IIR 6 815 0010 05/CANADIAN DEFENCE REVIEW BECOMING

C O N F I D E N T I A L SECTION 01 OF 03 OTTAWA 003111

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CONFIDENTIAL NOFORN

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SERIAL: (U) IIR 6 815 0010 05.

COUNTRY: (U) CANADA (CA).

IPSP: (U) IFC1511; IFC1513; IFC1516; IFC1311; IFC1547; IFC1520; IFC152
1; IFC1912.

TAGS: PARM
SUBJECT: IIR 6 815 0010 05/CANADIAN DEFENCE REVIEW BECOMING
SCHIZOPHRENIC (U)


WARNING: (U) THIS IS AN INFORMATION REPORT, NOT FINALLY
EVALUATED INTELLIGENCE. REPORT IS CLASSIFIED C O N F I D E N
T I A L/NOFORN.

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DEPARTMENT OF DEFENSE
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DOI: (U) 20041105.

REQS: (U) DHCD127055; DHCD204011.

SOURCE: A. (C) //6 815 0364// SENIOR HOST NATION MILITARY
OFFICER WHO HAS REPORTED RELIABLY IN THE PAST.


B. (C) //6 815 0365// SENIOR HOST NATION MILITARY OFFICER WHO
HAS REPORTED RELIABLY IN THE PAST.


C. (C) //6 815 0194// SENIOR HOST NATION MILITARY OFFICER WHO
HAS REPORTED RELIABLY IN THE PAST.


D. (C) //6 815 0199// SENIOR HOST NATION MILITARY OFFICER WHO
HAS REPORTED RELIABLY IN THE PAST.


E. (C) //6 815 0121// SENIOR HOST NATION MILITARY OFFICER WHO
HAS REPORTED RELIABLY IN THE PAST.


F. (C) //6 815 0361// SENIOR HOST NATION MILITARY OFFICER WHO
HAS REPORTED RELIABLY IN THE PAST.


G. (C) //6 815 0366// SENIOR HOST NATION GOVERNMENT OFFICIAL
WHO HAS REPORTED RELIABLY IN THE PAST.


H. (U) SITREP, ROYAL CANADIAN MILITARY INSTITUTE,
SEPTEMBER/OCTOBER, 2004 (U).

SUMMARY: (C/NF) CANADA'S LONG-AWAITED DEFENCE REVIEW IS
LIKELY TO BE A WATERED DOWN UPDATE RATHER THAN
TRANSFORMATIONAL. DEVELOPED IN PARALLEL WITH THE
INTERNATIONAL POLICY REVIEW IT WILL HAVE POLICY AND RESOURCE
DISCONNECTS. BUDGETARY ENVIRONMENT DIFFICULT.

TEXT: 1. (C/NF) CANADA'S DEFENCE REVIEW EXPECTED BEFORE THE
END OF CY2004 WILL LIKELY BE DELAYED INTO CY2005. THE
FOREIGN AFFAIRS CANADA (FAC) INTERNATIONAL SECURITY POLICY
REVIEW BEING DEVELOPED IN TANDEM, BUT WITHOUT COMPLETE
TRANSPARENCY, IS LIKELY TO PROVE A MISMATCH WITH SOME DEFENSE
OBJECTIVES AND BOTH ARE LIKELY TO BE UNDER-RESOURCED.
ACCORDING TO SOURCE B, THE DEFENCE REVIEW WILL NOT CASCADE
FROM THE INTERNATIONAL SECURITY POLICY REVIEW AND THE
20040417 FIRST-EVER NATIONAL SECURITY POLICY AS ONE MIGHT
EXPECT. ADDITIONALLY, THE DEFENCE REVIEW IS UNLIKELY TO BE
RELEASED IN TIME TO INFLUENCE THE 20050200 BUDGET FOR FY2005
BEGINNING 20050401. SOURCE C AND OTHER SENIOR DEFENSE LEADERS
ARE CONCERNED THAT THE FY2005 BUDGET WILL BE THE LAST
OPPORTUNITY FOR A NUMBER OF YEARS TO GET A PLUS-UP FOR
DEFENSE BECAUSE THE FY2006 BUDGET WILL LIKELY BE AN ELECTION
BUDGET AND FOCUS HEAVILY ON MORE POPULAR SOCIAL SPENDING TO
GARNER VOTES. THE INITIAL COUPLE OF BUDGETS AFTER THE NEXT
ELECTION (WIDELY EXPECTED IN 2006) WILL STRUGGLE TO KEEP
THOSE SPENDING PROMISES FOR SOCIAL PROGRAMS.


2. (C/NF) THE INTERNATIONAL SECURITY POLICY REVIEW WILL FOCUS
ON THE CANADIAN 3DT APPROACH OF DIPLOMACY, DEFENSE,
DEVELOPMENT, AND TRADE. THE 3DT APPROACH WILL CARRY THROUGH
INTO DEFENSE, BUT ACCORDING TO SOURCE E THERE ARE SIGNIFICANT
DISCONNECTS IN THE POLICIES AND RESOURCES. AT THE SAME TIME,
DEFENSE WILL BE CALLED UPON TO TRANSITION FROM A PEACEKEEPING
FOCUS TO A 'NATION-BUILDING' FOCUS, INTEGRATING THE ELEMENTS
OF DEVELOPMENT AND TRADE. THE DEPARTMENT IS TRYING TO HOLD
THE LINE ON ONLY PROVIDING TROOPS WHERE THEY CAN MAKE A
DIFFERENCE MILITARILY. ACCORDING TO SOURCE F, THE DEPARTMENT
OF NATIONAL DEFENCE (DND) IS ATTEMPTING TO KEEP THE CANADIAN
ARMY IN THE NICHE OF PROVIDING FORCES FOR 'HIGH-END
INTERVENTION', NOT HUMANITARIAN ASSISTANCE (HA) AND CIVIL
AFFAIRS (CA). ACCORDING TO SOURCE C, TROOPS PARTICIPATING IN
SFOR IN BOSNIA OVER THE LAST FEW YEARS HAVE BEEN INVOLVED IN
CIVIL SUPPORT AND LIGHT DUTY MISSIONS RATHER THAN HARD
SECURITY AND THIS HAS CONTRIBUTED TO A DECLINE IN THE MORALE
OF THOSE SOLDIERS AND LESS WILLINGNESS TO DEPLOY FOR SOFT
SECURITY MISSIONS. (FIELD COMMENT: THIS IS A PRIME REASON
WHY CANADA IS SEEKING A CHALLENGING PROVINCIAL RECONSTRUCTION
TEAM (PRT) MISSION IN AFGHANISTAN.)

3. (U) ACCORDING TO SOURCE H, THE IMPACT OF THE 3DT APPROACH
IS THAT THE SUCCESS OF CANADIAN FOREIGN POLICY INITIATIVES
WILL BE INCREASINGLY DEPENDENT ON THE FUNDAMENTAL
CAPABILITIES OF THE CANADIAN FORCES (CF) TO UNDERTAKE
SECURITY OPERATIONS DESIGNED TO SUPPORT AND FACILITATE THE
'DIPLOMACY' AND 'DEVELOPMENT' PILLARS OF 3DT. SOURCE NOTES
THE CAPABILITY OF THE CF TO UNDERTAKE THOSE OPERATIONS IS
DEGRADED BY A FIXED OR DECLINING (IN REAL TERMS) DEFENSE
BUDGET; RISING OPERATIONS AND MAINTENANCE (O&M) COSTS;
SHRINKING CAPITAL BUDGETS; AND BY A 'DEFACTO DEFENCE
CAPABILITIES TRIAGE AS CAPABILITIES SIMPLY DROP OFF THE TABLE
DUE TO CAPITAL EROSION'.


4. (C/NF) THE DEEPER ONE DELVES INTO THE ONGOING REVIEW THE
MORE SCHIZOPHRENIC IT SEEMS. THE GOVERNMENT HAS CALLED FOR
5,000 NEW REGULAR TROOPS AND 3,000 RESERVISTS, YET THEY HAVE
NO CAPACITY TO TRAIN AND FIELD THEM FOR YEARS. PM MARTIN HAS
PROMISED MORE MONEY FOR THE TROOPS YET HE HAS NO SPECIFICS
OTHER THAN TO REFER TO THE INVESTMENTS ANNOUNCED LAST YEAR IN
MARITIME HELICOPTERS, MOBILE GUN SYSTEMS, AND JOINT SUPPORT
SHIPS (A 6-10 YEAR PROJECT). THIS, WHILE THE GOVERNMENT HAS
A 9 BILLION CANADIAN DOLLAR (USD 7.2 BILLION) SURPLUS
EQUIVALENT TO 70 PERCENT OF THE DEFENSE BUDGET. NO ONE IS
TALKING ABOUT USING ANY OF THE SURPLUS FOR DEFENSE.
ACCORDING TO SOURCE H, THERE IS A 1.6 BILLION CD (USD 1.3
BILLION) (OVER 10 PERCENT OF THE TOTAL BUDGET) STRUCTURAL
DEFICIT IN THE DEFENSE O&M BUDGET DRIVEN BY:


A. (U) THE NEED TO RENT CIVILIAN EQUIPMENT AND SERVICES SUCH
AS AIRLIFT IN PLACE OF INOPERATIVE MILITARY EQUIPMENT (E.G.,
19 OF 32 C-130 HERCULES WHICH ARE NON-OPERATIONAL);


B. (U) THE VAST AMOUNTS OF RESOURCES BEING POURED INTO THE
MAINTENANCE OF OBSOLETE EQUIPMENT WAITING FOR THEIR
REPLACEMENTS TO COME ON LINE (E.G., CH-124 SEA-KING MARITIME
HELICOPTERS AND CC-115 BUFFALO FIXED WING SEARCH AND RESCUE
(SAR) AIRCRAFT);


C. (U) THE HIRING OF EXPENSIVE CIVILIAN CONTRACTORS WHO DRAW
MASSIVE OVERTIME TO SUPPLY FIELD LOGISTICS SUPPORT IN PLACES
LIKE AFGHANISTAN AND THE BALKANS; AND:


D. (U) THE INCREASING COSTS OF REAL PROPERTY MAINTENANCE OF
WORN-OUT INFRASTRUCTURE ON CANADIAN BASES WHICH ARE KEPT OPEN
FOR POLITICAL RATHER THAN MILITARY OPERATIONAL REASONS.


5. (C/NF) ACCORDING TO SOURCE D, THE DEFENCE REVIEW WILL ALSO
CALL FOR AN INCREASE IN STRATEGIC LIFT, BUT MAY POINT TO THE
JOINT SUPPORT SHIP AS SATISFYING THAT REQUIREMENT WHILE THE
MILITARY CONTINUES TO RENT UKRAINIAN AN-124 AIRLIFT TO DEPLOY
THE ARMY. EVEN THOUGH A NO-COST OPTION OF LEASING FOUR C-17S
(THROUGH RETIREMENT OF OLDER C-130S AND REDUCTION IN AN-124
RENTAL COSTS) HAS BEEN PRESENTED TO THE GOVERNMENT OF CANADA,
ACCORDING TO SOURCE B THE GOVERNMENT STILL HAS A HANGOVER
FROM THE CANCELLATION OF THE PREVIOUS C-17 LEASE OPTION BY
THEN MINISTER OF NATIONAL DEFENCE ((MCCALLUM)) WHO REMAINS IN
CABINET AND HAS MADE DEFENSE PLANNERS RELUCTANT TO READDRESS
THE ABYSSMAL STRATEGIC AIRLIFT SITUATION. (FIELD COMMENT:
THE ISSUE OF HAVING ORGANIC AIRLIFT MAY GET ADDITIONAL
ATTENTION AFTER CANADA HAD TO RENT AN AIRPLANE TO EVACUATE
CANADIANS FROM COTE D'IVOIRE. SEVERAL SENIOR OFFICERS MADE
THE POINT THAT CANADA SHOULD NOT BE DEPENDENT UPON RENTING
AIRLIFT WITHOUT DEFENSIVE SYSTEMS TO ACCOMPLISH NONCOMBATANT
EVACUATION OPERATIONS (NEO)).


6. (C/NF) IN A RECENT MEETING WITH U.S. GENERAL AND FLAG
OFFICERS, SOURCE G ANNOUNCED THAT 'CANADA REQUIRED A NATO OR
UNITED NATIONS MANDATE BEFORE DEPLOYING TROOPS.' WHEN A FLAG
OFFICER QUERIED SOURCE G ON WHAT ADDITIONAL MANDATE IS
REQUIRED WHEN NATO HAS ALREADY CALLED FOR TROOPS TO TRAIN THE
IRAQI ARMY AND THE UN IS REQUESTING TROOPS TO SECURE UN
PERSONNEL ATTEMPTING TO ENSURE FREE AND SAFE ELECTIONS IN
20050100, SOURCE G OPINED THAT 'THIS IS WHEN CANADA INVOKES
THE STRATEGIC PAUSE AND THE FACT WE DO NOT HAVE THE CAPACITY.'


7. (C/NF) SOURCE F HAS BEEN HIGHLY FRUSTRATED BY THE ENTIRE
DEFENSE REVIEW PROCESS AND CALLED IT 'SCHIZOPHRENIC.' EVEN
THOUGH THERE HAVE BEEN PLANS MADE AT THE REQUEST OF THE CHIEF
OF DEFENCE STAFF TO STUDY HOW CANADA MIGHT CONTRIBUTE TO
TRAINING AND EQUIPPING THE IRAQI ARMY, THE IRAQ ISSUE IS SO
CHARGED IN PARLIAMENT AND DOMESTICALLY THAT CANADA WILL BE
UNLIKELY TO EVEN PROVIDE IRAQI ARMY TRAINING OUTSIDE IRAQ,
SUCH AS INVITING IRAQI OFFICERS AND NCO'S TO PARTICPATE IN
MILITARY TRAINING COURSES IN CANADA.

COMMENTS: 1. (C/NF) FIELD COMMENTS. FRUSTRATIONS ARE RUNNING
HIGH AS THE DEFENCE REVIEW ENTERS ITS FINAL PHASE.
INTER-SERVICE RIVALRIES ARE REEMERGING WITH SOME CAPITALIZING
ON THE CHICOUTIMI SUB ACCIDENT TO CALL FOR AN END TO SUBS IN
THE CANADIAN FORCES, WITH THE ARMY NOT SUPPORTING STRATEGIC
AIRLIFT FOR THE AIR FORCE ('WE'VE ALWAYS GOTTEN THERE
SOMEHOW, HAVEN'T WE?'). BOTH THE GOVERNMENT AND THE POLLS ARE
SAYING MORE SHOULD BE SPENT ON DEFENSE WHILE, AT THE SAME
TIME, THE GOVERNMENT IS ASKING FOR MONEY BACK FROM DEFENSE.
OF THE 800 MILLION CD (USD 650 MILLION) ADDED ANNUALLY TO THE
DEFENSE BUDGET TWO YEARS AGO, THE GOVERNMENT WANTS BACK 135
MILLION CD (USD 110 MILLION) THIS YEAR, 185 MILLION CD (USD
150 MILLION) IN FY2005, AND 480 MILLION CD (USD 400 MILLION)
FOR FY2006 AND BEYOND (FROM A DEFENSE BUDGET OF JUST OVER 12
BILLION CD (USD 10 BILLION)) TO PAY FOR HEALTH CARE, CHILD
CARE, AND OTHER SOCIAL PROGRAMS. OPTIONS ARE BEING CONSIDERED
SUCH AS CUTTING THE OPERATIONAL BUDGET BY FIVE PERCENT,
CLOSING BASES (EXTREMELY POLITICALLY SENSITIVE - AN ORDER OF
MAGNITUDE HIGHER THAN BRAC),AND RETIRING NAVAL RESERVE
VESSELS.


2. (C/NF) WHILE THE TOP-HEAVY CANADIAN MILITARY TOTTERS
ALONG, THERE IS LITTLE CAUSE FOR OPTIMISM THAT THIS DEFENCE
REVIEW IS GOING TO BE THE CATALYST FOR ANYTHING MORE THAN
PRESERVING EXISTING SERVICE EQUITIES, SALAMI-SLICING OF A
BUDGET TOTALLY INCAPABLE OF SUSTAINING AND RECAPITALIZING
EVEN THE SMALL EXISTING FORCE, AND DELIVERING WEAK PLATITUDES
ON HOW CANADA'S MILITARY WILL BE A VITAL CONTRIBUTOR TO THE
3D APPROACH, CONTINENTAL SECURITY, AND GLOBAL PEACE
OPERATIONS.


3. (U) SOURCES REMAIN AVAILABLE FOR FURTHER EXPLOITATION.


4. (C/NF) THIS REPORTING SUPPORTS PRIORITY 3, PARAGRAPHS 1B
AND 1D OF THE DAO OTTAWA OPERATING DIRECTIVE.


5. (U) DIRECT ANY QUESTIONS CONCERNING THIS IIR TO DHO-1 AT
STU III (703) 907-0541, OR GRAY 981-8236.

COLL: (U) AB; AC; AD; AH; AS; AI; DB; MM.
INSTR: (U) US NO.
PREP: (U) 6-03048.
ACQ: (U) CANADA, OTTAWA (20041115).
DISSEM: (U) FIELD: AMEMB OTTAWA.
WARNING: (U) REPORT CLASSIFIED
C O N F I D E N T I A L/NOT RELEASABLE TO FOREIGN NATIONALS.

SIPDIS
DRV FROM: DO HUMINT SCG SEPTEMBER 2003
DECL ON: X1