INTRODUCTION: BACK TO THE FUTURE

Since 1989, the world has witnessed a dramatic change in official attitudes towards the utility of military force as an instrument of policy. The Cold War, characterised by the 'Super-Power' confrontation between the United States and the Soviet Union and their respective Western and Eastern Allies, had dominated the global military strategic scene for over forty years. Little could happen of a military security nature anywhere in the world which was independent of either side. The Cold War and its attendant ideological baggage was almost all pervasive. Few states were unaffected, or untouched.

Indeed, it could be argued that there was a practical interest that this should be so. The Cold War had injected a degree of stability into international political, diplomatic and economic relations. Dominated by two heavily armed camps in almost permanent confrontation, international relations assumed a degree of certainty, if not predictability. Through their ideological and political ties, and promoted and consolidated by economic aid, military alliances, and weapons exports, both Super-powers were able to create client state over whom they could assert a degree of hegemony and exercise political leverage.

Though some states attempted to mitigate the extent of this influence and control - such as the political coalition of non-aligned 'Third World' countries - few had either the scope or the residual power to pursue significantly independent foreign, military or strategic policies. One glance at the inventories of their national armies, navies and air forces is sufficient to demonstrate the extent of their dependency on the major powers, even if their governments attempted to project a semblance of independent initiative. Only China managed to distance itself from both sides, though even then only for a limited period.

The global impact of the Cold War has yet to be thoroughly researched from a holistic perspective. The inter- and intra-dependence of the East and West blocks after the Second World War, nevertheless, was acutely appreciated by all states, and every one recognised that any initiative would have to be translated and interpreted in terms of its implications for the Super-Power relationship. The currency was invariably military; the penalty of miscalculation was to threaten to upset the super-power balance and invite either sanction from one or other side or to draw the super-powers more immediately into a regional military conflict or political competition.

All too often the global super-power conflict would become manifest in a proxy war fought on their behalf by client states. Thus, whilst there was a degree of global stability, it was a fragile one. The encompassing global policies of the super-powers involved high risk and high stakes for all; a close monitoring of all political and military developments was an imperative for all concerned.

The mechanisms of super-power neo-hegemonic control were either political, economic or military. The United States, fundamentally a maritime power, sought to extend its influence and control through economic and maritime means. Its commitment to Europe land forces under NATO command marked a significant departure from past traditions. The deployment and stationing of soldiers overseas never rested easily in US strategic policy and planning except insomuch as it contributed to the 'containment' of the Soviet Union and deterred aggression on the central front. In matters of naval and air power the US maintained not merely superior capabilities to those of its rival, but also established an unequaled power projection capability that could reach all corners of the planet.

The Former Soviet Union, for reasons that have subsequently become evident as information has become accessible, emphasised strategies that operated primarily through military and political channels. A continental power, its primary influence was directed at contiguous regions, principal among which were countries Westwards in Europe and towards Asia and the Far East. Constrained by geography, Soviet policy of maritime projection was only re-started in any major way in the late 1960s and 70s. It was developed in conjunction with new foreign policy objectives under President Brezhnev to project Soviet influence in the Third World and to match a US naval control of the oceans which had exposed Soviet power limitations during the October 1962 Cuban missile crisis.

Both Super-powers, for almost four decades, saw the sale of military weapons and equipment as an important means to exercise control over their allies and friends, enhance political and economic influence, boost international trade balances, and adjust regional military balances to suit their interests. Nevertheless, there was also recognition that these regional balances were important to retain lest their collapse drew them directly into confrontation. Only over the Soviet Union's deployment of weapons over Cuba did this tacit understanding break down; it happened again later, in the mid 1970s, when the Soviet Union significantly began to make inroads into areas of the world which hitherto had been assumed were within the United States sphere of influence. Significantly, these later initiatives were taken in the wake of the massive expansion in the Soviet Navy under Admiral Gorshkov.

COLD WAR DEFENCE EXPENDITURE DISTORTIONS

From a global defence expenditure perspective, the Cold War introduced a number of significant distortions. These have to be borne in mind when considering both future developments in global defence expenditures and their implications for the future size, structure and performance of the world's defence-related industries.

Once the Cold War had effectively ceased at the end of 1989, the reasons behind the large majority of these distortions almost immediately appeared no longer directly to apply, such was the nature of its impact and the rapidity of the changes it heralded. Any differences before and after 1989 effectively became a matter of degree, rather than kind.

SUPER POWER CONTRIBUTION TO GLOBAL DEFENCE EXPENDITURE

The first, manifestly, was the overwhelming contribution of the two super-powers to the annual global total defence expenditure. Aside from the extent to which they provided massive military aid to allies and friendly states, either in direct grants or under extremely favourable terms, both super-powers appropriated an enormous proportion of their annual gross domestic product not just for their own defence, but also for the security protection of their immediate allies. Any reductions in post Cold War defence expenditures by either country would necessarily have a significant impact, first, on the annual global total, and, second, also on their client states.

Estimating national defence expenditure totals, let alone aggregate totals for the world as a whole, has proved to be an imprecise science at best and a crude art at worst.1 Attempts by research institutes such as the Stockholm Peace Research Institute or the International Institute for Strategic Studies, and government agencies such as the US Arms Control and Disarmament Agency, have generated annual totals and estimates results that generally bear little comparison. This is hardly surprising, given the degree of secrecy surrounding defence expenditures, the existence of 'black budgets', and widely varying estimating and accounting procedures. Given the dominant influence of the super-powers, and the variations in their defence totals, they alone would be responsible for significantly different results.

By the end of the 1960s, the US Department of Defense chose to disregard the Soviet Union's declared defence budget of around 14% of its GDP. It preferred instead to work on a conservative figure of between 20 and 25%. As such, this was an informed 'guesstimate', but provided a more realistic basis for its own strategic planning. Mr. Gorbachev admitted in the late 1980s that a more accurate figure was more in the order of 40% of Soviet GDP.

The International Institute for Strategic Studies Military Balance continues to calculate the defence expenditures of the Former Soviet Union at 14% of GDP in 1990, declining to 11% in 1991. However, it admits to using only Soviet or Russian published data, which would explain some of these disparities. Today, as the Former Soviet Union Republics address as a matter of economic necessity the problems of defence industrial conversion to overcome their respective domestic economic problems, even the figure of 40% has been increased cautiously upwards, a calculated increase that has not yet been challenged by former Soviet officials. The real figure may never be accurately calculated, though the current sclerosis within the Russian economy would indicate that the defence sector had unquestionably absorbed more than even the lion's share of the former Soviet Union's industrial, technological and scientific capacity.

There is good reason to suppose that the real total for US defence expenditure should also be revised upwards in absolute terms, since several putative non-defence programmes, such as NASA, had clear and intentional defence implications. The 'mythical' figures for the defence 'black budget' have also become better understood as the programmes that they financed, such as the stealth fighter and bomber programmes, are now discussed with a price tag attached. It would be no exaggeration to estimate that the DOD defence 'black budget' added a further 15% to the annual US defence total in the late 1980s of $290 billion.

SUPER POWER DEFENCE TECHNOLOGICAL DOMINANCE

A second distortion in post-war global defence expenditure stems directly form the strategic confrontation between the super-powers. With an emphasis on mutual nuclear deterrence, principally at the strategic level, the main focus of their defence expenditures was directed on inter-continental nuclear forces and invulnerable retaliatory capabilities. Inter-continental ballistic missiles (ICBMs), long-range bombers, submarine launched ballistic missiles formed the core of either side's deterrence postures. Each arm in the deterrent triad was supported by sophisticated logistic, command and control, reconnaissance, and research and development capabilities.

Their theatre force capabilities, to which must be added the contributions of their allies, were inextricably linked to their nuclear strategic posture. These sub-strategic forces were sufficient in number and capability only to allow time for reflection once conflict had broken out before the strategic nuclear option was exercised. The forces and defence policies of their respective NATO and Warsaw Treaty partners were structured to support this end. Their contributions were made predominantly in the form of conventional forces, logistics, and service support. The weapons and equipment they used were, in the case of the Warsaw Treaty states, virtually all sourced from the Soviet Union; within NATO several states had indigenous defence industrial capability, though much of the infrastructure, command and control and the more sophisticated systems were of US origin, if not produced there.

SUPER-POWER DEFENCE INDUSTRIAL BASES

A third distortion in Cold War world defence expenditure patterns is that of the disparity in the levels of defence technological competence between the super-powers and the rest of the world. Not only were the super-powers leaders in most areas of defence-related technology, but they could also demonstrate a technological competence across the board - in land, sea and air systems, and in space. Whilst a few European states could equal their competence in a few areas of weapons technology, their number was very small.

The super-power defence technological lead was correspondingly manifest in their respective defence industries and the size of their defence markets. The Former Soviet Union's defence industrial base was massive, vertically structured, and financially unaccountable. It wanted for nothing by way of resources, manpower and materials, worked independently and in secret, and its industrial units and defence research institutes (of which there were an estimated 1 200) were largely autonomous. Even today, the size and scope of its defence industrial structure, much of which was located behind closed doors in 'hidden cities' even within large conurbations, is not fully publicly appreciated either inside Russia and the other former Soviet Republics, or outside.

The US defence industry correspondingly was of sufficient size and importance that the economies of well over half the states of the Union were dependent on defence industrial expenditure to balance their budgets. Specific Congressional constituencies would depend on expenditure defence facilities and defence industrial corporations for their livelihood, a fact not lost on their Congressional representatives. Though structured differently from the Soviet Union, the US defence-related industries accounted for almost 3,5 million jobs (1,7% of the total labour force) the majority of which were concentrated in ten states. Defence-orientated companies accounted for 20 of the top 25 US corporations by turnover in 1988. Defence spending overall amounted to 23% of a Federal budget of $1261 billion in 1990, or 6% of GDP.2

NATO AND WTO DEFENCE EXPENDITURES

The defence expenditures of other Western states, and their corresponding investment in their defence industries and weapons technologies have been modest in comparison. Today, the economies of the Western European states combined approximate the US GDP; their aggregate defence budgets, however, only amounts to about 4% of the US total. The sum of their parts in defence industrial capability in no way matches the US whole, partly because of a huge amount of duplication, and the absence of a single large defence market. However, several states - France, Britain, Germany, Italy, and Spain in particular - have been successful in capturing specific overseas markets for items of military equipment. Outside Europe, only China has succeeded in penetrating the international arms market significantly. Nevertheless, together, the USSR and the USA accounted for nearly 70% of the total arms transfers by value in the 1980s, a fall from a peak of 80% in the late 1960s.3

None of this is to disregard defence expenditure in the rest of the world, or the existence of indigenous defence industrial capabilities elsewhere. In some cases these emergent or developing states have demonstrated considerable technological competence in the design and development of conventional military equipment. Most significant strides in this respect have been made during the past decade. Japan is a case in point, though might be regarded as something of an anomaly on account of its advanced technological competence, first world status, and massive gross national product. Despite a self imposed limit on defence spending of 1% of GDP, the Japanese Home Defence Forces' annual budget exceeds than of all but a handful of states. Its level of defence technological competence is high as it systematically modernises its armed forces. In some cases this has been conducted in collaboration with the US and other Western states. Along with India and China, Japan has been moving inexorably towards becoming a major member of the so-called 'space club'.

OTHER STATES WITH SIGNIFICANT DEFENCE CAPAPBILITIES

The developing defence technological competence of non-Soviet, American or European states was highlighted by the Gulf War and by the extent to which Iraq had not merely built up a technologically competent indigenous defence industrial base but had also acquired specific technologies that clearly indicated that it could become a nuclear power in the not too distant future. Other states with comparable technological competence and a maturing defence industry include China, India, Israel, Brazil, South (North) Korea, and South Africa. However, these emergent capabilities should not distort the overall picture: as one swallow does not make summer, so the evidence of some defence industrial competence does not create a major military power. Much of their technological competence is dependent on outside assistance. Furthermore, the global figures of defence expenditures tell their own tale.

The distortion in military and defence industrial and technological competence between the super-powers, their allies, and the rest of the world is best exemplified by the gross defence expenditure figures of the old NATO and Warsaw Treaty alliances as a percentage of the world's total defence expenditures. The Stockholm Peace Research Institute has estimated that NATO accounted for 47% of the world's total defence expenditure in the 1980s and the WTO a further 28%. The Rest of the World, including the major arms purchasers of the Middle East and those with established defence industries, together made up the balance of 27%.

A SEA CHANGE INTO AN UNCERTAIN FUTURE

The important point about these Cold War distortions is that the 'melt-down' of the Warsaw Pact in 1989 and then collapse of the Soviet Union in 1991, taken with the scramble among the Western allies to cash in on the 'peace dividend' that was believed to follow in the wake of its demise would dramatically change the profile of global defence expenditures. This has, to a remarkable degree, proved to have been the case. The states on either side of the West/East divide have progressively declared their intentions to 'down-size' their defence budgets and, correspondingly, their standing military forces

In other words, the cumulative total of 73% of the world expenditure on arms and the military for which they were responsible that prevailed before 1989 is steadily being reduced. Assuming that the rest of the world does not follow suit - and there is no evidence that they show any intention of doing so - the Rest of the World's percentage of a reduced absolute total of global defence expenditure is likely to increase proportionately.

HARBINGERS OF A NEW WORLD ORDER

Even before the Cold War was 'officially' declared to have ended - taken by most analysts to be the signing of the INF Treaty between Gorbachev and Reagan in Washington in 1988 - the 'draw down' in defence spending and weapons acquisition had already begun as both super-powers vied with one another to see which could make the more radical arms reduction proposal. Strategic Arms Reduction Talks (START) competed with Conventional Forces Reductions in Europe (CFE) for public attention only when the elimination of Intermediate Nuclear Forces (INF) were not capturing the limelight. Until the uncertainties caused by the abortive coup against Mr. Gorbachev in 1991 temporarily brought arms reductions to a halt, the world did indeed appear to be moving inexorably towards what Mr. Bush prematurely called a 'new world order'.

The NATO London Declaration and the Paris Agreements between NATO and the WTO of 1990 best encapsulate the changed atmosphere between East and West. They pointed the direction in which the world's major defence spenders would likely be going in the future. The disappearance of the Warsaw Pact, the withdrawal of Soviet forces from Eastern Europe, the abandonment of the Brezhnev Doctrine, the collapse of the Eastern European Communist Regimes, the significant conventional arms reductions in Europe, and the introduction of confidence-building measures into relations with the Soviet Union, together convinced the Western allies that the risk of major conflict on the Central European front had either very significantly receded or disappeared entirely. The expected warning time of a potential attack from the East was extended from a few months to years; the necessary forces to withstand an initial attack on permanent alert were judged to be no longer required. Accordingly, arms and force reductions and cost savings could immediately be made with some confidence.

The reasoning behind this conclusion was made all the more persuasive as the former Soviet Eastern European satellite states applied for NATO membership, joined in the CSCE process, found a vehicle for discussion in the North Atlantic Cooperation Council (NACC) and explored the possibilities of European Community membership.4 Furthermore, the parlous state of their economies and the influx of Western capital investment diminished further the likelihood of military conflict along the lines of the old Cold War model. But their situation paled in comparison with the steady economic collapse and hyper-inflation of the Former Soviet Union itself. There, the gross imbalance between defence and civil industrial production and the rigidities caused by the old centrally controlled system proved unable to respond to the government's free market policy initiatives. The Soviet Union economically could not contemplate nor afford military action.

PLANNING FOR UNCERTAINTY IN EUROPE

The sudden disappearance of the past Communist threat left the West with a dilemma: how to plan when there is no longer an obvious or immediate threat. There was manifestly no longer an immediate or, even, real risk to Western security. Nevertheless, there are still more than enough grounds for uncertainty, partly because the Commonwealth of Independent States, and the Russian Federation in particular, is still heavily armed even if bankrupt, and partly because past political animosities and disputes, suppressed for decades under totalitarian rule, threaten to break out.

The prospect of the Former Soviet Union imploding politically is one consideration. Entirely another is the possible contagion of local disputes and regional political vacuums leading to wider instabilities and conflicts throughout Eastern and Southern Europe and into the former Soviet Union itself. These uncertainties, many with historical precedents, have had to be addressed, the implications weighed, and the appropriate security provisions put in place. Though not requiring past levels of defence expenditure or massed military force, the Western allies have concluded that some rapidly deployed capability would be necessary. They have judged that NATO was the most suited arrangement to address the task.

It is around the concept of uncertainty that the Western European states have, over the past three years, restructured and moulded their defence forces and set the upper limits of their defence expenditure. Most have seen fit to reduce total defence expenditure by around 25%, though in some cases, such as Holland and Denmark, this has been nearer 40%. The NATO members have agreed to the creation of a Rapid Reaction Corps of four Divisions drawn from most member states. This is in addition to European national forces and reduced numbers of US forces stationed in Germany. A parallel development has been the creation of a European Corps manned by French and German units, and based politically on the European Community.

There is wide acceptance that NATO is the only alliance left that has the structure and command and control system that would enable states to operate in military coalition outside the European theatre. Without this rationale, there is a case that NATO could be judged to have outlived its usefulness. Its functions to address the Soviet Union and protect the North Atlantic Region has disappeared. Its future remains uncertain, and will depend on what, if any, alternative structures emerge, how committed the USA remains to the defence of Europe, and the utility of the NATO command structure as the basis for wider United Nations sponsored international peace keeping/maintaining operations.

Outside the immediate super-power strategic rivalry, the focus of Soviet and Western defence planning and expenditure has been primarily on Europe and the central front. This has largely absorbed the defence expenditures of the high defence spending states. The residual expenditure after the demands of the central front had been met, addressed interests in the rest of the world. In the West, only France and the UK among the Europeans entertained military power projection beyond the North Atlantic Region, and even then were only able to afford to do so in a limited way. The principal forces for this role were their navy and marine amphibious units, and these have been retained at cold war levels despite reductions elsewhere.

PLANNING FOR UNCERTAINTY - US POWER PROJECTION

Throughout the Cold War, the United States had maintained both a naval capability to ensure the reinforcement of Europe and an independent naval global reach. In the 1980s the US Navy was enlarged dramatically to a target total of 600 ships to match Soviet Navy's blue water naval building programme whilst retaining its commitment to the support of Europe. The Cold War's demise immediately called into the question the need for such a huge naval force - which had managed a total of 550 ships by 1990 - not merely because its European reinforcement role had diminished in importance, but also as the former Soviet Union's had been forced to cancel many of its major naval programmes.

In a major review of the US military forces, President Bush spoke of the need for both reductions and restructuring in the light of new strategic and security priorities.5 These priorities, influenced arguably by an optimistic view of a 'new world order', pointed to a greater emphasis on the United Nations - an emphasis strongly promoted by the UK government - and the role of the United States as a major contributor to world peace-keeping operations. Although the idealism of a new world order has quickly evaporated, the role of the US as world peace-keeper was quickly assumed, as the UN response to the Iraqi invasion of Kuwait graphically demonstrated. Whether or not his was a role that the Americans welcomed as an extension of US foreign policy, or one that the rest of the world readily thrust upon it, is a debatable point. The US reluctance to be involved in Yugoslavia might suggest that there is more in US national self interest than a sense of universal obligation as the last global military power.

The US has always been and remains principally a maritime power. Past isolationist inclinations do not negate this geo-political and geostrategic fact. As the US excluded naval matters from past arms control negotiations with the USSR, so it is to be expected that the US Navy is likely to be the least affected in any major US foreign and strategic policy review. That having been said, the incoming Clinton administration has made the revival of the American economy its first priority, with early indications that further significant reductions in defence expenditure are part of the strategy to achieve that goal. A cut of up to $40 billion from the defence budget was announced to Congress on February 17th as part of a comprehensive package to overcome the massive US budget deficit.

PLANNING FOR UNCERTAINTY - THE CIS REPUBLICS

The former Soviet Union has emerged the victim - or loser - of the Cold War and of its demise. Not merely has the Commonwealth of Independent States more or less broken up into the former USSR's constituent Republics, so also have its military forces become the subject of wrangling and bargaining between them. Insofar as there is a coherent foreign policy, the only Republics that really matter are those of the Russian Federation, the Ukraine and, possibly, Byelorussia. The declared policy of each is defensive, with reductions in the size of their armed forces and the cost of defence to levels that are merely sufficient to achieve that objective.6

It has long been recognised that the security of a state is built on its economic foundation, and it is here that the former Soviet Union is at its most vulnerable. The menace of the collapse of the CIS economy has turned the attention of the member Republics and the leadership inwards. Their participation on the world stage is minimal as they struggle to cope with a society that is visibly disintegrating. Defence expenditure, much reduced in total, has become relevant only inasmuch as it holds together the vestiges of the former Soviet military and prevents them from mutiny.

BUSINESS AS UAUAL FOR THE REST OF THE WORLD

The end of the Cold War has only just begun to touch the pattern of defence planning and expenditure of the countries of the rest of the world. During the Cold War they contributed relatively little in defence terms to either alliance and largely operated within one or other's sphere of influence. At best they were client states with varying degrees of dependence on foreign military equipment and support.

The reductions in defence expenditure by the NATO and WTO states have heralded the withdrawal of much of the super-powers' military presence throughout the world. The US has lost its bases in the Philippines as has the USSR in Vietnam, Angola and Somalia, for example. These departures present a new reality to which these smaller independent and non-aligned states will have to adjust. Indeed, the states in the principal regions of the world have had to reappraise new power relationships and modify their foreign and security policies accordingly.

Thus, in the past two years there has been a discernible acceleration in arms purchasing form the major suppliers - and the former Soviet Union more out of economic necessity that as an instrument of foreign policy is a major player - especially in South East Asia, and the Middle East. Whilst the collapse of the Soviet Union left something of a power vacuum in Eastern Europe, the end of the cold war has left small vortexes of instability around the world. Whether or not the United Nations, which is now conducting 19 peace-keeping or equivalent operations around the world, has the capacity, will or politico-military command structures to cope with any more international conflicts or emergencies appears increasingly unlikely.

DEFENCE EXPENDITURES AND RESOURCE ALLOCATION

It is one thing to recognise that the world had changed dramatically after 1989 and that all states had to take stock of their foreign and defence policy interests. It is entirely another to translate that process into practical policies and positive action. Domestic interests vie with Foreign Affairs and Defence for their share of public expenditure. Among the NATO and WTO 'Cold War' states, domestic interests have a case for special consideration in the light of past priorities having been directed at military strategic imperatives. Their prospects are reasonably promising for an improvement in their budgetary allocations; this is much less likely in the defence sector.

Any increase in budgetary spending, however, is easier to manage than reductions. In any organisation, and more particularly in the public service, institutional and organisational contractual commitments and obligations constrain options. Whatever decisions are made - and clearly radical reductions to defence spending are widely envisaged - they will no, nor can they, happen overnight. In all probability proposed reductions to armed forces will be phased over a 5-10 year period. It will most likely be conducted in such a way that new defence structures can emerge in a manner that is compatible with changed foreign policy objectives whilst at the same time enable a core military capability to be retained. This is necessary to maintain national security during the transition period.7

REEVALUATION OF SECURITY CONCEPTS

One important change in this process has been the emergence of a broader view of defence and security. The rather narrow focus on purely military and nuclear deterrent concerns that had focused decision-makers' attention during the cold war has been encompassed within a reevaluation and redefinition of the concept of security.8 This is not merely the product of a closed debate among academics, but a view that has been steadily embraced by policy-makers over the past decade as the defence costs impinged increasingly on the economic health of nations.

As the old order has progressively disintegrated over the past three years, new threats to the world have emerged 'that do not fall into traditional categories, such as environment, population, nuclear proliferation and catastrophic diseases'.9 To these might also be added the menace to sates of drug trafficking, illegal immigration, terrorism, and piracy. It is not yet clear whether these newly perceived threats to security properly come under the remit of defence expenditure, or will be assumed by other government departments.

DEFENCE EXPENDITURE REDUCTIONS AND 'DOWN-SIZING'

Between 1985 and 1991 the world witnessed a reduction in defence expenditure of 11% among the NATO nations and an estimated 62% within the CIS.10 How much further the CIS Republics collectively will reduce their defence expenditures further is a matter for speculation. In 1991 its total defence expenditure was merely 10% more than the total for the European NATO states and 35% than that of the USA. There is certainly scope for significant further reductions, but at an enormous cost in industrial production and employment and in defence support activity. The evidence from the world's major defence spenders suggests that over the next five years their cumulative defence expenditure total will decline by approximately a further 25%.11

How third world, emergent and developing states are responding to the altered world situation remains a matter for speculation, partly because figures are either unknown or extremely unreliable. Where figures indicate a significant increase in defence expenditure, it is more often than not a consequence of internal or external war. Thus states like Yugoslavia, Ethiopia, Kuwait, Colombia, and Venezuela have recorded sharp increases between 1990 and 1991. Total defence expenditure figures for these countries do not give any clue as to changing security or foreign policies following the end of the cold war.

Nevertheless, there are a number of states that are beginning to emerge as major actors within regions of the world from where the super-powers have been withdrawing, or reducing, their military presence. In the Middle East, Saudi Arabia remains the state with by far the largest defence budget, even after the Gulf War has been taken into account. Four times higher than Iran in 1991, it accounted for almost 40% of total Middle East defence expenditure, and 20% in more normal years. Much of its spending is with Western arms producers. Africa remains something of an enigma, since so few figures are available; it would seem however, that after South Africa, only Nigeria has a defence budget of any significance.

Asia and the Far East present a more interesting region, not merely because the United States have withdrawn from its bases in the Philippines, but more importantly because the states in the region have become major economic players on the world stage. Furthermore, the restraining influence of both the USSR and the USA has weakened relative to the steady growth in their GNP and their levels of defence expenditure. Two areas of foreign and security matters will preoccupy the states in the region in the near future: one is the disputes over territory that have lain dormant for many years, such as the Paracels, Spratleys, and Kuril Islands; the other is the need for such states as South Korea, Singapore, Hong Kong, Taiwan, and Japan to ensure free movement of trade. This in essence means the maintenance of sea lines of communication (SLOC) through the many isthmuses and straits in the region.

Japan and China are emerging as the region's two 'super-powers' and will dominate developments in the near future. China, with the world's fastest growing economy, and large natural resources, has steadily increased its defence expenditure in parallel with its economic growth. Japan has the largest defence budget in the area, and will come under pressure from the US and others in future to play a role in the world commensurate with its economic standing. At present its constitution precludes external military engagements, though a precedent has been set in the face of strong public opposition for Japanese troops to assist in a UN peace maintaining operation in Cambodia.

North and South Korea potentially have a part to play, conditional on their managing to accommodate their differences and unite. The foreign policies of these four, and the smaller states in the region, could well be characterised as moving forward uncertainly and with a degree of apprehension. One persuasive prognosis is the continued involvement of the United States military - mainly the Navy - to protect American economic interests and to act, in ways reminiscent of the United Kingdom in relation to Europe in the earlier part of this Century, as a balancing mechanism between the larger states.

Finally, Latin America, which has remained largely untouched by the cold war with the single exception of Cuba, continues to behave in much the same way as before. There is little evidence of significant alterations to defence expenditure patterns, or to radical changes to foreign policy objectives. Democracy, of a sort, has been restored to Chile, Brazil, Argentina. More significantly, these three states have signed arms control agreements banning certain categories of weapons (CBN) and have managed to keep outstanding boundary disputes at a low priority. The only question mark hanging over the region is the emergence of extra governmental power centres based on illegal drug manufacture and distribution about which the USA and, increasingly, the European states have registered concern.

DEFENCE EXPENDITURE AND WORLD NAVAL FORCES

It has been suggested that without a threat or an ever present enemy, governments and their armed forces would have to find one. The end to the cold war removed the focus of defence planning and preparations for the world's major military powers, so new threats have had to be found. Whether or not this is ground for cynicism or a manifestation of prudence, these major powers have focused their attention away from each other and more on prosecuting their national interests around the world either in an alliance, a coalition, or under the auspices of the United Nations. The emphasis is on intervention in situations which are considered to have wider implications for national, regional or global security. The means and capability to exercise this interventionary role have proved to be one of the central issues in current defence debates.

INTERVENTION AND OUT-OF-AREA OPTIONS

'Intervention' means power projection by military means. To be at all credible, it requires naval forces. Without them the necessary reach and logistic support would not be possible; nor would the flexibility inherent in sea power be at their disposal.12 The Gulf War demonstrated that 'very few navies are designed for power projection so far from their normal theatre of operations'.13 The lesson from that experience was that, other than the United States, no other state has the naval capability to intervene in external conflicts unilaterally. It might be possible in a coalition, though significant problems would arise, other than in a NATO context, with command and communication.14

The Gulf War provided a second lesson that to some degree reinforced a lesson learned by the UK during the Falkland Islands conflict: military operations 'out-of-area' require both military capability and significant logistic support. In the Gulf, this was achieved with little hindrance on account of it being a UN operation with almost universal endorsement. Consequently, the world's maritime merchant fleets were available - under commercial contract - to transport the logistic support necessary to conduct the military operations. No military opposition was encountered between point of despatch and point of delivery. A further bonus was the accessibility and security of the landing facilities in the Gulf.

None of these advantages were apparent in the Falklands. For the most part, the UK had to use its own naval logistic support vessels (Royal Fleet Auxiliaries) augmented with civil commercial ships taken up from trade (STUFT). These were limited in number, and could only just maintain the British naval task force and the forces fighting ashore. Since 1982, the numbers and types of UK merchant ships has declined further, leading to the conclusion that the UK could not repeat the Falklands campaign.15 In addition, the UK registered merchant ships supporting the operation were vulnerable, as the attack on the MS Atlantic Conveyer demonstrated. Had the UK not had the benefit of bases on Ascension Island, the Falkland Islands operation would have been impossible.

THE US STAND-ALONE IN POWER PROJECTION

Out of Area intervention, however, is a defence and foreign policy option open only to a few of the world's leading military powers acting in partnership or coalition, in the short run. The United States stands alone in being able to contemplate such a course of action unilaterally. Arguably its participation would be a sine qua non of any UN or other political coalition's interventionary force. Its Central Command, set up for the Gulf War, has been adopted as the formal structure for such a purpose.16

Even so, the US has its problems in this regard. The US merchant fleet has declined even more than Britain's and would not alone be able to sustain US major naval operations abroad. In addition to possible interventionary roles, the US has 43 separate defence commitments around the globe. Many do not require a naval commitment and some are redundant relics of the cold war; but the rest will make a claim on dwindling US naval resources.17

Over the next few years, the US will be significantly restructuring all its defence forces. The current projection is that the US Navy will likely be the least affected, though it will have to take a reasonable share of the overall reduction in expenditure and down-sizing in personnel and equipment. There are three reasons for this probable outcome: first, it is recognized that once disbanded, naval forces are the lengthiest and most difficult to reconstitute; second, sea power is the most efficient and effective means of global power projection; and finally, US national interests are best served through maritime power.18

Some indication of what the United States is likely to do in respect of defence expenditure and the US Navy is contained in Les Aspin's earlier statements before becoming Secretary of Defense. The US National Military Strategy emphasises forward presence and crisis response, for which the US Navy would play a leading role. The other two armed services would be brought in if it were necessary to project power ashore. For this, a Navy of about 350 ships and 12 aircraft carriers is considered sufficient, (Aspin's Force Structure C) and assuming that no residual cold war naval capabilities such as blue water ASW are retained.19 The future of the US Coast Guard, which hitherto had a military mission, is likely to emphasise more traditional 'littoral' defensive roles focused on inter alia drug interdiction, fishery patrol and immigration. Already larger vessels under development for the service have been cancelled.

OTHER POTENTIAL INTERVENTIONARY POWERS

Britain, France and the other leading European NATO members have addressed their future defence requirements, and none, it would seem, have yet satisfactorily come up with solutions. Britain's defence review, Options for change is itself under review with Option 2 and until some decision is made regarding the priority to underpin the NATO Rapid Reaction Corps, both Royal Navy and the Air Force will be severely constrained. Nevertheless, there is recognition of the requirement for an amphibious capability and the utility of retaining a surface fleet of around 40 ships. This is to be achieved within a reduced defence budget of around 15% by reducing the size the UK conventional and nuclear submarine fleet and other savings ashore.20

France pursued a largely independent defence policy during the cold war financed in some measure by her success in the military export market.21 Cost escalation, a decline in the export market and obsolescence coincided at the end of the 1980s forcing France to make difficult choices. These choices were made all the more poignant by her experience in the Gulf War, in which the effects of her independent stance had exposed a serious deficiency in several key operational areas. Reductions in the overall defence budget have forced the cancellation of the second nuclear aircraft carrier, a decision that will seriously limit France's overseas interventionary capability. The Raphael carrier-borne aircraft have still to enter service. Meanwhile, the nuclear deterrent is to be based on five SLBM Triomphant Class submarines. Total numbers of surface vessels and amphibious have still to be determined, though manning problems will dictate a reduction in all classes.

Germany has an in-built problem in as much as constitutionally German forces may not serve outside the country. German public opinion, as well as the military themselves, are reluctant to see any change.22 There is strong pressure to reduce the defence budget not merely to conform with CFE limits but also to effect economies in support of the unification process. Former East German ships are up for disposal and under a Naval study Marine 200, the size of the German Navy will be halved.

A similar fate is likely to befall the Dutch Navy, except the plans are for an amphibious capability to be retained (perhaps at the cost of future submarines) together with 16 frigates. Italy also is reducing its defence expenditure, and in line with others in NATO shifting emphasis from defence to out-of-area operations, for which the two Garibaldi Class aircraft carriers are suited.

THE NAVIES OF THE FORMER SOVIET UNION

The declared defence policies of the CIS Republics is defensive. Their defence budgets have been drastically reduced to a point where it is seriously in question whether any one of them can field a cohesive force structure, let alone all acting together as a reconstituted Soviet Armed Force. Alarming reports abound of wholesale sales of equipment, units, stores etc. to the highest bidder, and defections from former Soviet forces to those of the independent Republics. Nowhere was this more highly publicised than in the dispute between the Ukraine and the Russian Federation regarding ownership of the Black Sea Fleet.

The future of the former Soviet Navy is very uncertain. For the first time in Russian history, no new naval vessel has been started in 1993. Many ships under construction have been cancelled and some major projects at a relatively advanced stage of construction, such as the nuclear powered aircraft carrier, are unlikely to be completed. A second aircraft carrier whose hull was 60% completed reportedly has been sold to a Norwegian company for scrap.

For all intent and purposes, the ships of the former Soviet Navy are all tied up in harbour with neither the fuel nor the missions to put to sea. Ships have been offered for sale, many of them incorporating the latest Soviet technology, such as the Sovremennyy class guided missile destroyers. Soviet submarines have been sold to Iran, though a question mark hangs over their longer-term significance. One thing, however, is clear: the vision of Admiral Gorshkov of a Russian blue-water Navy with global maritime power projection has been deferred almost indefinitely.

The only remaining states with a sufficient naval capability which could be used in an interventionary role are India. It has long been India's ambition to be the dominant influence in the Indian Ocean, for which it embarked in the early 1980s on an ambitious naval building programme. This was dodged by economic problems and a small percentage of the Indian defence budget. Nevertheless, the intention is to build a small aircraft carrier and to shift the ratio in favour of ocean-going ships. Like many third world states, it had bought Soviet vessels and is currently finding it difficult to secure spare parts and maintenance support.

NAVAL DEFENCE AND EEZ PROTECTION

Defence of shipping and territorial protection will continue to be a primary naval task of all the navies with overseas trading interests. For the Western states, intervention is an added role made possible after expenditure cuts have been accommodated by the end of the Cold War. For third world navies, and now the Russian Federation and the Ukraine, defence is its only major role.

Nowhere in the world is this more evident than in South East Asia and the Far East. Indeed, the region is witnessing a modest arms race as the US presence begins to recede. Though defence expenditure is not rising other than in China and Japan, the allocation of defence resources would appear to moving in the direction of naval forces. Malysia, along with the other ASEAN countries bordering the South China Sea, has recognised the importance of sea communications and protection of its EEZ for which off-shore patrol vessels are being procured in addition to the corvettes delivered recently from Germany.23

Of interest in the region is the acquisition of conventional submarines as a deterrent. Malaysia and Thailand have expressed interest but taken no decision. Malaysia has, however, gone as far as ordering a training hull from Kokums of Sweden.24 Indonesia operates two submarines, as does Taiwan, and South Korea has six German 209 conventional submarines on order. In the light of the increasing Japanese naval presence, one prognosis is of an increase in submarine acquisition in the region towards the end of the 1990s.25

The African defence scene has become more uncertain than ever before, and correspondingly so have estimates of what the major African navies will look like in the future. Two factors account for this: first is the possibility of ex-Soviet ships and equipment being available at prices some states can afford, such as Libya, Egypt, Nigeria; and second, the African economies are in such disorder that serious growth or modernisation is unlikely.

South Africa's budget problems have prevented the planned expansion of its submarine fleet and the acquisition of four corvettes. Indeed, cancellations of orders appears to have been a feature of African navies in the early 1990s, as have down sizing naval vessel types and problems with maintenance. Conversely, there is an estimated interest expressed in submarines, especially in the Magreb, and in mine laying.26

Latin America, with the exception of Chile, has been bedevilled by hyper-inflation, the effect of which has been to curtail defence expenditure severely. The consequence has been a period of very little change in either the defence or foreign policies of the states in the region or in defence expenditure patterns. In naval matters, the states continue to operate navies on small budgets with ageing or obsolescent ships and equipment.

Brazil has the largest navy in the region with an emphasis on coastal defence, mine warfare and a modest number of ocean-going ships. Its power projection is limited by having only replenishment tankers. Argentina, by contributing two escorts to the UN operations in the Gulf, has demonstrated its blue water capability, but in reality its potential is limited. Chile, with a formidable coast line to patrol, is acquiring a conventional submarine force with plans to start building their own in the 1990s.27

CONCLUSION

The world as a whole is in a state of flux. The major actors that dominated international relations for the past forty plus years are no longer in a position to do so to the same degree as before. The focus of their respective defence and foreign policies has changed. In the case of the Western Allies this has been a matter of choice; for the Former Soviet Union, it has been a question of necessity, with little or no option. Just as interesting is the number of states on the brink of becoming major world players in the fullest sense of the word, among which China, India, and Brazil must be counted. Germany and Japan, long held at bay and reluctant to be drawn into wider international commitments, may well emerge as significant military and political powers.

All states have had to revise their defence policies, and in the process explore whether the levels of defence expenditure, justified by the risks associated with the Cold War confrontation and the arms races that flowed from it, can be maintained. Even if these levels were possible, it is doubtful whether domestic public opinion would accept them.

Cuts in armed forces, reductions in levels of defence expenditure, redefining threats to national interests and new perspectives on security have generated a new atmosphere and new policy priorities in most high defence spending states. The evidence points to a refocussing of defence roles and the political utility of military force. These new roles are for the purpose of prosecuting national interests outside the European and North Atlantic region through the establishment of interventionary forces.

Only the United States, despite a 30% cut in its naval and amphibious capability, can contemplate unilateral military intervention; other states will have to do so in coalition or in alliance. NATO may well provide the structural foundation for these interventionary forces, even though they will likely be conducted under the auspices of the United Nations. The principal capability for such operations will be naval, for which the development of amphibious, naval air power, and surface ships is the most probable future development.

Within the dialectic of war, interventionary capabilities will stimulate defensive naval forces. Here trends can be identified already among smaller nations which are likely - or probable - targets for intervention. The much-derided static mine will prove a potentially cost-effective means of defence, as will larger off-shore patrol vessels (the Gulf War exposed the vulnerability of the smaller versions). Maritime patrol aircraft with anti-shipping missiles is a more costly option and will likely be outside the budgets of all but the more wealthy states.

The most potent defensive naval weapon is the conventional patrol submarine. Already, in the most vulnerable part of the world where conflict is likely to break out - East Asia - there has already been a significant increase in interest and procurement in submarines. Taiwan and South Korea are setting the lead with the latter not merely planning up to ten boats in the near term but developing indigenous development and production capabilities. China and Japan, on account of size alone, are close behind. Indonesia has renewed interest in submarines, and Malaysia also is seriously giving them priority consideration.

Naval systems are expensive, both to procure and to maintain. As Morris has observed in his ranking of Third World Navies the difference between littoral defence and a blue water navy is a significant one.28 Further, the decision to embark on building up a navy is one not to be taken lightly, given current costs. Brazil has already floundered on an over-ambitious shipbuilding programme, as has India, and South Africa. Nevertheless, the sea would appear to be where future uncertainty and conflict is likely to erupt, for which the major powers must decide its best course of action. If intervention is to become a real option for states, alliances or the UN, then the composition of future navies will have to change significantly, and their merchant marine will have to be radically increased. If smaller states intend to protect their coast-lines and EEZ, then they also will have to give attention to defensive naval power.

The most likely scenario for the future will be Western naval capabilities being used in a more traditional balance of power role, intervening between two or more competing states within a region. This would not necessarily involve or imply an amphibious invasionary capability. For such an interventionary role to be successful, close attention would have to be given to sea or shore based logistic and maintenance capabilities. At present, the former USSR states must be considered as a non-starter until its domestic problems are resolved.

All of this may prove to be highly speculative. It certainly gives no direct pointers to the future of national ship-building industries. But one thing is certain: there is an important symbiosis between naval and merchant shipbuilding, and between naval and maritime power which needs to be recognised. If it is not, the capability to build any options for the future will be severely curtailed. Perhaps the time is near, as a part of the debate on national security, defence and foreign policy priorities, to consider the rebuilding of national maritime power in all its military, economic and political manifestations.

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