Leeds University 24 Jan. 2003

"Facing a Dangerous World: Managing Change in Defence” Speech by the Secretary General How do you define success in managing defence, either as a national Defence Secretary or as Secretary General of an international orga nisation such as NATO? Failure is easy to identify. You know when you have lost a war. Saddam Hussein knew after Desert Storm in 1991. Milosevic knew after NATO’s air campaign in 1999. You know when an operation has been unsuccessful. The UN knew that it had failed after the massacre at Srebrenica. The international community knew that it had failed when it withdrew from Somalia. You also know when a major equipment project runs off the rails, as the Nimrod early warning aircraft did in the 1980s. But success is almost always ambiguous. NATO deterred World War III for four Cold War decades. Yet should it also have prevented the Soviet invasions of Hungary and Czechoslovakia? Could it have achieved the same result with fewer resources? My experience is that the best test of success in defence is relevance and effectiveness. For example, to be successful Britain’s armed forces must be organised, trained and equipped to deal effectively with the challenges, risks and threats faced by the nation, its people and its interests today and tomorrow. By the same token, NATO must be able to meet its 19 members’ fundamental security needs in the radically changed international environment of the 21st century. If they cannot pass these tests of relevance and effectiveness, the management of the armed forces and of NATO could fairly be said to have been unsuccessful. This brings me to my main theme this evening. For both Britain’s armed forces and NATO, relevance and effectiveness, and therefore success, means change. Because the decade and a half since the end of the Cold War has seen a series of major evolutions in the international security environment in which both operate. The last, and perhaps the most demanding, evolution came in the wake of the September 11, 2001 atrocities. In many ways, the Cold War was like a sumo wrestling match. Two huge opponents. Clear rules, understood by both sides. Predictable lines of attack and defence. And the prospect of a short but titanic clash. With the collapse of the Berlin Wall, the game changed. And it has continued to change ever since. The sumo match is long over. What are the hallmarks of this new era? The first is greater instability. The disintegration of Yugoslavia was the first step. The Caucasus, Central Asia, South Asia and the Middle East all now offer a rich cocktail of instability. All these regions are going through political and economic transition of historic dimensions. Although, I believe that these changes will ultimately lead them in the right direction, for the foreseeable future they will continue to experience major convulsions. The second characteristic of the new security environment is spillover. In an increasingly globalised world, instability cannot be confined to the areas in which it originates. Take Afghanistan. Under the Taleban, it exported instability to its neighbours, drugs to Europe, terrorism and refugees throughout the world. And if the international community does not remain fully engaged, we can expect the same symptoms of overspill to reappear. The third characteristic: more terrorism. We in the UK are not unfamiliar with terror. But the new strain is more international, more apocalyptic in its vision, and far more lethal. September 11th was not the first example. But it rammed home the lesson that we now face a special new breed of terrorist, driven not by achievable political aims, but fanatical extremism and the urge to kill. The fourth characteristic of this new security environment is more failed states. In the past decade, we have seen states collapse in Europe, Africa and Asia. And failed states are not someone else’s problem. They are sources of illegal migration, transit areas for trafficked arms, drugs and people, and, as Afghanistan showed us, safe havens for terrorists. The fifth and final characteristic is increased proliferation. Despite the best efforts of our diplomats and counter-proliferation experts, the spread of bio-chemical and nuclear weapons is already a defining security challenge of this new century. It will put more fingers on more triggers. And because not all of these fingers will belong to rational leaders, traditional deterrents will not always deter. We cannot ignore Saddam’s arsenal or North Korea’s brazen defiance of its international obligations. The discovery of the chemical Ricin in terrorist hands in London shows that nowhere is safe from this threat. All this adds up to a guaranteed supply chain of instability. It adds up to a security environment in which threats can strike at anytime, without warning, from anywhere and using any means, from a box-cutter to a chemical weapon to a missile. To ensure our safety in this kind of security environment, we no longer need a sumo wrestler. We need a fencer – light, fast, able to adjust quickly and strike precisely. I suspect that very few sumo wrestlers have successfully made the transition into successful fencers. They are too heavy, too slow, and it is hard to stick to the diet. But that is the challenge our defence establishments have faced over the past decade -- to transform fundamentally. To change their policies, their structures and their capabilities, to continue to ensure our common security against dramatically new threats and challenges. I have been involved in two such transformations. As Britain’s Defence Secretary from 1997 to 1999, I conducted the Strategic Defence Review or SDR, a radical policy-led overhaul of all aspects of defence policy, organisation and management. Then as NATO Secretary General I have led the Alliance’s most profound modernisation ever, enshrined at the Prague Summit last November, and now in the process of implementation. I do not propose to bore you – or myself – with detailed descriptions of these exercises. Or to justify why I think they were both successes. We might debate that afterwards if you are interested. Instead, I would like to share with you some of the lessons I have learned since 1997 in how best to manage radical change in defence against the background of a complex, dangerous and rapidly evolving international environment. In doing so, I will draw examples from both the SDR and NATO. And I will concentrate on two main themes: constraints and how to overcome them; and how to encourage the change process. The first, and probably the most important, constraint is the need for consensus among key decision makers that change is required, and on the extent and rate of that change. In 1997, the new Labour Government was committed to a defence review, although after 18 years in opposition we had no preconceptions about what it should involve. But the previous Government had been against radical change, so we were for it. I therefore had the support of all my cabinet colleagues for a radical policy-led re?examination of all aspects of defence, the political equivalent of a blank cheque. Only once the process was underway did it become clear how deeply reform was needed – and wanted by many in the Armed Forces. Reaching consensus among 19 sovereign countries, even when they are long-standing and like-minded allies, is much more difficult. Herding cats or keeping frogs in a bucket are my favourite analagies. Not all member countries have the same long term vision for NATO. At any one time, some are always being driven by short term domestic political difficulties such as elections. Others will have particular resource problems, often dictated by very different variable economic circumstances. As a result, change in NATO has traditionally been slow and incremental, or driven by dramatic external impetuses. The end of the Cold War forced a gradual shift away from static territorial defence. Bosnia pushed the Alliance into peacekeeping operations. Kosovo gave it a warfighting role. My transformation agenda got off the ground because September 11 2001 sent a clear message to all 19 NATO members that the threats to our people and interests had changed fundamentally, and that the Alliance therefore had to embrace radical reform if it was to stay in business. Without 9/11 the deep transformation wrought at last November’s Prague Summit – new members, new capabilities, new partnerships – would almost certainly not have happened. So consensus was an unintended consequence of Al Qaida’s monstrous attack. For us in NATO, the trick was to seize the moment and translate that consensus into action. The second constraint is institutional conservatism. Hierarchies and bureaucracies do not like change. They need external stimuli to think outside the box. In 1997, I inherited plans to replace the Royal Navy’s three small aircraft carriers, the product of unsatisfactory Cold War compromises, with three new small aircraft carriers. When I challenged these plans, it rapidly became clear that the real choice was between no carriers and two much bigger carriers. Small carriers made no military sense at all. We eventually went for two large carriers, a solution around which there is now widespread consensus. But without a major shake up in thinking, the UK would I am certain now be building three useless small carriers simply because that was what we had before. In NATO, one of today’s main military requirements is heavy long-range transport aircraft. The Americans have 250. The RAF has 4. The rest of Europe has none at all. Politically, the Europeans recognise that they must fill this gap if they are to have any military credibility. An Airbus project, the A400M, is in the pipeline. At Prague, we bull-dozed through agreement to create a consortium to jointly lease and operate American C17s or an equivalent until the Airbus arrives. Pragmatic good sense you might think. Not to some European air force chiefs who would prefer to buy and own much smaller and much less effective aircraft than to lease and share the aircraft we all really need. The reason? They cannot envisage any solution that does not involve aircraft flying in their national colours, no matter that the aircraft concerned are useless for today’s needs. We will win this battle as I won the battle on carriers but it demonstrates the institutional hurdles with which any defence reform must deal. The third constraint sounds the most difficult but often it is not: the availability of resources. Our challenge today is more complex than the Cold War. It is in some respects more demanding – the need to move and supply forces over longer distances and for longer periods, for example. We can also take advantage of new technology to improve the effectiveness and the precision of our weapons. In Afghanistan, the US Air Force delivered 75% of its bombs on target, an extraordinary figure representing a quantum increase compared even to the Kosovo campaign only three years previously. So transformation cost money. It does not, however, have to lead to greatly increased defence budgets. Sumo-style Cold War defence was conducted on a massive scale and was inherently wasteful. Today’s changed requirements mean that we can reduce significantly the size of our armed forces – quality in place of quantity. This inevitably produces savings in personnel, equipment and running costs. We can shift resources away from some expensive but now less relevant capabilities. Fewer tanks, fewer anti-submarine frigates, fewer but better fighter aircraft means more money for precise weapons, state of the art command control systems, logistic support, long range airlift and tanker aircraft. Moreover, a more imaginative approach to the management of defence can produce real savings to fund the capabilities we now require. Smaller forces need fewer bases. Some equipment can be leased commercially much more cheaply than the traditional purchase route. In the UK we started by leading Army support vehicles and the like. But the success of these first steps has led to much more ambitious projects such as the multinational heavy lift and air tanker initiatives now being led in NATO by Germany and Spain respectively. So my message to NATO Defence Ministers has been that transformation of their armed forces needs to be properly funded, and defence spending must be given proper priority by nations. But if money is used sensibly, shifting priorities away from static, heavy metal armies and managing resources more efficiently than we have in the past, transformation is not only essential, it is affordable as well often from within existing budgets. So much for constraints. There are also things that a Minister or Secretary General can do to encourage the process of change within their organisations. Personal engagement is essential. It must be clear throughout the organisation that you are committed to and leading change. That means more than a snappy mission statement. During the SDR, I chaired all of the key meetings in which we hammered out the details of individual elements of our modernisation package. This had symbolic value within the MOD. More importantly, I came to understand the issues and could take informed decisions on vital but arcane points such as the relative merits of big, small – or no – aircraft carriers. Later, when I arrived in NATO, it was soon clear that one of the main challenges was to modernise the management of the civilian International Staff who run the Headquarters. Despite NATO’s new roles, their structure was unchanged since the Cold War. Working practices were inefficient. Employment terms were archaic. Previous reform attempts had floundered. Internal reform is not sexy. But no organisation can thrive through neglect. And the prospect of an enlargement of NATO membership from 19 to 26 next May meant that without radical reform the Alliance would face institutional and bureaucratic gridlock. I therefore became the champion of internal reform. I personally seduced, cajoled and bullied the nations, from Prime Ministers through to Ambassadors, until my agenda became their agenda. Over time I built consensus among them that no change was not an option, and that tradition and entrenched vested interests should be cast aside. This personal investment of time and prestige paid off. Last year alone we streamlined working methods and pruned committee numbers by 30% (previous exercises had not succeeded in cutting a single committee). We introduced a new contracts policy for staff. Modern delegated budget management and performance management processes were developed. A radical restructuring will be completed during the summer. And this week we selected a design for NATO’s new headquarters building. But change cannot be achieved from the top alone. You must have a wide constituency of committed stakeholders. To create a wide groundswell of support for change during the SDR, I invited every member of the armed forces to write to me with suggestions. Many did. Some of their ideas were extremely good. To gain the goodwill of the Chiefs of Staff, I made it clear that the SDR was not a cuts exercise but a policy-led review, starting from basics and with all options on the table. One very positive result was that the traditional battle for resources between the Royal Navy’s aircraft carriers and the RAF’s bombers was resolved by an imaginative deal whereby a future generation of bombers would be operated jointly by the Navy and the Air Force, including from the new, larger carriers. In NATO, I mobilised support for internal reform by an initiative called NATO Plus, to engage staff at all levels in identifying where change was needed, producing ideas for reform and then implementing them. This unleashed a wave of enthusiasm and creativity which has re-invigorated NATO’s civilian staff. To keep all of these stakeholders on side, you must be as transparent as possible. That does not come easily to many in defence, where the tradition of confidentiality often extends well beyond the need to preserve real secrets. Transparency has many variations. It can mean informing the public about issues which it is right that they are aware of and understand them. So when I published the SDR White Paper, the contents of the nuclear chapter went from Top Secret one day to unclassified the next. Transparency can mean engaging Ministers directly in the strategic development of policy at a stage when their officials would normally still be squabbling over details. NATO’s cornerstone decisions at the Prague Summit on enhancing key military capabilities was the product of my direct appeal to European Defence Ministers, over the heads of their experts, to close the politically damaging capabilities gap between Europe and the United States. Transparency can also mean explaining to staff, unused to and nervous about change, how the process is evolving and how it will affect them. And listening to them when they think – sometimes rightly – that you have got it wrong. NATO’s new civilian staff contract policy is a direct consequence of an exchange of that kind. All of this requires the defence change manager to have clear objectives and the determination to drive them through, but combined with flexibility on detail and tactics. I am a great advocate of bidding high at the outset while being prepared to vary your tactics as circumstances change. When I arrived at NATO, I announced glibly that my three priorities were “capabilities, capabilities, capabilities”. Had NATO not been galvanised by 9/11, I might well have lived to regret that statement. Despite my private and public harangues, most member countries had at that stage responded only with rhetoric rather than had commitments. But in the wake of 9/11, the common realisation that the world had changed produced a new determination to provide the military assets needed to deal with today’s all too real threats. From being an irritant to nations, I became the focal point for pushing ahead with real transformation. The result was a commitment at Prague to fill key shortfalls such as strategic airlift and tanker aircraft, creation of the cutting edge NATO Response Force, and the streamlining of the Alliance’s command structures. These decisions are fundamental to NATO’s future military effectiveness and political credibility. And my high risk strategy was vindicated. Ladies and Gentlemen, The proof of the pudding is always in the eating. I have no doubt that the Strategic Defence Review ensured that Britain’s navy, army and air force will remain amond the very best in the world. I am equally sure that the transformation package agreed at our Prague Summit will secure NATO’s future as the primary vehicle for dealing with 21st century challenges to the security and defence of Europe and North America. We have launched the biggest round of enlargement in the Alliance’s history. Brought down a final curtain on the sterile discussion of the Cold War by creating a NATO-Russia Council where we can work together as equal partners. Set NATO at the centre of collective military planning and preparation to meet future terrorist attacks. Broken a longstanding political logjam which was blocking progress on our strategic relationship with the European Union. Committed nations to rapidly transform their armed forces. And made radical reforms to NATO’s political structures. As a result I can say with confidence that NATO is a uniquely flexible tool for transatlantic consultation and multinational cooperation. It is the world’s largest permanent coalition. And it is the world’s most effective military organisation. This is what managing change is all about. Setting objectives. Driving them through, personally and with the help of stakeholders. Keeping a grip on implementation. And then taking the credit.