NATO costs to U.S. could skyrocket True bab for expansion likely to be more than taxpayers should bear


Even though the Senate is rushing toward a vote -- perhaps as early as tomorrow -- on whether to admit Poland, Hungary and the Czech Republic into NATO, it has ducked some tough questions about what this ambitious venture is going to cost U.S. taxpayers.

Recently, the Pentagon put out a laughably low estimate of the U.S. share of North Atlantic Treaty Organization expansion costs at just $400 million over 10 years. This figure conveniently excludes the enormous costs of helping Eastern and Central European nations upgrade their military forces. The Congressional Budget Office has put the cost between $14 billion and $125 billion over 15 years, with the United States paying up to $19 billion. And a report by the World Policy Institute suggests that the tab could reach $500 billion over the next 10.5 years, of which the U.S. share could be as much as $250 billion. The study documents more than $1.2 billion in U.S. government subsidies paid for NATO expansion in the past three years alone, more than three times what the Pentagon claims it will cost over the next decade.

The truth is that the costs of NATO expansion are open-ended. Will it stop at three new members or will it extend to cover nearly all of Eastern and Central Europe? Will Western Europe pay its share or will it follow French President Jacques Chirac, who has refused to increase his country's contribution by one dime? Will the goal of attaining "interoperability" among NATO forces involve carefully targeted spending on communications and infrastructure or will it serve as an excuse to peddle billions of dollars of high-tech armaments?

What about the cost to civil society? NATO requires that 3 percent of gross domestic product be spent on a member nation's armed forces. Are Eastern Europe's cash-strapped economies best served by urging them to spend billions of dollars modernizing their militaries?

One way to get a better handle on the cost of increasing NATO membership is to look at several big ticket items already in the federal budget that are designed to pay for NATO growth:

Defense Export Loan Guarantee Fund: This $15 billion taxpayer-backed fund was created by Congress at the urging of Lockheed Martin and other major weapons exporters in 1995. Eight Eastern and Central European countries are eligible for loans and the first commitment -- for $26 million worth of pilotless drones for Romania -- was finalized late last year.

Central European Defense Loan Fund: This newly created fund designed to support the transfer of U.S. weaponry to "creditworthy Central European and Baltic states for acquisition of NATO-compatible equipment," has received appropriations of $40 million to support loan commitments of $647 million.

Expansion of foreign military financing: The United States has budgeted $180 million in military aid to "prospective NATO members" for 1996-1998.

A closer look at these programs suggests that costs could skyrocket in years to come. First, U.S. military aid already extends far beyond NATO's first three possible new entrants to include 19 Eastern and Central European states and former Soviet republics. Aid to these countries is likely to increase dramatically as NATO expansion proceeds.

Another major cost stems from possible defaults on taxpayer-backed military loans.

Since 1990, $10 billion in U.S. military loans have been written off at taxpayer expense. Despite this dismal record, Lora Lumpe of the Federation of American Scientists reports that U.S. arms manufacturers are lobbying the Clinton administration to apply looser standards on credit ratings for the Pentagon's $15 billion arms sales loan fund. This could be a recipe for disaster.

Finally, U.S. defense contracts and their allies in military services are likely to drive up NATO expansion by pusing for high-tech arms sales. The Navy and Air Force recently offered low-cost leases of F-18 and F-16 fighters to the Czech Republic as a way to get Czech forces hooked on U.S. technology. Last April, former Lockheed Martin CEO Norman Augustine made a whirlwind tour of Eastern and Central Europe during which he alternated pitches for weapons sales with promises to fight for the "widest possible expansion" of NATO. And Lockheed Martin Vice President Bruce L. Jackson has been moonlighting as president of the U.S. Committee to Expand NATO. If the arms lobby is successful in helping the Clinton administration sell NATO expansion to Congress, it will have considerable influence in shaping its content to include more U.S. subsidies for expensive weapons systems.

Before voting on NATO expansion, the Senate should demand that the Clinton administration provide an honest accounting for the full costs of this initiative and who will pick up the tab. Moreover, the Senate should cap the U.S. share of expansion costs at a total of no more than $1 billion to $2 billion for grants, subsidized loans and weapons giveaways. Otherwise, U.S. taxpayers could find themselves on the hook for tens of billions of dollars in sudden costs to help Lockheed Martin and Boeing fatten their bottom lines by making subsidized weapons sales to Eastern and Central Europe.

Ralph DeGennaro is the executive director of Taxpayers for Common Sense. William D. Hartung is a senior research fellow at the World Policy Institute and the author of a report on the hidden costs of NATO expansion.

Pub Date: 3/08/98

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