NATO Secretary General Anders Fogh Rasmussen rarely uses the term “transformation.” He prefers instead to discuss “smart defense,” an initiative Rasmussen launched at the Munich Security Conference last February. “[Smart defense] is not [about] more money,” he explained at the time. “It is [about] money spent more effectively. It is shared defense. It is efficient defense.”

Asked by DTI on Oct. 4 whether smart defense has replaced transformation, which he had described six months after his appointment as NATO chief in August 2009 as being “about improving our working methods and preparing for the future while spending our resources efficiently,” Rasmussen replied: “Transformation is an integrated part of smart defense. We need to transform our armed forces in the direction of more flexibility and more mobility, and that's part of the smart defense agenda.”

Prior to the NATO defense ministers' meeting in Brussels on Oct. 5-6, Rasmussen named two smart defense envoys: Gen. Stephane Abrial of the French air force, who is Supreme Allied Commander Transformation; and Deputy Secretary General Claudio Bisogniero. When he first announced at the Allied Command Transformation (ACT) Industry Day in London on Sept. 12 his intention of appointing smart defense envoys, Rasmussen said they would “work hand-in-hand with nations, as well as with industry, to identify where we can get more from multinational cooperation.”

The heart of Abrial's new portfolio is to solve the equation of “lower defense budgets plus more expensive equipment, which must equal sufficient capacity in the future.” Abrial describes capacity as the whole chain, from establishing doctrine to training and procuring equipment. “We must maintain our capacity despite today's difficult budgetary situation that affects almost all NATO members,” he says. “The only way of solving this equation is by working together.”

Abrial cites the December 2009 Nordic Defense Cooperation among Denmark, Finland, Iceland, Norway and Sweden, and the November 2010 Franco-British Defense Treaty as examples of working together. “The best security is shared security, and it is by working together that we achieve this,” he told a media breakfast in Paris on Oct. 4.

In the same vein, Ivo Daalder, U.S. ambassador to the alliance, remarks: “NATO territorial missile defense would not be possible without interceptors in Poland and Romania, a radar site in Turkey, and early warning provided by satellites of various nations.” Rasmussen says territorial missile defense will reach initial operational capability by NATO's next summit in Chicago in May 2012, and full operational capability in 2018.

Abrial says the 28 NATO members “participated intensively” in preparing the ACT report on smart defense, which he presented in Brussels. “Our proposals are practical and can be translated into strong and concrete actions,” he says. While he concedes that “the initial mandate was not ambitious, we will step up a gear in the second stage, which will be much more ambitious now that we have political momentum.”

In this first stage, the 169 projects contained in the report concern priority areas highlighted during NATO's November 2010 Lisbon summit, namely missile defense, cyberdefense, defeating improvised explosive devices (IED), medical support, transport capacity, command and control, and intelligence and surveillance. Abrial says these projects include a robotic vehicle to counter IEDs—a project led by one nation (he would not say which) and joined by five others. Other priority areas are helicopter maintenance and joint training.

ACT is working with industry “on both sides of the Atlantic” in the Framework for Collaborative Interaction with Industry, or FFCI (DTI June, p. 27). FFCI is designed to accelerate development cycles “and have well-adapted capacities,” Abrial says. He describes ACT's relationship with the 35 companies involved in FFCI as “ACT being the demand side and the companies' R&D departments the supply side.” He says “everything is moving now,” and wants to ensure that small and medium enterprises get involved. “They are often a precious source of innovation.”

At the ACT Industry Day in London, Abrial said FFCI had “proven extremely relevant to cost-effectiveness. For example, it opens the perspectives of allowing us to use industrial battle labs, limiting our costs in testing hypotheses at practically no marginal cost to our partners.” And, he added, “the big idea behind FFCI is that an enhanced dialog well upstream of acquisition—ACT is not involved in procurement—will help align capability supply and demand several years down the line. Industry acquires a better idea of where our needs and requirements will be taking us, and we military acquire a fuller view of what industry may be able to offer, in what timeframe and at what cost.”

At the ACT Industry Day, Rasmussen called for the liberalization of defense markets on both sides of the Atlantic: “More open, less restricted competition will make companies more efficient,” he said. “It will lead to lower costs, greater economies of scale, lower prices and better margins. That's good for industry, good for the taxpayer and good for NATO.” Looking ahead to next May's summit in Chicago, Rasmussen called on industry to “play a full role in smart defense” and help win what he termed “an innovation race.”

Meanwhile, in his new role as envoy for smart defense, Abrial will continue to review projects and nurture them toward reality. “I will pick up my pilgrim's staff and go from country to country to look at projects.”

U.S. Defense Secretary Leon Panetta, speaking at an event hosted by Carnegie Europe in Brussels on Oct. 5, suggested that smart defense could be harmonized with the European Union's “pooling and sharing” initiative. He also said the Alliance Ground Surveillance (AGS) system, which he described as a crucial symbol of collaboration and critical to boosting NATO's intelligence, surveillance and reconnaissance capabilities, was currently at an impasse due to disagreements over funding.

AGS illustrates the difficulties Rasmussen's smart defense envoys face. Following the withdrawal of several nations, 13 members are pooling their resources to procure the system, based on the Northrop Grumman Global Hawk high-altitude, long-endurance unmanned aerial vehicle. The U.S., however, wants all 28 NATO nations to fund AGS operations, as they do for the 18-nation NATO airborne warning and control (AWACS) system. This is meeting with resistance from some countries. France, for example, withdrew from the program and prefers to use the funding for national initiatives.

“If we are going to move into the future, if we are to have a cooperative relationship with regard to capabilities, this is crucial to put into place,” Panetta said. “Unless [AGS] is implemented successfully, the drive for similar, cost-effective, multinational approaches to capability development would be seriously undermined.”

Rasmussen's original transformation agenda included the reform of NATO's political headquarters in Brussels, its 14 agencies and military command structure to make the alliance “a faster, more efficient service provider for member nations.” In June, NATO revealed plans for a new defense structure to reduce personnel by 26% (8,000 of the current 30,000), which could save $20 million a year. Brig. Gen. Patrick Wouters of the Belgian air force, deputy director of the Plans and Policy Division of NATO's International Military Staff, says the new command structure will be leaner, more efficient and more deployable.

The plan will also eliminate four headquarters and three commands. NATO's two joint force commands, in Brunssum, Netherlands, and Naples, Italy, will be converted into larger joint force headquarters able to deploy 500 of their 850 personnel. These new headquarters will regain the regional focus lost during the last NATO command restructuring.

The one remaining air component command, in Ramstein, Germany, will acquire tasks such as missile defense. This command will be better adapted to use NATO's joint air component air command concept and more easily revert to a wartime structure such as the one used for air operations against Libya, Wouters said.

NATO's 14 agencies are being streamlined into three major themes: procurement, support, and communication and information. Existing agencies that manage multinational procurement programs such as Eurofighter and the NH90 helicopter will become program offices within a new NATO Procurement Agency. Initially these offices will remain in their current locations near industrial partners. The NATO Support Agency, to be located in Capellen, Luxembourg, will manage pooled assets like the Strategic Airlift Capability's three Boeing C-17s and NATO AWACS, while the NATO Communications and Information Agency will be in Brussels. The latter will absorb the Communications and Information Systems Agency, whose 18 deployable communication modules (signals companies) and 1,300 personnel will be transferred to Supreme Headquarters Allied Powers Europe.

A Science and Technology (S&T) Organization will also be created before July 2012. It will include the S&T Board, Program Office for Collaborative S&T and the NATO Undersea Research Center.