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Report to Congressional Committees:

United States General Accounting Office:

GAO:

May 2003:

NATO Enlargement:

Reports Are Responsive to Senate Requirements, but Analysis of 
Financial Burdens Is Incomplete:

GAO-03-722:

GAO Highlights:

Highlights of GAO-03-722, a report to Senate and House Committees on 
Armed Services and Appropriations, the Senate Committee on Foreign 
Relations, and the House Committee on International Relations

Why GAO Did This Study:

On November 21, 2002, the North Atlantic Treaty Organization (NATO) 
invited seven countries to join the alliance. To facilitate 
congressional consideration of NATO enlargement, the U.S. Senate 
mandated in 1998 that GAO review and assess the reports the Senate 
directed the President to provide on countries invited to join NATO.  
The President submitted the required reports to Congress on March 25, 
2003.  To fulfill its mandate, GAO determined if (1) the reports met 
the Senate’s requirements and the information was accurate and current, 
(2) the methodology for assessing the likely impact on NATO’s military 
effectiveness was reasonable, and (3) the methodology for analyzing the 
ability of the invited countries to fulfill the full range of financial 
burdens of NATO membership was reasonable.

What GAO Found:

The President’s reports responded to the Senate’s requirements.  The 
information provided in the reports was generally accurate and current.  

The methodology for assessing the likely impact of each invited country 
on NATO’s military effectiveness was reasonable.  The reports provided 
a clear explanation of the methodology used and provided information on 
countries’ defense reform plans, past and current contributions to U.S. 
and NATO operations, and expectations of countries’ ability to 
contribute specialized military capabilities.  The methodology was 
consistently applied to assessments of each of the seven invited 
countries. 

The methodology used to analyze each invited country’s ability to 
fulfill the full range of financial burdens of NATO membership was not 
described and the information provided was limited.  The reports 
included some cost information but did not discuss the costs of 
maintaining representation at NATO’s headquarters or military command 
posts.  Furthermore, the same types of information were not 
consistently provided for each country. 


What GAO Recommends:

To ensure sound analyses of invited countries’ financial capabilities 
in reports required for any future NATO enlargement, GAO recommends 
that those reports fully explain the methodology, ensure the range of 
information is sufficient to support the conclusions, and consistently 
apply the methodology.  

We provided a draft of this report to the National Security Council.   
The council did not provide comments on this report.

www.gao.gov/cgi-bin/getrpt?GAO-03-722.

To view the full report, including the scope
and methodology, click on the link above.
For more information, contact Joseph Christoff, 202-512-8979.

[End of section]

Contents:

Letter:

Results in Brief:

Background:

Reports Responded to the Mandate's Requirements:

Methodology for Assessing Likely Impact on Military Effectiveness Was 
Reasonable:

Methodology for Analyzing Ability to Meet Financial Burdens Was 
Limited:

Conclusion:

Recommendation for Executive Action:

Agency Comments and Our Evaluation:

Scope and Methodology:

Figure:

Figure 1: Countries Invited to Join NATO and Current European NATO 
Members:

United States General Accounting Office:

Washington, DC 20548:

May 5, 2003:

Congressional Committees:

In the Senate resolution ratifying enlargement of the North Atlantic 
Treaty Organization (NATO) in 1999,[Footnote 1] the Senate required the 
President to submit to Congress a classified and an unclassified report 
that provides updated information on the status of political, economic, 
defense, and related issues for countries invited to join NATO. In 
addition, these reports are to provide an assessment of the invited 
countries' likely impact on NATO's military effectiveness and an 
analysis of the ability of each invited country to fulfill the full 
range of financial burdens of NATO membership. The President submitted 
these reports to Congress on March 25, 2003. The Senate mandated that 
GAO review and assess these reports.

The President had previously submitted a report to Congress that 
provided information on the nine countries that were seeking NATO 
membership.[Footnote 2] As required by the Senate, this August 2002 
report assessed how countries would further the principles of the North 
Atlantic Treaty, contribute to North Atlantic security, and affect U.S. 
national security interests. It also evaluated countries' eligibility 
for membership and estimated the military requirements and costs 
associated with a country's membership for both NATO and U.S. budgets. 
In our November 2002 report, we found that the President's report met 
the Senate's requirements. However, we provided additional information 
on such eligibility issues as border relations, judicial independence, 
civil rights, human rights, and minority rights because the President's 
report did not provide a full understanding of the challenges facing 
these countries and their efforts to address those challenges.[Footnote 
3]

To fulfill our mandate to review the President's current reports, we 
determined if (1) the reports met the Senate's requirements and the 
information was accurate and current, (2) the methodology for assessing 
the likely impact on NATO's military effectiveness was reasonable, and 
(3) the methodology for analyzing the ability of the invited countries 
to fulfill the full range of financial burdens of NATO membership was 
reasonable.

To assess the President's current reports, we developed information 
from a broad array of sources, including U.S., NATO, and foreign 
government reports and analyses of the countries invited to join NATO 
and discussions with U.S. and foreign government officials. We 
determined if each of the Senate's requirements was addressed and if 
the information provided was accurate and current. To assess the 
methodologies used for the analyses in the reports, we determined if 
the methodology was clearly and fully described, if the range of 
information provided supported the conclusions, and if the methodology 
was applied consistently to analyses for each invited country.

The President submitted a classified and an unclassified report to 
Congress on the seven countries that NATO invited to join the alliance-
-Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia. 
The National Security Council was responsible for developing these 
reports. While we reviewed both reports, no classified information has 
been included in our observations.

Results in Brief:

The President's reports responded to the mandated requirements for each 
of the seven countries invited to join NATO and provided information 
that was generally accurate and current. The information was generally 
consistent with the data we collected independently from a broad array 
of sources, including U.S. government, NATO, and foreign government 
sources. No recent events have occurred to alter the general 
information provided in the reports.

We found that the methodology for assessing the likely impact of each 
invited country on NATO's military effectiveness was reasonable. The 
reports clearly identified the methodology used and the assessments in 
the reports provided information on the countries' defense reform 
plans, past and current contributions to U.S. and NATO operations, and 
expectations of countries' abilities to contribute specialized military 
capabilities. The methodology was consistently applied to assessments 
of each of the seven invited countries.

We found that the methodology for analyzing invited countries' ability 
to fulfill the full range of the financial burdens of NATO membership 
was limited. The reports did not identify the methodology used and did 
not provide information on the costs of maintaining representation at 
NATO's headquarters or military command posts, which representatives of 
the invited countries consider part of the costs of membership. In 
addition, invited countries' representatives to NATO stated that their 
commonly funded costs and the costs of maintaining representation at 
NATO ranged from about 1 to 4 percent of their defense budgets and that 
these total costs have been included in their budgets. The reports also 
did not identify the costs of NATO membership as a percentage of the 
countries' total defense budgets. This information would have 
identified the level of demand these costs would place on the country's 
total allocation of funds for defense. Finally, the reports did not 
consistently discuss the same types of information for each of the 
seven countries. The discussions of these types of information for each 
country are classified.

Although the methodology for assessing the likely impact of the invited 
countries on NATO's military effectiveness was reasonable, the 
methodology for analyzing the ability of countries to fulfill the full 
range of financial burdens of membership was limited. Therefore, to 
ensure that sound analyses of invited countries' financial capabilities 
are provided in future reports, we are recommending that the National 
Security Council fully explain the methodology, ensure that the range 
of information is sufficient to support conclusions, and consistently 
apply the methodology.

The National Security Council provided no comments on this report.

Background:

The North Atlantic Treaty was signed on April 4, 1949, by 12 European 
and North American countries to provide collective defense against the 
emerging threat that the Soviet Union posed to the democracies of 
Western Europe. Since its inception, NATO has enlarged its membership 
four times as changing political and strategic circumstances have 
warranted. Turkey and Greece joined NATO in 1952, West Germany in 1955, 
and Spain in 1982.

In 1994, NATO committed to enlarging its membership to include the 
newly democratic states of the former Communist bloc. In 1999, Poland, 
the Czech Republic, and Hungary became the first of those countries to 
join the alliance. At its summit meeting in November 2002 in Prague, 
NATO invited seven countries to join: Bulgaria, Estonia, Latvia, 
Lithuania, Romania, Slovakia, and Slovenia. Figure 1 shows the invited 
countries and the current members of NATO.

Figure 1: Countries Invited to Join NATO and Current European NATO 
Members:

[See PDF for image]

[End of figure]

Reports Responded to the Mandate's Requirements:

The President's reports responded to the three requirements in the 
Senate's mandate with regard to each of the seven invited countries. 
First, to provide updated information on the five issues required to be 
addressed in the report submitted to Congress on August 26, 2002, the 
reports included updated information on the political, economic, 
defense, budgetary, information security, and legal conditions and 
preparations of the invited countries. Because NATO's military 
requirements did not change, the reports included no changes in the 
methodology for assessing the potential costs of enlarging the alliance 
or in the estimates provided in the earlier report. Second, the reports 
provided an assessment of each invited country's likely impact on 
NATO's military effectiveness. Third, the reports provided a variety of 
information regarding each country's ability to meet the financial 
burdens of NATO membership, including such issues as current and 
planned defense spending levels and economic growth rates.

The information provided in the reports was generally accurate and 
current. No major events appear to have been excluded. The information 
provided in the reports was generally consistent with the data we 
collected independently from a broad array of sources, including U.S. 
government, NATO, and foreign government sources. The reports' cutoff 
date for the timeliness of information was January 31, 2003, and the 
timeframes for events, particularly recent ones, were usually 
identified. No recent events have occurred to alter the general 
information provided in the reports.

Methodology for Assessing Likely Impact on Military Effectiveness Was 
Reasonable:

We found that the methodology for assessing the likely impact of each 
invited country on NATO's military effectiveness was reasonable. The 
reports clearly described the methodology. That methodology called for 
assessing the soundness and feasibility of each country's defense 
reform plan, each country's support of U.S. and allied actions through 
contributions to U.S. and NATO military operations, and the ability of 
each country to contribute specialized military capabilities to NATO 
once it becomes a member. The information provided supported the 
reports' conclusions about the likely impact of these countries on 
NATO's military effectiveness. The discussion of defense reform plans 
provided an understanding of the status of the countries' defense 
modernization efforts and their degree of military preparedness. 
Identifying examples of how countries have participated in or 
contributed to NATO or other multilateral defense operations 
demonstrates how countries can be expected to participate in NATO 
operations as members of the alliance. Determining what kinds of 
specialized military capabilities a country could provide to NATO 
illustrates how the country will enhance NATO's preparations for future 
missions. Finally, the methodology was consistently applied in the 
assessment of each invited country.

Methodology for Analyzing Ability to Meet Financial Burdens Was 
Limited:

We found that the methodology for analyzing the ability of invited 
countries to fulfill the full range of financial burdens of NATO 
membership was limited. The reports did not explain the methodology 
used and the information provided to support the conclusions was 
limited.

The reports discussed the ability of countries to meet their share of 
NATO's commonly funded costs,[Footnote 4] but did not consider the 
costs of supporting country representation at NATO facilities. 
Officials of the invited countries told us that their share of NATO's 
commonly funded costs generally ranged from about 1 to 2 percent of 
their annual defense budgets. However, becoming a member also entails 
the cost of supporting country representation at NATO's facilities such 
as its civilian and military headquarters in Belgium and its command 
posts in Europe. According to officials of each of the seven invited 
countries, the costs of establishing and maintaining country 
representation at NATO facilities are part of the costs of NATO 
membership. Those country officials anticipated that the costs for 
establishing and maintaining country representation at NATO will vary 
between under 1 percent to, in one case at least, as much as 2 percent 
of their annual defense budgets. While the reports do not address these 
costs, officials of the seven invited countries stated that the costs 
of supporting country representation--along with their share of NATO's 
commonly funded costs--have been accounted for in the defense budgets.

The reports also did not identify the costs of NATO membership as a 
percentage of countries' total defense budgets. Although this was not a 
requirement, these data would have provided useful information about 
the level of demand these costs will place on a country's total 
allocation of funds for defense.

Finally, the discussions of countries' abilities to meet the financial 
burdens of NATO membership did not consistently address the same types 
of information for each country. The report provided several types of 
information intended to demonstrate the countries' ability to meet the 
financial burden of membership. The report provided information on such 
factors as a country's share of NATO's commonly funded costs, the 
percentage of Gross Domestic Product committed to defense spending, 
commitment to funding needed defense expenditures, and economic growth. 
The discussions of these types of information for each country are 
classified.

Conclusion:

The President's reports responded to the Senate's requirements, 
providing information that was generally accurate and current on each 
of the seven countries invited to join NATO. While the methodology for 
analyzing the likely impact of the invited countries on NATO's military 
effectiveness was reasonable, the methodology for analyzing countries' 
ability to meet the full range of the financial burdens of NATO 
membership was limited. The methodology used to analyze invited 
countries' financial capabilities was not explained. Lack of discussion 
of the methodology used limits the understanding of how the conclusions 
were derived. Also, because the reports did not discuss all of the 
costs associated with NATO membership, the reports did not provide 
comprehensive support for their conclusions on this issue.

Recommendation for Executive Action:

To ensure that sound analyses of invited countries' financial 
capabilities are provided in future reports required under section 
3(2)(E)(ii) of the Senate Resolution of Ratification on the Protocols 
to the North Atlantic Treaty of 1949 on the Accession of Poland, 
Hungary, and the Czech Republic, we recommend that the National 
Security Council fully explain the methodology, ensure the range of 
information is sufficient to support conclusions, and consistently 
apply the methodology.

Agency Comments and Our Evaluation:

We provided a draft of this report to the National Security Council. 
The council provided no comments on this report.

Scope and Methodology:

We assessed the President's reports by determining the extent to which 
they addressed each of the mandated requirements. We assessed the 
accuracy of the information in the reports by determining if it was 
consistent with the information in the sources we developed. We 
assessed the currency of the information by determining whether any 
recent events identified in our sources raised questions about the 
accuracy of any of the reports' main findings. We did not independently 
assess foreign laws or regulations. To make this assessment, we 
developed an extensive array of documentary information from a broad 
spectrum of sources, including reports and analyses of the U.S. 
government, NATO, and governments of the seven countries invited to 
join NATO, including:

* invited countries' commitments to NATO upon accession and the 
timetable for meeting those commitments;

* invited countries' defense modernization and reconstruction plans and 
their planned defense expenditures;

* NATO assessments of invited countries' defense capabilities;

* invited countries' documentation updating progress in meeting NATO 
political, economic, budgetary, information security, and legal 
membership goals;

* the U.S. State Department's country background reports and its annual 
reports assessing human rights practices and religious freedom;

* reports of the Congressional Research Service on NATO enlargement;

* the European Union's 2002 annual regular progress report on the 
political and economic developments and other preparations of countries 
seeking membership in the European Union;

* Freedom House 2002 Nations in Transit report's country ratings of 
democratization, rule of law, and economic liberalization;

* Freedom House Annual Survey of Press Freedom 2002;

* Transparency International Corruption Perceptions Index 2002; and:

* related media coverage.
:

We met at NATO headquarters in Brussels, Belgium, with representatives 
of Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and 
Slovenia, and obtained additional testimonial evidence through 
discussions with U.S. agency officials in Washington, D.C. and NATO 
headquarters, as well as with NATO international staff.

To assess the methodologies used to analyze the likely impact of new 
members on NATO's military effectiveness and the ability of invited 
countries to fulfill the full range of the financial burdens of 
membership, we determined (1) if the methodology and analytical 
criteria were clearly and fully described; (2) if the methodology 
provided a range of information that supports the conclusions; and (3) 
if the methodology were applied consistently to analyses for each of 
the seven invited countries.

We conducted this review from December 2002 to April 2003 in accordance 
with generally accepted government auditing standards.

We are sending copies of this report to other interested congressional 
committees, the Chairman of the National Security Council, the 
Secretary of State, and the Secretary of Defense. We will also make 
copies available to others upon request. In addition, this report will 
be available at no cost on the GAO Web site at http://www.gao.gov.

Please contact me at (202) 512-8979 if you or your staff have any 
questions about this report. Key contributors to this report were F. 
James Shafer, Beverly Ann Bendekgey, Monica Brym, Martin de Alteriis, 
Ernie Jackson, and Lynn Cothern.

Joseph A. Christoff, Director
International Affairs and Trade:

List of Congressional Committees:

The Honorable Richard Lugar
Chairman
The Honorable Joseph R. Biden, Jr.
Ranking Minority Member
Committee on Foreign Relations
United States Senate:

The Honorable John W. Warner
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate:

The Honorable Ted Stevens
Chairman
The Honorable Robert C. Byrd
Ranking Minority Member
Committee on Appropriations
United States Senate:

The Honorable Henry J. Hyde
Chairman
The Honorable Tom Lantos
Ranking Minority Member
Committee on International Relations
House of Representatives:

The Honorable Duncan Hunter
Chairman
The Honorable Ike Skelton
Ranking Minority Member
Committee on Armed Services
House of Representatives:

The Honorable C.W. Bill Young
Chairman
The Honorable David R. Obey
Ranking Minority Member
Committee on Appropriations
House of Representatives:

FOOTNOTES

[1] Section 3(2)(E)(ii) of the Senate Resolution of Ratification on the 
Protocols to the North Atlantic Treaty of 1949 on the Accession of 
Poland, Hungary, and the Czech Republic, 144 Cong. Rec. S4217-20, 1998.

[2] Section 3(2)(E)(i) of the Senate Resolution of Ratification on the 
Protocols to the North Atlantic Treaty of 1949 on the Accession of 
Poland, Hungary, and the Czech Republic required the President to 
provide such a report before NATO extended any invitations to countries 
seeking membership. 

[3] See U.S. General Accounting Office, NATO Enlargement: Report Is 
Responsive to Senate Requirements, but Additional Information Could Be 
Useful, GAO-03-255 (Washington, D.C.: Nov. 15, 2002).

[4] Commonly funded costs cover NATO's day-to-day operating costs, 
military headquarters, and defense infrastructure projects in member 
countries. Each member of NATO pays a certain percentage of these 
costs. 

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