The national security strategy of the United States since World War II has changed frequently during the course of eight administrations and two wars. But it has also had an underlying consistency, driven by three major factors: the cold war, our position as leader of the Western world and our economic strength. In the 1990s, however, our national security strategy is likely to be very different as the cold war abates, our global political leadership role evolves from one of dominance to that of senior partner, and our economy is stressed by actions to reduce the budget and trade deficits.

Most significant are the revolutionary changes under way in the Soviet political and economic systems. Under Mikhail Gorbachev's leadership the Soviet Union is experimenting with a major restructuring of its economic system in an attempt to revive its stagnant economy. At the same time Gorbachev has introduced "new thinking" into Soviet foreign policy, which includes promises of unilateral reductions in the Soviet defense structure and proposals for treaties that would make deep cuts in NATO and Warsaw Pact forces.

It is clear that the Bush Administration will have to formulate a new national security policy that recognizes the new world that is emerging. Such a policy should seek to seize the opportunities presented. Thus, if we could negotiate a major reduction of Soviet forces in Eastern Europe, and perhaps in European Russia as well, we could strengthen our security while easing pressure on our budget.

On the other hand, we must recognize the risks inherent in the current volatility in the world. There is a danger that the West will begin to disarm on the basis of Gorbachev's promises, without waiting for concrete actions. Furthermore, there is every reason to doubt that Gorbachev will succeed in completing perestroika, or restructuring, and some reason to question how long he can remain in power. A neo-Stalinist assuming power after we have disarmed would present a particularly dangerous situation. Finally, threats in other regions are likely to increase in a turbulent world.

A new national security policy thus must take account of these complexities. This article will deal with one aspect of such a policy: namely, how to structure a defense investment strategy that recognizes both the opportunities and the risks in the new political and economic dynamics.

II

The most significant factors influencing our future defense strategy will be the state of our relations with the Soviet Union and the public perception of those relations. It is premature to pronounce the end of the cold war. But there is no doubt that Mikhail Gorbachev has introduced a genuine "new thinking" in foreign policy which, if consistently pursued by the Soviet Union, would allow for a winding down of the cold war. This new thinking no longer envisions national security as a zero-sum game in which, for Soviet security to gain, American security must lose. Instead it argues that the Soviets are most secure when a common security is achieved with the United States. This policy has already led to proposals to reduce nuclear arms to "common levels" on the premise that a nuclear war cannot be won with any amount of nuclear arms; it has also led to proposals to reduce conventional arms to common levels at which neither side has a short-warning attack capability. If these policies and proposals were to be carried out, they would dramatically transform Soviet military strategy and capability from their present offensive posture, which we see as threatening, to a basically defensive posture.

To date, there are more words than deeds in this new thinking. The Soviet military still has a formidable offensive capability, including the capability for a short-warning attack on Western Europe. But words are the necessary first step, and these are the most encouraging words on national security from the Soviet leadership since the cold war began.

One consequence of Gorbachev's approach is that it provides a national security basis for both the United States and the Soviet Union to reduce arms to substantially lower common levels. Also, the priority both countries are placing on solving internal economic problems provides a strong economic incentive for such reductions. In particular, the climate should be ripe for two major arms reduction agreements: one in the Strategic Arms Reduction Talks (START) and another on conventional arms reductions.

It seems likely that an agreement in START will be reached early in the Bush Administration. A conventional arms reduction treaty is the logical sequel to a START treaty. A primary objective of a conventional accord would be to reduce the danger of war in Europe by reducing the capability of conventional forces to make a short-warning attack. A related objective would be to reduce the need for large standing armies in Europe. Both of these aims are addressed by the Soviets' comprehensive proposal for a three-stage process beginning with reductions of weapons and forces to equal ceilings 10-15 percent below the "lowest" current level of East or West; and then in a second stage, another 25-percent reduction; and finally, the restructuring of each side's forces into purely "defensive" forces. There is no doubt that the Soviet proposal will receive serious consideration at the conventional stability talks, involving 23 nations, which began in Vienna in March.

Another framework, dramatically different from other proposals, could be considered in the wake of Gorbachev's speech to the United Nations in December 1988, in which he announced unilateral reductions in Soviet forces in Eastern Europe. That is, the East and West could proceed to reduce conventional forces through a series of unilateral but reciprocal reductions. Because it would avoid the complexities of treaty negotiations with 23 nations, this approach ought to be given serious consideration as well.

A conventional arms reductions treaty would be much more significant in military, strategic and economic terms than a START treaty, however great the latter's political value. Because of its potentially great value and its probable complexities, negotiations on a conventional arms treaty should begin in earnest without waiting to reach final agreement in START. If a conventional treaty is concluded during this administration, it will have a fundamental impact on our defense strategy for decades to come.

The second factor of significance to our future defense strategy is the economic situation in both the Soviet Union and the United States. The economy of the Soviet Union, never strong, has become so stagnant that only a fundamental restructuring can hope to revive it. President Gorbachev is dedicated to this perestroika. While it is unlikely that he can achieve a truly competitive economy within the constraints of a planned socialist system, even incremental improvements in the availability of food and other consumer products would be welcomed by Soviet citizens and give perestroika some breathing room. In any event, the economic restructuring envisioned will require a significant diversion of resources from the Soviet military to achieve the capital equipment modernization desperately needed by Soviet industry. Additionally, Soviet industry, in order to improve its productivity, needs a major infusion of modern technology, some of which is available only in the West, but much of which could be developed by the Soviets if they were to transfer top technical talent from military programs.

In contrast, the United States has the largest and strongest economy in the world, based on an innovative, entrepreneurial culture, world leadership in science and technology, and a robust free market system. Even the U.S. economy, however, is facing problems that will have substantial influence on defense spending levels.

Reducing the federal budget deficit will require difficult decisions involving revenue-raising and budget-cutting-both certain to be unpopular. It is already clear that defense will not be immune from budget cuts. The five-year defense plan of the Reagan Administration for fiscal years 1990-95 called for two percent per year real growth in the defense budget. Partly because tensions with the Soviet Union are easing and partly because public consensus is against greater defense spending, congressional support for these projected real increases is lacking. It is more likely that the defense budget will be flat in real terms for the next few years. Moreover, if during the course of the Bush Administration a conventional arms treaty were to be approved, subsequent defense budgets would likely decline. The defense budget proposal submitted by President Bush in February called for a one-year "freeze" and envisioned modest real growth in later years.

The third factor of significance to our future defense strategy is the combination of forces tending to weaken the alliances, both East and West, that were formed in the wake of World War II. For decades East European countries have stayed in the Warsaw Pact for two primary reasons: fear of the Soviet Union's military strength and dependence on the Soviet Union for economic support. Under glasnost this fear is diminishing (perhaps mistakenly), and if a conventional arms agreement leads to a major reduction in Soviet tanks in Eastern Europe, it will decrease even more. In the meantime the Soviet Union is increasingly unable to assist East European countries with either economic or technological support for their industry. In fact some of the East European countries have stronger economies than the Soviet Union. As a result, this alliance is losing both the carrot and the stick which kept it together. It would not be surprising to see one of the Warsaw Pact countries try to break away, creating a political crisis to which the Soviet Union may respond militarily, as it did 21 years ago in Prague.

The situation in NATO is fundamentally different in that this alliance was formed by free nations who willingly joined together for their mutual self-interest (and who can freely leave the alliance at any time). There are forces, however, tending to weaken the bonds holding NATO together, as well as those of our alliances with Japan and other Asian-Pacific nations. The challenge for American leadership is clear. First, the Asian and West European countries, like the East European countries, have substantially less fear of the Soviet Union than at any time since the alliances were formed. Second, our allies face growing tension with the United States as they increasingly compete with us in world markets, at the same time that arguments on burden-sharing dominate the congressional debate on our defense budget. Finally, if a conventional accord leads to a significant decrease in American forces in Europe, it will be accompanied by a decrease in the political influence of the United States in Europe.

This is not to say that NATO is losing its relevance, but rather that its political dynamics are changing. In the past the United States was the dominant influence on decisions within NATO since it was so much stronger, both militarily and economically, than any other member nation. In the future the United States will evolve into more of a senior partner, with the European pillar of NATO becoming the other, essentially equal, partner. How quickly this evolves, and to what degree, depends on economic and political actions in Western Europe, especially on the extent and pace of unification in the European Economic Community, which is scheduled for a major strengthening in 1992. Of course, the pace of NATO restructuring will also be affected by developments in the Soviet Union; in particular, a backing away from glasnost and perestroika or a change of leadership in the Soviet Union could slow it down.

Along with changes in our major alliances, we will see Third World issues evolving more as regional problems that the superpowers are less and less able to influence. Additionally, we will have an increasingly difficult time maintaining our overseas military bases, which have played a critical role in our projection of military power. In sum, the world is becoming multipolar, and the national security issues facing the United States are likely to be dominated by regional problems in which direct intervention by our military forces will be exceedingly difficult both logistically and politically.

III

The new secretary of defense needs to understand the nature of these national security problems, over which he has little control, and to create a new defense strategy responsive to them. While he alone cannot determine the country's defense strategy, he can have considerable influence on it.

He will apparently be formulating this strategy as the Soviets are making significant reductions of conventional forces in Europe and Asia. But, even if this scenario were to develop, we would still be faced, at least in the initial stages, with a Soviet military force of very large capability and a government that we still would see as highly unpredictable. At the same time, there would be in the United States, and to a greater extent in allied countries, a perception that the threat from the Soviet Union had greatly decreased. Therefore, the secretary's challenge is to formulate a new defense strategy which can deal with a dangerous and still unpredictable potential adversary in the face of a reduction in resources and a probable reduction in influence on our allies.

The most visible manifestation of an administration's strategy is its defense investment strategy-that is, how it allocates its defense budget. I am postulating a defense budget that will be flat in real dollars until a conventional arms treaty is approved, and thereafter flat in then-year dollars (which could mean an annual real decline of three to six percent). The secretary of defense will have a very difficult task restructuring a five-year defense plan that has been based on unrealistic assumptions of budget growth for the past three years. In fact, the growth planned in the last five-year defense budget submitted by former Defense Secretary Caspar Weinberger is almost $150 billion more than a flat budget over the same five-year period. As a consequence, there is a ticking time bomb of programs started in the past five years which cannot be completed even under a flat budget, much less at the budget levels I have postulated. Therefore, the plans made by each of the services for the development and maintenance of their forces for the next five years are totally unrealistic and will have to be redone from the ground up.

In considering this restructuring it is useful to think of the defense budget in terms of its four major components: manpower, research and development (R&D), modernization, and operations and maintenance (O&M). Historically, budget cuts have squeezed R&D (mortgaging the future), stretched out modernization programs (decreasing long-term readiness and increasing unit costs), and slashed O&M (reducing near-term readiness). Manpower levels have been held constant, but manpower costs have been reduced somewhat by reduction of real wages. The budget reductions after the Vietnam War led to what the former chief of staff of the army, General Edward Meyer, called a "hollow army." It is imperative that the defense strategy of the 1990s not repeat these mistakes. In particular, a premium should be placed on readiness, both near-term, by maintaining the O&M account, and medium-term, by maintaining an efficient modernization program to replace aging equipment that is difficult to operate and maintain.

In summary form, the guidelines for restructuring the defense budget should be:

-to maintain the O&M budget at about the level established in the five-year defense plan; as active units are transferred to the reserves, a fractional part of their O&M budget would be reallocated to the reserves and the rest saved;

-to maintain the modernization budget at about the level established in the five-year defense plan, but reestablish the priority of the programs within that account (as will be described in subsequent sections);

-to reduce the R&D budget from levels set in the five-year defense plan to a level consistent with the growth (or decrease) in the overall defense budget; and

-to reduce the manpower budget from the five-year defense plan level to a level that compensates for the relative increases in the O&M and modernization accounts.

These changes would have to be phased over time to be compatible with actual budget levels. For example, if the five-year plan called for a two-percent real increase over the previous year, and the actual defense budget was targeted to be flat in real terms, then these guidelines would allocate a two-percent real increase to the O&M and modernization accounts, a flat budget to the R&D account, and about a three-percent real decrease to the manpower account (assuming this account was two-thirds the size of the O&M and modernization accounts).

A primary challenge, then, of the new strategy would be to mitigate the effect of the reductions in manpower through a variety of "off-budget" compensatory actions. Foremost among these would be to push aggressively for treaties that give us a real reduction in the military threat we face, with particular emphasis on the threat of short-warning attack. Second, as we reduce our strategic forces under a START treaty, we could convert some of the surplus strategic platforms so they could be used to bolster our tactical forces. Third, we should work to achieve an effective program of defense cooperation with our allies. As they assume a greater share of the ground defense of Europe, we must closely coordinate our reinforcement plans with their defense strategy and restructure the NATO modernization program to make more effective use of their technology and industry. Fourth, we should emphasize "competitive strategies" to make selective use of our technology in areas where we have a substantial lead and where that technology is highly significant to defense. Finally, in this new strategy, we should make much more effective use of our reserve and National Guard forces than we are doing currently.

Realistically, it will not be easy to prevent budget reductions of this size over a number of years from leading to a "hollow army." This would certainly happen if we were to keep the same force structure but skimp on training, supplies, and equipment maintenance and modernization. The Defense Department would have to stand firm on its proposals for manpower reductions, as politically difficult as this would be, in order to avoid falling into this trap.

IV

Thus it follows that a necessary but painful element of the new strategy is for the Defense Department to reduce its manpower, both military and civilian. We cannot deal effectively with a budget problem of the magnitude I have postulated by tinkering at the margins.

A proposal to cut manpower in any part of the Defense Department (or any other department of government) is certain to elicit strong opposition from those directly or indirectly affected, and they are likely to receive powerful support from some members of Congress. Therefore, in order for a reduction plan to be approved, it would have to be carefully worked out to minimize its human impact (as the plant-closing legislation attempts to do in the civilian economy), and phased so as not to endanger national security. But while such a major reduction would have to be very carefully planned and executed, it is incorrect to believe that detailed analysis alone can determine the "right" size of the reduction. To a great extent, determining the size of the reduction will be a matter of judgment.

In my judgment, reductions of up to 20 percent can be made in the civilian personnel of the Defense Department over four years. These could begin in fiscal year 1990 and proceed at the rate of about 50,000 a year. Some of these would be scheduled retirements or early retirements. Functionally, these reductions would be directed at three major areas: civilian personnel made surplus by the closing of unnecessary bases (legislation has already been passed to effect base closures, and it is likely that the first such closures will occur soon); civilian personnel made surplus by general overhead reductions; and civilian personnel made surplus by planned reductions in the defense acquisition system. This last reduction would be consistent with the Packard Commission's recommendation to streamline the acquisition system, with attendant reductions of personnel. The commission's chairman, David Packard, in testimony before the Senate Armed Services Committee, has elaborated on this recommendation by stating that acquisition efficiency is consistent with a reduction in acquisition personnel of at least 20 percent (which could involve up to 50,000 personnel).

Some reductions in military manpower would be associated with the same base closures and organizational streamlining that permit the reduction in civilian personnel. It is difficult to estimate the number of military personnel that would be affected by these actions, but it is possible that as many as 50,000 military personnel could be phased out over the same four-year period. Substantially greater military manpower reductions would be possible if we were to conclude a treaty to cut conventional arms significantly. In that case it is possible that 200,000 military personnel could be transferred from the active forces to the reserves.

It would be a grave mistake, however, to make major reductions in military manpower unilaterally. NATO forces in Europe are already outnumbered by Warsaw Pact forces, and unilateral reductions in American forces would only aggravate that situation, weakening NATO both militarily and politically. In addition, any unilateral reduction on our part could undercut our ability to negotiate bilateral reductions in conventional arms talks. I believe that asymmetrical bilateral reductions in military manpower are achievable in these talks, and can enhance our national security, but we must not give away our negotiating leverage.

V

While our strategic nuclear forces account for less than 15 percent of the defense budget, they obviously play a uniquely important role in our strategy. Our new strategy must provide for maintaining nuclear forces that constitute an unambiguously effective deterrent. Treaties to reduce nuclear arms should be seen as a component of U.S. defense strategy that seeks to enhance the stability of the deterrent forces of the Soviet Union and the United States through bilateral reductions, with a special emphasis on reducing those components of the nuclear forces which have first-strike potential and are therefore destabilizing. Our nuclear modernization program, which must be compatible with our treaty obligations, should have three distinct objectives:

-to improve the survivability and security of our forces, thereby removing the incentive for a preemptive attack and reducing the risk of a nuclear war starting by accident or miscalculation;

-to improve the operability and maintainability of our forces, thereby increasing readiness and reducing operating costs; and

-to provide for a contingent response to a plausible Soviet breakout (abrogation of a treaty) or breakthrough (development of a revolutionary new capability, e.g., in submarine detection).

A START treaty would determine the broad parameters of our central nuclear forces, but within those parameters there is still quite a bit of discretionary judgment about how to configure the forces. One possible configuration, compatible with START, seeks at moderate cost (somewhat less than programmed in the five-year defense plan) to maximize the three objectives just described.

(1) The reduced force of intercontinental ballistic missiles would consist of 500 warheads on 50 MX missiles based in Minuteman silos; in addition, about 950 warheads would be retained on a mixture of Minuteman II and III missiles, also based in Minuteman silos. A Midgetman missile would be developed and, when available, deployed in Minuteman silos to replace the aging Minuteman missiles. The exact number of Midgetman missiles deployed would be based on the political situation at that time, including whatever progress is being made on a second START treaty. The Minuteman silos could be substantially hardened before deploying the new Midgetman missile; however, the survivability of this silo-based ICBM force would depend primarily on the fact that current Soviet ICBMs and submarine-launched ballistic missiles cannot successfully launch a surprise attack against both the bomber force and the ICBM force. If the Soviets were to develop an SLBM force capable of a simultaneous short flight-time attack on both our ICBM force and our bomber force, an effective, low-cost and timely response would be to construct additional silos in the Minuteman fields and occasionally shift the missiles covertly from silo to silo.

(2) The SLBM force would consist of about 3,450 warheads on 432 Trident I missiles deployed in 18 submarines. Initially, the submarines would be a mixture of Poseidon and Trident, but by the mid-1990s we would have an all-Trident force. As the Trident II missile (the D-5) becomes available in the early 1990s, it would replace the Trident I. The SLBMs are the most stabilizing component of our deterrent forces because of their invulnerability to attack; the modernization program is intended to maintain that survivability even as the Soviets increase their capability in antisubmarine warfare. The characteristics of the Trident force indirectly enhance the survivability of the ICBM force. Because the Trident II missile has performance capabilities (accuracy and nuclear yield) equivalent to ICBMs, it serves as a disincentive for an ICBM attack, since even if the Soviets were successfully to destroy our ICBMs, they would still face retaliation with the ICBM-like missiles in our SLBM force.

(3) The bomber force would consist of 90 B-52Hs carrying about 1,000 air-launched cruise missiles (ALCMs) and 98 B-1s carrying a mixture of ALCMs, short-range attack missiles and gravity bombs. The B-52Gs would be armed with conventional munitions and committed to NATO. When the Advanced Technology Bomber (B-2) is ready for deployment, it could replace the B-1s, which, outfitted with advanced conventional munitions and improved electronic countermeasures, would then replace the B-52Gs which had been assigned to NATO. Both the B-1 and the B-2 greatly improve the survivability of the force compared to the B-52 by virtue of their fast "base escape" and, in the case of the B-2, its effectiveness in penetrating Soviet air defenses. Because of the greatly improved effectiveness of the B-2, one wing (about 70 aircraft) should be sufficient to replace the B-1 force.

This strategic force, which would comprise about 8,000 nuclear warheads, could be decreased further in the mid-to-late 1990s if a follow-on START treaty were approved. I believe it would be reasonable to reduce the strategic forces of the United States and the Soviet Union to a level as low as 4,000 warheads each, if the basing modes were survivable and the counterforce threat minimal. If we reduced forces much below that number, we would face a risk of instability if cheating on the treaty were to occur, or if nontreaty countries were to escalate their nuclear forces.

Besides our strategic nuclear forces, we have four other categories of nuclear weapons: ground-based ballistic missiles intended to support a specific theater of operations (e.g., NATO); sea-launched cruise missiles intended to extend the strike capability of our naval forces by attacking either land or ship targets; battlefield nuclear weapons (artillery shells, mines, depth charges); and nuclear bombs used with dual-capable aircraft. The modernization issue is different for each category.

The most controversial issue facing the United States is whether we should "modernize" (i.e., build a new generation of missiles to succeed the short-range Lance missile stationed in Europe), renovate Lance or do nothing on the assumption that the Intermediate-range Nuclear Forces Treaty will be extended to include this class of missile. The prudent course is to renovate Lance sufficiently to allow its continued certification, but not attempt to redesign it to improve its performance. The renovation program would probably involve recasting the Lance's solid-fuel rockets.

Also controversial since the Soviets want to include them in START are the sea-launched cruise missiles. Our primary interest in SLCMs is in the conventionally armed SLCM; modernization programs would be directed to reducing its detectability, improving its performance and reducing its unit cost. No special modernization program is needed for the nuclear version of this missile. Modest quantities of nuclear-armed SLCMs are now deployed on some attack submarines and surface ships to complicate the targeting problem presented to Soviet military planners. For this purpose, presently deployed quantities are sufficient.

Battlefield nuclear weapons play an increasingly less significant role in our war planning. They should be maintained in the force pending real progress on a conventional arms reduction treaty, but no modernization or expansion program is required.

Nuclear bombs on dual-capable aircraft will be the backbone of our theater-based nuclear deterrence and, as such, should be kept fully modernized and in a high state of readiness. However, the principal requirement for modernization lies not with the bombs but with the platforms and their associated electronics. The primary motivation for modernizing the bombs themselves is to improve their security and safety, which is done as part of an evolutionary security-enhancement program. The platform modernization program would include upgrading the F-15 and the F-16 (avionics, armament and counterdetection), developing a new-generation fighter and, in time, adapting the B-1 for theater operations.

VI

In March 1983 President Reagan called for scientists to begin a research program in strategic defense technology whose objective would be "to render nuclear weapons impotent and obsolete." In response to this challenge the Defense Department launched the Strategic Defense Initiative (SDI), to be managed by the new Strategic Defense Initiative Organization. The SDI was perhaps the most controversial defense program of the Reagan Administration, partly because of profound confusion about its objectives and partly because of its sensitive interaction with our ICBM modernization program and strategic arms treaties.

Five years after the president's speech Defense Secretary Frank Carlucci convened a panel of the Defense Science Board to assess the progress made by the SDIO, to evaluate the prospects for strategic defense and to recommend a framework for the continuation of the program. At the time, the department was considering a proposal to move into "early deployment" with a space-based kinetic-kill weapon system. The DSB panel concluded not only that it was premature to deploy a space-based system, but that it was too early to settle on a preferred technology among the many being pursued.

As a result, the panel recommended "that R&D priority should be given to the sensors, processing and communications that would be necessary with any system," and that the country should "undertake to deploy the next generation of space surveillance systems to improve our early-warning detection and assessment of a ballistic missile attack." It also recommended deferring the early deployment of a space-based system in favor of a more conservative plan that envisioned phased deployment, the first step of which would be a "limited, treaty-compliant deployment of 100 fixed ground-based long-range interceptors."

These recommendations provide a sound basis for restructuring the SDI program into three concurrent efforts plus one contingent effort. The concurrent efforts would be:

-to develop advanced sensor, processing and communications technology;

-to deploy the next-generation space surveillance early-warning system;

-to conduct vigorous research on the most promising of the new technologies for destroying ballistic missiles in order to hedge against a treaty failure or a technological breakthrough. (If a breakthrough is to occur in this field, we want it to occur first in the United States.)

These three components of the SDI program could be carried out at a funding level which would be about two-thirds of the present SDIO funding (about half of the programmed five-year defense plan funding). Whether and when we should proceed to deploy the ground-based interceptor system would be contingent on a comparison of the military benefits of that system with other defense programs of comparable cost.

VII

More than 80 percent of the defense budget is spent directly or indirectly on our conventional forces, so it is on them that budget reduction actions have historically focused. Indeed, in the Eisenhower Administration, this was explicit in the tripwire strategy, which held that an attack on our conventional forces would call forth "massive retaliation" by our nuclear forces. This strategy was adopted after a NATO study concluded that a conventional defense of Europe would require 96 active divisions in Europe, and this at a time when we had overwhelming superiority with our nuclear forces. As a result, budget-conscious governments in NATO, including our own, accepted conventional forces that were numerically inferior to those of the Warsaw Pact, counting on American nuclear weapons as a low-cost equalizer.

Since that time, the Soviets have achieved rough parity with the United States in their nuclear forces and have made some progress in closing the technological gap in conventional forces. Therefore, we should revise our strategy in order to raise the nuclear threshold. We can do this by selectively increasing the capability of American conventional forces through a modernization program which would put priority on:

-maintaining at high readiness levels a selected part of our forces, including but not limited to the Special Operations Forces and marines, because in the crises most important to our national security we would not have months or years to mobilize;

-increasing our ability to transport these selected forces, because they will generally not be based in sufficient numbers at the location where a crisis arises;

-improving our intelligence and surveillance systems, to give us maximum time to respond to crises, and to deploy our limited forces correctly the first time;

-maintaining the technological superiority of our naval air, tactical air and army air forces, because they can be used to project power rapidly anywhere in the world; and

-developing improved antiarmor weapons.

These last two points are important because we will generally be unable to move our armored forces to a crisis area during the critical early phase of a crisis. In particular, should a conventional arms reduction treaty lead to the return to the United States of several of our armored divisions and all of their equipment, these units could not be reinserted in Europe for the first month or two after a decision to redeploy. In this case the bulk of the heavy ground forces in NATO available to meet a short-warning attack would be those of our European allies, particularly West Germany and France. Even with improvements in the cooperation and effectiveness of the French and German forces, the United States would still have major responsibilities to improve its support to NATO. The highest priority is the development of a new generation of all-weather antiarmor weapons which, once fired, would be autonomous in operation (to defeat Soviet operational countermeasures) and would be of sufficiently high energy to defeat the Soviet technical countermeasures (reactive armor in particular). These antiarmor weapons would be designed to operate from army and marine attack helicopters, tanks and infantry fighting vehicles and all of NATO's tactical support aircraft. These weapons are vital to stopping an armored attack, since we would have relatively few tanks in place in the early, decisive phase of a war.

A second area of importance to our ground forces is the improvement of the capability of attack helicopters. A new generation should be developed for the army and the marines; it would be self-ferrying so that helicopter units could be moved quickly to Europe or crisis areas anywhere in the world. The design should be optimized to improve survivability greatly (by including stealth features) and to lower operating costs substantially.

Finally, the army's modernization program should decrease funding for heavy armored vehicles, but provide for refitting existing vehicles with features to enhance their survivability.

VIII

Our primary means of projecting conventional military power to distant operational theaters will be through air power: attack helicopters, carrier-based aircraft and the tactical air arm of the air force. Greater emphasis should be put on air power in our support to NATO because we can move air units to Europe rapidly. Unlike our heavy ground units, a major part of our tactical air forces and army air units can be moved quickly because most of the aircraft are self-ferrying.

Since air power alone cannot win battles, our air units must be able to operate in conjunction with the ground units of allies as well as the limited number of our own ground units (Special Operations Forces and marines) that we could quickly move into place.

NATO's need for rapid reinforcement with air units requires that we take vigorous actions to maintain a high state of readiness in the air units that are moved to the reserves. We should have a major increase in the budget for training and for modernizing equipment in the air reserves, the air national guard and the army air units to achieve the necessary increase in readiness. Additionally, we should increase the aircraft in the Civil Reserve Air Force program, which provides funding for structural reinforcement of commercial airliners as they are built so that they can be used more effectively to transport matériel in wartime.

If we are outnumbered on the ground, it will be critically important to offset this disadvantage with air superiority. Air superiority will allow effective interdiction and execution of the support missions necessary to reduce the Soviet ground advantage as well as to protect NATO's ground forces from Soviet tactical air forces. Therefore, we must increase emphasis on the R&D critical to air superiority, especially those technologies critical to low-observability (stealth) and to autonomous all-weather air-to-air missiles. The modernization program would include refitting current fighter aircraft to improve their low-observable characteristics, development of the Advanced Tactical Fighter, and evolutionary improvement of the Advanced Medium-Range air-to-air missile.

Additional strengthening of our tactical air forces could be achieved by using resources originally developed for our strategic forces. For example, after the B-2 is deployed, the B-1 could be reconfigured as a conventional bomber with a capability for high-accuracy high-payload long-range interdiction missions. Prior to that time, the B-52G could be used (albeit less effectively) for the same missions.

IX

Along with the restructuring of our ground and air units, the navy could be restructured by transferring some active-duty forces to reserves. This could be done by phasing down to 13 carrier battle groups in the active-duty forces.

Aircraft carriers would continue to be a primary means of projecting American military power around the world, and the navy's modernization program would emphasize the maintenance of our distinctive advantage in carriers. I do not believe, however, that the development of a new attack aircraft is necessary at this time. Rather, the modernization program for naval air forces and marine air forces would focus on evolutionary improvements (particularly the introduction of low-observable technology) to the F-18, the A-18 and the A-6. Development of the new attack aircraft could be initiated after the conclusion of the Advanced Tactical Fighter development program.

To offset partially the decrease in offensive striking power resulting from the reduction in carriers, we could deploy a large number of conventionally armed SLCMs. Both sea-attack and land-attack versions would be deployed, as they already are, on attack submarines and surface ships. And as the Poseidon nuclear submarines are retired from our nuclear forces, some could be refitted to carry large numbers of conventionally armed cruise missiles (assuming this was not barred under a START treaty).

More emphasis should be placed on antisubmarine warfare technology, particularly on developing new sensors to deal effectively with the new generation of quiet Soviet submarines. A major (and very expensive) part of our submarine program would be to complete the development of a new attack submarine, the Sea Wolf. These programs respond to Soviet advances in submarine and ASW technology over the last decade. Making them priorities reflects the relative importance to the United States of maintaining open sea-lanes in the face of an increasingly capable Soviet submarine force.

X

Nearly all U.S. weapon systems are built by defense contractors, unlike those of the Soviet Union, which are built in government arsenals. Our defense industry, created in World War II, was a crucial factor in winning the war, and during the postwar period it led the United States into world leadership in nuclear power, jet aircraft, jet engines, radar, computers and semiconductors. For years our defense strategy has implicitly assumed a strong defense industrial base and world leadership in technology. Both are now eroding. The erosion stems from three primary factors: (1) the isolation of the defense industry from commercial technology and manufacturing processes; (2) decreased funding of the defense technology base; and (3) a crisis in the defense industry caused by criminal investigation and financial setbacks.

Because the Defense Department imposes unique standards and specifications on its equipment, and buys with a set of unique procurement regulations, nearly all defense suppliers have established enclaves for their defense business which they isolate from their commercial business. Moreover, commercial suppliers generally are disqualified from bidding for defense contracts on technicalities or procedural grounds even if they have a lower-cost product that meets military needs. As a result our military products rarely get the cost benefit of large commercial production runs, nor do they fully benefit from the technology and manufacturing processes developed for our commercial products. Thus, during the last few decades our weapon systems have come to depend more and more on defense-funded technology. But at the very time this dependence has been increasing, funding for the defense technology program actually has declined to about half of what it was in the early 1960s.

Therefore, it is critically important to achieve a sustained increase in the technology base program (at the expense of weapon systems R&D), while at the same time working to "commercialize" certain aspects of defense procurement. In particular, a major effort is needed by the Defense Department and industry to establish joint military-industrial standards, specifications and manufacturing processes for integrated circuits, computers, software, connectors and other dual-use devices. Such a joint effort will potentially save billions of defense procurement dollars every year, as well as improve the quality of military equipment.

A financial crisis is looming for many defense companies because their revenues will decline as the defense budget decreases, their profits will decline due to changes in procurement regulations, and they must increase their capital because of these factors plus a change in tax regulations-the change in tax regulation alone adds more than $5 billion to the capital requirement of the 50 largest defense contractors. As a result, the defense industry is entering a period of traumatic restructuring in which the weakest companies will go out of business and many others will be acquired (foreign companies are showing the greatest buying interest). The Defense Department should not take actions to counter the market forces that are causing this restructuring, since inefficiencies will result from leaving the excess capacity in place, but it should reform the procurement regulations that are driving the industry to decreased investments in facilities and R&D, since the quality of our weapon systems is the ultimate victim of these regulations.

Even more damaging to the industry are the allegations of criminal misconduct that are being aired in the media and in congressional hearings. It is obviously important to convict and sentence any criminals in the defense industry, but the implication that the system is infested with criminal activity threatens to cripple the entire industry; it also distracts us from the actions that are urgently needed to bring about effective reform of the acquisition system. A blueprint for achieving acquisition reform is spelled out in the Packard Commission report delivered to President Reagan in 1986; it simply has not been implemented.

The Packard Commission report describes in some detail a program to improve efficiency in the acquisition system. The recommendations involve establishing streamlined acquisition procedures, increasing the use of prototype testing, increasing the use of technology to reduce cost, stabilizing funding in defense programs and expanding the use of commercial products and competitions. The commission also recommended a program to restore integrity in the acquisition system, the centerpiece of which was an extensive industry self-governance program with real teeth in it.

The Bush Administration should make the execution of these recommendations a top priority. It will not be possible to achieve sustained congressional support for the defense budget (even a flat budget) without restoring public confidence in the competence and integrity of the defense acquisition system.

XI

To sum up: major changes are under way in the three major factors that have driven our national security strategy since World War II-the cold war, our economic strength and our alliance structure. These changes provide the national security basis for both the United States and the Soviet Union to reduce arms to substantially lower common levels, as well as a strong economic incentive to make such reductions.

We have an opportunity to seize the diplomatic initiative and press for multilateral force reductions that reduce the risk of a short-warning attack in Europe. This would allow us safely to reduce our forces, thereby reducing pressure on our federal budget. But we also face a risk, namely, that we or our allies will respond unilaterally and reduce our capability-perhaps irreversibly-before the real threat is reduced. This would be particularly dangerous if Gorbachev were to fall from power and be replaced with a neo-Stalinist. Even if Soviet "new thinking" is sustained, the restructuring of our defense forces must be done in such a way that we can continue to respond to unpredictable crises around the world.

Meeting our national security requirements with reduced military forces will require: an increased emphasis on readiness in a smaller active-duty force; an increased emphasis on reserves and National Guard forces; an increased emphasis on tactical air units, marines, Special Operations Forces and selected units that can be moved rapidly; an increase in our means of transport through modification of commercial airliners; and a more effective acquisition system, including increased use of commercial products and standards.

A defense strategy responsive to the world that is now emerging will require significant changes. Both we and our allies have become comfortable with the status quo. But there are dramatic new forces loose in the world. The United States, as the world's leading power, should not simply react to those forces after their effects are evident. We should initiate new policies and new programs to shape those forces, to strengthen our national security and thus to enhance the prospects for world peace.

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  • William J. Perry was the Under Secretary for Defense from 1977 to 1981. He is currently the Chairman of H&Q Technology Partners, an investment banking firm specializing in high-technology companies, and a member of the Defense Science Board and the Center for International Security and Arms Control of Stanford University.
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