NATO, The Euro And African Currency Unions. By Dr Gary Busch

NATO, The Euro And African Currency Unions

Dr. Gary K. Busch

19.06.2011

It may seem strange to see these three topics linked together but their inter-relationships will be very important in the political and economic development of African and European states.

The Evanescence of NATO:

It has become clear, especially after the frank speech of Secretary Gates recently, that NATO has a "dim, if not dismal” future. The European partners of the US in NATO have not been paying their way and have reduced their military budgets by almost 15% in the last ten years. They performed poorly in Iraq and, with the exception of the UK, performed even worse in Afghanistan. The current operations in Libya are incompletely funded and the putative NATO forces have run out of cash, armaments, missiles, intelligence-gathering equipment, etc. They are relying on the US to fund them and to replenish their stocks. The US, restrained or not by the War Powers Amendment which says the President must consult Congress after ninety days, is trying to reduce its annual military expenditures to cope with a massive national budget deficit and long-term debt. All parts of the US government are being restrained in their spending and cuts are universal.

The US population does not support NATO or the war in Libya. According to a Rasmussen report conducted on 12-13 June 2011 more than half of those polled wanted to US to leave NATO. The study showed “The United States spends approximately $2,500 per person on defence, while the other NATO nations spend $500 per person. Knowing this, 49% of voters think the United States should remove its troops from Western Europe and let the Europeans defend themselves”. i With the US having spent over $1.5 billion in the first six days of the European war in Libya, the US population do not believe President Obama when he “insists that NATO allies like Great Britain and France are now leading military operations in Libya, with the United States taking a back seat since the early weeks of the campaign. U.S. voters aren’t so sure: 38% believe the military operations in Libya are being handled primarily by U.S. allies like England and France, but 32% think the United States is primarily in charge.”ii Just 36% of voters now look positively on the Obama administration’s handling of the situation in Libya. Only 26% feel the United States should continue its military actions in Libya.

A more fundamental concern is the massive proliferation of US military bases across the world. The US operates over a thousand military bases around the world at a cost, not including Iraq and Afghanistan, over $102 billion a year. The US has 227 bases in Germany alone.iii “It makes as much sense for the Pentagon to hold onto 227 military bases in Germany as it would for

the post office to maintain a fleet of horses and buggies,” writes Gustersoniv The perilous chase to find a solution to the debt ceiling in the US will add pressure for the US to start closing hundreds of redundant bases, especially in Europe. Few Congressmen have constituencies in Europe who will object to the closing of these bases. The fact that the US is paying for 72% of the annual NATO expenditure has not escaped the bean-counters. There will be big cuts in US military spending in Europe and this will have the backing of a large proportion of the US voting public.

The European Sovereign Debt Crisis

It has become apparent since mid-2010 that Europe, both within the Eurozone and externally was suffering from a massive overhang of unrepayable debt. The credit agencies re-evaluated their assessments of the European economies and devalued the bond rating of several European states (particularly Spain, Greece, Ireland and Portugal in the Eurozone) and Iceland, Rumania and Hungary on the periphery.

The tide of rising governmental debts and the downgrading of European sovereign debt by the rating agencies led the Europeans to create mechanism to protect them from the effects of this alarm in the financial markets. On 9 May 2010, Europe's Finance Ministers approved a comprehensive rescue

package aimed at ensuring financial stability across Europe by creating the European Financial Stability Facility (EFSF). It was worth almost a trillion dollars. This EFSF was triggered by the efforts of the IMF and the Eurozone to prop up the Greek economy. On 2 May 2010 they arranged a €110 billion loan for Greece; worth almost a trillion US dollars. This was followed by a €85 billion loan to Ireland in November 2010 and a €78 billion bail-out for Portugal in May 2011. Greece has received further assistance.

Much of this European sovereign debt is owed to European banks that hold their paper.

What is important is that Europe, particularly the Eurozone, is in serious financial difficulty, Moreover, the debts are held by the European Banks and the IMF. The IMF, by virtue of a mutual, if unenforceable agreement, has primary call on the assets with the Europeans so, in the event of a default, the European banks may have settled for absorbing heavy losses. There are few economists in the world who do not expect a Greek default soon as the social pressures of austerity destroy the fabric of Greek political and social institutions. Spanish youth, too, have been demonstrating against the vicissitudes of European-sponsored austerity in Spain and Spain, too, may have a difficult time getting its citizens to adapt to the straight-jacket of Euro cuts and interference with Spanish institutions.

The Germans, with the strongest economy in Europe, and the source of much of the bailout funds, has developed a ‘Plan B’ – the Northern Euro (‘Neuro’). That is, in the event of a Euro crisis Germany is suggesting that it may join with the Scandinavians states, Austria and Holland to establish the Neuro. Even the Czechs have applied to join. The most interesting aspect of this plan is that France will not be invited to join. It will have to stay with the Southern and Eastern Europeans in the diminished Eurozone. This plan has not been completed but it has serious support in Germany, outside the cadre of political Euro-politicians there.

The important point is that Europe, beset by debt and credit problems is even less likely to be able to pull its weight within the NATO alliance. If they can’t fund their current accounts as they stand, nor service their debt burdens, investment in military prepared ness is not very likely. The country which is most affected by this is France whose military overreach is becoming more apparent by the day. For domestic political reasons, and allegiance to French savage and barbaric traditions, French troops were sent into the Ivory Coast to attack and capture Gbagbo and to massacre thousands of unarmed Ivorian civilians. At the same time, France launched an air assault on Libya to try to effect regime change there as well. Unfortunately for the French the Libyans were not unarmed Africans going about their daily business, but a well-armed military willing to fight. Despite the participation of the British and a token assistance by four other countries (and initially the US) this battle is, so far, a stalemate. The French have run out of money. They are poorly prepared for a lengthy campaign and face severe financial pressures at home. This, and the relationship between France and its African neo-colonies, will have a dramatic impact on Africa’s currencies.

The CFA and African Currencies

A key factor in African currencies is the operation of the CFA franc (the Financial Community of Africa -Communauté financière d'Afrique – CFA franc). There are actually two separate CFA francs in circulation. The first is that of the West African Economic and Monetary Union

(WAEMU). WAEMU represents seven francophone West African states (Benin, Burkina Faso, Côte d’Ivoire, Mali, Niger, Senegal, and Togo) plus the lusophone Guinea-Bissau. This WAEMU was established by the Treaty of Dakar in 1994. The second is that of the Central African Economic and Monetary Community (CEMAC) which comprises six Central African countries (Cameroon, Central African Republic, Chad, Congo-Brazzaville, Equatorial Guinea and Gabon).

One of the primary problems in dealing with the CFA is that it is not within the purview or competence of African officials to regulate the value or changes in the CFA franc. This was the sole responsibility of the French Treasury officials, and now, the French officials seconded to the European Central Bank (ECB). This is a result of an incomplete decolonisation by France of its former colonies in Africa.v

The creation and maintenance of the French domination of the francophone African economies is the product of a long period of French colonialism and the learned dependence of the African states. For most of francophone Africa there are only limited powers allocated to their central banks. These are economies whose vulnerability to an increasingly globalised economy expands daily. There can be no trade policy without reference to currency; there can be no investment without reference to reserves. The African politicians and parties elected to promote growth, reform, changes in trade and fiscal policies are made irrelevant except with the consent of the French Treasury which rations their funds. There are many who object to the continuation of this system. President Abdoulaye Wade of Senegal has stated this very clearly “The African people’s money stacked in France must be returned to Africa in order to benefit the economies of the BCEAO member states. One cannot have billions and billions placed on foreign stock markets and at the same time say that one is poor, and then go beg for money....”vi

This system of dependence is a direct result of the colonial policies of the French Government. In the immediate post-war period after the signing of the Bretton Woods Agreement in July 1944 the French economy urgently needed to recover from the several disasters of the Second World War. To assist in this process it set up the first CFA amongst its African colonies to guarantee a captive market for its goods.

The principal decision which resulted from the Bretton Woods Agreement was the abandonment of the Gold Standard. In short, the new system gave a dominant place to the

dollar. The other currencies saw their exchange rate indexed to the dollar. The reserves of the European central banks at that time consisted of currencies of dubious post-war value and gold which had been de-pegged from the fluctuations of the currency. For this reason France needed the currencies of its colonies to support its competitiveness with its American and British competitors. De Gaulle and his main economic advisor, Pierre Mendès France met with some African leaders and developed a Colonial Pact which would enshrine this is in a treaty (with both public and secret clauses).

“Following the devaluation of the French Franc, it was naturally expected that the currency which was also circulating in Francophone Africa would also be devalued. Instead, France decided to create a new currency for its African colonies on 26 December 1945... The newly created CFA was however not devalued but overvalued. In deciding to overvalue the new currency, the CFA zone economies were effectively excluded from the international market as their products became too expensive on the competitive global market.

There remained only one market for the CFA zone, and that was France their colonial master. This enabled Metropolitan France to appropriate to itself the raw materials needed for its post-War and young industries. The colonies were tied hand and foot to serve Metropolitan France as other markets closed their doors to their expensive products. Thus through the new CFA currency, France was able to economically re-colonise its African colonies that had earlier been cut off from Paris as a result of the War.”vii

Decolonization south of the Sahara did not happen as de Gaulle had intended. He had wanted to create a Franco-African Community that stopped short of total independence. But, when Sekou Toure's Guinea voted "no" in the 1958 referendum on that Community, the idea was effectively dead. Guinea was severely punished because of its decision and the French soon had to proceed towards allowing the independence of its colonies but at the price of a strict continuing control over their economies. They agreed at independence to be bound by the Pacte Colonial.

The key to all this was the agreement signed between France and its newly-liberated African colonies which locked these colonies into the economic and military embrace of France. This Colonial Pact not only created the institution of the CFA franc, it created a legal mechanism under which France obtained a special place in the political and economic life of its colonies.

The Pacte Colonial Agreement enshrined a special preference for France in the political, commercial and defence processes in the African countries. On defence it agreed two types of continuing contact. The first was the open agreement on military co-operation or Technical Military Aid (AMT) agreements, which weren’t legally binding, and could be suspended according to the circumstances. They covered education, training of servicemen and African security forces. The second type, secret and binding, were defence agreements supervised and implemented by the French Ministry of Defence, which served as a legal basis for French interventions. These agreements allowed France to have predeployed troops in Africa; in other words, French army units present permanently and by rotation in bases and military facilities in Africa; run entirely by the French.

According to Annex II of the Defence Agreement signed between the governments of the French Republic, the Republic of Ivory Coast, the Republic of Dahomey and the Republic of Niger on 24 April 1961, France has priority in the acquisition of those "raw materials classified as strategic.” In fact, according to article 2 of the agreement, "the French Republic regularly informs the Republic of Ivory Coast (and the other two) of the policy that it intends to follow concerning strategic raw materials and products, taking into account the general needs of defence, the evolution of resources and the situation of the world market.”

According to article 3, "the Republic of Ivory Coast (and the other two) informs the French Republic of the policy they intend to follow concerning strategic raw materials and products and the measures that they propose to take to implement this policy.” And to conclude,

article 5: "Concerning these same products, the Republic of Ivory Coast (and the two others) for defence needs, reserve them in priority for sale to the French Republic, after having satisfied the needs of internal consumption, and they will import what they need in priority from it.” The reciprocity between the signatories was not a bargain between equals, but reflected the actual dominance of the colonial power that had, in the case of these countries, organised "independence" a few months previously (in August 1960).

In summary, the colonial pact maintained the French control over the economies of the African states; it took possession of their foreign currency reserves; it controlled the strategic raw materials of the country; it stationed troops in the country with the right of free passage; it demanded that all military equipment be acquired from France; it took over the training of the police and army; it required that French businesses be allowed to maintain monopoly enterprises in key areas (water, electricity, ports, transport, energy, etc.). France not only set limits on the imports of a range of items from outside the franc zone but also set minimum quantities of imports from France. These treaties are still in force and operational.

The WAEMU CFA franc is issued by the BCEAO (Banque Centrale des Etats de l’Afrique de l’Ouest). This currency was originally pegged at 100 CFA for each French franc but, after France joined the European Community’s Euro zone at a fixed rate of 6.65957 French francs to one Euro, the CFA rate to the Euro was fixed at CFA 665,957 to each Euro, maintaining the 100 to 1 ratio. It is important to note that it is the responsibility of the French Treasury to guarantee the convertibility of the CFA to the Euro.

The monetary policy governing such a diverse aggregation of countries is uncomplicated because it is, in fact, operated by the French Treasury, without reference to the central fiscal authorities of any of the WAEMU states. Under the terms of the agreement which set up these banks and the CFA the Central Bank of each African country is obliged to keep at least 65% of its foreign exchange reserves in an “operations account” held at the French Treasury, as well as another 20% to cover financial liabilities.

The CFA central banks also impose a cap on credit extended to each member country equivalent to 20% of that country’s public revenue in the preceding year. Even though the BCEAO has an overdraft facility with the French Treasury, the drawdowns on that overdraft facility are subject to the consent of the French Treasury. The final say is that of the French

Treasury which has invested the foreign reserves of the African countries in its own name on the Paris Bourse.

The central banks of these 2 zones – the Central Bank of West African States (BCEAO) for WAEMU and the Bank of the Central African States (BEAC) for CEMAC – have supranational status. For each zone, the reserves of member states are pooled; members have no independent monetary policy and no possibility of undermining the central bank’s independence or monetising public deficits.

This fixed exchange rate regime draws its credibility from monetary agreements with France that, via the Treasury, guarantee the convertibility of the CFA franc and provide the central banks an overdraft facility (compte d’opération) to meet liquidity needs. As a counterparty to this guarantee, 50% of their reserves must be placed within the French Treasury in the compte d’opération. The reserves must amount at least to 20% of central bank short-term liabilities. If the reserves are below this level (or if the compte d’opération is in debit) for more than one quarter, the central banks must take corrective measures (interest rate increases, credit rationing, and seizure of foreign exchange available in the zone).

In short, more than 80% of the foreign reserves of these African countries are deposited in the “operations accounts” controlled by the French Treasury. The two CFA banks are African in name, but have no monetary policies of their own. The countries themselves do not know, nor are they told, how much of the pool of foreign reserves held by the French Treasury belongs to them as a group or individually. The earnings of the investment of these funds in the French Treasury pool are supposed to be added to the pool but no accounting is given to either the banks or the countries of the details of any such changes. The limited group of high officials in the French Treasury who have knowledge of the amounts in the “operations accounts”, where these funds are invested; whether there is a profit on these investments; are prohibited from disclosing any of this information to the CFA banks or the central banks of the African states.

For a decision to be valid at the BEAC, it must be unanimously approved by all the members of the administrative council. At the Comoros Central Bank or BCC, at least five of the eight administrators must approve a decision. At all times, no decision can be approved without the French. France is, therefore, in a position to block any major decisions taken by these banks. So if a decision favoured by the Comorian representatives at the BCC does not tally

with French interests, the French administrators have the power to block it. The way these central banks function, therefore, legalise and perpetuate the direct intervention of France in the vertebral column of the CFA zone economies. Even to appoint the governor of the BEAC for instance, the candidacy is proposed by Gabon, but it must be approved by Paris which seeks to ensure that the governor is malleable and ready to dance to French tunes to the detriment of African economic interests.”viii

This makes it impossible for African members to regulate their own monetary policies. The most inefficient and wasteful countries are able to use the foreign reserves of the more prudent countries without any meaningful intervention by the wealthier and more successful countries.

The major problem with the CFA franc is that because of its pegging to a fixed rate to the Euro its value reflects the successes or failures of European monetary policies, not African realities. Now, in the wake of the global credit crunch there are more worrying changes. The principal worry is the state of the French economy and the pressures on the Euro to cope with the vast monetary and fiscal divergences among the 27 states and the impact of the sovereign debt crisis. The declining value of the African reserves, bound up in investments in a falling French stock market has diminished the ardour for French subsidies of development projects in such economic basket cases as Niger, Mali, Burkina Faso and others. France has shown itself unwilling to continue to finance the stationing in Africa of so many troops, including those wearing the blue berets of the United Nations.

If the Euro fails, breaks apart into two zones, or disappears in a mountain of defaults what happens to the francophone African states? Their money is tied up in the French Bourse, almost completely out of their control. They have no idea of their positions and are not confident that a decaying France will be able to financially maintain a par CFA which will be credible or reflect the value of African exports; the very nature of the original bargain. There are many African economists who are convinced that the French Treasury has been using their reserves as collateral on French long-term debt. If the Euro breaks up or declines dramatically, how will the Africans get their own money back?

The Move Towards Currency Unions

There have been moves to create an African currency union for a number of years. There are several types of currency union. There is the informal currency union, as in the South Pacific, where the

Cook Islands, Niue and the Pitcairn Islands all use the New Zealand dollar as their currency and Kiribati. Nauru and Tuvalu use the Australian dollar. These smaller islands get the advantage of having a convertible currency without the additional expenses associated with this. A more formal union is the Southern Africa Customs Union (SACU) in which five nations (Lesotho, Namibia, South Africa and Swaziland) have formed a customs union and use the South African Rand as their common currency. The more formal types of union are those of the CFA franc where there is internal harmonisation managed by the French Treasury.

However, there t=are two additional initiatives which are very important. The Economic Community of West African States (ECOWAS) is developing its own monetary union. Currently, the states within ECOWAS use their own currencies but have pledged to introduce a common currency within their own grouping, the West African Monetary Zone –WAMZ. These states (Ghana, Guinea, Nigeria, Sierra Leone, the Gambia, Capo Verde and Liberia) hope to introduce a new common currency, the ECO, to rival the CFA franc and, eventually to merge the ECO and the CFA franc into a single monetary unit for the region. The pace of these developments is very slow.

The first step towards the economic integration of West Africa was the establishment of the Economic Community of West African States (ECOWAS) in 1975. Under the ECOWAS treaty, it was envisaged that the 16 member-nations would form a common market. Subsequently, the heads of state and government adopted the ECOWAS Monetary Cooperation Program (EMCP) IN 1987. Under the initiative, it was envisaged that all the countries would come together to form a single monetary one by 2000, from the eight currencies in the sub-region, one of which is the CFA franc. The idea of a common currency by 2015 was initiated by the West African Monetary Zone, comprising six countries within the ECOWAS, in 2000 to promote economic integration and trade in the sub-region. But the West African states planning to adopt the Eco currency have largely failed to meet self-set primary criteria of a single digit inflation rate and reduction in budget deficit for the introduction of the currency, as the overall compliance with macroeconomic convergence criteria deteriorated.

Sanusi Lamido Sanusi, Governor of the Central Bank of Nigeria and Chairman of the Committee of Governors of Central Banks of the WAMZ, indicated that most member countries are on course in meeting the convergence criteria target date of 2015. The West African Monetary Institute based in Accra, Ghana is developing the new currency with the eventual goal of merging the Eco with the CFA franc, to give all of West and Central Africa a single, stable currency.

i Rasmussen Reports June 14, 2011

ii Ibid

iii Hugh Gusterson, Bulletin of American Scientists 10 March 2009

iv Ibidc

v See “How France lives off Francophone Africa via the CFA franc, Mamadou Koulibaly, “New African” 1/08

vi “We Want Our Money”, Ruth Tete, “New African” 1/08

vii “The Euro is bad news for the CFA”, Ruth Nabakwe, “New African” 7/02

viii CFA, the devil is in the details”, Ruth Nabakwe, “New African” 7/02

The second major currency union to be close to formation is the East African Monetary Union, joining Tanzania, Uganda and Kenya. There used to be an East African Union and an East African Shilling which was interchangeable in all three countries (or four if you count unincorporated Zanzibar) Now these nations are trying to reconstitute the East African Community and install a common currency. This is becoming a dawn out and convoluted process and mixed in with a wider initiative in Southern Africa.

Plans to adopt a single currency for the 15-member Southern African Development Community (SADC) by 2018 could be overtaken by a much broader regional single currency and customs project that would include two other trade blocs, SADC, the Common Market for East and Southern Africa (COMESA) and the East African Community are in talks aimed at setting up a single monetary union and a free trade area by 2016. When the SADC monetary union plan was mooted, 2016 was initially set as the target for a monetary union and a single currency by 2018. Currently, SADC has launched a regional payment integration system which facilitates electronic settlements between banks within the region. The regional payment system is widely seen as a forerunner towards the single currency initiative.

In addition to the East Africans, Zimbabwe, Madagascar, Seychelles, Mauritius, the DRC, Swaziland, Malawi and Zambia are also in COMESA along with Burundi, Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Libya, Rwanda, and Sudan.

Whatever the example it is clear that Africa is seeking to create customs union, free trade areas, and common monetary unions. These will develop at whatever pace is possible, given the diversities of the various stages of economic growth. However, the development of a West African monetary union is fast approaching. As it grows there will be a concomitant demand from the nations locked in the CFA franc zone for a release from its constraints. The decline of the French economy and the approaching failure of the Euro are very likely to trigger a mass defection from the CFA franc. Then France will have to give some kind of proper accounting to its erstwhile partners about all the money it has been hoarding, supposedly for their benefit. That should certainly be amusing. Perhaps that is why the Germans did not invite them to the Neuro.

NATO and Its Crisis

Dr. Gary K. Busch

A few days ago US Defence Secretary, Gates, made a speech which dispensed with the diplomatic niceties and told the truth about the imbalance of contribution and capabilities within the transatlantic military pact of NATO. This signals a major shift in European policy by the US and will have a profound impact on the European economies.

There is a lovely Russian word which describes the state of NATO;, kvastism. This is a word that is derived from the Russian (indeed pan-Slavic) word for tail; as in the tail of a dog. In its simplest form it can mean the "tail wagging the dog"; an alliance being led by its tail. However, Russian is a more subtle language as well. Its diminutive, kvastik, can mean something coming to the "tail end" of its life. In both senses of the word, kvastism is an appropriate epithet for NATO.

In his final address to his troops in New York, General George Washington, soon to be the first President of the United States, put forward an important tenet of American foreign policy when he said, "Beware entangling alliances." He was warning the fledging nation against becoming involved in the major European sport of internecine bickering and mutual destruction. This is a warning that resounds through the intervening two hundred and thirty-odd years since Washington's speech.

Europe was, is and forever will be a cockpit of petty nationalisms and jealousies where the concept of national sovereignty is important but is of recent origin. There is a popular fantasy in which people refer to European nations as if they have been around for a long time. This is patently untrue; the landmass has been there but the united organised sovereign nation state is of relatively recent origin. Much of what is now counted as Europe did not exist until the end of Napoleon's Grand Tour of the continent.

Holland and Belgium weren't established until the mid-1820s; Germany until Bismarck in the 1860s was a hotbed of petty princedoms; Italy didn't come into existence until the early 1870s. Most of what is now Eastern Europe and the Balkans was made up of small regional entities owned and operated by some more powerful local political entity. When Karl Marx and Friedrich Engels wrote, "workers have no country" they were not only writing rhetorically. For most workers in Europe this was a fact. They were occupied nations; sometimes by a foreign power; sometimes by an imposed twiglet of the Hapsburg-Hanoverian family trees. This included the waning days of the Holy Roman, Austro-Hungarian, Ottoman and Russian empires. These nations barely surfaced until after the First World War, only to be subsumed again in the maelstrom of World War II. These maxi and mini-states of Europe emerged from World War II as international basket cases. It wasn't until almost three years into the Marshall Plan that they were able to afford a foreign policy. Only Britain and Russia (the two nation states not to fall to Napoleon) and the rump state of France proceeded to their own political reorganisations unaided. These maintained some continuity with the past, even if this vision of the past was economically sustainable only through the exploitation of their foreign colonies.

The post-war nations of Eastern Europe defaulted to their original status as nations occupied by a powerful neighbour, the Soviet Union, until the early 1990s and Germany was not reunited until 1990.

And today in these reconstituted states of Europe there is little respite from the very tribalisms and divisions that have always plagued them. Europe has never resolved the questions raised by the Thirty Years' War. The ethnic splits that divide countries like Germany, Belgium, Ireland, Holland and others mirror their Catholic-Protestant schisms. The Balkans are divided at the margins of the Ottoman Empire where Muslims and Christians face each other across a great divide. In the Ukraine there is a split between the Christians of the Uniate and Orthodox churches. In Russia some of the earliest victims of state persecution were not aristocrats or anti-Communists; they were the "Old Believers" who were sent on internal exile along the uncharted reaches of the Yenisey and Lena Rivers because they used three fingers to cross themselves instead of two. Many of the Scandinavian and Czech immigrants left their countries because of religious fundamentalism.

It is wickedly ironic that the seat of European unity is installed in Brussels (a French-speaking enclave in a Flemish region) where language-ethnic riots are not infrequent and whose country operates a parallel ethnic track in every ministry.  For example, there is a Flemish-speaking foreign service and a French-speaking foreign service. Promotions, etc. are made by "track" and in strict proportions. There are similar parallel divisions in every government agency, ministry and many municipalities. On reflection, Belgium probably is a good mirror of European unity.

In 1949 it made some sense to create an alliance to preserve the unity of the wartime alliance in the face of the perceived Communist threat in Soviet-occupied areas of Eastern Europe and the outbreak of the Korean War. The unequal relationship between US military might and economic muscle and the pitiful remnants of the Western European armies and a "degraded" European infrastructure was tolerated by US planners because they knew that if a vacuum was left there were candidates ready to fill it. The goal, according to Lord Ismay, the first NATO Secretary General was "to keep the Russians out, the Americans in, and the Germans down".

The major battle in NATO over the years has been to convince the European NATO partners that the US was actually willing to stand behind its commitment to Europe; to risk the Mutually Assured Destruction of Boston, Chicago and New York for restraining a land incursion into Germany by the Soviet armies. This policy criterion has frequently thwarted proper military assessment and deployment. The US was forced to establish land-based Tomahawk Cruise sites across Europe in the face of a wave of European public protest at sites like Greenham Common in England because the European governments insisted that the US commit these to land sites in Europe. It was generally agreed that these missiles would be much more effective, secure and available for use if they were carried underwater on mobile submarine launching systems and as part of the Tactical Air Force. The Europeans fought against this at every step, as they were sure that their political masses required the visible presence of US troops and equipment.

NATO solved the problem of commitment by instituting a culture of planning.  With a clearly understood mission, NATO planners (composed of representatives from all the constituent nations except France from 1968 to 1995) analysed every possible contingency.  For every contingency, they generated a plan.  For every plan, they allocated forces.  For every force, NATO devised endless training exercises designed to make execution as automatic as possible.  This has been NATO's main achievement; they created a system of automated, conditioned responses that were to be executed so rapidly that participants did not have the time or opportunity to pause, reflect and potentially renege.

The planning and exercise process, quite apart from being necessary for military preparedness, was also an instrument that psychologically and operationally locked in the actors.  Under such circumstances, given the doctrine and the particular plan that applied, units in Fort Bragg, North Carolina, the Netherlands, and Sicily all went into motion.  In operational terms, the goal was to make the commitment of forces as thought- free as possible.  Even complex war fighting doctrines like Air-Land Battle, which foresaw a fluid and unpredictable battlefield, still contained highly routinised, automated procedures for the initiation of and response to conflict.  NATO's internal battles were referred to countless planning cells that packaged a basic strategic challenge into an array of automated responses. 

In many respects, scenario construction, contingency planning, war gaming, and repetitive exercises was the only thing holding NATO together, staving off the fear of a last minute double-cross. However, by 1992, the rock on which the church rested, the Soviet threat had largely disappeared or, like the smile on the Cheshire Cat, appeared only when required.  Without that threat, contingency planning collapsed.  War gaming is built on a foundation of agreed and tested assumptions.  Exercises become intellectual in nature, not preparatory, and derive from a set of predetermined responses to variable cues. As was seen but not learnt in the failures in Bosnia, NATO operates in a highly undefined set of circumstances.  Having debated the meaning of NATO ever since the collapse of communism, NATO suddenly found itself with a mission; one wholly unanticipated even despite the collapse of European planning in Bosnia. To react to the events in Kosovo NATO found it had no plans, no war games, no exercises and no one was on automatic pilot for any of the knee-jerk responses required.  Therefore the inevitable happened: everyone became wholly unreliable. This was a case of deja-vu.

In the early days of the war in Croatia and later Bosnia it was the Europeans who insisted on excluding the US (except financially) from its military and political planning. Egged on by Genscher's insistence that Croatia and Slovenia should be free, the leadership of Croatia (Tudjman and his Ustash cronies) was emboldened to declare its independence from the Yugoslav Federation based on territory that included many ethnic Serbs. These Serbs had already had a long experience with ethnic cleansing conducted by the black-shirted SS battalions of Croatian Ustashi of Ante Pavelic.  The Serbs needed no reminder of their welcome in an independent Croatia. They turned to Russia and asked for assistance. Russia and US politicians and military leaders discussed this amongst them and felt that a common resolution was possible. However, before anything was undertaken the Europeans in NATO vetoed this initiative. They reiterated that "Croatia is a European problem" and had to be dealt with by the Europeans if they were ever to maintain any credibility as a politico-military force.  Lord Carrington and David Owen were dispatched to bring to the Balkans their skills in diplomacy honed in the debacles of Rhodesia and Portadown. They were able to achieve what everyone expected and feared that they would achieve and soon it was the responsibility of the US and the Russians to bring the parties to table and establish the fragile Balkan peace despite the Europeans

Even after that spectacular misadventure, NATO decided to intervene in Kosovo. As in Croatia and Bosnia NATO's exquisite preplanning process with its branching logics and pre-negotiated solutions was not in place.  Rather, Yugoslavia required planning on the fly.  Basic strategic decisions had to be made in parallel with operational implementation and tactical deployment.  NATO was simply unable to cope with that because its strategic planning process assumed a dramatic separation in time between strategic planning and operational implementation.  NATO strategy has to be discussed at various levels in dozens of working groups, hammered out over years and locked into place.  In Kosovo there was no time for that planning and no time to generate the requisite political consensus. NATO agreed on a bombing plan and settled for paralysis in all other areas.

NATO planning and action requires consensus among its nation states and a willingness to suppress narrow national interests. This is a polite phrase that means that each country has limited political leeway within its domestic constituencies that permit a course of action that is tolerable. This is not the same for every country so NATO reflects the lowest common denominator of national tolerances. Because of their various histories and aspirations in the Balkans, commercial, political and military, some nations are more equal than others. Germany saw itself as a Balkan power with commercial and military ties to the Slovenes, Croats and the Bosnians. The British were determined to maintain the fiction that they were a ranking military power and had an autonomous strategic stance outside Europe and between the Europeans and the US in NATO. The French merely wanted to sell military equipment and to get the US to pay for the suppression of the Yugoslavs. The others thought that it was important as Europeans to show they had some independent military capability.  The amount of bombs, missiles and other tactical devices used in the first two weeks of the Kosovo campaign exceeded the total arsenal storage of the totality of the European Community. The amount spent per day on the bombing of Kosovo, including indirect costs, amounted to over $12.5 million. It would have been far cheaper to buy Serbia than to bomb it. NATO could have offered each Serb $100,000 a head plus moving costs and still saved money. Under NATO rules the US was obliged to pay two-thirds of these costs.

The notion of costs and contributions, highlighted by the European failure in Kosovo to match its budgets with its ambitions, is the root of the current problem. Europe, despite its elaborate plans for a European Defence Force, has refused or been unable to pay for the maintenance of a national military. Defence spending has dropped from an already low level by around 15% in the last ten years. This general statement masks the fact that the biggest cuts have been in the adequate provision of transport aircraft. Most of the transport of military personnel has had to be done by the US. Left on their own the Europeans would have to walk, paddle or catch cabs to the frontline.

This is not to say that the Europeans, especially those in the Common Market/EU didn’t make arrangements for a European Force. In the early 1950s, France, Germany, Italy and the Benelux countries made an attempt to integrate the militaries of mainland Western Europe, through the treaty establishing the European Defence Community (EDC). This scheme was vetoed by the French Gaullists and the French Communist Party. The Europeans tried again in 1954 with an amendment to the Treaty of Brussels. They succeeded in replacing the failed  by establishing the political Western European Union (WEU) out of the earlier established military Western Union Defence Organization. Out of the 27 EU member states, 21 are also members of NATO. Another 3 NATO members are EU Applicants and 1 is solely a member of the European Economic Area. In 1996, the Western European Union (WEU) agreed to create and implement a European Security and Defence Identity within NATO. After the passage of the Lisbon Treaty these functions were passed to the EU.

On 20 February 2009 the European Parliament voted in favour of the creation of Synchronized Armed Forces Europe (SAFE), directed by an EU directorate, with its own training standards and operational doctrine.  The EU is pushing for a unified European Defence Force, notionally within NATO but separate in terms of action. That is a polite way of saying the Europeans want an autonomous defence force but that the US should contribute two-thirds of the cost. In fact the US is now paying 74% of these costs.

The simple fact is that the Europeans do not fund their military as they have agreed. They have not paid their way in Afghanistan and the current operation in Libya is a joke. The Europeans (calling themselves NATO) have run out of ammunition, bombs and money. The US spent almost $1.5 billion in the first wave of attacks by the French and British. As Gates said in his speech, ““Despite more than 2 million troops in uniform – not counting the U.S. military – NATO has struggled, at times desperately, to sustain a deployment of 25,000 to 45,000 troops -- not just in boots on the ground, but in crucial support assets such as helicopters; transport aircraft; maintenance; intelligence, surveillance and reconnaissance; and much more.” He went on ““We have the spectacle of an air operations centre designed to handle more than 300 sorties a day struggling to launch about 150. Furthermore, the mightiest military alliance in history is only 11 weeks into an operation against a poorly armed regime in a sparsely populated country – yet many allies are beginning to run short of munitions, requiring the U.S., once more, to make up the difference.”

Congress, and the American people, understands that the Cold War is over. From whom are we protecting the Europeans, other than themselves? The US operates scores of military bases across Europe – for what? The US pays a small fortune in stationing aircraft abroad. Right now the US operates air bases in Europe at: Ankara AS, Araxos AB. Aviano AB, Bitburg AB. Comiso AB,  Decimomannu AB, Einsiedlerhof AS, Geilenkirchen AB, Ghedi AB, Hahn AB, Hellenkion AB. Incirlik AB,
Izmir AS, Iraklion AS. Keflavik NAS, Lajes Field, AZR, Lindsey AS, Morón AB, RAF Alconbury, R,,AF Fairford, RAF Lakenheath, RAF Mildenhall, RAF Molesworth, RAF Upwood, Ramstein AB,Rhein-Main AB, San Vito del Normanni AS, Sembach AB, Soesterberg AB, Spangdahlem AB, Stavanger AB, Zaragoza AB, Zweibrucken AB, Burgas AP, Mostar AB, Taszar AB,Tuzla AB. Those are just air bases.

This costs a small fortune for men, aircraft, repair facilities, communications, etc. Why? Some, of course, like Incirlik, are important to the US effort against its main enemy Al Qaida but most can be safely relocated. The weapons systems and equipment used by the Europeans are largely two generations behind. A good deal of modern warfare does not require pitched battles with lots of troops shooting each other. Unmanned aircraft, satellite pulses, electronic warfare are gradually replacing more conventional systems. The Europeans are not keeping up. They can’t even finish their fighter jets on time.  The many malfunctions on the French carrier, De Gaulle, have been partially rectified and it didn’t have to be towed to Libya but was able to make it under its own power this time.

Like it or not, the US is going through a period of severe austerity, with the defence budget being cut substantially. Troops are gradually being withdrawn from both Iraq and Afghanistan, but the b=need for a reduction in marginal expenses will certainly involve reducing the forward presence of American troops and equipment in Europe. The Europeans will have to start paying for their own defence. The austerity demands of the failing Euro and its bailouts do not leave a lot of funds available for this. So the Europeans will have to find a different way of protecting themselves. Perhaps they will declare, like Switzerland, their neutrality and cut back entirely.

This would be very good news to the various African countries in which the French, in particular, have been busy massacring civilians; as in the Ivory Coast.  French military cutbacks come too late for the dead of the Cameroons, Algeria, Rwanda and Abidjan, to name a few, but may inspire others seeking democracy to think they stand a better chance.