NATO Enlargement
Reports on Albania and Croatia Respond to Senate Requirements, but Analysis of Financial Burdens Is Incomplete Gao ID: GAO-08-1165R September 22, 2008On April 2, 2008, the North Atlantic Treaty Organization (NATO) invited Albania and Croatia to begin accession talks for NATO membership. NATO wants new members to be democracies, have harmonious relations with neighboring countries, modernize and restructure their defense capabilities, protect civil liberties and human and minority rights, and have open market economies. The admission of new members requires ratification by two-thirds of the United States Senate. To ensure that Congress had sufficient information on the countries invited to join NATO, the Senate mandated in a 1999 resolution that the President provide Congress with information on countries seeking to join the alliance--before NATO made any decision on enlarging its membership. In particular, the President was required to assess how countries would further the principles of the North Atlantic Treaty, contribute to North Atlantic security, and affect U.S. national security interests. The President also was required to evaluate countries' eligibility for membership and estimate the military requirements and costs associated with a country's membership for both NATO and U.S. budgets. The President submitted this classified report on Albania and Croatia to Congress on March 28, 2008. Prior to signing any protocol to the North Atlantic Treaty on the accession of any country, the Senate mandated that the President provide Congress a classified and an unclassified report that provide updated information on the status of political, economic, defense, and related issues for the countries invited to join NATO in the recent round of enlargement discussions. In addition, these reports are to provide an assessment of the invited countries' likely impact on NATO's military effectiveness and an analysis of the ability of each invited country to fulfill the full range of financial burdens of NATO membership. The President submitted these reports on Albania and Croatia to Congress on June 20, 2008. The Senate also mandated that GAO review and assess these reports. To fulfill our mandate, we determined whether (1) the reports met the Senate's requirements, (2) the information in the reports was complete, and (3) the information in the reports was current. To address our objectives, we reviewed information from an array of reports and analyses from the U.S. government, NATO, and the countries invited to join NATO, and discussed supporting documentation and methodologies used to prepare the reports with officials of the Departments of Defense (DOD) and State (State). To address the first objective, we determined whether major issues in the mandates were addressed in the reports. To address whether information in the reports was complete, we assessed whether information in the President's reports concerning the aspirant countries was consistent with other U.S. government documents and data we collected from various sources, and whether key evidence that could affect the conclusions in the reports was included. To assess whether information in the reports was current, we assessed the supporting evidence to determine that it was dated within the past year and whether key events that have occurred that might alter the general information provided in the reports were included. This report addresses both the March and the June 2008 President's reports.
The President's March and June 2008 reports on NATO enlargement respond to the congressionally mandated requirements and address all the key elements contained in the resolution concerning Albania's and Croatia's accession to NATO membership. For example, the reports discuss how Albania and Croatia would further the principles of NATO and contribute to the security of the North Atlantic area. They also discuss country eligibility for membership, including political, economic, defense, budgetary, information security, and legal issues--all goals of NATO's Membership Action Plan (MAP). Similarly, the President's reports respond to mandated requirements for estimates of the potential impacts of new members on both NATO and U.S. costs, and on NATO's shared costs. The reports' information is generally complete and consistent with the data we collected from various sources, including agencies within the U.S. government and NATO. For example, the discussion of country eligibility for membership, including political, economic, defense, budgetary, information security, and legal issues and the status of their implementation is detailed and provides more information than reports submitted to Congress for previous rounds of NATO enlargement. However, we found that the report provides an incomplete explanation of why NATO lowered its estimate of certain enlargement costs for the two aspirants. We also found that the information concerning the countries' ability to fulfill the full range of financial burdens of NATO membership is incomplete. The June 2008 classified and unclassified reports provide little information concerning Albania's and Croatia's ability to meet the full range of the financial burdens of NATO membership and do not identify the methodology used to support the conclusions that Albania and Croatia should be able to meet their financial obligations. We raised similar issues in our May 2003 report on the previous round of NATO enlargement. Without a complete understanding of the aspirant countries' ability to meet their financial obligations, NATO cannot be assured that goals in other areas will be achieved, since many of the goals rely on financial resources for their successful implementation. In addition, a key U.S. intelligence assessment that we reviewed differs from some of the conclusions in the President's reports concerning Albania's and Croatia's ability to meet NATO financial obligations. Further discussion of this report is classified. We found that the information in the report and the supporting evidence are generally current. For example, most of the documents we reviewed that were used to support the report were dated within the last 12 months or were those most recently available. On the basis of our review of relevant documents, we did not identify any key events that were not addressed in the reports. In addition, according to DOD and State officials, no recent events occurred that could cast doubt over the reports' findings.
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Director: Team: Phone:GAO-08-1165R, NATO Enlargement: Reports on Albania and Croatia Respond to Senate Requirements, but Analysis of Financial Burdens Is Incomplete
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GAO-08-1165R:
United States Government Accountability Office:
Washington, DC 20548:
September 22, 2008:
Congressional Committees:
Subject: NATO Enlargement: Reports on Albania and Croatia Respond to
Senate Requirements, but Analysis of Financial Burdens Is Incomplete:
On April 2, 2008, the North Atlantic Treaty Organization (NATO) invited
Albania and Croatia to begin accession talks for NATO membership. NATO
wants new members to be democracies, have harmonious relations with
neighboring countries, modernize and restructure their defense
capabilities, protect civil liberties and human and minority rights,
and have open market economies. The admission of new members requires
ratification by two-thirds of the United States Senate. To ensure that
Congress had sufficient information on the countries invited to join
NATO, the Senate mandated in a 1999 resolution that the President
provide Congress with information on countries seeking to join the
alliance--before NATO made any decision on enlarging its membership.
[Footnote 1] In particular, the President was required to assess how
countries would further the principles of the North Atlantic Treaty,
contribute to North Atlantic security, and affect U.S. national
security interests. The President also was required to evaluate
countries' eligibility for membership and estimate the military
requirements and costs associated with a country's membership for both
NATO and U.S. budgets.[Footnote 2] The President submitted this
classified report on Albania and Croatia to Congress on March 28, 2008.
Prior to signing any protocol to the North Atlantic Treaty on the
accession of any country, the Senate mandated that the President
provide Congress a classified and an unclassified report that provide
updated information on the status of political, economic, defense, and
related issues for the countries invited to join NATO in the recent
round of enlargement discussions.[Footnote 3] In addition, these
reports are to provide an assessment of the invited countries' likely
impact on NATO's military effectiveness and an analysis of the ability
of each invited country to fulfill the full range of financial burdens
of NATO membership. The President submitted these reports on Albania
and Croatia to Congress on June 20, 2008.
The Senate also mandated that GAO review and assess these reports. To
fulfill our mandate, we determined whether (1) the reports met the
Senate's requirements, (2) the information in the reports was complete,
and (3) the information in the reports was current.
To address our objectives, we reviewed information from an array of
reports and analyses from the U.S. government, NATO, and the countries
invited to join NATO, and discussed supporting documentation and
methodologies used to prepare the reports with officials of the
Departments of Defense (DOD) and State (State). To address the first
objective, we determined whether major issues in the mandates were
addressed in the reports. To address whether information in the reports
was complete, we assessed whether information in the President's
reports concerning the aspirant countries was consistent with other
U.S. government documents and data we collected from various sources,
and whether key evidence that could affect the conclusions in the
reports was included. To assess whether information in the reports was
current, we assessed the supporting evidence to determine that it was
dated within the past year and whether key events that have occurred
that might alter the general information provided in the reports were
included. This report addresses both the March and the June 2008
President's reports.
We conducted this performance audit from June 2008 through September
2008 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
Results in Brief:
The President's March and June 2008 reports on NATO enlargement respond
to the congressionally mandated requirements and address all the key
elements contained in the resolution concerning Albania's and Croatia's
accession to NATO membership. For example, the reports discuss how
Albania and Croatia would further the principles of NATO and contribute
to the security of the North Atlantic area. They also discuss country
eligibility for membership, including political, economic, defense,
budgetary, information security, and legal issues--all goals of NATO's
Membership Action Plan (MAP).[Footnote 4] Similarly, the President's
reports respond to mandated requirements for estimates of the potential
impacts of new members on both NATO and U.S. costs, and on NATO's
shared costs.
The reports' information is generally complete and consistent with the
data we collected from various sources, including agencies within the
U.S. government and NATO. For example, the discussion of country
eligibility for membership, including political, economic, defense,
budgetary, information security, and legal issues and the status of
their implementation is detailed and provides more information than
reports submitted to Congress for previous rounds of NATO enlargement.
However, we found that the report provides an incomplete explanation of
why NATO lowered its estimate of certain enlargement costs for the two
aspirants. We also found that the information concerning the countries'
ability to fulfill the full range of financial burdens of NATO
membership is incomplete. The June 2008 classified and unclassified
reports provide little information concerning Albania's and Croatia's
ability to meet the full range of the financial burdens of NATO
membership and do not identify the methodology used to support the
conclusions that Albania and Croatia should be able to meet their
financial obligations. We raised similar issues in our May 2003 report
on the previous round of NATO enlargement.[Footnote 5] Without a
complete understanding of the aspirant countries' ability to meet their
financial obligations, NATO cannot be assured that goals in other areas
will be achieved, since many of the goals rely on financial resources
for their successful implementation. In addition, a key U.S.
intelligence assessment that we reviewed differs from some of the
conclusions in the President's reports concerning Albania's and
Croatia's ability to meet NATO financial obligations. Further
discussion of this report is classified.
We found that the information in the report and the supporting evidence
are generally current. For example, most of the documents we reviewed
that were used to support the report were dated within the last 12
months or were those most recently available. On the basis of our
review of relevant documents, we did not identify any key events that
were not addressed in the reports. In addition, according to DOD and
State officials, no recent events occurred that could cast doubt over
the reports' findings.
We are recommending that for future NATO aspirants, the Secretary of
Defense, in consultation with the Secretary of State, provide more
complete information on the true costs of NATO enlargement. Such
information would include the full range of the financial burdens of
NATO membership for each country invited to join NATO in the future,
each country's ability to assume those burdens, and the methodology
used to reach conclusions on this issue in the President's report, with
explicit identification of the known and unknown costs involved.
Background:
The North Atlantic Treaty was signed on April 4, 1949, by 12 European
and North American countries to provide collective defense against the
emerging threat that the Soviet Union posed to the democracies of
Western Europe. Since its inception, the alliance's key objective has
been to achieve a lasting peace in the North Atlantic area that is
based on the common values of democracy, the rule of law, and
individual liberty. Article 10 of the treaty permits accession of
additional European states if they are in a position to further the
treaty's principles and contribute to North Atlantic security. While
members must unanimously agree to any new country's accession, the
treaty contains no explicit criteria that a country must meet to join
the alliance. NATO's invitations to countries to join the alliance are
political decisions based on the unanimous agreement of members.
At the 1999 summit meeting in Washington, D.C., NATO promulgated, among
other things, the Membership Action Plan, to provide guidance and
counseling to other NATO aspirants to facilitate their preparations for
possible membership. The plan sets forth defense, budgetary,
information security, legal, political, and economic goals for
countries to work toward to enhance their readiness for membership.
Essentially, NATO wants countries that are seeking to join the alliance
to (1) be democracies that are based on the rule of law; (2) have
harmonious relations with neighboring countries and settle
international disputes peacefully; (3) provide and protect civil
liberties, human rights, and minority rights; and (4) have an open
market economy. In addition, NATO wants countries to modernize and
restructure their defense capabilities to be interoperable with NATO
and therefore be able to contribute to NATO operations. To reach that
goal, NATO would like countries to spend at least the equivalent of 2
percent of their gross domestic product (GDP) on defense development.
Countries also need to implement NATO requirements for handling and
securing NATO classified information and to be free from legal barriers
that would prevent a country from deploying forces abroad or hosting
foreign troops on their territory. Each country participating in the
Membership Action Plan develops an annual plan of actions that it will
pursue to achieve those goals. NATO reviews the plans and progress
implementing them and provides annual feedback to each country.
Since its inception, NATO has enlarged its membership five times as
changing political and strategic circumstances have warranted. The
first three occasions were linked to confrontation with the Communist
bloc, particularly the Soviet Union, and were taken to meet pressing
strategic and security needs. Turkey and Greece joined NATO in 1952 for
strategic reasons, permitting NATO to shore up its southern flank to
forestall Communist military action in Europe at the height of the
Korean War. West Germany joined the alliance in 1955 after agreeing to
maintain extensive NATO forces on its territory and to place its
national army within NATO's integrated command structure. With Spain's
membership in 1982, NATO gained better access to Spain's air and naval
bases, while the newly democratized nation improved its chances of
joining the European Economic Community.
A significantly different strategic environment marked the fourth and
fifth enlargements. With the collapse of the Soviet Union, NATO's goal
was to extend stability eastward. In 1994, NATO committed to enlarging
its membership to include the newly democratic states of the former
Communist bloc. As a result, Poland, Hungary, and the Czech Republic
joined the alliance in 1999. At its summit meeting in November 2002 in
Prague, NATO invited 7 additional countries to join as part of the
fifth enlargement. Bulgaria, Estonia, Latvia, Lithuania, Romania,
Slovakia, and Slovenia became members in March 2004. On April 2, 2008,
Albania and Croatia were invited to begin accession talks with NATO,
marking the start of the sixth enlargement. Figure 1 shows the two new
invited countries and the current European members of NATO.
Figure 1: Countries Invited to Join NATO and Current European NATO
Members:
[Refer to PDF for image]
This figure is a map of Europe depicting the following data:
European NATO members:
Belgium:
Bulgaria:
Czech Republic:
Denmark:
Estonia:
France:
Germany:
Greece:
Hungary:
Iceland:
Italy:
Latvia:
Lithuania:
Luxembourg:
Netherlands:
Norway:
Poland:
Portugal:
Romania:
Slovakia:
Slovenia:
Spain:
Turkey:
United Kingdom:
Countries invited to join NATO:
Albania:
Croatia:
Source: GAO.
[End of figure]
President's Reports Respond to Mandate Requirements:
The President's March and June 2008 reports respond to the Senate's
requirements for information on the two countries seeking NATO
membership. The March 2008 report, submitted before the commencement of
accession talks with Albania and Croatia, responds to the requirements
for information identified in the congressional mandate. The June 2008
report updates the information in the March 2008 report and responds to
additional information requirements concerning the aspirant countries'
ability to meet the full range of the financial burdens of NATO
membership and the aspirants' likely impact upon the military
effectiveness of NATO.
The March 2008 report responds to the five requirements in the Senate's
mandate. The five requirements include assessing (1) how countries
would further the principles of the North Atlantic Treaty and
contribute to North Atlantic security, (2) countries' eligibility for
membership based on the principles and criteria identified by NATO and
the United States, (3) how countries would affect U.S. national
security interests, (4) the common-funded military requirements and
costs associated with integrating the countries into NATO and the
impact on NATO's costs and members' shares of those costs, and (5) the
impact on U.S. defense and other budgets of integrating the country
into NATO.
The President's June 2008 report on NATO enlargement also responds to
Senate requirements. These requirements are to (1) update the
information contained in the March 2008 report and (2) provide an
analysis of the countries' ability to meet the full range of financial
burdens of NATO membership, and the likely impact upon the military
effectiveness of NATO.
Information in the President's Reports Is Generally Complete but Lacks
Detail on Financial Burdens:
The information in the two President's reports is generally complete
and consistent with the data we collected from various sources,
including agencies within the U.S. government and NATO. The discussion
of country eligibility for membership, including political, economic,
defense, budgetary, information security, and legal issues and the
status of their implementation is detailed and provides more
information than reports submitted to Congress for previous rounds of
NATO enlargement. However, we found that the report provides an
incomplete explanation of why NATO lowered its estimate of certain
enlargement costs for the two aspirants. We also found that the
information in the June 2008 report concerning the countries' ability
to fulfill the full range of financial burdens of NATO membership lacks
the detail needed to facilitate an understanding of how the report
reached its conclusion.
March 2008 Report's Information Is Generally Complete:
Information in the March 2008 President's report is generally complete.
In addition to providing detailed information on the status of each
aspirant under each required element, the report discusses challenges,
progress, and future plans to address the elements. However, in
response to the requirement to provide an analysis of the common-funded
military requirements and costs associated with integrating the
aspirant countries into NATO (requirement 4), we found that the report
provides an incomplete explanation for why NATO lowered its estimate of
certain enlargement costs for the two aspirants.
Requirement 1: How a Country Would Further the Principles of the North
Atlantic Treaty and Contribute to North Atlantic Security:
To assess how countries would further the principles of the North
Atlantic Treaty and contribute to North Atlantic security, the
President's March 2008 report provides a broad discussion of the
countries' support of NATO principles, such as democracy, individual
liberty, and the rule of law, and provides some examples of Albania's
and Croatia's achievements in this area. For example, Albania remains
committed to good neighborly relations and regional cooperation with
its neighbors and has continued to be a steadfast ally in the War on
Terror, offering substantial troop contributions to both Iraq and
Afghanistan, according to the report. The report states that Croatia
respects and promotes the basic principles embodied in the North
Atlantic Treaty. It has a stable, multiparty, democratic political
system characterized by regular elections and a free and vibrant press.
Croatian armed forces are under civilian control. In discussing
countries' potential impacts on North Atlantic security, the report
describes countries' contributions to regional peace and stability--in
particular, the ways in which Albania and Croatia address issues with
neighboring countries and enhance regional cooperation. For example,
Albania is a member of a Black Sea economic cooperation organization,
which promotes economic liberty, cooperation, and trade development.
Croatia enjoys good relations with neighboring countries and was
elected to a nonpermanent seat in the United Nations Security Council
during the 2008 and 2009 period. To address the implications of
countries' membership for U.S. security, the President's report
provides a detailed discussion of the contributions that countries have
made and continue to make to NATO operations in Europe's Balkan region
and their cooperation and assistance in the war on terrorism.
Requirement 2: Country's Eligibility for NATO Membership Based on the
Principles and Criteria Identified by NATO and the United States:
Most of the March 2008 President's report addresses the second
information requirement of the mandate: Albania's and Croatia's
eligibility for NATO membership based on the principles identified by
NATO and criteria identified by the United States. The President's
report presents a detailed discussion of the political, economic,
defense, budgetary, information security, and legal goals that are part
of each country's eligibility for membership. These goals emanate from
NATO's Membership Action Plan. The report includes more detail on
issues concerning membership eligibility than the reports submitted to
Congress in 2002 and 2003, during the previous round of NATO
enlargement.[Footnote 6] In addition to providing the status of each
MAP category, the report identifies the challenges faced by Albania and
Croatia to meet these goals and their plans to correct identified
challenges. For example, the report notes that corruption in Albania
remains a problem but that the government has made additional arrests
of high-level public officials and is making progress on convictions.
The political and economic goals addressed in NATO's MAP cover a broad
spectrum, ranging from the implementation of democratic institutions,
free and fair elections, the rule of law, judicial independence, and
civil liberties to peaceful relations with bordering countries,
peaceful settlement of international disputes, and protection of human
rights and minority rights. The economic area discusses the status of
each country's economy, including economic growth. As in our 2002
report, we are providing additional information that Congress may find
useful on economic issues and the two aspirants. Specifically, this
information is a comparison of measures of economic freedom for NATO
aspirants, which is not contained in the President's reports. See
appendix I for an updated comparison of Albania's and Croatia's
economies compared with those of other NATO countries.
Discussion of defense issues is extensive and describes Albania's and
Croatia's achievements in each of five capability areas: deployability
and mobility; sustainability and logistics; command and control;
effective engagement; and survivability of forces and infrastructure.
The report's discussion of budgetary issues focuses on the countries'
commitments to defense spending as a percentage of gross domestic
product, and defense procurement. Discussion of information security
and legal issues focuses on the extent to which each country has met or
achieved NATO requirements. For information security, the report
assesses the extent to which Albania and Croatia each has implemented
NATO requirements for personnel screening and the handling and storage
of classified documents. Regarding legal issues, the report assesses
whether a country's constitution and/or laws provide any barriers to
the deployment of the country's troops abroad in support of NATO
operations, and discusses certain other legal issues.
Requirement 3: Potential Effect of Albania's and Croatia's NATO
Membership on the National Security Interests of the United States:
The President's report provides generally complete information on
Albania's and Croatia's effect on U.S. national security interests by
focusing primarily on the aspirant countries' participation in NATO-led
and coalition operations within the region and outside of it. The
report speculates on Albania's and Croatia's continued capability to
provide support to coalition operations. For example, the report stated
that Albania is building its niche military capabilities and is on its
way to being interoperable with NATO forces. It stated that Croatia has
demonstrated its willingness to contribute to common defense and
security efforts and its membership in NATO would strengthen stability
and security in the Balkan region.
Requirement 4: An Analysis of the Common-Funded Military Requirements
and Costs Associated with Integrating the Countries into NATO, and the
Impact of Enlargement on NATO's Costs and Members' Shares of Those
Costs:
The President's report contains an incomplete analysis of the common-
funded military requirements and costs associated with integrating the
aspirant countries into NATO. NATO estimates the common-funded
enlargement costs for Albania and Croatia at $60 million each over a
period of 10 years or more post-accession. This is nearly half the
estimate for a small aspirant country used during the previous round of
enlargement. The President's report does not, however, provide an
explicit explanation of how NATO reached its conclusion except to state
that the decision to reduce the cost estimate was based on experience
from the 2004 round of enlargement. Providing a fuller explanation of
how NATO arrived at these cost figures would be useful, particularly in
light of the uncertainties associated with the condition and capability
of defense facilities in Albania and Croatia, as identified in the
report. These uncertainties include the condition and capability of
command, control, and communications networks, reception facilities,
and air defense systems.
The report offers a generally complete explanation of the impact of
enlargement on NATO's costs and members' shares of those costs. In its
calculations, the report assumes that given the relatively modest
estimated costs of enlargement for Albania and Croatia, these costs
would be funded largely within future common-funded budget ceilings.
The report does not, however, explain how it determined that Albania's
and Croatia's enlargement costs will be "modest," particularly after
identifying uncertainties associated with defense facilities and
installations in these two countries. The report projects that any
increases to the NATO Security Investment Program or Military Budget
attributable to this round of enlargement would be minimal. On the
basis of Albania's and Croatia's projected cost shares, the report
states that the U.S. cost share for each of the military common budgets
would be reduced by approximately 0.08 percent.
Requirement 5: Impact on U.S. Defense and Other Budgets of Integrating
Albania and Croatia into NATO:
The President's report contains a generally complete discussion of the
impact on the U.S. defense budget and other U.S. budgets of integrating
Albania and Croatia into NATO, and the information provided generally
supports the conclusions presented. According to the report, the costs
can be accommodated within the likely future ceilings for the NATO
Security Investment Program budget through a reordering of project
priorities and extending the schedules for other projects. As a result,
the report concludes that there will be minimal impact on DOD budget
elements that provide the U.S. contribution to the NATO Security
Investment Program and the Military Budget. For NATO's Civil Budget,
the report estimates that in light of the smaller number and size of
the current aspirants, the addition of Albania and Croatia will result
in only a small increase in the Civil Budget and possibly in
construction costs for the new NATO headquarters building. Any increase
would be partially offset by the new members' contribution to the Civil
Budget and to the construction project.
June 2008 Report Information Is Generally Complete but Lacks Details on
Financial Burdens:
The information in the President's June 2008 report on NATO enlargement
is generally complete. As required, the report updates the information
contained in the March 2008 report. The report then provides an
analysis of the countries' ability to meet the full range of financial
burdens of NATO membership, and the likely impact upon the military
effectiveness of NATO. However, we found that the information and
analysis concerning the countries' ability to fulfill the full range of
financial burdens of NATO membership are incomplete. The report does
not discuss the methodology used to reach conclusions about the
countries' ability to meet financial obligations and does not include
some costs. Without a full understanding of the aspirant countries'
ability to meet their financial obligations, NATO cannot be assured
that goals in other areas will be achieved because many of these goals
rely on financial resources for their successful implementation. In
addition, a key U.S. government information source differs from some of
the conclusions in the President's reports concerning Albania's and
Croatia's ability to meet NATO financial obligations.
Aspirant Countries' Ability to Meet the Full Range of Financial Burdens
of NATO Membership:
The June 2008 classified and unclassified reports provide incomplete
information on Albania's and Croatia's ability to meet the full range
of the financial burdens of NATO membership. The discussion in the
reports is limited to identifying the countries' common-funded budget
cost share and their 2008 defense budgets.[Footnote 7] On the basis of
this information on the two governments' commitment to meet these
costs, and the current rate of economic growth in both countries, the
President's reports conclude that Albania and Croatia should be able to
meet their financial obligations to NATO. The reports do not identify
the methodology used to support the conclusions that Albania and
Croatia should be able to meet their financial obligations. Without
such a discussion of the methodology used, it is difficult to
understand how the conclusions were derived.
In addition, the President's reports do not discuss all the costs
associated with NATO membership. For example, becoming a NATO member
also entails the cost of supporting country representation at NATO's
facilities, such as its civilian and military headquarters in Belgium
and its command posts in Europe, as identified in GAO's 2003 report on
NATO enlargement.[Footnote 8] As we reported, officials of the aspirant
countries invited to join NATO during the previous round of enlargement
stated that the costs of establishing and maintaining country
representation at NATO facilities are part of the costs of NATO
membership. According to these officials, costs could vary between
under 1 percent to as much as 2 percent of a country's annual defense
budget. For countries with relatively small GDPs, this commitment of
personnel and resources could be significant. By not discussing all of
the costs associated with NATO membership, the reports do not provide
comprehensive support for their conclusions on this issue.
In addition to not reporting the costs of country representation at
NATO facilities, the reports also did not identify the costs of NATO
membership as a percentage of the countries' total defense budgets. As
discussed in our previous report on enlargement, the President's
reports are not required to include this information, but these data
would have provided useful information about the level of demand these
costs will place on a country's total allocation of funds for defense,
and hence its ability to fulfill the full range of NATO financial
obligations.
Finally, a U.S. intelligence assessment that we reviewed differed with
some of the conclusions identified in the President's report. Further
discussion of this report is classified.
Impact on the Military Effectiveness of NATO:
We found that the information and description of the methodology for
assessing the likely impact of Albania and Croatia on NATO's military
effectiveness were generally complete. The methodology laid out in the
classified and unclassified reports assessed the soundness and
feasibility of each country's defense reform plan, each country's
support of U.S. and allied actions through contributions to U.S. and
NATO military operations, and the ability of each country to contribute
specialized military capabilities to NATO once it becomes a member. The
information provided supports the reports' conclusions about the likely
impact of these countries' membership on NATO's military effectiveness.
The discussion of defense reform plans provides an understanding of the
status of the countries' defense modernization efforts, their degree of
military preparedness, and the extent to which NATO may need to assist
the countries in accomplishing certain tasks. For example, the report
points out that both Albania and Croatia have transformed their
militaries from primarily territorial-based forces to militaries
capable of deploying to Alliance and coalition operations and that the
United States and NATO have had numerous opportunities to assist
Albania and Croatia in developing and implementing their defense reform
plans. Identifying examples of how Albania and Croatia have
participated in or contributed to NATO or other multilateral defense
operations demonstrates how they can be expected to participate in NATO
operations as members of the alliance. Determining what kinds of
specialized military capabilities the aspirants could provide to NATO
illustrates how they will enhance NATO's preparations for future
missions.
Information in the Reports Generally Is Current:
We found that the information in the reports and the supporting
evidence is generally current. For example, documents used to support
the report were generally dated within the last 12 months or were those
most recently available. Further, based on our review of documents and
discussions with DOD and State officials, there were no recent events
that might cast doubt over the report's findings.
Conclusion:
The President's reports responded to the Senate's requirements,
providing information that was generally complete and current on each
of the two aspirants invited to join NATO. While the discussion of
country eligibility for membership is detailed and provides more
information than reports submitted to Congress for previous rounds of
NATO enlargement, we found that the information and methodology
concerning the full range of the financial burdens of NATO membership,
and the countries' ability to assume those burdens, was incomplete. We
raised similar issues in our May 2003 report on NATO enlargement, but
the President's 2008 reports do not address these issues. Without a
more complete assessment of the financial burdens of NATO membership
for Albania and Croatia, and their ability to assume those burdens,
Congress would not have a fully accurate picture of the true cost of
NATO enlargement.
Recommendation for Executive Action:
To provide Congress with a complete picture of the cost of NATO
enlargement, we recommend that the Secretary of Defense, in
consultation with the Secretary of State, provide more complete
information on the financial burdens of NATO enlargement for the
President's reports to Congress. The needed information would include
the full range of the financial burdens of NATO membership for each
country invited to join in the future, each country's ability to assume
those burdens, and the methodology used to reach conclusions on this
issue in the President's report, with explicit identification of the
known and unknown costs involved. Given the short time frames for
congressional action on Albania and Croatia, we would not expect such
information to be provided for Albania and Croatia, but would expect
that the Secretary implement our recommendation for all future NATO
aspirant countries.
Agency Comments and Our Evaluation:
We provided a copy of this report to DOD and State for comment. DOD
officials responded orally that DOD concurred with the recommendation.
They also provided additional information and documents on Albania's
and Croatia's ability to meet financial obligations that were not
available at the time the President's reports were drafted. DOD
officials said that they would add a more detailed discussion of the
financial burdens of NATO membership for each country invited to join
in the future. This would include more explicitly identifying both
known and unknown costs and the methodology used to reach the report's
conclusions. We modified the recommendation slightly to reflect DOD's
comments. State generally concurred with the report's findings and
conclusions but had no comments on the recommendation.
Scope and Methodology:
We assessed the March and June 2008 classified President's reports and
the June 2008 unclassified report and determined whether they addressed
each of the mandated requirements. We assessed the completeness of the
information by identifying whether all the major issues in the mandate
were addressed, information in the President's reports and other U.S.
government source documents were consistent, and key evidence that
could affect the conclusions in the reports was included. However, due
to our time frames, we did not compare the information with that
contained in non-U.S. government sources. For the financial
information, in our 2003 report, we determined whether the methodology
and analytical criteria were clearly and fully described and whether
the methodology provided a range of information that supported the
conclusions.
To assess the currency of the President's reports, we determined
whether the supporting evidence was current and whether any recent
events cast doubt over the findings. For the purpose of this report, we
defined current information as being from documents dated within the
past 12 months or those most recently available. As part of our
assessment, we also determined whether the President's reports
addressed the recommendations that GAO made in its May 2003 report on
NATO enlargement, and whether the unclassified report was generally
consistent with the findings and conclusions identified in the
classified reports.
We relied primarily on source documents from U.S. government agencies,
including:
* the State Department's (State) country background reports and annual
reports assessing human rights practices, religious freedom, and
trafficking in persons;
* State's reports and cable traffic concerning the aspirant countries;
* defense reform assessments prepared by the Department of Defense
(DOD);
* NATO documents concerning the aspirant countries' progress in meeting
the goals identified in NATO's Membership Action Plan;
* country background reports from the Congressional Research Service;
and:
* assessments and reports from the U.S. intelligence community.
We also reviewed reports from Amnesty International, Freedom House, and
Human Rights Watch, and statistics from the Fraser Institute's and the
Heritage Foundation and The Wall Street Journal's (Heritage Foundation/
The Wall Street Journal) annual assessments of economic freedom. To
assess the reliability of the statistical indexes in the Heritage
Foundation/The Wall Street Journal and Fraser Institute's assessments,
we reviewed the methodologies used to create them, and compared the
indexes against each other. We determined that the indexes are useful
tools for describing the relative levels of economic freedom for the
nations included in them.
We conducted this performance audit from June 2008 through September
2008 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
We are sending this report to interested congressional committees and
to the Secretaries of Defense and State. We will also make copies
available to other interested parties on request. In addition, the
report will be available at no charge on the GAO Web site at
[hyperlink, http://www.gao.gov].
Please contact me at (202) 512-8979 if you or your staff has any
questions concerning this report. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last
page of this report. Key contributors to this report include Jeffrey D.
Phillips, M. Elizabeth Guran, Gezahegne Bekele, Lynn A. Cothern, Martin
H. De Alteriis, Ernie E. Jackson, and Berel Spivack.
Signed by:
Joseph A. Christoff:
Director, International Affairs and Trade:
Enclosure:
List of Congressional Committees:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Joseph R. Biden, Jr.
Chairman:
The Honorable Richard Lugar:
Ranking Member:
Committee on Foreign Relations:
United States Senate:
The Honorable Patrick J. Leahy:
Chairman:
The Honorable Judd Gregg:
Ranking Member:
Committee on Appropriations:
United States Senate:
The Honorable Ike Skelton:
Chairman:
The Honorable Duncan Hunter:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable Howard L. Berman:
Chairman:
The Honorable Ileana Ros-Lehtinen:
Ranking Member:
Committee on Foreign Affairs:
House of Representatives:
The Honorable Nita M. Lowey:
Chairman:
The Honorable Frank R. Wolf:
Ranking Member:
Committee on Appropriations:
House of Representatives:
Enclosure:
Independent Assessments of Economic Development:
Independent Assessments of Economic Development: Two Studies Rate
Economic Freedom:
One of the goals of NATO's Membership Action Plan is the commitment to
promote stability through economic liberty (freedom). Currently, there
are two studies that produce numerical measures of economic freedom--
the Fraser Institute's 2007 Economic Freedom of the World report, which
covers 141 countries for the year 2005, and the Heritage Foundation/The
Wall Street Journal's 2008 report, Index of Economic Freedom, which
covers 162 countries generally for the year ending mid-2007. [Footnote
9] Both indexes are revised annually and are based on numerous measures
or indicators that are grouped together into areas of economic freedom.
To assess the reliability of the indexes, we reviewed the methodologies
used to create them, and compared the indexes against each other. We
determined that the indexes are useful tools for describing the
relative levels of economic freedom for the nations included in them.
To measure economic freedom, the Fraser Index studied 23 factors--some
of which include multiple components--that fall into five categories:
[Footnote 10] (1) size of government; (2) legal structure and security
of property rights; (3) access to sound money; (4) freedom to trade
internationally; and (5) regulation of credit, labor, and business.
Each country's overall score for economic freedom is based on the
average of its scores in each of these five areas. Scores range from 0
to 10, with 10 the highest degree of economic freedom.
To measure economic freedom, the Heritage Foundation/The Wall Street
Journal index studied numerous economic variables that fall into 10
broad categories of economic freedom: [Footnote 11] (1) business
freedom, (2) trade freedom, (3) government size, (4) monetary freedom,
(5) investment freedom, (6) financial freedom, (7) fiscal freedom, (8)
property rights, (9) freedom from corruption, and (10) labor freedom.
Each country's overall score for economic freedom is based on the
average of its scores in each of these 10 areas. The index scores
countries from 0 to 100, with 100 indicating an assessment of "most
free."
Figure 2 presents the ratings of countries by the Fraser index and the
Heritage Foundation/The Wall Street Journal index for the NATO
applicants Albania and Croatia, each of the 10 newer members, as well
as each of the 16 older members. The more a country's location is in
the upper right of the graph, the higher its ratings of economic
freedom. For example, considered together, the two indexes rate the
United States followed by Canada then the United Kingdom as having the
most economic freedom and they appear farthest toward the upper right.
Since all of the countries we are concerned with scored between 5 and 9
on the Fraser index and 50 and 90 on the Heritage Foundation/The Wall
Street Journal's index, we limited the graph to this region.
Both Albania and Croatia have low levels of economic freedom compared
to most NATO members. Economic freedom in Albania is rated lower than
all NATO members by the Fraser index but slightly greater than or equal
to 7 NATO members according to the Heritage Foundation/The Wall Street
Journal's index. Economic freedom in Croatia is rated slightly greater
than or equal to those of 3 NATO members, according to the Fraser
index, but is lower than all NATO members according to the Heritage
Foundation/The Wall Street Journal's index.
Figure 2: Indexes of Economic Freedom for NATO Members and Countries
Seeking NATO Membership:
[Refer to PDF for image]
Old members:
Country: Turkey;
The Heritage/The Wall Street Journal Index: 60.8;
Fraser Index: 6.2.
Country: Greece;
The Heritage/The Wall Street Journal Index: 60.1;
Fraser Index: 6.9.
Country: Italy;
The Heritage/The Wall Street Journal Index: 62.5;
Fraser Index: 7.
Country: Portugal;
The Heritage/The Wall Street Journal Index: 64.3;
Fraser Index: 7.2.
Country: France;
The Heritage/The Wall Street Journal Index: 65.4;
Fraser Index: 7.
Country: Norway;
The Heritage/The Wall Street Journal Index: 69;
Fraser Index: 7.5.
Country: Spain;
The Heritage/The Wall Street Journal Index: 69.7;
Fraser Index: 7.1.
Country: Germany;
The Heritage/The Wall Street Journal Index: 71.2;
Fraser Index: 7.6.
Country: Belgium;
The Heritage/The Wall Street Journal Index: 71.5;
Fraser Index: 7.2
Country: Iceland;
The Heritage/The Wall Street Journal Index: 76.5;
Fraser Index: 7.8.
Country: Netherlands;
The Heritage/The Wall Street Journal Index: 76.8;
Fraser Index: 7.7.
Country: Denmark;
The Heritage/The Wall Street Journal Index: 79.2;
Fraser Index: 7.7.
Country: United Kingdom;
The Heritage/The Wall Street Journal Index: 79.5;
Fraser Index: 8.1.
Country: Canada;
The Heritage/The Wall Street Journal Index: 80.2;
Fraser Index: 8.1.
Country: United States;
The Heritage/The Wall Street Journal Index: 80.6;
Fraser Index: 8.1.
New members:
Country: Poland;
The Heritage/The Wall Street Journal Index: 59.5;
Fraser Index: 6.9.
Country: Slovenia;
The Heritage/The Wall Street Journal Index: 60.6;
Fraser Index: 6.2.
Country: Romania;
The Heritage/The Wall Street Journal Index: 61.5;
Fraser Index: 6.4.
Country: Bulgaria;
The Heritage/The Wall Street Journal Index: 62.9;
Fraser Index: 6.9.
Country: Czech Republic;
The Heritage/The Wall Street Journal Index: 68.5;
Fraser Index: 7.
Country: Slovakia;
The Heritage/The Wall Street Journal Index: 68.7;
Fraser Index: 7.3.
Country: Latvia;
The Heritage/The Wall Street Journal Index: 68.3;
Fraser Index: 7.5.
Country: Hungary;
The Heritage/The Wall Street Journal Index: 67.2;
Fraser Index: 7.5.
Country: Lithuania;
The Heritage/The Wall Street Journal Index: 70.8;
Fraser Index: 7.5.
Country: Luxembourg;
The Heritage/The Wall Street Journal Index: 75.2;
Fraser Index: 7.8.
Country: Estonia;
The Heritage/The Wall Street Journal Index: 77.8;
Fraser Index: 8.
2008 applicants:
Country: Croatia;
The Heritage/The Wall Street Journal Index: 54.6;
Fraser Index: 6.4.
Country: Albania;
The Heritage/The Wall Street Journal Index: 63.3;
Fraser Index: 6.1.
Source: The Heritage Foundation and The Wall Street Journal, and the
Fraser Institute.
[End of figure]
[End of section]
Footnotes:
[1] Resolution of Ratification to the Protocols to the North Atlantic
Treaty of 1949 on the accession of Poland, Hungary, and the Czech
Republic, 144 Cong. Rec. S4217-20, 1998.
[2] Section 3(2)(E)(i) of the Senate Resolution of Ratification on the
Protocols to the North Atlantic Treaty of 1949 on the Accession of
Poland, Hungary, and the Czech Republic, 144 Cong. Rec. S4217-20, 1998.
[3] Section 3(2)(E)(ii).
[4] The MAP is a document intended to aid the preparations of those
nations seeking to join the Alliance. Their participation in the MAP
and in other NATO programs is intended to enable them to make
significant strides in reforming their militaries and in enhancing the
interoperability of their armed forces with NATO's forces.
[5] GAO, NATO Enlargement: Report Is Responsive to Senate Requirements,
but Additional Information Could Be Useful, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-03-255] (Washington, D.C.: Nov.
15, 2002) and NATO Enlargement: Reports Are Responsive to Senate
Requirements, but Analysis of Financial Burdens Is Incomplete,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-722] (Washington,
D.C.: May 5, 2003).
[6] One of the findings in GAO's November 2002 report on NATO
enlargement was that the President's report provided limited discussion
of some eligibility issues, particularly concerning challenges facing
the countries seeking NATO membership and what the countries were doing
to address those challenges. See [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-03-255].
[7] For example, according to the June 2008 unclassified report,
Albania's common-funded budget cost share, which includes the Civil
Budget, the Military Budget, and the NATO Security Investment Program,
is 0.0685. Croatia's common-funding budget cost share is 0.2550.
Albania's approved 2008 defense budget is $268.9 million, which
represents 2.01 percent of GDP. Croatia's approved 2008 defense budget
is $1.14 billion, which is 1.8 percent of GDP.
[8] GAO, NATO Enlargement: Reports Are Responsive to Senate
Requirements, but Analysis of Financial Burdens Is Incomplete,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-722] (Washington,
D.C.: May 5, 2003).
[9] The Fraser Institute is an independent Canadian economic, social
research, and educational organization that works to raise the level of
understanding about economic and social policy; an additional 72
institutions in 72 countries are co publishers. The Heritage Foundation
is a research and educational institute that promotes conservative
public policies that are based on the principles of free enterprise,
limited government, individual freedom, traditional American values,
and a strong national defense.
[10] For the Fraser index, the key ingredients of economic freedom are
personal choice, voluntary exchange, freedom to enter and compete, and
protection of persons and their property.
[11] The Heritage Foundation/Wall Street Journal index defines economic
freedom as the absence of government coercion or constraint on the
production, distribution, or consumption of goods and services beyond
the extent necessary for citizens to protect and maintain liberty.
[End of section]
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