 And thank you all for joining us. We're hoping that in the balance of our time here, until about 5 o'clock, that we can shed some additional light, if not maybe even some heat, primarily from an American perspective, but certainly informed by a close observation of the British debate. I'm Stephen Flanagan, Senior Vice President here at CSIS and holder of the Kissinger Chair of International Security. And I'm delighted to be joined by a panel of very seasoned and expert analysts of the UK defense scene and of transatlantic relations. And I, as I say, I think they will provide us with some additional insights into how this UK strategic defense and security review unfolded, what some of the implications are, both for the special relationship and for transatlantic security cooperation. It comes, as General Hutton noted, at a critical time. Obviously, he didn't address Afghanistan. I hope we will, in this discussion, the impact on Afghanistan, the fact that the UK has made that clearly a priority out to 2014, as General mentioned. But also, how does this mesh up with other plans that are underway? We're on the eve later this month of a NATO summit, a summit that will also set some guidelines calling for flexible and adaptable kinds of force capabilities that the UK strategic defense and security review has called for as well. But how will they mesh up with other allied capabilities, particularly at a time of scarce resources? And of course, there was a great deal of concern as to how other allies would react to the UK cuts. And indeed, the fact that they were not nearly as severe as some had initially forecast led to at least somewhat of a sigh of relief on this side of the Atlantic. But nonetheless, the way in which this all fits together and how I propose that last question, how does this relate also to bilateral cooperation among European countries, particularly the UK, French Axis, in sustaining effective capabilities to deal with a wide range of contingencies in an uncertain world? So let me, without further ado, get to our panelists. I'll introduce them in their fortuitously lined up both their speaking order and they'd like to introduce them to my immediate left is Mr. James Townsend. Jim is a long time. And you have their detailed bios in the handout before you, so I won't go on. But Jim has been a long time. He's serving currently as Deputy Assistant Secretary of Defense for European and NATO policy. But he has over 25 years of service in the federal government and the Defense Department in various jobs dealing with European and NATO affairs. We were also happy to have him as a colleague when he served just down the street from us here at the Atlantic Council of the United States as Vice President there. And we were collaborating with him on a number of projects. He also is informally, I guess you could say, I think he sees himself as at least the Pentagon's unofficial keeper of the special relationship. So we're very interested to hear his comments on the next down the route here, Dr. Corey Schachy, who is currently a research fellow at the Hoover Institution. She lives a bi-coastal existence fortuitously, both in Palo Alto and here in Washington occasionally when she must. She is a former colleague at the National Defense University, but also has a great deal of experience in foreign and defense policy and defense planning, both at the Joint Staff and the National Security Council. And she also served as an advisor, as you'll note in her bio, to the McCain-Pailin Presidential Campaign Senior Defense Advisor in 2008. Next, David Bertot, who is our director here at CSIS of our Defense Industrial Initiatives Group. David has a long career in a variety of Pentagon and governmental appointments, as well as in the private sector. It's also been affiliated with the International Security Studies Program at the Maxwell School at Syracuse. And he has just released, as some of you may know and have seen, we'll have an event just a little bit of brief advertising, an event later this week on Friday to discuss a new report that he and his team have just released on tenure trends in European defense spending. And I'm sure he's going to touch on a little bit of that today as it relates to the UK. And last but certainly not least, Mr. Nate Fryer, before he put on that suit, he had a 25-year career in the US Army. He's a senior fellow now with us in the International Security Program at CSIS, but also a dual-hatted as a fellow at the Army Award College. So he also lives a bit of not quite a bi-coastal existence, but he shuttles back and forth between Carlisle and here. And he is, in a sense, somewhat of our, well, if Jim is the custodian of the special relationship, Nate, having served very closely during his military career, both as a strategist and in a variety of operational assignments, he also served for two years with the UK Armed Forces, the British Army. So I think he feels he has a special affection and relationship himself with the British Armed Forces. So we'll have him address some of that. So let me turn the floor over to Jim Townsend. Thank you, Jim. Thank you, Steve. And also thanks to John Hamery, who I think might still be here for putting CSIS on the case in terms of taking a look at what the UK accomplished with its review and what this means for all of us and what it means for the next 10 years. I think it's very timely and it's something that I've been working on for months as the UK began to come to grips with the financial situation that it has and that a number of nations have across the Alliance in terms of deficits and economies that need to be strengthened and governments that are trying to work out how do they go about spending the tax monies they have in a way that will help their economy while also keeping intact other things such as defense. And what I was asked to talk about a little bit today, which is how the US worked with the UK on this which I will. And also I'll make a couple other points. I'm gonna pass off to Corey who will set you all straight on what really happened. But first, as the general said, we've worked with the UK for a number of years in terms of planning. We've, the US has had planners do rotations through the UK planning establishment and the UK similarly with us as we go about doing our QDR. And so there's an exchange of information on how we go about these analytical products which are very difficult to do. There's a real science to it. I know you all know that. But it's something that we collaborate on and have for a long time. And it's not just with the UK either. There are other nations we have consultations with and we try to take advantage of all the brainpower out there in the planning community as we try to look out the years that we've got to be planning for and ready for. And that certainly takes as many, as much brainpower as we can pull together from across the alliance. With the UK, what's different is that up until now they have not had a review on a sustained basis, on a routine basis, something that was consistent. This is something new. It seemed to me, and I might be wrong, but it seemed to me that they had a review whenever they felt it was time for one. Which is interesting in how they go about determining when that is. But obviously, given the strategic situation where we are now, post 9-11, new strategic concept at NATO, new threats that we're trying to be ready for, I think the UK felt it was time, new government there. But particularly, it was the budget drill that made this, made it something that had to be approachable on an aggressive basis. And one where, very quickly, we began to receive briefings and hear some of the early thinking about where the UK felt it needed to go. I took a few trips to London myself and sat there and tried to help think through what it was that made sense for our two countries in terms of our future collaboration. What did we hope that the UK could bring to the table five to 10 years out? In an alliance context, what would we hope that the UK would bring to the Allies when it was a NATO operation that had to kick off? And given on the one hand, this attempt to figure out what it was that the UK needed to bring to the table, while on the other hand, dealing with the amount of money that was gonna be available, it was some very stark choices became very apparent. And I think we all quickly realized that we were at a point, and certainly in British defense and military history, where it was very different than the 1998 review. I think there was another one in 2004 where there were reviews, but not one that had the kind of decisions that this one had to make. And so we had to do a lot of thinking on the US side. We don't necessarily always think in terms of other nations, when we do the QDR we do some of that, but this time we had to really put our analytical brainpower to work within the Pentagon and come up with something that, some advice and that type of thing that would be value added to what the UK was indeed struggling with. And so we did. But I will say it was a cliffhanger for us too, as the days approached when the review was to be laid out. And I had seen, as I said, some of the early ideas about where the UK was going and they were some pretty draconian directions that I'm glad were not taken as the UK dealt with the reality. And so they came up with a package that was finally released that you heard about from the general that I feel having worked this, put them in a pretty good place, given what they had to deal with in terms of the finance and given what they had to deal with in terms of future threats. And I'm just gonna give you a couple of points that I'm gonna continue to watch and to work on and then I'm gonna pass it to Corey and then I'm sure we'll have lots of questions. But the first of all, first point is that as the general said, this is the beginning and not an end. And that to me is a key point. As a defense planner myself out at NATO trying to look out 10 years, you know that you're always having to go through and adapt and reshape your thinking based on events, based on the unexpected and surprise. And the fact that there's gonna be another review in 2015 is important so that we can, so that the UK can gauge the unintended consequences of decisions just made. If this was gonna be a one-time decision and then off they went until it was felt it was time for another defense review, that would have, I think, put the UK and our relationship on a unstable footing. So the fact that it's going to be one where other reviews are coming has given us all confidence that we can move ahead and make changes as we need to. The fact that adaptability was put into their planning was key for me as well. Again, as we know from defense planning, as we know from history, we have to adapt and sometimes very quickly. And there was some fear that the changes that the UK was gonna make were gonna keep, was gonna be pretty much locked in stone. Some of them are gonna be far reaching some of these decisions, but the ability to adapt to new situations, if in 2015 there's a feeling there's gotta be changes made, I'm glad that that has been maintained. There was a quick reference to regeneration and that has been repeated a couple of times. That regeneration aspect is also crucial for me, but I will tell you, I think we all talk about regenerating things, putting things into cold storage and waiting for better times to come. And when those better times come, things don't necessarily regenerate the way you wanted them to. And so we'll all be watching that regeneration process. He mentioned that armor and artillery was gonna be part of this regeneration process. And he mentioned that armor and artillery are less relevant today. I feel armor and artillery is always relevant. The more, the better. I realize that's probably a little bit of old thinking there, but I do hope that in terms of regeneration of skill sets such as those, I hope that in fact it will come sooner rather than later. And then my final point and then over to Corey is that we have worked with the UK for many years. Myself, I feel I'm a bit of a force generator because in so many times, whether it was Desert Storm or it was Somalia, the Balkan Wars, Iraq, Afghanistan, because we do European policy and the Pentagon, we're the ones that have to gather together the European participation, both at NATO as well as on a coalition basis. And what we always find is that there's never enough UK forces. UK forces, as you don't have to be told, are some of the best in the world. And we've had a long history of working with them. And when we're in the thick of things, we always need more rather than less. And so my concern and what I will be watching closely as all of us will, is the ability for the UK forces to be capable of sustainment and dealing with concurrent operations where UK forces could be strung out doing two or three other things and a big requirement comes up and we find that they're stretched too thin or there's been some hollowing out. No one wants that. No one wants to find themselves stretched too thin. No one wants to find readiness numbers impacted because of an obstempo problem. So I hope as the UK forces get smaller and as we all work together dealing with force reshaping and reductions that we can keep this sustainment and concurrent operations issue at bay and keep our eye on that. Because as I said, the call is always there's never enough UK forces and now they're gonna get smaller. And that's what concerns me. Final point, Cori, and then over to you is, you know, it's not just the UK that's doing it. The US is also downsizing so are the European allies. What we've got to do is try to do this in a coordinated fashion at NATO. My big concern is that in terms of transatlantic capabilities we've got to manage these drawdowns and these reshapings whether it's the German forces or French in such a way that we don't hollow ourselves out as a transatlantic capability. Five, 10 years down the road we wake up we need to have a good force structure and we find that we haven't coordinated them to such a degree that we have the forces that we're gonna need 10 years out. And so I hope that the alliance over the next six to eight months will take up a review to see where these reforms will take us. So, Cori, over to you. So I wanna make three points. The first about the political and economic context in which the British defense review took place. The second to grade it on strict defense policy. And then third to raise a couple of concerns that I have about it going into the future. First the context. It's hard to actually capture the breathtaking magnitude of what the British government has undertaken because we haven't tried anything like this either in magnitude or seriousness in a really long time. 20% cuts to every government department except for healthcare. The original target was 25% cuts. Imagine a quarter of government spending going away at a time when the government's worried about the jobs not just the 25,000 folks being bounced out of the defense ministry but overall. That they have taken this much near term risk in order to buy themselves a stronger strategic situation. I think it's extraordinarily commendable. It's fantastic. Britain will be a better ally to the United States in 2015 from getting their house in order. And as a taxpayer, I really wish our government would work on this magnitude as well. This is, they've made a difficult set of choices and they made them well. They cut spending in order to afford the reductions in government spending. A third, they took a thirds at it. So a third of the increase in government revenue will come from taxes, two thirds of the decrease. So how you get to where they are. A third increase in taxes, a two thirds decrease in government spending. That strikes me as a proportion that is sellable in even other countries. In fact, perhaps even the dusty little cow town in Northern California that I hail from. The second thing that they did that I think is extraordinarily commendable is that defense wasn't just treated like another government department. And I think that's not only appropriate given the security threats they face but also given that they're fighting two wars. And so defense took an 8% cut. Other departments ended up taking closer to 20%. That too strikes me as a reasonable and politically saleable proportion because to suggest to people that their retirement age will be increased and their weighting lines at the DMV are gonna be higher but defense will remain untouched. Especially in the American case where defense spending has more than doubled in the course of the last nine years. I think that's a difficult proposition to pull off as a political high wire act. So I think in the broader context where they accepted near-term risk in order to strengthen their strategic circumstances where they put tax increases and spending cuts in a 1 to 2 thirds ratio and where they put defense at roughly 8% reductions when other departments are at roughly 20%. Those all feel roughly right to me and I'd be proud of my government who would do such a thing. Second point as defense policy. This strikes me that they made a very difficult set of choices very well because they didn't cut their commitment to the wars that were fighting. Second, the proportion of reductions in personnel that they took, 5,000 a piece for the Army and the Air Force, excuse me for the Navy and the Air Force, the Army's reductions pushed more into the future because of the current demands on the Army. Again, that sounds to me sensible. They maintained their nuclear deterrent. They maintained continuous at sea presence of their submarines and the deterrent. They accepted, they maintained the two carriers, although that was, as I understand, under grievance and that the Chancellor of the Exchequer would have liked to have gone after them in a more serious way if the contracts for them had been more nimble or more fungible. The other things that they did, they increased spending on special forces. They increased spending and effort on cyber. They made a set of choices that shields to a much greater degree the things that make the British military most valuable to us, most capable of fighting alongside us at the highest level of intensity of operations. That's a terrific set of choices that I think we ought to, ought to commend. There are clearly things we wish they hadn't done. I'm sure there are clearly things they wish they hadn't done, but they were operating in a very tight fiscal environment. Looks to me like the biggest gap is the now to 2019 carrier fighter gap, which lots of ways you could fix it. You could rush unmanned aviation in there. You could partner with the French or other, I mean, lots of creative ways you could do it. None of those things are actually funded in this budget. So if they wanna overcome that near-term gap, they're gonna have to spend some money for it. Third point, the concerns that I have, one would be that Prime Minister Cameron has sort of winked and nodded that defense spending will go up again in 2015. If I were the defense ministry, I'd spend a lot of time trying to get clarification in public on the record from that, because I'd be surprised given how difficult the choices they are having to make in non-defense spending, whether in 2015 defense spending's gonna go up. Second, continuous at sea presence of the nuclear deterrent. I don't wanna be too much in the nuclear priesthood here, but it does seem to me that the difficulties attendant on shifting from continuous at sea to part-time at sea can be enormously destabilizing in crisis. And I would encourage our British friends and colleagues not to rush to something to reduce the continuous at sea presence, which will make near-term fiscal sense, but won't make strategic sense. Another concern I have looking across as a green eye shade comptroller type is that it does seem to me that the creeping underfunding that the Cameron government is justifiably upset about having unearthed in the defense budget is likely to creep right back in there. That's a tendency in all defense budgets as no less a source than John Henry could tell us. The program of record very often is underfunded. Given the kinds of cuts that non-defense spending is being expected, are being expected, yes, are, I lost track of my sentence. That are being taken. It seems to me that the Cameron government will likely punish and should punish any creeping underfunding that comes back into the defense program, especially on such a short timeframe. To conclude, the last thing I would say is that in the British strategic defense review, and I agree with Jim's judgment, but this is a budget review. It's not really a strategic review, although they make good strategic choices, it looks to me. That the British have the luxury of being able to have us pick up any slack for what needs doing. We actually don't have that luxury with anybody else in the international order. And as comforting and helpful as NATO allies are, it is often tempting to wish we could get a better brand of allies to trade them in for. There's not a better brand of allies on the horizon. It doesn't look like to me. And so we, I agree with Jim's closing caution that we ought to be extremely careful that as allies do defense reviews that result in budget cuts, that it doesn't accrue a larger and larger set of expectations of what the United States will do. Thank you, Corey. David? Thank you, Steve. I wanna provide a couple of brief comments about the impact of the SDSR on defense industry, both in Britain and perhaps across Europe and even in the US. And also provide a little bit of context about the broader European situation. And as Steve mentioned, we are releasing and have a roll out event on Friday morning at CSIS of our European defense spending, our defense trends report. And you'll have more detail on it then. First on the impact on industry, on hardware, clearly there are reductions in funding and reductions in programs, cancellations, et cetera. There is the potential for some recovery in a couple of areas. I think one of the grave challenges that you face in any European country and the British have not been exempt from this is the tendency when funds go down to become nationalistic in the focus and to only buy from domestic producers regardless of whether or not that's competitively priced or provides the kind of capability that's necessary. And we'll have to see whether or not that's in fact what develops inside the United Kingdom. There's also I think an emphasis much stronger on reliance on legacy systems. And that will provide an opportunity for more sustainment. This is not addressed clearly in either the SDSR or in the budget, but the potential is clearly there for an increased reliability on sustainment. The US, by the way, will soon face a similar choice. On the services side, which of course is in the US, it's about half of the defense spending in the UK. It's nearly the same. The cuts to civilians that are laid out while we don't have the year-by-year reductions and it's 25,000 off of the base of under 100,000. So it's really significant, nearly a third cut. Really, unless activities themselves are eliminated, we will see this lead to exactly the same thing that we've seen elsewhere, which is an increase of reliance on contractors. Because if the work has to be done and you get rid of the people who are doing it, but you don't get rid of the work, then there will be another way found to do it and that typically is reliance on contractors. So while there may be opportunities here for individual companies, I think there's a pitfall for the overall strategic intent of the review, unless that's addressed. And since the timing's uncertain, it's a little bit difficult to conceive of the outcome there. There's a focus and an emphasis on more reliability on commercial items, commercial off the shelf, and on exports to sustain the industry. This is a familiar tune. We've heard this over and over again. It requires one of two things, or actually both of two things. One is a lot better commercial stuff or a reduced capability. The second is in fact to change and export control regimes, because while the British may want to export more, all of their material will be subject to US ITAR considerations and we've been watching the progress of that or the lack thereof over the last couple of years in the US. I think there is still some hope for progress in the future, but if the British system will depend upon US progress on export control reforms, they've put themselves in our pocket in a way in which we don't necessarily benefit. There's a broader context so that I think it's worth looking at here and let me give you a couple of just sort of general European trends and how the British fit into that category. Over the last decade, defense spending across Europe has been down almost 2% per year. The British have held pretty firm in that context and so they've been kind of one of the outliers in terms of that overall trend. But inside that trend are a couple of very interesting counterpoints. One is that the actual reduction in forces has exceeded the reduction in spending so that across Europe, spending per soldier has actually gone up. And even within the UK where you haven't had significant reductions, it's been held steady. This actually has some significant potential implications for capability of the remaining force regardless of the ultimate size. And I think it's a very positive trend and one that the US should continue to encourage, notwithstanding the fact that I don't have any indication we actually even are aware of it, which makes it difficult to encourage. Also within that reduction, contrary to the US experience, the investment accounts have been largely protected. While overall spending is down 1.8%, investment spending is down on an annual rate of less than half of that. And that's typically not the case here in the US where we protect personnel accounts and infrastructure accounts and we reduce R&D and procurement. European trends has been in the opposite direction. Whether this can continue into the second decade or the 21st century remains to be seen. Then finally, with respect to industry, we actually created an index to track European security defense and space firms and we've been tracking their performance over the last decade as well. And while spending is down nearly 2%, the revenue of these firms is up on an annual average rate of 5%. So it's pretty clear they've already done what the British say they're gonna do, which is they've relied on growth in exports. And much of that export growth has been to the US. So as long as our budget was doubling, it made it easy for European defense industry to continue to grow. Now that our budget's gonna go down, that may create an additional circumstance that will be hard to follow. Finally, let me close with an anecdote about regeneration because I like Jim's comment about how difficult it is to do. I had the privilege nearly two decades ago to chair the Defense Conversion Commission, which was looking at what we were gonna do after the end of the Cold War and how we were gonna spend the peace dividend to keep the industry alive and help them figure out what to build since they weren't gonna build tanks and ships and planes anymore. One of the things that we ran across was the incredible angst which the Army approached the ending of the cavalry. And I'm not talking about the cavalry regiments we have today, I'm talking about man and force-backed soldiers. Now, there are a few Army guys in the audience here, I know some of you and you all know how hard it is for the Army to let go of its past. And the Army looked forward with great, great anxiety towards eliminating horseback riders. And among the concerns documented at the time, this is the 1930s, so this is not all that long ago, was a grave concern that if the situation ever warranted reconstitution of the cavalry, we might not have the saddle and bridle harness industry capability to be able to sustain that regeneration of the cavalry. And so there was actual physical evidence of analysis of whether we should act to preserve the saddle and bridle industry in America in order to allow the reconstitution of the cavalry. Now I'm happy to report that no government funds were expended on that point. And at the time we looked at it, the latest data showed that the domestic commercial saddle and bridle industry in the US was four times larger in 1989 than it had been in 1937. And so we actually had the ability to reconstitute the cavalry should we have wanted to if that ever came about. And we still have that capability today. So there is always hope, Jim. So with that, let me turn it over to Nate. Thanks, thanks. We didn't know the Northern Alliance would help fill some of the gap, but go ahead to Nate. Precisely. I'm not gonna, I don't wanna belabor points that are already made, so let me just make a couple of quick observations and then move it on to questions and answers. As Steve alluded to, as a mid-career officer some 12 years ago, I was fortunate enough to be seconded to the British Army in the North of England for two and a half years. And what that experience allowed me to gain was, I gained an appreciation for the British, much like the American military has this, you know, has this, the reputation for kind of a can-do attitude. But the British military, it was always can-do with less resources, right? I mean, it really was. I mean, they literally were doing things with far fewer resources than we ever had at the time. And there's something to be said for that. And actually, I mean, what I see in this review, quite frankly, is the British sort of reaffirming the can-do attitude. They're saying, look, we're gonna continue to fulfill our responsibilities around the world. It's just we have to take some very difficult, you know, fiscal decisions in particular that are gonna require us to basically stand down some capability. And in certain cases, in order to sort of do a down payment for capability in the future, which I think, I do think that is actually a wise choice on their part. I mean, let me just say a couple of things first about their review in general. I mean, I like, Corey would like to actually say that it is, there's some laudable aspects to this review in that, unlike in the United States, we tend to actually say, look, we need to take whole government approaches to things. We need to see, you know, security problems in a much more civil military context as opposed to a military and civilian context separately. The British seem to have taken that a step further, actually, in their national security strategy and their SDSR, and they've actually incorporated the two. And said, look, we're gonna look at, you know, our security problems in a more holistic civil military context. And within that context, there are things best performed with a civilian lead and those things that are best performed with the military lead to the extent possible we're gonna attempt to fill those gaps with those more appropriate agencies. And we put out a critical question before General Halton's speech a couple of weeks ago and a similar point came up in the green when we were discussing, look, my sense is that the British Armed Forces are sort of the lead recon element in a discussion that we're gonna go through very soon. That we are gonna have to make some difficult strategic choices with respect to our own military spending. I think Corey alluded to that as well, but spending has doubled in the last decade for obvious reasons, but there's gonna be a period where that's not gonna be, that that spending is gonna be difficult to justify at least at the levels it's at and therefore we're gonna have to decide, much like I think the British are deciding and I'll make a couple points on this, what is it we are going to do and what is it we're gonna refrain from doing commonly? And how are we gonna actually sort of restrain ourselves from in fact making the mistake of over commitment and over stretch? I found it really ironic actually, when I was actually seconded to the British Army at the time, the Army was not much smaller than it is right now, 103,000 I think at the time and at the time the American military was really complaining about the seven or eight percent it had deployed at any one given time in the Balkans and other commitments around the world and talking about how it was removing our fighting edge and at the same time the British had up to like 40% of their military deployed around the world on operations in Northern Ireland and the Balkans, et cetera. So I mean you just, you really do gain a new appreciation for the benefit of having a lot of stuff. So let me just talk about through, I think it's three real quick points. First, let me just give the British government plaudits on their risk construct. We have struggled with the idea of articulating risk in a document like this for years. We've never actually articulated it in a way that was honest and made sense and I think actually the British with their three tier risk construct identifying sort of 15 key risks, I think is the number in three tiers is a step forward. Is it perfect? No, I actually have some, I would have some very serious questions about some of the things they've included in tier one versus tier two and things like that, but that doesn't matter. What matters is actually they've made a sort of a public statement of risk and where their principal risks lie. So that's a very big plus. The second I'd say is they've articulated a force sizing construct that whether they adhere to it or not is a completely different point. I think General Houghton made that point that policy is not actually execution. But I mean, we have struggled for some time to actually articulate a force sizing construct inside our own Department of Defense that makes sense. I mean, in the British SDSR they've basically said, we can do, I have it here somewhere, we can do one of these and two of these or we can do three of these or we can do one big of these, right? And that makes a lot of sense to me. I mean, when you're dealing, when you have to make strategy on find out resources, you have to be able to articulate what it is the force is capable of doing and to actually make that statement, I thought was a big plus as well. Now, let me just conclude on two points. First, the regeneration point. I wanna echo everything that's being said here. Regeneration, especially when you're talking about the competencies that are required to fight an AS-90 battalion or a challenger battalion in the British Army is very difficult and the technical hurdles of overcoming that are difficult. So I think that I would caution, that's a caution I would lay out. And then finally what I would say though is again getting back to this discussion that we're gonna ultimately have to have in the United States, I think was very, the most interesting and unrecognized piece of the document in my mind was this restatement of a new realism that's contained in it which basically says it's really almost like an articulation of a Powell or Weinberger doctrine from a British perspective. And it basically says we are gonna take actions in the future that are interest-based, that we're gonna get the most bang for the buck from strategically. And it's basically what I think it is, is it's a statement of recognizing that we can do a lot of things, but we're gonna choose to not do as much as potentially we've done in the past. And I don't think that is not a retraction of any global influence. What that is is a recognition of a reality, again, that we're probably gonna have to face up to as well in the future. And with that, I'll open to questions. Great, thank you very much, Nate. Thanks, and we're happy to now take some, we have about 15, maybe 20 minutes or so for questions and dialogue with the audience, so I look forward to it. Harlan Ollman, I see you on the first, you just identify yourself and wait for a microphone. And Keith, Don. I'm Harlan Ollman, thank you for your comments. And Corey and Nate, I agree with you entirely. I think that this document that the British have come up with also has the values of being apolitical and nonpartisan, which seem to elude us in this country. My question is this, the British have come up with an interesting statement, but now they're in the process of implantation. And General Sir David Richards, the new Chief of Defense staff, has given roughly 60 days to come up with how they're gonna actually make this work. It seems to me central to making this work is how do you include innovation, imagination, and creativity, which are very much unmentioned. Now as many of you may or may not know, there are six studies that have not been released yet that underpin the SDSR that have to do with regeneration, the multi-combat brigades, et cetera, et cetera, et cetera. Because those brigades are still undefined, how they're gonna use their naval forces, whether they're gonna be able to bring in French or US naval assets. These are things that are still very much works in progress. It seems to me this is a terrific opportunity. If we, having just disestablished joint forces command in the need for experimentation, are interested in innovation, creativity, and imagination, how then do we team with the British so that their defense review and what they're doing can become a testbed for a lot of things that have to be done in an alliance context and certainly within the context of the strategic relationship. For example, Corey was very concerned about part-time at sea deterrents. You can fire a defy from a London bus, actually. So, this may give one an opportunity for looking at new ways of doing deterrents. My question is, can we use this as an opportunity for innovation, imagination, and how do we go about doing that, okay? Let me, let's hold that and let's take a couple more questions and then let the panel respond. Keith Dunn, I'll write you in the third row there, man, I'm sorry. Keith Dunn, this is really a specific one for Jim and it's given what we heard about the review and correct me if I'm wrong, but I believe that you're playing or have played a major role in the Command Structure Review that we announced at NATO Summit and the International Staff Review that's been played out. What impact did they, what you knew was going on in the UK having those discussions? Can I rule that, can we rule that question out of order or? I knew when you called on Keith. I knew it was going to be hard. Okay, sorry. I can't see any other questions quickly or let me, let's go ahead, you want to get to the specific one and then go to the general one. I'll start with you, Drew. Thank you. Go ahead. You mean all those mics. Well, first, let me start with Harlan quickly and I think Harlan, Steve handed me this two minutes please note, right? When I was getting ready to say exactly that your point. And that is that this is a time for really trying to get creative and figure out how we can do things smarter and I can't tell you how this is something within the Alliance context we're going to have to grasp and do. I'll give an example, Julian Lindley French, our friend from the UK had an editorial talking about maritime patrol aircraft and he was pointing out that the UK and the French and US should maybe go about, you know, I can't remember exactly his suggestion but why can't we go about somehow having that as a joint capability that we all, we all practice. Now the UK has canceled the maritime aircraft which is a pity. The requirement I think is still there but that was part of the hard decisions that they had but maybe we can come up with a way of operating where we can still maintain maritime patrol aircraft if we operate together. The UK and the French are going to announce some I hope very creative ideas coming up but I keep stressing in the Alliance context this is how we're gonna have to go as well and this gets to where Keith is. You know, it wasn't just in London where these economic pressures caused decisions to be made that we never thought we'd see made in our lifetime. Another place is in NATO where we have gone through over the past year probably one of the most ambitious reform agendas that I never thought I'd see in my lifetime but we did it because we had no choice in terms of the common funds to the Alliance needed to have for Afghanistan, the funding crises that we had in various European capitals and certainly our own concerns about funding here in Washington. So part of that led us to developing a new command structure, which is smaller than what we currently have now and more fit for purpose as they say. And I think the Alliance, particularly the military side and the political side frankly can be very proud of the analysis that went into that and part of the Lisbon Summit will be agreeing on a new blueprint and then after Lisbon we'll be putting together the geography of it and this type of thing but the point here is that whether it's reform with NATO agencies, whether it is the new NATO command structure there's nothing like a financial crisis to really make you analyze what you're doing and try to figure out can you do it more efficiently and more affordably while keeping your quality and your capability higher. I think we were able to do that with the NATO command structure and I think that kind of thinking wasn't around the tables, we were doing that Keith. It wasn't just the UK having in their own capital wrestling with the same type of thing but in Germany as well and Paris, Washington all around. So we came to that table with this idea that whether it was at home or whether it was gonna be with NATO and with NATO institutions we were gonna have to be more creative, have to be more affordable and more efficient while keeping the quality up. Corey, did you wanna address Ronald's question on and maybe if I could add one other thing what about coherence, overall forced coherence as we look at innovation and other things? I like Harmelin and I'm a big fan of innovation. I think it's the fundamental American advantage in everything and that if the American way of war is adaptive it's because we very often don't have it right, we get it right. And so creating a system that's open and malleable to building a better mousetrap is our traditional advantage and when we ought to celebrate and encourage. Where I think we might disagree Harlein is that it looks to me like that attitude is actually thriving in the American military now and the driver of it has actually not been GIFCOM. It's been the wars that we're fighting. It's been smart sergeants trying to keep soldiers from getting killed and that has perked upward as much as innovation in grand concepts has perked downward. It does seem to me that the most important document GIFCOM ever published was last spring's joint operating environment which said that the largest threat to the United States is the debt we are accumulating because it will crowd out sensible military spending in a very short period of time. So I'm grateful to GIFCOM for that and much else but I don't think they are essential to the kind of innovation that's going on. I think the wars have actually concentrated innovation in a service and a joint context. GIFCOM can contribute to that but in my judgment they're not the fundamental drivers. The last thing I would say is your innovative basing concept for the D5. I think merits some consideration. It's bringing to mind the Carter administration's deceptive mobile basing but I'm teensy fit skeptical whether the Cameron government is actually gonna get public support in parliament for bus based. It's kind of a hybrid warfare thing like all you civilians can protect our nuclear deterrent. I'm not sure it's going very far though. Nate, would you like to? I just want to make a quick point on innovation. I think that the, here's the big innovation that's gonna occur in my mind right now between and I think the British and the Americans are both gonna go through this and that innovation is and I think General Houghton spoke to this as well. There is obviously a degree of caution about intervention that is going to come from the past decade's experience. The cost of intervention, the price of the length, the duration, et cetera. And I think what's gonna be important for both of our countries is actually looking at a new, in some respects, a new American or a joint or combined way of war that foresees interventions that are less resource or time intensive but that are focused on achieving a more limited and circumspect set of objectives in very complex environments. And there I think we all have to get our heads together because frankly I think that the defense or military or popular market will not bear anything other than that right now given what we've invested over the years. Just another quick, I thought I saw another hint. Yes, it's two in the back row. Hi, Pete Nenos, John Topkin, Supplied Physics Laboratory. Harlan is a former director of the Navy Strategic Program that produced many Trident Missiles under the special relationship of the Plymouth Sales Agreement. I don't think a bus would quite handle a D5 but that's, it's close. But on the other hand, you may paint it so it looks like a bus but believe me, it won't be a bus. But I'd like to talk a little bit about the Plymouth Sales Agreement because there is a bit of innovation in that that I don't think people really recognize and that is that the UK has saved billions of pounds over the years because of the special relationship within that program. That in fact, the US has borne the development cost for the most part of the D5 and the UK has just borne the recurring costs because of the merged nature of the missile production and missile storage. And they don't have to pay the test requirements and everything else. So there is a degree of cooperation with that program and it's also clearly because the increased production capability has saved US dollars also. And I was wondering if there was any inkling that perhaps in the future there would be some more development programs on that model that might save and help them stretch their dollars further and get to more compatible and interoperable capability. Okay, thank you. Could you just pass the microphone to the woman just two rows in front of you there? Heather Conley from CSIS. We should roll this question out of that so it's gonna be a right. Thank you. Hi, Heather Conley from CSIS. This is for Jim but I'd love comments for the rest of the panel. It was your cliffhanger comment, Jim. I was in London when Secretary Clinton made her comments widely publicized right before the SDSR was released about we need a more capable ally we're concerned about these cuts. How much do you think what role played in both Secretary Gates and Secretary Clinton's both public interventions, the interventions, I'm sure that were happening behind the scenes and going from what was rumored to be a 20% reduction to an 8% and I'm just thinking reverse wise if it's true that implicitly in the SDSR it's we're making reductions but with the built-in assumption across many European strategic reviews that the US will pick up where we're cutting back. I'm just trying to think sort of the reverse engineer of that when we start making difficult choices and cuts are we gonna hear from Liam Fox and Cameron others going oh wait a minute guys you can't cut because you're part of my strategy so just wondering if I can have your comment on that. Let me tackle Pete's question first about the potential for further collaboration at the programmatic and perhaps broader level. If you go back to the QDR from last year it has a very strong emphasis on building partnership capacity and if you look at the actualization of that emphasis over the last year and a half or so it's primarily been focused on the slowest wagons in the wagging train not on those who are closest to the pace that we can capture here. I used to be a teacher and this is akin to teaching to the lowest student in your class which will guarantee that he or she gets better but all the rest of them fall further behind. I think we have a very strong national interest and in fact going to the opposite end of that spectrum that is focusing a whole lot on cooperation and collaboration and building partnership capacity with our greatest allies rather than those that happen to be the most demanding of the situation at the moment. In order to do that though we're gonna have to have more than a program by program look at that opportunity and I think that's gonna require a substantial change in the way DOD thinks about it today. So I'm not personally optimistic Pete about the potential for that. I think the reality is quite clearly there. If you look at a situation in which Europe is spending more per soldier but less overall clearly that's gonna take you in one of two directions. You're gonna have a hell of a lot less capability or you're gonna focus that capability on fewer people and have more of it on a per soldier basis. Europe needs to make that choice. They're not gonna make that choice without us helping them and I don't see the US stepping up to that quite yet. I'll just take a quick pass at Heather's question. It does seem to me that the Obama administration is unlikely to react well to other people telling us what we have told the British and I think the Congress likely to be elected tomorrow even less enthusiastic about other people telling us to do more. Well Heather, first it's good to see you and we worked these issues a few years ago under other circumstances and here we're working them again. I think your point's a good one but I think during the months that we worked with the UK I think what we both struggled with at the highest levels as our ministers would talk and then at the lower levels as we would meet with our British counterparts and talk this through was how can we go about maintaining as much capability together as we could going about it in a more creative way. How can we do this smarter? And I say that because I've spent hours around a table with John Day, others in London trying to figure out because both of us have been in this business a long time and trying to figure out how can we go about doing reductions and fixing problems that we know had been legacy problems from the Cold War that are in the forces that are using monies that could be used elsewhere. How can we go about changing those and what is it that the UK should really focus on? What is it that the US should really focus on and trying to get a picture of when we operate together how do we want to do that and what do we want each to bring to the game? How can we go about arranging our forces so that we're as efficient? It was really all about efficiency. But again, it also goes back to this idea of the NATO context because as I said, it's not just the UK, it's other NATO capitals as well making these reductions and having to face the same issue how can we keep our capability intact by going about what we spend our money on in a smarter way? How can we operate together in a smarter way? It's hard to believe that we ever had the luxury a number of years ago of having more money and I guess there you can... You have more money this year, Jeff. Yes, well this year, yes. Well, we do indeed, but others don't. I think what's happened is that there has been this real understanding that we were able to get away with things 10, 15 years ago in terms of how we spent our money and how we shaped our forces that we can't get away with anymore, that we've got to make those changes and so it goes back to this opportunity point. If we can do this in a coordinated fashion when the alliance, then there won't be as much responsibility left to the United States or burdened up for the United States to carry. Obviously we don't want to carry increasingly an unfair burden and that's always been something at NATO we've worked on for years. All the number of us in this room have worked on the burden sharing aspect and that's something that we have worked hard and to try to keep things as level as we could. We're continuing to do that, but I tell you if we cannot do this at NATO in a coordinated fashion then there might be a problem in terms of that burden sharing. I look on it almost like a potluck dinner. You can't just let people bring what they want to bring based on their pocketbooks. There's got to be someone with a signup list saying you're going to bring us out and then you're going to bring so that we can have something that makes sense when we need it. And frankly NATO is going to have to come in I think after Lisbon and try to sort out where we are in the alliance in terms of capability as we go through all these reviews. Jim on that one, can I just raise one point that has been a little bit controversial I think and particularly in the British debate on this and the great uncertainty about the future of the British surface Navy force. Clearly the decisions of the SDSR made some very specific choices about the notion that maybe long-term lack of access to bases, the need for carriers, but carriers capable of conducting a full range of combat operations not so much focused on literal. In fact to cashier the current ocean and some of the other carriers that are more designed for literal operations and kind of limited interventions. What do you see is or in the discussions if you can get into it with the British government have you discussed this notion of how we look at particularly if we had to do some kind of intermediate options. We heard General Hutton talk a little bit about they've certainly planning for one major non-combatant evacuation of the kinds of humanitarian missions but what kind of capabilities do you think and is there a way to harmonize this in terms of what the US Navy is doing? Well I am, you know when I was in London I stuck to my beat which was the geopolitical aspect and the broad aspect of how we would operate together so I did not get into the services because I knew they'd want to all be in the room with me to make sure their interests were presented but I will say that the US Navy and the Royal Navy have been close for years and both on that nuclear side as well as on the conventional side and I know they've had a long tradition of working together and ensuring that as trends went back and forth whether it was from the sea or literal operations or whatever it might be littoral operations, whatever it might be that they were working together and trying to make sure that they brought to the table capabilities whether it was Desert Storm or wherever it might be. I know that as the Royal Navy went through its value for money study of the UK nuclear program that there was a lot of good back and forth and attempts to see where savings could be made down into the future and so I'm sure on the surface side that was being done the same way that's the thing about the special relationship that people talk about and that I am the custodian of and that is there is a tradition that we have had since at least World War II of this very close working together at the service level that isn't seen unless you're in that service and you're working. I think we have a very good example right at the end of the table of how we go about doing this in small ways and in big ways too and I think as we as the UK goes through the SDSR and begins to implement its findings and has its another review in 2015 whether it's the Navy or it's the other services working fast jets or working the ground side I think at the service level is where we're gonna find a lot of these ways where we can operate together where we can operate more efficiently and where we can try to keep the capability as strong as it was even when we had larger forces. Anyone else wanna know? Well as General Hutton said this is in terms of the SDSR this was the beginning of a much longer process and even maybe more contentious one that the UK will have to go through. You've heard a number of our panelists suggest that maybe also the UK has been a bit of a mind canary for what the US military may have to go through in the coming years. We certainly hope to be engaged in part of that debate and in beginning as we mentioned on Friday there'll be yet another forum Friday morning at nine at CSIS and B1 Conference Center on the trends and analysis in both European defense spending and defense industry but we're also continuing to do some work on this whole question of how the United States and its key allies manage in an era of austerity to maintain defense capabilities effective to deal with the range of likely contingencies. So we look forward to continuing to and hope you will be able to join us for some of those discussions. I wanna thank all of our panelists for joining us this afternoon and thank you again General Hutton for getting us off to a good start and again another phase in a dialogue within the special relationship about the future of our defense cooperation. So thank you all very much for joining us. Thank you.