CRS Report for Congress
NATO Expansion: Cost Issues
Updated February 26, 1998
Carl Ek
Specialist in International Relations
Foreign Affairs and National Defense Division

Congressional Research Service ˜ The Library of Congress

In July 1997, when members of the North Atlantic Treaty Organization (NATO) announced
that three former Warsaw Pact countries (Poland, the Czech Republic, and Hungary) would
be invited to join, U.S. policymakers were greatly concerned over the potential cost of
incorporating new members. At that time, three major U.S. studies — by the RAND
Corporation, the Congressional Budget Office, and the Clinton Administration — had
examined this question, and developed widely differing cost estimates. Subsequently,
NATO staff published yet a fourth estimate, which, on the surface, appeared to be much
lower than the others. This report, which will not be updated, examines the assumptions that
the four organizations used to develop their estimates, and attempts to reconcile or account
for the differences; it also raises additional questions that will likely need to be addressed
as the alliance grows. For additional information, see CRS Report 98-239, NATO Common
Funds Burdensharing: Background and Current Issues and CRS Issue Brief 95076, NATO:
Congress Addresses Expansion of the Alliance.

NATO Expansion: Cost Issues
During their December 1997 summit in Brussels, members of the North Atlantic
Treaty Organization (NATO) signed protocols that would add three countries —
Poland, the Czech Republic and Hungary — to the alliance; the national legislatures
of the current 16 current member countries must now approve the enlargement; one
major question being considered is how much expansion might cost.
Early in 1997, the Clinton Administration sent to Congress a report detailing its
rationale and cost estimates for NATO enlargement. The report noted that, with the
collapse of the Soviet threat, NATO has reoriented itself from a static defense posture
suitable during the Cold War to a more flexible and mobile set of capabilities to
respond to different types of threats. The Administration maintains that this “new
strategic concept” dovetails with the task of extending NATO membership to new
entrants through measures that will permit them to defend themselves and integrate
with NATO forces, and through enhancing the alliance’s ability to project ground and
air power. The report estimated enlargement costs (between 1997 and 2009) at $27-

35 billion. Of this, the U.S. share is projected to be $1.5-2.0 billion.

Two other U.S. organizations, RAND and the Congressional Budget Office
(CBO), also estimated expansion costs, but used a wider range of threat assumptions
and scenarios and came up with different results. The RAND cost estimates ranged
from $10-110 billion, while CBO costs were from $21 billion to $125 billion.
Although the RAND authors present a series of increasingly ambitious deployments,
their report highlights a $42 billion, joint (air/ground) power projection program,
similar to the type of defense posture outlined by the Clinton Administration. It
appears that if the CBO had used the same reduced threat assumption for its
comparable defense posture, its estimate would have been over $60 billion. Part of
the cost disparity may arise from different perceptions of what constitutes an
“adequate” defense. Also, it would appear that more micro-level assumptions —
those regarding specific types of weapon systems and equipment necessary — can
have a major effect on aggregate costs.
In December 1997, NATO announced that its staff had estimated the 10-year
cost of enlargement at $1.5 billion. Unlike the other studies, this one did not include
the aggregate deployment expenses of individual member countries, but focused
strictly on increased costs for NATO’s common budget to fund programs for new
members. The U.S. Department of Defense reportedly has concurred with the new
NATO estimate.
As they debate expansion, policymakers may encounter some longer-term issues
that will affect costs, including: the timing of expenditures associated with
expansion; possible economic benefits for the United States; the ability of Russia to
rebuild its armed forces; future rounds of NATO expansion; alliance burdensharing,
and political pressures.

Introduction ................................................... 1
The Clinton Administration’s Cost Estimates...........................2
Alternative Cost Estimates.........................................5
Congressional Budget Office...................................6
RAND .................................................... 8
NATO ................................................... 11
Factors Affecting the Cost of Expansion.............................11
Threat ................................................... 12
Deployment ............................................... 13
New Members.............................................14
Burdensharing ............................................. 15
NATO’s New Missions......................................16
Additional Considerations........................................17
Timing ................................................... 17
Savings .................................................. 17
Russia ................................................... 18
Alternative Views..........................................18
Cost Perspectives...........................................18
Further Expansion..........................................19
Burdensharing ............................................. 19
Political Pressures..........................................20

NATO Expansion: Cost Issues
At its July 1997 summit meeting in Madrid, the North Atlantic Treaty
Organization (NATO) invited Poland, the Czech Republic, and Hungary to begin1
negotiations to enter the alliance. Slovenia and Romania were also backed by
several member states. In December of 1997, after negotiations, alliance leaders2
signed protocols of accession for the three invitees; the current members most now
follow their constitutional processes to ratify an amended North American Treaty to
admit the candidates.
Created in 1949, NATO is a mutual defense pact; under Article V of the treaty,
if one of the members is attacked, each member
will assist the Party or Parties so attacked by taking forthwith, individually
and in concert with the other Parties, such action as it deems necessary,
including the use of armed force, to restore and maintain the security of the3
North Atlantic Area.
For four decades after the treaty was signed, the most likely aggressor was considered
to be the former Soviet Union. With the collapse of the Soviet Union and the
Warsaw Pact, however, there is general agreement today that the threat has greatly
diminished; accordingly, NATO’s central mission has become less urgent.
Twelve countries in Central and Eastern Europe have indicated a desire to join
NATO. They regard membership not only as an important security guarantee, but
also as a sign of acceptance by, and means of political and economic integration with,
the West. Most current NATO countries believe that enlargement will not only
strengthen the alliance militarily, but also help promote democracy and stability in
the region.

See: U.S. Library of Congress. Congressional Research Service. NATO: July 19971
Madrid Summit Outcome. By Stanley R. Sloan. CRS Rpt. No. 97-443 F. Updated July 14,


For additional background, see CRS Issue Brief 95076, NATO: Congress Addresses2
Expansion of the Alliance, by Paul Gallis.
Appendix VIII. The North Atlantic Treaty. Article 5. NATO Handbook. NATO Office3
of Information and Press. Brussels. October, 1995. p. 232.

The candidates for entry, however, are still grappling with the difficult transition
from command economies to market-based systems. Their militaries use out-of-date4
equipment that is not interoperable with NATO’s. To integrate with NATO, these
countries, over time, will need to acquire and train with new weapons and equipment
and conduct joint exercises with the alliance — all of which costs money. Current
NATO members — including the United States — also face budgetary and political
constraints and have been reducing their defense spending in recent years.
Consequently, one major factor that policymakers are taking into account as they
deliberate the pros and cons of enlargement is how much expansion may cost.
On February 24, 1997, the Clinton Administration sent to Congress a report
detailing its rationale and cost estimates for NATO expansion. The document,5
which may be viewed as the President’s statement of U.S. policy, outlines the defense
posture the administration believes is necessary, presents the likely costs for its
scenario, and estimates the share of costs that would be assumed by the United
States, its allies, and new members. When the report was released, some Members
of Congress took issue with the Administration’s conclusions; they were particularly
critical of the cost estimates, which, they asserted, were unrealistically modest.
Members have also expressed concern that the United States might end up bearing
a disproportionate share of the cost of expansion. Other Members, however, believe
that the Administration’s cost projections are reasonable, and that the price would be
moderate, particularly in comparison to what the alliance and individual member
countries were spending before the Berlin Wall fell.
This report describes the Administration’s proposal, and presents the findings
of three other studies that sought to estimate the costs of expansion, but which used
a wider range of threat assumptions and came up with different results. It then
discusses some of the major factors that likely will affect the cost of expansion,
compares the assumptions of the three studies, and presents some longer-term issues
that policymakers may encounter.
The Clinton Administration’s Cost Estimates
At the outset of its report to Congress, the Administration points out that NATO
has been undergoing a transformation from a defense posture suited to the Cold War,
to one that is adaptable to a new strategic environment. The alliance has shifted from
a static defense, mainly centered in former West Germany, to one that entails
maintaining a continuous capacity to project power, both in the context of mutual

For additional background, see CRS Issue Brief 92051, Poland, Czech Republic,4
Slovakia, and Hungary: Recent Developments, by Julie Kim and: Romania’s New
Government: Politics, Policies, and Relations with the United States. By Carl Ek. 97-451
F. April 10, 1997.
U.S. Department of State. Bureau of European and Canadian Affairs. Report to the5
Congress on the Enlargement of the North Atlantic Treaty Organization: Rationale,
Benefits, Costs and Implications. Washington, D.C. February 24, 1997.
[] Later, the Department of
Defense amplified on the discussion of the cost estimates in a presentation entitled The
Military Implications and Costs of NATO Enlargement.

defense commitments, as well as non-Article V missions. The Administration
describes NATO’s New Strategic Concept, adopted in 1991, as “[an] ability to
respond rapidly and flexibly by reinforcing areas where forces are needed... .” This6
new focus is reflected in Administration estimates of the costs of admitting new
The Administration contends that adding members to the alliance will confer
several benefits, to the United States, to Europe at large and to the central/eastern
region in particular. Enlargement, it is argued, will help foster political stability,
consolidate democracy, improve intra-regional relations, strengthen collective
defense, enhance burdensharing, and promote economic prosperity.
In developing its cost estimates, the Administration assumes that “enlargement
will take place in a European security environment in which there is no current threat
of large-scale conventional aggression and where any such threat would take years
to develop.” With no significant threat on the horizon, NATO will extend Article7
V assurances to new members through improving its ability to send reinforcements
if necessary, rather than through stationing substantial forces in the new territories.
NATO’s task, in this plan, is to enable new entrants “to be able to operate with
NATO forces and for current NATO allies to be able to provide and support such8
Throughout the period 1997-2009, the Administration envisions two phases to
accommodate expanded membership under these terms. During the first phase, to
be completed by 2001, NATO will aim at achieving an initial capability of ensuring
that the alliance will continue to be able to meet Article V commitments. This phase
would focus on high-priority actions that will provide some degree of interoperability
and limited capabilities for new members to defend themselves with the help of the
alliance. These measures are to be funded by NATO’s common budget and by the
new members. Beginning with accession, NATO would also seek to develop, over
a 10 year period, a mature capability, which will further enhance interoperability
through such steps as equipment replacement, and force modernization and
restructuring; this process will involve expenditures by current and new members,
as well as common NATO funding.
The Administration lists several priorities for attaining interoperability — new
members will need to train and exercise with alliance forces to become familiar with
NATO procedures; they also will need to integrate with NATO’s command, control,
communications and intelligence (C3I) network, be able to receive and support
NATO troops, operate with the alliance’s air defense system, and field combat and
logistical support. The goal will be not only to ensure that these countries can help
NATO defend their borders, but also to enable them to deploy their own forces to
assist NATO in both mutual defense and non-Article V missions.

Report to Congress on NATO Enlargement. p. 8.6
Report to Congress on NATO Enlargement. p. 10.7
Report to Congress on NATO Enlargement. p. 12.8

The Administration notes some further assumptions for its estimate: 1) it
applies to “[a] small group of nonspecified Central European countries;” 2) it will9
be unnecessary for NATO permanently to station a large number of forces in the new
countries; 3) standard burdensharing rules (members pay for their own forces and
share the costs of infrastructure improvements and other common activities) would
apply; and 4) some of the activities (e.g., language training and air traffic control
upgrades) are already underway.
The Administration states that its estimates are based not on total defense
spending, but on two types of measures that are associated with enlargement: the
first, those that would take place whether new members are added or not, and the
second, those that are tied directly to expansion. It breaks these measures down into
three categories: 1) new members’ military restructuring; 2) NATO regional
reinforcement capabilities; and 3) direct enlargement measures.
To restructure and modernize new members’ armed forces, the Administration
estimates that, from 1997-2009, it would cost between $800 million and $1 billion
annually, or a total of $10-13 billion. This will include such measures as
modernization of ground forces, including artillery, armor and ammunition;
procurement by each country of surface-to-air missiles and one squadron of combat10
aircraft; and training. The cost of these steps would be borne by the new countries.
The U.S. study reemphasizes the point that many of these measures would be
undertaken with or without expansion.
For NATO regional reinforcement capabilities, the Administration estimates
alliance costs of $600-800 million per year, or $8-10 billion total. This estimate is
based on the stated goal of being able to deploy and sustain “a notional force of four
divisions and six NATO fighter wings” to reinforce new members in the event of a
threat. Because the United States is already fully prepared to deploy such forces,
these costs would fall largely on current NATO allies, according to the
Administration. Like restructuring and modernization, most of these steps, it is
reasoned, would take place regardless of expansion plans, as they are applicable to
NATO’s evolving strategy regarding non-Article V missions. They are based on
earlier allied commitments to force goals implied by NATO’s 1991 New Strategic
Concept. 11

Report to Congress on NATO Enlargement. p. 12. The identity of the countries was9
classified at the time by the Administration; after the Madrid summit, however,
Administration spokespersons stated that four countries had been included in the estimate:
Poland, the Czech Republic, Hungary and Slovakia.
However, the report does suggest that the United States might help out with “an10
undetermined portion of the cost of restructuring the militaries of new members, contingent
on decisions by NATO, new member states, and the United States Congress.” See: Report
to Congress on NATO Enlargement. p. 15.
One analyst has noted that the costs for strengthening regional reinforcement capabilities11
are steep for the allies because they have been somewhat slow to implement the New
Strategic Concept.

Direct enlargement costs, according to U.S. calculations, would average $700-
900 million per year, or a total of $9-12 billion to attain “mature capability.” These
costs consist of upgrading and/or ensuring interoperability of: command, control,
communications and intelligence (C3I); air defense systems; logistics support;
reinforcement reception; infrastructure; and exercise facilities and staging. The
report estimates that about 40% of the costs for direct enlargement activities would
be paid by individual member countries — both current and new — to improve their
own forces, and the remaining 60% would be financed by NATO common funds for
infrastructure. Divided in this manner, the new countries would pay about 35%
($230-350 million per year, or $3-4.5 billion total); current allies — other than the
United States — would contribute 50% ($350-425 million per year, or $4.5-5.5
billion total); and the United States’ share would be 15% ($150-200 million annually,
or $1.5-2.0 billion total). Because common funding of NATO activities would
commence only after accession in 1999, the U.S. contribution is reckoned over the

10-year period 2000-2009.

Total costs for the Administration’s scenario consequently range from $27
billion to $35 billion, of which new members would pay $13-17.5 billion, current
allies $12.5-15.5 billion, and the United States $1.5-2.0 billion.
The Administration notes that its estimates exclude programs in support of
relations with eastern and Central European countries, as well as U.S. funding for
NATO’s Partnership for Peace program, since neither is directly related to NATO
enlargement. 12
The Administration also concedes that enlargement costs could increase or
decrease considerably if one or more of its assumptions were off. For example,
although it is not anticipated, a “direct territorial threat to NATO members” would13
prompt “substantial” response costs. In addition, if more — or fewer — countries
were to join in the first enlargement tranche than assumed, costs would rise above or
fall below the estimates.
Alternative Cost Estimates
Two other U.S. organizations, the Congressional Budget Office and the RAND
Corporation, also attempted to assess the likely cost of expansion. Their estimates
ran from a low of $10 billion to a top figure of $125 billion. This enormous range
is due to differences in threat scenarios, as well as other fundamental assumptions.
It should also be noted that two of the reports — those by the Administration and
RAND — promote enlargement of NATO, while the Congressional Budget Office
study is neutral on the question.
Most recently, NATO announced in November 1997 the results of a study that
had been performed by its staff and subsequently approved by all member countries,

For further information, see: U.S. Library of Congress. Congressional Research Service.12
Partnership for Peace. By Paul E. Gallis. CRS Rpt. No. 94-351 F. Updated Aug. 9, 1994.
Report to Congress on NATO Enlargement. p. 15.13

including the United States. NATO’s analysts estimated enlargement costs at $1.5
billion over 10 years. It is important to bear in mind that the NATO estimate was
limited strictly to expenditures from the alliance’s common funds — unlike the three
American studies, which tallied up costs of individual national defense budgets, as
well as the common budget costs.
Congressional Budget Office
In March 1996, the Congressional Budget Office (CBO) published The Costs
of Expanding the NATO Alliance, a study that estimates the amounts that would be14
necessary to fund several possible expansion scenarios. The report opens with a
discussion of the pros and cons of a wide range of future options for NATO, from
disbanding the alliance, to expanding it slowly or rapidly, to opening the door to
admit Russia. The subsequent cost analyses focus on expanding the alliance to
include the four countries considered most likely at the time the analysis was written:
Poland, Hungary, the Czech Republic and Slovakia — often collectively referred to
as the “Visegrad” countries, after the Hungarian town where their leaders first met
in 1991 and agreed on measures for regional cooperation.
CBO states that, although the threat to the alliance has diminished drastically
since 1989, NATO’s Article V — its mutual defense provision — is still viewed as
the core mission, and expansion would necessarily extend the security guarantee to
new entrants. CBO assumes two levels of threat: regional dangers, which are more
likely, and a much less likely threat from Russia — the only power with the potential
to mount a significant threat to the alliance. The varying perceptions among defense
analysts of these threats give rise to several possible defense postures. The CBO
study presents five scenarios, with cumulative costs; that is, the cost of each is added
to the previous ones. Costs are calculated for the period 1996-2010.
Option 1 — Strengthen Visegrad Defense Forces and Provide for NATO
Reinforcement ($60.6 billion). The most fundamental and least costly single
scenario, option 1 envisions current NATO members assisting the four above-named
countries in defending themselves against “a border skirmish with a neighbor or a
limited war with a regional power.”15
CBO notes that most defense analysts agree that three steps should be
considered key to enabling western NATO allies to assist and send reinforcements
in the event of an attack on one of the new members. The first involves instruction
in NATO military doctrine and procedures, as well as large-scale exercises with the
alliance. The second consists of improvements in and interoperability of new
members’ C3I systems. Finally, the new countries would need to upgrade their air

U.S. Congressional Budget Office. CBO Papers. The Costs of Expanding the NATO14
Alliance. March, 1996. Washington, D.C.
Costs of Expanding the NATO Alliance. p. xv. Excluding current NATO and Visegrad15
countries, Poland has borders with Russia (Kaliningrad Oblast), Lithuania, Belarus, and
Ukraine; Slovakia touches Ukraine and Austria; the Czech Republic shares a border with
Austria; and Hungary has common frontiers with Ukraine, Romania, Serbia, Croatia,
Slovenia, and Austria.

defenses to enable them, for example, to distinguish friendly from hostile aircraft.
CBO estimates total costs for such steps at $21.2 billion.
Given CBO’s assumptions, various improvements in military capability are
presumed necessary under option 1. Nearly one-third ($19.2 billion) of the cost of
this option is dedicated to upgrading equipment (of new members and current allies)
and acquiring new stocks, including such items as fighter aircraft and anti-tank
weaponry. In addition, CBO also includes $5 billion for tanker aircraft for in-flight
refueling of NATO tactical fighters en route to assist a besieged new member, and
nearly $7 billion for improving Poland’s army and navy.
In order for the new members to receive supplies and reinforcements from
NATO, the alliance would also likely need to upgrade infrastructure in the new
member states, which would consist of making improvements in transportation and
fueling systems, including roads, ports, airfields, railways, and pipelines. CBO
budgets $3 billion for such work. CBO also factors in $4.7 billion for the
construction of training facilities, and $0.6 billion for purchase of fuel and
ammunition stocks.
CBO estimates the total cost of option 1 at $60.6 billion over 15 years, of which
the United States would contribute $4.8 billion, the new members $42.0 billion, and
other members $13.8 billion. The report acknowledges that it might be politically
infeasible for some NATO members — old and new — to increase their defense
spending drastically, and that “[w]ith the current low levels of threat to this region,16
... this lower-cost approach might be adequate.” However, the study adds that, if
NATO chose simply to provide for a minimum defense capability by employing the
first three initiatives (C3I, air defense, and training), the estimated cost of expansion
would fall to $21.2 billion, of which the U.S. share would be $1.9 billion.
Option 2 — Project NATO Air Power East to Defend the Visegrad States ($79.2
billion). According to CBO, options 2-5 “would attempt to provide an Article V
defense against an aggressive and militarily potent Russia.” Under CBO’s second17
scenario, NATO would project air power eastward by creating prepared or co-located
operating bases (COBs). This would permit NATO aircraft from western states to
fly into and operate from new member states in time of crisis. Allowing NATO
aircraft to operate directly out of the eastern territories would obviate the need for
purchasing tankers cited in the first option. Creating NATO-standard COBs —
which would include staging exercises and providing fuel and ammunition storage
— would add $18.6 billion to the first option, $4.6 billion of which would be paid
by the United States.
Option 3 — Project Power Eastward With Ground Forces Based in Germany
($109.3 billion). Option 3 adds ground forces to air power by enabling nearly all of
NATO’s 11 divisions to move from Germany to the Visegrad states in the event of
an attack. This option would not require a troop buildup, but would entail more
funding for: additional combat support (e.g., helicopters, artillery, and air defenses);

Costs of Expanding the NATO Alliance. p. xv.16
Costs of Expanding the NATO Alliance. p. 41.17

reception facilities in the new member states; storage of ammunition and fuel; and
large-scale training exercises. Choosing this option would add about $30 billion to
the above two options, with the U.S. share being $3.6 billion.
Option 4 — Move Stocks of Prepositioned Equipment East ($110.5 billion).
This option envisions storing equipment sufficient for 5 brigades of U.S. troops, who
would fly in directly from the United States in the event of an emergency. Existing
stocks of equipment would be moved from their current west European locations to
newly built storage facilities in the Visegrad countries at an additional cost of $1.2
billion, with $290 million of it funded by the United States.
Option 5 — Station a Limited Number of Forces Forward ($124.7 billion). The
last option entails moving nearly three divisions of U.S. and allied ground forces and
two air wings from Germany to renovated bases in the new member states, where
they would be permanently stationed. This option by itself would cost approximately
$14 billion, with $5.5 billion paid by the United States.
To review, the cumulative totals for the CBO scenarios are: Option 1—$60.6
billion; option 2—$79.2 billion; option 3—$109.3 billion; option 4—$110.5 billion;
and option 5—$124.7 billion.
In the Autumn 1996 issue of Survival, three analysts at RAND, a non-
governmental research organization, published another study of the possible costs of
NATO expansion. They observe that some critics of enlargement have been18
arguing that the costs of adding new members would be prohibitive, and counter that
expanding the alliance “is not just a financial calculation, but also a political and
strategic one.” They also note that some of the costs of enlargement may be offset19
by savings in some areas, and that the alternative of not adding new members might
result in higher costs for individual member countries.
Like CBO, the RAND authors posit a series of enlargement options. Rather
than assigning a single cost estimate to each option, however, RAND provides
funding ranges for each, based on different policy choices. RAND also assumes the
Visegrad four to be the most likely new members, though acknowledging that
Slovakia’s chances had “clearly diminished.”20
The RAND study develops cost estimates based on a menu of policy choices
regarding the path to enlargement chosen by NATO, the military strategy selected,
and the accompanying defense posture. The RAND authors discuss analytical
frameworks for different defense postures; political rationales and military
requirements; and the political and military tradeoffs and cost distribution.

What Will NATO Enlargement Cost? By Ronald D. Asmus, Richard L. Kugler, and F.18
Stephen Larrabee. Survival. Vol. 38, No. 3. Autumn, 1996. pp. 5-26.
What Will NATO Enlargement Cost?. p. 5.19
What Will NATO Enlargement Cost?. p. 5.20

In general, the RAND analysts contend that the cost of NATO expansion would
be relatively moderate. They do not envision the need for a buildup of forces in the
foreseeable future. In addition, some of the expansion measures can be made to fit
in with changes that NATO aspirant states likely will be making, regardless of
whether they soon become members of the alliance. Given the reduced threat
environment, these countries will continue to downsize and streamline their armed
forces. Importantly, as they restructure and modernize, they can do so in consultation
with the alliance so that any changes will ensure eventual interoperability.
RAND attempts to place expansion costs in perspective by making several
points. First, the report argues, it costs less for a country to act in concert with an
alliance than for it to rely solely on its own resources for defense. Secondly, the cost
of expansion is small relative to the total amount that the alliance’s wealthy member
states already devote each year — approximately $160 billion by the Europeans —
to their national defense budgets. Finally, the types of changes needed to
accommodate the Visegrad nations would dovetail with NATO’s changing strategy,
which now aims at being able to project mobile forces over distance, both within —
and perhaps beyond — the European continent.
RAND believes that four tasks will define what needs to be done to
accommodate NATO’s old and new missions under expansion. First of all, the new
entrants’ armed forces must be prepared for merging with NATO; this will involve
modernizing aging equipment and purchasing new weapon systems, as well as taking
other steps that will ensure that the new members’ forces are compatible with
NATO’s. Second, the infrastructure in the new territories must be upgraded and
configured for NATO needs. Third, provisions must be made so that NATO forces
— limited to command staff and support troops — may be based in the new
countries. And fourth, NATO’s current forces must be reconfigured to project power
toward the new countries.
The RAND study then posits four alternative defense postures, somewhat
similar to those constructed by CBO. RAND also develops increasingly ambitious
scenarios, but provides additional flexibility within each option; for example, in the
first option, two types of surface-to-air missiles are considered, and under option 2,
costs vary according to the number of fighter wings employed.
Option 1. The “self-defense support” option assumes that new member states
will be responsible for defending their own borders, and that western NATO member
assistance might be limited to aiding in such key areas as C3I and logistics; however,
the alliance might provide other forms of aid, such as assisting new members develop
better air defenses, infrastructure, munitions reserves, and helping them improve their
readiness. Option 1 costs range from $10-20 billion.
Option 2. As in the CBO study, RAND’s second option adds air power, through
such steps as the upgrading of European air wings and the construction of co-located
operating bases with munitions storage facilities in the new member territories. Once
more, the cost of this option would depend on the extent of the forces used. If 5
fighter wings were readied for eastward deployment in the event of a crisis, costs
would go up to $20 billion; if 10 fighter wings were equipped, costs would rise to
$30 billion.

Option 3. The third option combines land forces with air power. Current
NATO member forces would remain where they are presently based, but would be
prepared to “commit armored and mechanized forces to perform a broad spectrum
of missions in Eastern Europe, ranging from border defense to peacekeeping and21
crisis management.” RAND estimated that costs for this option would range from
$30-52 billion; the higher estimate would combine 10 NATO divisions with 10
fighter wings. A middle option with a $42 billion price tag is discussed in some
Option 4. Under the fourth and final option, set up to address a “worst case
scenario,” NATO would move significant forces — both land and air — eastward.
Estimated costs for this option range from $55 billion to $110 billion; the latter
estimate arises from forward deployment of the 10 divisions and air wings of option
3. RAND points out, however, that because there is no imminent threat, “[s]uch a
posture is clearly not needed today.”22
The RAND authors argue that the defense posture NATO ultimately adopts will
depend upon the interaction of the political and strategic approaches chosen by the
alliance. RAND identifies three political approaches to enlargement: an
evolutionary path that assumes no imminent security threat in the area; a “promote
stability” track that sees NATO membership playing a key role in fostering
democracy and security in the region; and a “strategic response” that would be
appropriate only if Russia were to emerge as a threat. In accordance with these
political considerations, policymakers must decide which military threat to prepare
for: low-intensity local conflicts; regional dangers, which might be comprised of a
coalition of medium-size powers; or a theater threat, which could be presented by
Russia, allied with the Commonwealth of Independent States. The RAND analysts
believe that an assessment of the political and military situation, as presented by
these six conditions, will help determine which defense posture would be most
consistent and effective.
RAND argues that if expansion is to proceed, it would be preferable for NATO
to make a decision early, so that the alliance and those whom it invites to begin
negotiations over membership would have more preparation time; corollary to this,
earlier membership would mean that total enlargement costs would be spread over
a longer time period, thereby reducing the size of annual payments.
On the topic of burdensharing, the authors note that member states currently are
responsible for funding their own forces, and pay a share of the NATO common
infrastructure costs. The amount that any given country will contribute to expansion
will depend upon how large its share is of the common infrastructure budget and
upon how extensively its forces will be used. Thus, under the first option (self-
defense support), a larger share of the burden would be borne by the new members,
while projecting air and/or ground forces would entail greater expenses by current
members. Under RAND’s above-mentioned $42 billion “middle” scenario, for
example, current members would contribute approximately $25.6 billion (61%), new

What Will NATO Enlargement Cost?. p. 15.21
What Will NATO Enlargement Cost?. p. 16.22

members would pay $8.0 billion (19%), and the remaining $8.4 billion would come
from the NATO infrastructure funds. Of this amount, the U.S. share of the total
package could range from $420 million to $1.4 billion — an estimate that appears to
assume a redistribution of contributions.
In November 1997, NATO announced the results of its staff’s assessment on the
costs of enlargement. The NATO analysts’ “initial assessment” set direct23
enlargement costs at $1.5 billion over 10 years, $1.3 billion of which would be
funded by the Security Investment Program. The report was approved by all24
member countries, including the United States; the U.S. Department of Defense has
concurred with the NATO cost appraisal. Unlike the other three, the NATO study25
estimated only “costs which would be eligible for common funding;” the U.S. share
of which is approximately 25%. Details of the study remain classified.
Factors Affecting the Cost of Expansion
The four studies on the costs of expanding NATO provide different — and quite
disparate — cost ranges. To recapitulate: the Clinton Administration estimates the
price of expansion at between $27 billion and $35 billion, the Congressional Budget
Office puts it at $21-126 billion, RAND suggests $10-110 billion, while NATO
claims $1.5 billion will suffice. Why are there such enormous differences?
Part of the answer is that two fundamentally dissimilar approaches were used:
the CBO and RAND studies sketch several different types of possible threat
environment. They posit what they believe would be the necessary steps to counter
the various threats, and then calculate the approximate costs for each step. On the
other hand, the Clinton Administration and, in all likelihood, NATO, more narrowly
define the threat (based on intelligence projections and political judgments) and the
implied defense posture, leading to a much narrower range of estimated costs.
Another part of the answer lies in what the studies have counted and what they
left out. For example, an August 1997 General Accounting Office (GAO) report
stated that “[o]ur analysis of DoD’s cost estimate to enlarge NATO indicates that its
key assumptions were generally reasonable and were largely consistent with the26
views of U.S., NATO and foreign government officials.” However, the report
faulted the Defense Department for including expenditures, such as those needed for
allies’ force modernization, that would have been made regardless of enlargement,

NATO Enlargement Costs. Reuters. November 27, 1997.23
Final Communiqué. Meeting of the North Atlantic Council in Defence Ministers Session24
Held in Brussels on 2nd December 1997. Press Release M-NAC-D-2(97)149. December

2, 1997. See: []

Report to the Congress on the Military Requirements and Costs of NATO Enlargement.25
Department of Defense. Washington, D.C. Feb. 1998.
U.S. General Accounting Office. NATO Enlargement: Cost Estimates Developed to26
Date are Notional. GAO/NSIAD-97-209. August, 1997. p.

and for not including such things as support for the Partnership for Peace program
and U.S. military assistance to potential future NATO members.
The NATO study constitutes another example of analysts’ counting certain costs
while omitting others. NATO staff appear to have agreed with the Administration’s
assessment of a low security threat, and their analysts estimated common costs
accordingly. However, the $1.5 billion NATO estimate should not be compared to
the Administration’s overall estimate of $27-35 billion, but rather to just that part
which was devoted to direct enlargement costs eligible for common funding. As
noted earlier, that amount was estimated at 60% of $9-12 billion, which equals $5.4-
7.2 billion. Also, U.S. Defense Secretary Cohen told Congress in October 1997 that
the upcoming NATO cost assessment likely would be lower than the Clinton
Administration’s because the latter’s had included Slovakia, which did not make the
final cut. Secretary Cohen added that the three invitees also had made progress on
interoperability. 27
Numerous factors will affect any study of the cost of enlarging NATO. An
understanding of the underlying assumptions is key, since the alliance as a whole is
still addressing a large number of issues that will guide funding needs.
The type of deployment NATO deems appropriate will be shaped by the
evolving perceptions of current and future threats to the alliance: is a resurgent
Russia the major power to be guarded against? If so, then would an attack originate
in the Kola Peninsula, where a large share of the former Warsaw pact forces and
equipment were relocated, and then sweep down across the plains of Poland? What
kind of troops and armaments would the Russians be able to muster if they launched
an invasion; would NATO face an endless wave of modern tanks, supported by state-
of-the-art fighter aircraft? If such a threat is not imminent, when might Russia,
which, according to many analysts, is too weak to pose a serious threat today, be able
to rebuild its military? Should the alliance be looking instead to its south? Which2829
are the more likely scenarios — border clashes, or civil ethnic strife, as in the former
Yugoslavia? The greater and more geographically dispersed the perceived threat, the
more extensive the likely deployment, and the steeper the cost.
None of the studies specifies that Russia — or any other country — will pose
a significant threat to any members of the alliance in the next few years. The

However, the picture in the candidate countries may still be somewhat clouded. Although27
the Administration stated that the infrastructures of the invitees is in better condition than
was originally believed to be the case, in recent weeks there have been reports of a leaked
NATO document that purportedly finds the contrary.
See: Russia’s Dilapidated Army. The Economist. Vol. 343, No. 8019. May 31, 1997.28
p. 49. U.S. Library of Congress. Congressional Research Service. Russian Conventional
Armed Forces: On the Verge of Collapse? By Stuart D. Goldman. CRS Rept. No. 97-820
F. September 4, 1997.
See, for example: Instability to the South Worries U.S. Forces in Europe. By William29
Drozdiak. Washington Post. May 19, 1997. p. A1.

Administration assumes an environment devoid of a significant conventional threat
for the foreseeable future; it notes that if a serious threat to European security were
to emerge, the alliance would have sufficient time to prepare an appropriate response.
Moreover, the Administration implies that expanding NATO will help avert a threat
from developing in the future. In a speech to graduating cadets at West Point,
President Clinton contended that “there is no powerful threat in part because NATO
is there. And enlargement will help make it stronger.’”30
The CBO authors declare that their defense plans assume “an uncertain threat;”31
as noted earlier, the longest chapter in the CBO report is devoted to the first option,
which would prepare the alliance’s new members to defend against “a border
skirmish with a neighbor or a limited war with a regional power”; in options 2
through 5, CBO analysts set up a “resurgent Russia” as a potential threat, which
substantially raises costs. They add, however, that Russia’s military has suffered
from deep troop cutbacks, low morale, obsolescent and ill-maintained equipment,
and reductions in training.
The authors of the RAND study maintain that the CBO work is aimed mainly
at defending against Russia, whereas their approach “is not threat- but rather goal-
and capability-based[,] ... anchored in the premise of avoiding confrontation with32
Russia, not preparing for a new Russian threat.” The RAND cost estimates, not
surprisingly, are lower than CBO’s. As noted, RAND’s escalated defense postures
are designed to cope with: low-intensity local conflicts; regional dangers —
comprised of a group of medium-size powers; and a theater threat, composed of
Russia in league with allies.
Perhaps the major immediate factor driving costs is the potential deployment of
forces: what kind of military support will be offered by current members to the new
countries, and what will be expected of them in return? Does NATO intend simply
to transport reinforcements to any of the new members if they are attacked? At the
opposite end of the spectrum, would NATO, in a changed security environment,
envision stationing a significant number of troops and aircraft in the new territory?
The more troops and equipment involved in defending the new entrants, the more
expensive the expansion.
Because the CBO and RAND studies offer a menu of choices for threat
scenarios, they also provide a variety of different possible deployments. There is an
apparent consensus on two matters: 1) at a minimum, the alliance should help the
new members prepare to defend themselves, with NATO reinforcements if necessary;
and 2) the first steps to be taken should include ensuring interoperability through
providing C3I, air defense, and training.

NATO plan Draws Some Salutes at West Point. By Peter Baker. The Washington Post.30
June 1, 1997. p. A9.
Costs of Expanding the NATO Alliance. p. 13.31
What Will NATO Enlargement Cost?. p. 7.32

CBO admits at the outset that “[i]t is difficult to determine what NATO would
need to do to provide an adequate defense for the Visegrad nations.” If NATO33
policymakers agree that the threat is — and will remain — low, then the first option
— strengthening Visegrad defense forces and providing for NATO reinforcement —
might be considered sufficient; the $21 billion subset of this option, however, would
“only marginally improve the defenses” of the Visegrad countries. CBO’s four34
additional options are geared toward an increasingly formidable threat; the addition
of first air power and then ground forces, of prepositioning equipment, and of
stationing troops, each boosts costs considerably.
Although the RAND authors also present a series of increasingly ambitious
deployments, their report highlights a $42 billion, joint (air/ground) power projection
program, similar to the type of defense posture outlined by the Clinton
Administration (estimated to cost $27-35 billion).
This points up an important difference among the studies: the CBO study’s
roughly comparable joint power projection scenario (the third option, assessed at
$109 billion), would still likely cost significantly more than the “self-defense
support” option, set at about $61 billion, even if similar threat assumptions were
used. Why are there such large differences for a similar defense posture? Part of the
cost disparity may arise from different perceptions among defense analysts of what
constitutes an “adequate” defense. It would appear that more micro-level35
assumptions — those regarding the specific types of weapon systems and equipment
that would be necessary — can have a major effect on aggregate costs. For example,
CBO assumes that, for an appropriate air defense, new members would need to
acquire modern Patriot surface-to-air missiles, whereas the Administration assumes
the use of older — and cheaper — I-HAWK type missiles. The RAND study
contrasts the costs of Patriots versus a far less expensive Russian air defense system.
New Members
Other factors affecting cost include the number of new states to be added, who
will join, where they are located, how large they are, and when they will become
members. Generally speaking, the more countries that are added, the higher the
initial cost of providing mutual security. Also, it would cost less to add a country if
it is in closer proximity to existing NATO members, is smaller in size, has a stronger
economy and a better trained and equipped military, and, arguably, joins sooner
rather than later — financing direct enlargement measures over a longer period would
mean smaller annual payments.36

The Costs of Expanding the NATO Alliance. p. xii.33
The Costs of Expanding the NATO Alliance. p. xvi.34
Amos Perlmutter and Ted Galen Carpenter, for example, argue that “[t]he RAND and35
Pentagon figures are little more than wishful thinking based on Pollyanaish security
scenarios.” Nato’s Expensive Trip East: The Folly of Enlargement. Foreign Affairs.
January/February 1998. p. 2.
However, some analysts note that this argument ignores the economic concept of the time36

Concerning the new states to be added, CBO and RAND assume that Poland,
the Czech Republic, Slovakia and Hungary will be the new members, while the
Pentagon simply states that it assumes a “small group of ... countries.” According
to one defense budget analyst, removing Slovakia from the equation would not
change the numbers “significantly;” the RAND report notes that “[t]he marginal cost
of including Slovakia ... would be small[.]”37
A particularly thorny issue is the distribution of costs among members. Nearly
all of the current member states have been paring back their defense spending since
the end of the Cold War. And the prospective members are busy repairing the
economic damage wrought by four decades of communism, and will be hard-pressed
to undertake large increases in their defense budgets. If a member state perceives that
it is bearing a disproportionate share of the burden, its legislature may be less likely
to ratify the agreement.
In general, all three studies (and, according to CBO, NATO staff as well)
assume that the incoming countries will bear a large share of the costs of
enlargement, that infrastructure improvements will be paid for, in part, out of one of
NATO’s common funds — the Security Investment Program (SIP), and that current
member countries will be responsible for financing the use of their own forces.
There are some differences, however, among the three U.S. reports on the
distribution of costs.
The Clinton Administration, as noted above, assumes that “[s]tandard NATO
cost-sharing rules would be applied for new defense arrangements — i.e., individual
NATO nations pay for ... their own ... forces while costs for infrastructure are shared
where they qualify for common funding.” The executive branch report concedes38
that “[t]hese costs would, of course, increase if there were a dramatic increase in the
threat or a decision by the United States to bear a larger share of the costs than would
otherwise fall on our current allies or the new members.” The Administration39
assumes that, for total enlargement costs, new nations would pay approximately 50%,
current non-U.S. allies roughly 44%, and the United States about 6%.
CBO notes that Central European defense budgets have been declining, and
cites Western defense officials who state that “key allied nations are reluctant to
increase their contributions to the SIP.” These factors, CBO analysts believe, raise40
serious questions about both the ability of new members and the willingness of

value of money, while others maintain NATO actually might pay less for a later entrant,
which presumably would have been developing economically and modernizing its military
What Will NATO Enlargement Cost?. p. 18.37
Report to Congress on NATO Enlargement. p. 13.38
Report to Congress on NATO Enlargement. p. 9.39
The Costs of Expanding the NATO Alliance. p. 21.40

current members to meet the necessary expenses of expansion. CBO therefore
assumed that, since the United States and Germany have been the most ardent
proponents of expansion, the two countries would shoulder a larger portion of the
burden. Accordingly, CBO projects that the new states would pay for 70% of their
infrastructure improvements, and that the remaining 30% would be divided into 10%
increments, paid equally by the United States, Germany, and the SIP. CBO also
makes the “somewhat arbitrary” assumption that the United States and Germany
would pay 20% of the cost of upgrading and training the Visegrad nations’ forces.
The study concludes that the U.S. share of SIP would fall from 28% to 22%, as some
current members increase their shares and new members begin to add to the fund.
For total expansion costs — using, for purposes of illustration, the $60.6 billion
option 1 — the new members would pay 69%, non-U.S. allies 23%, and the United
States 8%.
The RAND study reasons that shares will be determined in part by the defense
posture that NATO adopts. For purposes of illustration, they break down cost shares
for their $42 billion, joint (air/ground) power projection posture; their calculations
yielded 19% of the costs accruing to new members, 20% to the common fund (which
would have to increase considerably in size), and 61% to current members. RAND
notes further that “the burden on the US can be reduced if the number of participating41
countries extends beyond the core group of the US, the UK, France and Germany.”
RAND concludes that “the US annual share could range from $420m to $1.4bn,
depending on how ... decisions are made.”42
NATO’s New Missions
The engagement of NATO forces in the former Yugoslavia marks a change in
the role of NATO, and the alliance may continue to undertake new missions.
Traditionally, the alliance has had the treaty’s Article V (an attack on one is regarded
as an attack on all) as its defining mission. With the dissolution of the Soviet Union
and the Warsaw Pact, however, increasing emphasis has been placed on what Danish
Foreign Minister Niels Helveg Peterssen has termed the “soft instruments of
security” — peacekeeping and peace enforcement, search and rescue, drug
interdiction, anti-terrorist activities, and humanitarian assistance. Unanticipated43
contingencies such as the Bosnia deployment may be expensive for participating
nations. A more proactive NATO could be a more costly NATO. 44

What Will NATO Enlargement Cost? p. 24.41
What Will NATO Enlargement Cost? p. 26.42
See: U.S. Library of Congress. Congressional Research Service. NATO Adapts for New43
Missions: The Berlin Accord and Combined joint Task Forces. By Stanley R. Sloan. CRS
Report No. 96-561 F. June 19, 1996. Also see: U.S. Library of Congress. Congressional
Research Service. NATO’s Future: Beyond Collective Defense. By Stanley R. Sloan. CRS
Report No. 95-979 S. Sept. 15, 1995.
Other analysts, however, argue that using NATO to support such missions could promote44
more effective burdensharing than if missions were conducted unilaterally or on an ad hoc

According to RAND, the self-defense option alone “does not provide for ...
NATO combat forces to carry out new Article 5 commitments.” Both RAND and45
the Administration believe that a deployment involving a combination of self-defense
and air/ground power projection would mesh well, not only with NATO’s task of
extending its security guarantee to the new states, but also with whatever new, non-
Article V missions that NATO may undertake. Power projection would be suitable
both for confronting a conventional attack, as well as for crisis management, both
within and, if necessary, beyond the European continent.
Some have cautioned that if expansion proceeds without a carefully articulated
mission and a roster of requirements, member states will be essentially giving NATO
a blank check that current allies must fill in. Others maintain that costs will emerge
through subsequent negotiations — and decisions — over the types of missions and
defense posture the alliance will adopt. As the RAND authors argue, the defense
posture — and implied deployment and budget — that NATO ultimately adopts will
depend upon the interaction of the political and strategic approaches chosen.
Additional Considerations
A number of other issues may be raised as policymakers assess the likely future
costs of NATO expansion:
When will the bills come due — will they be spread out fairly evenly over the
transition period to “mature capability,” or will they be heavily front loaded?
Member countries, it has been argued, may spend less on their own armed forces
because they are members of NATO. Once the alliance has expanded and been made
interoperable, national defense spending by individual countries may not need to be
as high as would be the case if they were not a part of NATO, because missions and
responsibilities are rationalized through specialization. Is it possible that alliance
costs could actually fall off in the out years, as the new nations’ militaries modernize
and become interoperable and their economies grow stronger? Or might the
introduction of more sophisticated — and costlier — defense technology increase
funding needs?
Will there be any offsetting savings for the United States or other members
states? It is likely that a portion of the costs of joining NATO paid by the new
entrants would flow back into the U.S. economy. For example, as they upgrade their
air defenses, new members will need to buy electronic systems, surface-to-air
missiles and fighter aircraft. Some of these will likely be procured from American
manufacturers, which would indirectly offset the economic impact of increased U.S.
defense expenditures. Also, as the economies of the new entrants continue to grow,
their private sectors are expected to contribute to the development of national

What Will NATO Enlargement Cost? p. 13.45

transportation and communications systems, which should augment the alliance’s
defense capability.
Seeing NATO expand to include former Soviet allies, how likely is it that
Russia would want to or be able to institute a substantial program to build up its
armed forces? Because Russia’s economy is in worse condition than the economies46
of most central and eastern European countries, and because Russia would have to
rearm without foreign assistance, a military buildup and modernization program
would involve great economic and social sacrifice.
Alternative Views
The first three studies discussed in this report reflect primarily a U.S. view on
NATO enlargement. Do current NATO allies and prospective new members share
these assessments — particularly the Administration’s — of reduced threat and the
consequent defense posture and costs? For the most part, it appears that they do not.
For example, shortly after the Madrid Summit, French President Chirac stated that
“We have adopted a very simple solution: Enlargement must not cost anything in net
terms.” That same week, German Foreign Minister Klaus Kinkel stated that “the4748
costs of NATO’s expansion have been exaggerated ... by American institutes.” In
addition, some European allies have objected to the U.S. Administration’s $8-10
billion estimate of expenses needed for current non-U.S. allies to enhance their
“regional reinforcement capabilities.” The Europeans argue that, in so doing, the
Administration has been using its cost estimates to dictate the national spending
priorities of its allies.
Cost Perspectives
Some analysts have argued that, although all of the estimates of funding
requirements for enlargement exceed $1 billion — a substantial amount of money —
this number needs to be put in perspective. For example, the Administration
estimate, which put the maximum, total, 10-year U.S. cost of expansion at $2 billion,
is approximately one-half of one percent of annual U.S. defense spending. In
addition, a National Defense University publication notes that “[f]or the West

See: U.S. Library of Congress. Congressional Research Service. NATO Enlargement46
and Russia. By Steven Woehrel. CRS Rpt. No. 97-477 F. Updated May 28, 1997.
Document provided by the French Embassy. Cited in: NATO: Congress Addresses47
Expansion of the Alliance.
Germany: Kinkel Wants Reduction of EU Contributions. FBIS/West Europe. July 15,48

1997. See also: Netherlands: Defense Minister Opposes US Estimate on NATO Costs.

FBIS/West Europe. October 3, 1997. Belgium: Officials Question US Cost Estimates for
NATO Enlargement. FBIS/West Europe. October 17, 1997.

European members of NATO, [the U.S. Administration’s estimate] will cost only
about 1% of the $2 trillion that they will be spending on defense.49
Further Expansion
NATO has expanded four times since the alliance was formed. Regarding the50
current accessions, the Administration has declared repeatedly that “the first shall not
be the last.” When might NATO next add new members? Would the next entrants
come in on a another “wave,” or would individual countries be let through the
turnstile one by one? Who might the next members be — Slovenia and Romania?
If so, the cost estimates might need to be revised upward. On the other hand, if one
of the former neutral countries, such as Austria, Finland, or Sweden were to join, per-
country costs might actually decline. 51
How will the costs be shared; will standard burdensharing rules continue to
apply, or will members seek to renegotiate their shares? Will the entire NATO
common fund need to grow in size? How realistic are the U.S. studies’
burdensharing assumptions? CBO assumed that, since the United States and
Germany are the most avid proponents of expansion, they will take on a larger part
of the burden, but some analysts question whether either country would be willing
to contribute a disproportionate amount. Also, must contributions be made as costs
are incurred (for example, as large weapons systems are purchased) or might they be
financed and redistributed over time, so that new entrants’ shares would rise as their

Costs of NATO Enlargement: Moderate and Affordable. By Richard L. Kugler.49
Strategic Forum. National Defense University. Institute for National Strategic Studies.
Number 128. October, 1997. p. 2. See also: NATO Enlargement: Putting the Costs in
Perspective. By David C. Gompert. Strategic Forum. National Defense University.
Institute for National Strategic Studies. Number 129. October, 1997.
NATO added members on four previous occasions. Because these earlier expansions all50
occurred during the Cold War, when the threat environment was drastically different,
defense budget analysts believe that comparing the cost of past expansions would not be
useful for policymakers today. Greece and Turkey were added in 1952, when Stalin was
still head of the Soviet Union, which had recently detonated its first atomic weapon. In
1955, West Germany, still under allied occupation, was permitted to create armed forces and
join NATO. Much of the weaponry and equipment it subsequently acquired were American;
in addition, as troops were added to the Bundeswehr, it is possible that fewer American
soldiers had to be stationed in Europe. Spain, which joined in 1982, was, in the words of
one analyst, “a geostrategic bargain”—NATO gained control of the western entry to the
Mediterranean, air and naval bases, and fallback territory. Finally, in 1990 former East
Germany became a part of NATO; the costs were absorbed by the united Germany. Until
the fall of the Berlin Wall, NATO allies were constantly attempting to strengthen the
alliance’s defense capability. See: U.S. Library of Congress. Congressional Research
Service. Senate Consideration of the North Atlantic Treaty and Subsequent Accessions:
Historical Overview. By Stanley Sloan. CRS Report No. 97-1041 F. December 8, 1997.
See: U.S. Library of Congress. Congressional Research Service. NATO Enlargement51
and the Former European Neutrals. By Stanley R. Sloan. CRS Report No. 97-249F.
Updated November 5, 1997.

economies developed, perhaps by pegging their share to growth of GDP? On the
other hand, if the economic performance of one or more of the new states began to
falter, would other NATO members be willing to pick up the slack, either through
bilateral lending or grants, or more extensive use of NATO’s Security Investment52
Program? Could costs instead be stretched into the future?
Political Pressures
National office holders in the United States and Canada are under considerable
political pressure to cut spending, while most of the European members of NATO are
also attempting to reduce their budget deficits in order to meet the rigorous fiscal
qualifications for entry into the European Monetary Union. At the same time, many
Central and Eastern European countries are facing budgetary constraints under the
International Monetary Fund’s economic reform programs. In addition, once they
have been accepted into NATO, the new entrants will likely set their sights on — and
adjust their budget priorities for — joining the European Union. In short, most
members of the enlarged NATO will find it difficult to increase defense spending,
although all three candidates have promised to do so even with the limits they face.
Finally, officials of both NATO and the Clinton Administration have admitted
privately that their respective estimates were held low to keep them acceptable to the
U.S. Congress. What are the likely future interactions between budget and policy53
— will the former come to drive the latter? The CBO report notes that “[i]f the
parliaments of the 16 member nations actually voted to expand NATO, the current
low-threat environment would probably allow those legislative bodies to spend as
much or as little as they chose to carry out the expansion.”54

See: U.S. Library of Congress. Congressional Research Service. NATO: Alliance52
Expansion, Partnership for Peace, and U.S. Security Assistance. By Richard F. Grimmett,
Paul E. Gallis, and Larry Nowels. CRS Rpt. No. 97-531 F. May 9, 1997.
A War of Numbers Emerges Over Cost of Enlarging NATO. By Steven Erlanger. The53
New York Times. October 13, 1997. p. A10.
The Costs of Expanding the NATO Alliance. p. 41.54