THE NETHERLANDS: 2004 REPORT TO CONGRESS ON

UNCLAS SECTION 01 OF 07 THE HAGUE 003150

SIPDIS

SENSITIVE

STATE FOR PM/B, EUR/UBI, EUR/RPM, DOD FOR OSD/PA&E,
OASD/ISA/EUR, OASD/ISA/NP, OASD/ISA/AP, OASD/ISA/NESA,
OASD/ISA/BTF

E.O. 12958: N/A
TAGS: MARR MOPS MCAP PREL PGOV NL NATO
SUBJECT: THE NETHERLANDS: 2004 REPORT TO CONGRESS ON
ALLIED CONTRIBUTIONS TO THE COMMON DEFENSE

REF: SECSTATE 305999


1. (U) Point of Contact is Pol-Mil Officer Nathaniel Dean,
(31) (70) 310-9346, email DeanNP@state.gov. Average exchange
rate is one Euro equals 1.22 USD.

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GENERAL ASSESSMENT
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2. (U) The Netherlands made significant contributions
to allied goals in 2003. Dutch land, sea, air and marine
forces participated in allied military operations in Iraq,
Afghanistan, the Balkans and elsewhere. In addition to its
military participation, the governing coalition led by PM
Jan Peter Balkenende gave strong political support for
Operations Iraqi Freedom and Enduring Freedom. In the face
of a stagnant economy, Defense Minister Henk Kamp has sought
to manage large mandated defense cuts in a way that makes
Dutch forces more effective and increasingly deployable,
while
increasing the percentage of defense expenditures on
equipment modernization. Throughout 2003, then FM de Hoop
Scheffer and other members of the Dutch government argued
strongly in support of keeping the EU's European Security
and Defense Policy (ESDP) tied to NATO-EU Berlin plus
agreements. The Dutch were outspoken opponents of the
conclusions of the so-called April 2003 "Mini-Summit" on
European defense that called for a separate EU military
headquarters at Tervuren, Belgium. De Hoop Scheffer's
strong leadership in support of allied goals and maintaining
the vitality of the transatlantic alliance in the face of
certain challenges culminated in his selection as successor
to Lord Robertson in January 2004 as NATO Secretary
General. Finally, the Dutch served as Chairman in Office
of the Organization for Security and Cooperation in
Europe (OSCE) in 2003, and charted an ambitious program
that included adoption of a strategy to address Threats
to Security and Stability in the 21st Century.

NATO issues: PCC, NRF, PfP


3. (U) The Dutch made efforts in 2003 in support of their
Prague Capabilities Commitment (PCC) goals to acquire
Nuclear Biological and Chemical defense vehicles, upgrade
their theater ballistic missile defense capability and
enhance alliance PGM stocks (see also paras 5-6). Strong
supporters of the NATO Response Force (NRF),the Dutch
agreed to participate in NRF rotation one with one frigate,
a number of staff officers and logistics support. The Dutch
contribution to NRF-2 will be the same augmented by six
Dutch air force F-16s. The Dutch-German High Readiness
Force Corps Headquarters will participate in the NRF-4
rotation. The Dutch have agreed to provide an Army Brigade
every other rotation for the near future, in addition to
niche troops as appropriate. The Dutch have been very
active participants in Partnership for Peace (PfP) since
its inception. The Netherlands strongly supported expansion
of NATO by extending invitations to Bulgaria, Estonia,
Latvia, Lithuania, Romania, Slovenia and Slovakia.
The Dutch consider such expansion important to enhancing
security and stability on the European continent.

Defense Spending and Acquisitions


4. (U) The Dutch defense budget for 2003 was Euro
7,438,900,000
(1.57 percent of GDP). The projected defense budget
for 2004 is Euro 7,667,939,000. While this seems to
represent a nominal increase, it in fact reflects a re-
allocation of resources following significant budget cuts.
In June 2003, Minister of Defense Kamp announced plans for
restructuring the Dutch military in response to severe
mandated budget cuts which affected all government
ministries. His proposed budget was accepted essentially
intact by the Parliament in October 2003. These plans
included significant mandated cuts to the Dutch defense
budget (enacted under the first Balkenende government
2002-03) of an average of 380 million Euros a year for the
next four years. In the period, 2004-2008, the material
cuts include reducing Dutch frigates from 14 to ten,
tanks from 180 to 110, Apache attack helicopters from
30 to 24, F-16s from 137 to 108, and eliminating the Navy's
P-3 Orion maritime patrol aircraft fleet, as well as
delaying certain Prague commitments (i.e., increasing the
number of Patriot missile batteries). Personnel will be
reduced through the elimination of 12,000 positions,
while at the same time 5,000 new warfighter positions are
created for younger personnel. Overall personnel strength
will be reduced from approximately 70,000 to 65,000.
Finally, the bases of Valkenburg (2005),Seedorf (2005),
Soesterberg (2007) and Twenthe (2007) are to be closed.
Kamp called for these cuts in major operational capabilities
and personnel to save money and to reallocate budget
resources
to focus on substantial new investments. His goals include
gradually increasing the Dutch rate of investment in new
equipment from 15.8 percent to 21.3 percent of their total
defense budget by 2008. His ultimate goal is to make all
Dutch forces deployable -- and he has stressed a preference
for expeditionary forces as well as an interest in
investments, such as potential future acquisition of the
Tomahawk missile system to enhance the utility of the Dutch
navy's four new Seven Provinces-class frigates to the NATO
Response Force (NRF).


5. (U) Kamp's spending cuts should yield sufficient funding
to
invest in certain ready capabilities and to sustain
participation
in military missions over a longer period of time. In terms
of
investments, the Dutch have continued their commitment as a
Level
II partner in the Systems Development and Demonstration (SDD)
phase of the Joint Strike Fighter program and are anticipated
to begin negotiations as a partner to the Production MOU in

2004. They have begun modification of their F-16 fleet
adding
Link-16 datalink capability. In 2003 the GONL allocated
Euros
78 million for replenishment, maintenance and upgrade of the
Dutch air force's precision-guided missile capabilities. As
part
of this effort, in late 2003, the GONL began the process to
acquire 40 Joint Direct Attack Munition (JDAM) kits.
Additionally they will spend approximately $132 million to
begin a significant modernization of the targeting systems
(MTADS) for their remaining fleet of Apache attack
helicopters.
Further to Dutch Prague Capabilities Commitments, the Royal
Netherlands Air Force anticipates approval by February 2004
to upgrade their current Patriot batteries to a PAC 3
capability
and purchase 32 Patriot PAC 3 missiles giving them a
hit-to-kill
capability against the ballistic missile threat.
Additionally,
they have allocated over Euros 140 million in an effort to
modernize network-centric warfare operations of their air
defense forces and their High Readiness Forces command and
control capabilities. In another focus on meeting Prague
goals for strategic airlift, the RNLAF is negotiating a
commercial purchase of a DC-10 transport to augment their
strategic lift capacity, a mission currently fielded by
their two KDC-10s.


6. (U) The Dutch Army in accordance with Prague commitments
concerning its chemical, biological, radiological and nuclear
(CBRN) defense competence had begun a multi-year development
and investment program (Euro 45 million) in CBRN capabilities
and vehicles. They also have made a long-term commitment to
the Alliance Ground Surveillance (AGS) program (Euro 116
million).
On the Navy side, there continues to be investment in
shipboard
weapons and the Dutch are near to signing a trilateral
agreement
with Germany and the U.S. for Production and Research and
Development of the Standard Missile (SM). The Dutch Air
Defense
and Command frigate (LCF) fleet conducted the first live fire
test of SM 2 in November 2003. The second of four LCFs will
begin cold water trials by the end of 2003 and the third
comes
into service in 2004.

Economic Factors, Grant Aid


7. (U) Despite economic recession, the Dutch continue to be
among the world's leading donors of Overseas Development
Assistance and in 2003 devoted Euros 57 million and
32 million to Afghanistan and Iraq respectively. The
Dutch economy slumped into recession with GDP growth
in 2003 falling by an estimated 0.75 percent (y/y) --
after marginal 0.2 percent (y/y) GDP growth in 2002. This
is the lowest growth rate since 1982. The labor market
deteriorated in step, with the rate of unemployment rising
from 3.9 percent in 2002 to an estimated 5.5 percent in 2003.

Core inflation is expected to dip from 3.5 percent in 2002
to 1.5 percent in 2003. The European Convention remains high
on the Dutch political agenda after failure to reach a
compromise at the December EU Summit in Brussels. The Dutch
have expressed strong concerns about France and Germany's
failure to comply with the EU's Growth and Stability Pact
deficit criteria.

Peacekeeping and Humanitarian Operations (Bosnia, Liberia)


8. (U) The Dutch are long-time participants in NATO's
Stabilization
Force (SFOR) in Bosnia. Currently there are 942 Dutch ground
troops deployed with SFOR. The Dutch task force (a
reinforced
mechanized infantry battalion) operates in Multinational
Division
Southwest in the vicinity of Vitez, Novi Travnikand, and
Knezevo.
On November 5, the Royal Netherlands Navy deployed the
Loading
Platform Dock, HNLMS Rotterdam, to the coast of Liberia as
part
of the UN mission to that West African Nation (UNMIL). The
ship
accompanied by 257 military personnel, including a surgical
team,
a marine platoon, a boat company and a helicopter detachment.
the Dutch also contribute smaller numbers of personnel to
other
NATO, UN and OSCE peacekeeping missions.

Counter proliferation, Nuclear Threat Reduction


9. (U) The Dutch strongly supported the goal of curbing the
proliferation of missile and weapons of mass destruction as
charter members of the Proliferation Security Initiative
(PSI).
In 2003 they also joined the G-8's Partnership Against
the Spread of Weapons and Materials of Mass Destruction.
In addition, the Dutch were the first country in the world
besides
the U.S. to install radiological detection gates at
Rotterdam,
Europe's largest container port.

The Global War on Terror


10. (U) Throughout 2003, the Dutch maintained a robust level
of participation in overseas allied military deployments. As
of December 3, 2003 the Dutch have 2527 troops deployed in
operations worldwide mostly in support of allied operations
(see paragraphs 11 - 14 for further details).

Iraq: Operation Iraqi Freedom


11. (U) In February, despite being in caretaker status at
the time, the first Balkenende government offered strong
political support for Operation Iraqi Freedom (OIF) and
dispatched three needed Patriot missile batteries to defend
NATO ally Turkey at a time when the alliance was deadlocked
on the issue. These units were deployed to Diyarbakir and
Batman in southeastern Turkey. They remained in Turkey from
February 26 until May 1 with 360 Royal Netherlands Air Force
personnel providing much needed deterrence of Theater
Ballistic
Missile threats and allowing U.S. and allied units to focus
efforts elsewhere in the region. From February 17 until May
19,
the Dutch provided Host Nation support for shipment of
equipment of U.S. military units from their posts in Germany
on to Kuwait and Turkey for operations in Iraq. In addition,
during 2003 the Dutch provided support (fueling, catering,
force protection, and operational security) for over 100
Civil
Reserve Air Fleet (CRAF) flights ferrying approximately
40,000 U.S. service members from the U.S. through Schiphol
International Airport bound for Kuwait. Since July 31, the
Dutch have had approximately 1100 military personnel in Iraq
as part of the Stabilization Force (SFIR) serving in Al
Muthanna
province as part of the UK's Multi-National Division (MND)
SouthEast. Their participation consists of a reinforced
Royal
Dutch Marine battalion supported by a Royal Netherlands Air
Force Detachment (three CH-47 Chinook transport helicopters)
and small units from the Royal Netherlands Army and
Constabulary
(Marechausee). On November 28, the Dutch Cabinet decided to
extend the deployment by six months and to dispatch an
additional
Chinook helicopter as well as a company of Dutch army special
operations forces commandos for reconnaissance. The Dutch
also
have six officers serving as part of the Polish division
Headquarters in Al Hillah.

Afghanistan: ISAF and OEF


12. (U) In Afghanistan, the Dutch began 2003 with 200
infantry
troops deployed in Afghanistan as part of a joint
German-Dutch
unit participating in the International Security Assistance
Force (ISAF). Beginning on February 10, the Dutch co-led
ISAF III with Germany via the German/Dutch High Readiness
Force Corps Headquarters employing approximately 700 Dutch
military personnel. The GE/NL HRF Corps headquarters handed
over the command to NATO's AFNORTH Headquarters on August 10,

2003. Most recently, Defense Minister Kamp agreed to
consider
deploying four Dutch Apache attack helicopters in support of
NATO's expanded ISAF mission. As part of Operation Enduring
Freedom, the Dutch have authorized blanket overflight and
basing and they have sent five liaison officers to the
CENTCOM
staff in Tampa FL, headed by a Brigadier General. They have
provided maritime assets and other military assets to include
two P-3 Orion aircraft, a tanker, a C-130, six F-16s (October
1, 2002 - October 1, 2003),two frigates, and two
minesweepers.
The Dutch F-16s served as part of the European Participating
Air Forces (EPAF) squadron, which provided combat support
to OEF out of Manas, Kyrgyzstan.

Maritime Surveillance: Operation Active Endeavor


13. (U) The Royal Netherlands Navy currently has one frigate
and one logistics ship deployed to the Mediterranean for
NATO Operation Active Endeavor (OAE) under the command of
NATO's Standing Naval Forces Mediterranean. The Dutch
Frigate
HNLMS Jacob van Heemskerck was the command ship for the
STANAVFORMED from September 25, 2002 until September 25,

2003.
Accompanying the ships were 349 service members.

Force Protection for U.S. military facilities


14. (U) In terms of enhanced force protection, the Dutch also
provided approximately 88 personnel for increased force
protection around military facilities in the Netherlands from
January to December 2003 at an estimated value of $1,200,000.

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Direct Cost Sharing
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15. (SBU) The Dutch government spent no funds on cost sharing
for stationed U.S. forces in CY 2003. The U.S. currently
maintains few facilities in the Netherlands and downsizing of
the U.S. military presence in the Netherlands continues. In
September, OSD announced that two Army Prepositioned Sets
(APS)
sites would terminate operations on February 29, 2004. The
sites
are used to store Army pre-positioned stocks. Built in 1983,
the
facilities once held a brigade's worth of weapons, vehicles
and
equipment in case they were needed by U.S. troops to defend
Cold
War allies. These closures will affect 10 U.S. soldiers, two
U.S. civilians, eight local-national civilians and
approximately
400 employees of the Dutch Ministry of Defense who work at
these
facilities. The closure of additional facilities is under
discussion and is currently in the staffing phase.

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Indirect Cost Sharing
--------------


16. (U) The Dutch government forgoes tax revenue, and grants
privileges and immunities to officials working at the
International Court of Justice (ICJ),the International
Criminal Tribunal for the Former Yugoslavia (ICTY),the
Iran-U.S. Claims Tribunal, and other international legal
institutions based in The Hague although it has taken steps
over the past two years that erode a number of these
benefits.
These steps have engendered increasing criticism from these
institutions and has prompted the Iran-U.S. Claims Tribunal
to demand arbitration of these issues with the GONL. The UN
pays rent for the facilities that house the ICJ and the ICTY.

The Dutch provide the Iran-U.S. Claims Tribunal facility rent-
free, although the Tribunal bears the significant costs of
maintaining the facility. The Netherlands also provides
prison space, on a fee basis, to the UN for alleged ICTY War
Criminals during pre-trial detention, trial and appeals.

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Grant/Humanitarian Aid
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17. (U) As one of the leading donors of international
development aid in the world, the Netherlands continued in
CY 2003 to provide considerable official development
assistance to both Afghanistan and Iraq. Total Dutch Overall
Development Assistance (ODA) for FY 2003 stands at
approximately EUR 3.8 billion, which includes multilateral
and bilateral contributions.

Afghanistan
--------------
The Netherlands is one of the major contributors to Afghan
reconstruction and humanitarian aid. The Netherlands seeks
to continue to play a key role in the donor coordination
process and appreciates frequent consultations with U.S.

The Netherlands FY 2003 contributions were:

Afghan Reconstruction Trust Fund (ARTF) -- USD $45 million

Elections -- USD $5.9 million

UNHCR -- USD $5.9 million

Iraq
--------------

The Netherlands continues to seek out ways to contribute
to reconstruction efforts. Dutch FY 2003 contributions
are as follows:

UN Consolidated Appeal (Humanitarian) -- Euros 18 million

Dutch NGOs operating in N. Iraq -- Euros 3 million

Police Training and Equipment -- Euros 900,000

During the October 2003 Madrid Donor's Conference, the
Netherlands pledged an additional Euros 10 million for Iraq:
Humanitarian Aid -- Euros 5 million

Multilateral Trust Fund -- Euros 5 million
The Dutch Ministry of Foreign Affairs will also give
Euros 300,000 to aid demining and is looking to support
the mass graves project with personnel and funding.

Stability Fund
--------------

A new Dutch government "Stability Fund" will consist of
Euros 64 million in FY 2004 and Euros 110 million in
FY 2005. It will be a combination of ODA money and other
funds, directed to conflict-resolution and peacebuilding
programs. Approximately half of the money will be used
for the continuation of existing programs, and half will
be put toward new, as yet undesignated programs.

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Peacekeeping
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18. (U) NATO SFOR: 942 personnel (RNLA reinforced mechanized
infantry battalion) part of Multinational Division Southwest

NATO KFOR HQ/EUMM - two military personnel

OSCE Macedonia - four military personnel

OSCE Moldova - one military personnel

UNMIL (Liberia): One RNLN Amphibious Landing Platform Dock
vessel, HNLMS Rotterdam, 257 personnel (including a surgical
team, RNLMC platoon, RNLN boat company and RNLN helicopter
detachment)

UNTSO Middle East - 12 military personnel

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Contingency Operations
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19. (U) ISAF II: Until February 200 RNLA personnel
ISAF III: February to August 700 (mostly RNLA) personnel,
part of NL/GE High Readiness Corps HQ
NATO ISAF IV: August to date, 30 personnel in NATO ISAF HQ

Operaton Display Deterrence (Turkey): 3 Patriot Missile
Fire Units with 360 RNLAF personnel to Turkey from February
- May

Operation Iraqi Freedom: 1,100 personnel (RNLMC, RNLA, RNLAF
and
Royal Constabulary); four Chinook CH-47 transport helicopters
to Al Muthanna Province as part of UK's Multi-National
Division
South East; six personnel to Polish Division HQ at Al Hillah

Operation Enduring Freedom: six/nine F-16s to Manas,
Kyrgyzstan,
January - October; one K/DC-10 air refueling tanker; one
C-130
transport plane; two P-3 maritime patrol aircraft; two
frigates;
two minesweepers to Gulf region

NATO Operation Active Endeavor: one frigate and one
logistics
ship, January to September; 349 RNLN service members.

In addition, the Dutch joined the Proliferation Security
Initiative (PSI) as a charter member of this effort and
have sent personnel as observers to initial PSI exercises.

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Counter-proliferation
--------------


20. (U) In addition to their participation in the PSI,
the Dutch joined the G-8's Partnership Against the Spread
of Weapons and Materials of Mass Destruction in the run
up to the 2003 Evian G-8 Summit. The Dutch currently fund
a chemical weapons destruction facility in Russia as part
of this effort. To combat the illicit spread of radio-
logical materials the Dutch were the first country in the
world besides the U.S. to install radiological detection
gates at
Rotterdam, largest container port in Europe.


21. (U) The Dutch play an active role in the nonproliferation
regimes such as Nuclear Suppliers Group, the Missile
Technology
Control Regime, the Australia Group and other international
counter-proliferation regimes. The Netherlands is also the
seat of the Organization for the Prohibition of Chemical
Weapons (OPCW). The Dutch served as inaugural chair in
2003 of the Hague Code of Conduct against the proliferation
of Ballistic Missiles which was inaugurated in November 2002
and has been since subscribed to by over 100 states. The
Dutch serve on the Board of Governors' of the UN's IAEA and
share the U.S.'s strong concerns about the Iranian nuclear
program.
SOBEL