Kazakhstan                                                           0
Kyrgyzstan                                                           0
Latvia                                                         268,469
Lithuania                                                      291,651
Malta                                                                0
Moldova                                                              0
Poland                                                               0
Romania                                                      4,337,329
Russia                                                               0
Slovakia                                                        10,598
Slovenia                                                             0
Sweden                                                               0
Turkmenistan                                                         0
Ukraine                                                              0
Uzbekistan                                                           0
Total                                                       $6,629,103
\a Former Yugoslav Republic of Macendonia. 

(See figure in printed edition.)Appendix V
========================================================== Appendix IV

(See figure in printed edition.)

(See figure in printed edition.)Appendix VI
========================================================== Appendix IV

(See figure in printed edition.)

(See figure in printed edition.)

*** End of document. ***

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