Policy Analysis No. 286

The High Cost of NATO Expansion: Clearing the Administration’s Smoke Screen

By Ivan Eland
October 29, 1997

Executive Summary

The Clinton administration’s estimate of the costs of NATO expansion is fatally flawed. Even if the dubious major assumptions—that the current benign threat environment will continue and that no NATO forces will need to be permanently stationed in new member states—are accepted, the administration’s estimate that the total cost of expansion will be only $27 billion to $35 billion is much too low. Its paltry estimate of $1.5 to $2 billion for U.S. costs is even more incredible.

The U.S. Department of Defense, which made the cost estimate for the administration, did not develop a detailed list of military enhancements needed for expansion, estimate the cost of each enhancement, and add those costs up for a total. Instead, in many cases DoD analysts used a “macro” approach to select a level of spending (what they termed “level of effort”) for a particular category of military improvement, with little or no military rationale or analysis to back it up. In other cases, where DoD made microassumptions, they were very questionable and designed to hold costs down. In addition, DoD analysts felt constrained in how much military infrastructure they could assume would be built on the territories of new member nations. All of those dubious methods were needed because the DoD’s estimate resulted from negotiations within the administration; it was not a valid estimate of costs based on military requirements.

In this study, a detailed critique is offered of the administration’s assumptions and method of estimating the costs; and an alternative cost estimate, which uses the DoD’s major assumptions but is based on more realistic microassumptions and better methodology, is presented. That estimate projects the total costs of expansion at about $70 billion (although they could reach $167 billion), of which at least $7 billion would accrue to the United States.

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Ivan Eland is director of defense policy studies at the Cato Institute.