1. Introduction

I am tempted to start this speech about the future, with a giant leap back in naval history.

Almost a thousand years ago, Norway was ridden by civil war. On one occasion the reigning king met an opponent in the middle of a Norwegian fjord. The conventional way to fight on the sea in those days was to tie your ships together, before closing with the enemy. Subsequently, the ships became platforms for close combat and infantry fighting.

However, on this special occasion the king just pretended that he roped the ships, and suddenly he let them run free. In the confusion that followed, the king crushed the enemy completely.

It would obviously be an exaggeration to promote this story as an early example of transformation, even if the king’s fleet actually performed a staggering transformation in the very eyes of the enemy.

Deception and cunning plans have always been important tricks of the military trade. Transformation is something else.

So what is transformation? And how may we achieve it?

To try to exemplify what transformation is, Admiral Giambastiani have used an example from the industry: "We don’t make the products that people use, we make the products that people use better".

In militar terms: transformation is not about firing missiles or sailing submarines – it is to make the missiles and submarines and a whole lot of other tools that the military use, to work better - and better together.

Transformation requires changing the structure of our military forces; our military culture and doctrine and streamlining our warfighting functions.

The title of this seminar is US Transformation – Implications for the Alliance and I fully agree that the Alliance should be the focus.

In november in Prague, the alliance focused on PCC, NRF and ACO – the operational part of the commandstructure. Now the focus is on transformation, ACT and its European footprint. Open Road 03 is the kick off of this process.

The record of our Alliance is impressive. It has served us well – all of us. To neglect it would be a tremendous mistake.

To neglect the urgent needs for reform, and for transformation, would be equally dangerous. Our security cannot be taken for granted.

The Alliance is as important as ever. To counter new threats, we need an Alliance that is ready, flexible, deployable and interoperable. To achieve that, we – the Alliance – must transform.

An efficient and co-ordinated transformation effort, imposes the need for a genuine two-way street across the Atlantic. The required military transformation in Europe cannot take place in the short term, unless the United States is prepared to share information, technology, experimental concepts, and other know-how.

And, just as important, the United States has to open up for state of the art technology and concepts from across the Atlantic. Best value must be the overall principle for all of us.

In the transformation process, we must ensure efficient and relevant European inputs. Or to put it differently: the proof of the pudding is in the eating. It shouldn’t matter on wich side of the Atlantic an idea originate, as long as it is good.

Transformation has to be a two-way street, drawing on the military talents and innovative thinking on both sides of the Atlantic.

In this respect, the proposed Joint Transformation Element in Europe will have a key role to play.

I fully agree with the former SACEUR, General Ralston, who has strongly recommended that the European Allies send their best people to Norfolk, to make sure that Eurpoe is not left behind in the transformation process.

There is a lot to learn. Clearly, we – the Europeans – need to focus on how to catch up with the United States. The current military capability and technology gaps across the Atlantic, may shred the very fabric of transatlantic relations unless they are rectified.

There is no question about it: Europe lags seriously behind in military transformation.

What should the implications of American transformation be for the Alliance? Well, we, the European Allies, should make a strong effort in order to narrow the gap across the Atlantic.

The hard question is: how do we do it? How may Europe catch up with America?

The answer is, what I usually refer to as the Norwegian "four legged plan":

First, we must review existing and planned national assets and capabilities in order to make them more relevant to current security challenges. This approach should provide significant results in the short run.

By looking harder at how we do things and how we set our priorities, it may be possible for a number of Allies to provide improved capabilities that are of direct relevance to the Alliance.

All our efforts cannot be aimed at the long-term future. On many issues we must be good enough both today and tomorrow.

However, at the same time as we rectify the most pressing deficiencies, we must also focus on the long-term transformational needs.

Second, we need more specialisation. The Alliance has to give increased attention to the need for a division of labour.

Smaller specialised units, operating within important functional "niches", will enhance the Alliance’s overall capabilities and strengthen its ability to respond swiftly and decisively.

It is important that all NATO members – including our new Allies – are able to contribute meaningfully to the full range of Alliance missions, also in the short term.

Third, we have to identify partners and expand co-operation among groups of Allies. It is necessary for new and smaller Allies to find specific strategic partners within the Alliance, in order to form tangible teams for closer co-operation.

In order to enhance existing capabilities and to develop new ones, such co-operation obviously makes political sense.

And fourth: it also makes sense to make use of multinational funding in order to fulfil a few specific and large multilateral projects. AWACS is an existing project with great succsess. A NATO Air to Ground Surveillance capability is a good example of a new project, and a top priority. Such assets give concrete expression to Alliance cohesion and collective will.

But even more important than the four legs, is transformation:

Transformation is not simply about new technology. It is also about new ways of thinking and new ways of fighting. Numbers and size are no longer the main issue in military matters. What counts is the ability to produce the desired results – rapidly and with few losses, and with as little collateral damage as possible.

2. Millenium challenges 02 -new ways of thinking

I once heard that "the only thing harder than getting a new idea into a military mind, is to getting an old one out".

In times of transformation, status quo thinking – pose a significant challenge.

Transformation is more than just new equipment, it is just as much about thinking in new directions and new ways.

One outstanding example of new ways of thinking that really impressed me, was Millennium Challenge 02.

I had the opportunity to witness this event at first hand, together with my two good friends, the former commander of Joint Forces Command, General Buck Kernan and Admiral Ian Forbes, at that time deputy SACLANT.

We spent a week together, from Norfolk in the east, to San Diego in the west, and Nellis Airforce Base in the middle of the desert.

I was impressed by the way Joint Forces Command was abel to get and to communicate realtime pictures and information. The use of off-the-shelves- technology was interesting, cheaper, and sometimes better than traditionally military-industry development.

General McNeill realised this, and when he left for Bagram, in the spring of -02, he took with him some of the equipment developed for MC 02 to the desert of Afghanistan.

The spinning wheel, between 1) the experimentation such as MC 02, 2) the developement of new technology, 3) the ongoing operation, such as Enduring Freedom and 4) the doctrine development - is actually illustrating the core of transformation.

The information superiority gave the commanders and the troops a uniqe situation awareness. The aim was to know more about the enemy than the enemy knew about themselves.

Such information supremicy, with a clear picture of the situation, both your own and the enemies, gives you a possibility to superior decision making, and to use your joint forces in an effect based operation in an impressing way.

I realized - this is the future, and the key element to success for NATO forces.

The combination of virtual and real forces, inseperable to the Commanders gave a challanging realizme to the largest experiment ever in US military history.

From my point of view, the MC 02 was a success . I will certainly make sure that Norway will participate next time such an event takes place, either present in the US, or connected by new technology to our National Joint Headquarter in Stavanger.

3. From numbers and size- to ability and effect

Our ability to think in new directions is challenged by the fact that the military sphere suffers the consequences of two different kinds of major upheavals – or so-called revolutions. The revolution in strategic affairs is just as profound as the revolution in military affairs.

Until the end of the Cold War, most of the Europeans thought that if trouble occurred, it would show up at our own front door. Owing to the existential threat from the Soviet Union, most European military forces, and military thinking, was a question of territorial defence: size and numbers.

Consequently, moving to force projection has involved tremendous political, cultural, doctrinal, organisational, and structural reform.

In short, most European Allies have generally faced far more radical challenges to their force structures than the United States.

Norway, like most other European Allies, had a long way to go when we started to adapt to a radically transformed security environment after 1989, when the wall came down.

As a consequence of the revolution in strategic affairs, some of Norway’s procurements in the late 1980’s became largely obsolete even before they were unwrapped. Not because they where technologically outdated, but because the enemy disappeared, and the master-scenario evaporated.

One of the downsides of being Minister of Defence after the demise of the existential threat from the East, is to close down redundant military installations, some of them famous and almost mythological, with traditions spanning centuries, and some of them almost brand new.

"Tears from heaven", was one of the headlines on national television, when we closed down one our border garrisons. "Tears from heaven"!!!!!!

For many military officers, it is a heart-breaking process to leave behind something that used to be important, used to make them important. In some cases, it implied changing their own established world view.

Economists as myself, know that sunk costs should not influence decisions, but psychologists know that they do.

But like it or not, relevance must overrule sentimentality. We have to focus on new capabilities, and to try to forget about yesterday’s force structures: Transformation without determination will lead us nowhere.

But, to phase out and wind up what is no longer needed, may delude people into believing that defence money could be better spent elsewhere. I therefor strongly agree with Secretary Donald Rumsfeld, who said " the notion that we could transform while cutting the budget was seductive, but false".

Hence, Norway is increasing the defence budget. The Norwegian Parliament has approved an increase of the defence budget that will account to about 7.5 per cent in real terms over the next two years. And by 2005, one third of our defence budget will be spent on investments.

And certainly we no longer focus on size and numbers!

Conventionally, military wisdom would dictate that the big battalions usually win. But the numbers are no longer decisive. Quality is.

It is unproblematic to be outnumbered in military capabilities of little relevance. Information dominance – enabled by the information revolution, effects-based operations, interoperability and precision, offset the value of high numbers.

To quote President Bush:

"We're witnessing a revolution in the technology of war, power [is] increasingly defined not by size, but by mobility and swiftness."

In this context, small countries have one distinctive advantage: flexibility through short communication lines. With a small warfighting community, it is often possible to quickly understand operational deficiencies, apply creative thinking, and identify a smart solution.

In Norway, this is what we have been doing with our Norwegian Battle Lab and Experimentation organisation – called NOBLE.

This small but efficient force-multiplying, joint think tank. NOBLE works on the basis of ideas that come up from the operational community and may be tested quickly: "Bottom up", without buraucracy, based on real life experiences.

In times of transformation it is important that innovative activities are pegged down into a larger network. Consequently, we have linked our Battle Lab directly to our national Joint Operations Headquarters in Stavanger.

This headquarter - is our national tranformation command, responsible for the command and control of Norwegian forces, both domestically and abroad. In addition, it will be our operational nexus between concept development, exercises, experimentation and lessons learned – with regard to all operations.

Substantial military transformation in Europe is both desirable and necessary. However, no one can be dragged through transformation against their will, or without active participation.

The United States has, on several occasions, made important initiatives to help provide a roadmap for NATO’s relevance, for instance through the Defence Capabilities Initiative, the Prague Capabilities Commitment and the NATO Response Force.

This leadership is important, and we need it in the transformation process as well – including a command structure that provides tranformation. But we need to give the new US based Allied Command Transformation a clearly visible European footprint. This is neccesary both to ensure the needed focus on transformation in Europe and to strengthen the transantlantic link.

Such a footprint will underscore that transformation must be seen as – and function as – a genuine two-way street across the Atlantic.

It is important to establish a strong Allied Command Transformation as a driving force in the transformation of the Alliance:

1. This will partly be ensured by the co-location with the US Joint Forces Command, and by the double-hatting.
2. This will provide a good framework for transferring information and know-how, between the US Command Structure and NATO.
3. And this European footprint should draw extensively on existing bodies, agencies and available infrastructure.

Successful transformation will be the synthesis of a well co-ordinated and determined top-down approach, in combination with creative activities, experimentation, and experience from - bottom up – or should I say from the practical level.

Especially in this field, it is essential to ensure forceful and efficient European inputs. Successful transformation in Europe must draw on the military talents and innovative thinking on both sides of the Atlantic.

And since important incentives for transformation originate at the tactical or sub-tactical levels, a Joint Transformation Element in Europe has an important role to play.

This element should co-ordinate the transformational activities in Europe and act as the agent of Allied Command Transformation on the other side of the Atlantic.

In summary, transformation has both to be a top/down and bottom/up process. Consequently, the current has to flow freely in both directions. A Joint Transformation Element in Europe will be crucial in order to merge and co-ordinate these two flows.

With regard to the transformational activities in Europe, the focus should be experimentation, training, education, testing and evaluation of doctrine, including joint exercises and lessons learned.

I support the establishment of a Joint Transformation Element, which will coordinate the transformational activities in Europe and act as the link to Allied Command Transformation here in Norfolk.

The basic function of the Joint Transformation Element in Europe must be to " set transformation to work".

As a result, we will obtain a real political leverage behind transformation, as you have here in the United States.

4. Division of military labour – niche capacities

I am an economist by education, consequently Adam Smith was one of the classics in my syllabus. He stated that the art of war was "the noblest of all arts", and "one of the most complicated among them". Hence, one had to practice division of labour in order to improve it.

Also the Alliance should put a strict division of labour into practice. We cannot afford a bloated and redundant command structure, when size in itself does not contribute substantially to our common defence.

The command structure has to be trimmed to a leaner and more flexible instrument. The new command structure must respond to new threats, including terrorism, preserve and reinforce the transatlantic link, and ensure the cohesion of the Alliance.

In my view, it is only logical to transfer the savings from an operational chain of command that has been trimmed for redundant functions, in order to give the needed priority to the transformational efforts.

I fully agree with Deputy SACEUR: NATO’s ultimate mission is to fight and win across the whole range of the security spectrum. But, to be able to win the conflicts of tomorrow and the day after that, we have to ensure today, that we will be in position to do so. We have to transform today, to be able to win tomorrow.

As Admiral Giambastiani said yesterday: You cannot transform, you cannot command, without a close link between them. Consequently, force planning and transformation must not be disconnected.

Every member of NATO can no longer achieve an acceptable level of proficiency within every field of military practice. We need an Alliance in which different members achieve excellence within different but complementary fields.

In order to safeguard our common security, the military forces of the Alliance should to some degree resemble a palette, from which the North Atlantic Council and NATO’s Military Authorities may mix colours according to the picture they want to paint.

Let me give you a Norwegian example. In addition to significant elements of our special forces and other highly specialised personnel, we offered mineclearing teams to support Operation Enduring Freedom.

By Cold War standards the number of troops was close to insignificant. But without them, the operations out of the Kandahar and Baghram airbases would have been considerably more difficult.

In other words, the total output of the coalition increased, due to small but important niche capabilities. For smaller Allies and particularly for the newcomers in the Alliance, this kind of division of labour is the only realistic way to contribute meaningfully across the whole spectrum of Alliance operations.

In the future, I think that multinational co-operation and specialisation within a broad scope of military matters, will reach deeper and wider than ever before. This means that the decision-making process must be inclusive. It must be transparent.

If there is insufficient inclusiveness and transparency, then our ability to contribute – to reach agreements among ourselves, to convince our parliaments and publics – will inevitably suffer.

I feel compelled to stress one point very clearly: None of the allies can be taken for granted. If smaller Allies are left out, they may decide to stay out. The result could easily be lower international legitimacy and reduced political solidarity, and in the end, a less safe world to live in.

Allies excel in different areas of expertise because they have different national needs. NATO should identify in which areas each member state can provide specialised military capabilities, and how these capabilities should be developed in order to easily plug into different multinational force-packages.

Geography, demography, history and military experience are factors that help deciding how each nation may excel within particular areas of expertise.

-Germany is very experienced and advanced in the use of tactical unmanned aerial vehicles.

-The Czech Republic has great expertise in protection against nuclear, chemical and biological weapons.

-There are many such examples of European expertise.

What is Norway’s trademark ?

So far, we have offered the Alliance niche capabilities primarily within areas such as:

• expertise on operations in the littorals and under harsh climatic and topographic conditions, in particular winter warfare.
• special operations and deployableintelligence assets
• explosive ordinance disposal(EOD) and mine clearing
• multinational logistics
• movement control
• and expertise on strategic sealift.

We need a discussion on who should do moreof this and who should do lessof that, as part of an increased focus on a division of labour in NATO.

To sum up: Increased division of labour will allow different Allies to assume the kind of work for which they are best suited. Within a system based on a higher degree of role specialisation, smaller nations may contribute substantially across the whole spectrum of Alliance operations.

But, an increased division of labour must not take place at the expense of an equitable sharing of risks. In the Alliance, we must continue to share the dangers and risks, and not only the benefits from our collective security.

5. Strategic partners

In the 1970s, Norway joined a rather unusual consortium, together with the United States, Denmark, the Netherlands, and Belgium, to procure the F-16.

The European F-16 users, called European Participating Air Forces (EPAF), bought a total of 348 aircraft, of which Norway bought 72.

At the time, the reason for this unprecedented teamwork was almost exclusively a question of money. Relying on the principle of economics-of-scale, it was possible for Norway to purchase state-of-the-art fighter aircraft at a lower price per craft.

This joint purchase of identical aircraft yielded even more profit when the EPAF-countries decided to give their F-16 fleet a major Mid-Life Update. The Mid-Life Update in the 1990s could have been the last chapter in a success story of multinational military procurement, but it was not.

On October 1 ^st> 2002, 6 French Mirage 2000s, 12 US F-18’s, and refuelling aircraft stationed at Manas Airport at Bishkek, Kyrgyzstan, were relieved by members of the very same "European Participating Air Forces".

The detachment of 18 Dutch, Norwegian, and Danish F-16s, supported by a Dutch tanker aircraft, that replaced 18 US and French air-fighters, was possible precisely because the three countries operated the same aircraft and had been educating and training their pilots together for years.

In addition, by sharing maintenance facilities and logistics, each participant’s logistics bill was reduced to almost a third. Instead of setting up three logistics and support organisations, each one for 6 aircraft, Denmark, the Netherlands and Norway could set up one common organisation in support of 18 aircrafts.

This is real plug-and-play, made possible through years of close co-operation and familiarity at an unprecedented high level among separate national Air Forces. This "plug and play" startegy provides the alliance with interoperability and integration – different countries have to operate as one.

I do not think that the three Ministers of Defence from Denmark, the Netherlands and Norway, in the early 1970s, were as foresighted as this example may indicate.

They could hardly have anticipated – nor even imagined – that some of the aircrafts they purchased together, would be patrolling the skies above Afghanistan.

But what this story really reveals, is that by co-operating closely, small countries increase their ability to carry out their share of the collective defence burden.

My vision is that future Norwegian defence ministers will be able to tell the same kind of story, involving major parts of all of Norway’s Armed Forces, from all branches.

It was probably not a coincidence that Norway co-operated with the United States and nations surrounding the North Sea, when we purchased fighter aircraft back in the 1970s. For various reasons, the United States and the countries around the North Sea, stand out as the most natural partners for Norway.

We have already taken several steps in that direction. Norwegian participation in the 1 ^st> German/Netherlands Corps and in the British led Allied Command Europe Rapid Reaction Corps, are cases in point. In the future, we intend to expand this kind of multilateral military collaboration with "plug and play" forces on a broad scope.

It is important to note that this kind of smaller "study groups within the class" complement the Prague Capabilities Commitment and other Alliance-wide initiatives. NATO should not, of course, develop into a club of clubs.

I would like to note that our concept of particularly close cooperation around the North Sea does not exclude close cooperation with other Allies, when such co-operation is warranted or useful. It is, for instance, of great importance that we support the integration and inetroperability of our new Allies.

6. Conclusion

I gave away the conclusion of this speech in my introductory remarks. We, The European Allies have to catch up. That is truly an ambitious goal, but we simply cannot allow the gap across the Atlantic to widen.

The Alliance has given us peace and prosperity for more than 50 years, and it will continue to do so if – and only if – we make a substantial and common effort to narrow the gap.

To do this, the Alliance has to foster specialisation and division of military labour, and member states will need strategic partners within the Alliance. Furthermore, transformation is not just about new technology, it is even more about new ways of thinking and new ways of using military force.

In that respect, big ideas are not reserved for big fellows only. That is good news for the Alliance, and an inspiration and a challenge for the smaller Allies. Concentrated efforts will pay off.

Furthermore various military capabilities of the Allies must be shaped into a coherent fighting force. For that, you need joint training and exercises, interoperability and integration, both at a small and a large scale.

Where in Europe may the Alliance look to fulfil its needs in these fields? Joint warfare, interoperability, integration and training!?

• If you are looking for training and exercise areas for joint operations covering blue water, the littorals, large and almost unrestricted airspace, rugged topography and a demanding climate ?

• if you are looking for an area in Europe that enables the full use of modern link communications, as for instance Link 16, during large-scale exercises ?

• if you are looking for training facilities for operations other than war, including the need to co-ordinate military activities with civil society and civil actors ?

• if you are looking for a multinational, joint and readily available headquarter, with close access to superior training areas – in order to ensure an unbroken wheel between concept development, doctrine, training and education on the one hand, and experimentation, joint exercises and lessons learned on the other ?

• If you are looking for all these:
  - look to Norway.

Since this seminar is hosted by an admiral, I find it appropriate to end my speech with a famous quotation from the first man in the U. S. Navy to hold the title of admiral, David Farragut. During the operations against Mobile in 1864, the admiral had to sail through a minefield. The admiral observed the anxiety among his crew and allegedly shouted " Damn the torpedoes, full speed ahead!"

When talking about transformation of the NATO forces, of restructuring of the NATO organisation through PCC, NRF, and new command structures, I often feel like I am in the middle of a minefield too, where people yell: " You can’t do that, you can’t go there!"

Sometimes the warnings are well founded and appropriate, but now and then I feel an urge to shout: " Damn the torpedoes, full speed ahead".

Thank you for your attention.