THINLY STRETCHED NEW ZEALAND MILITARY AIMS HIGH,

C O N F I D E N T I A L SECTION 01 OF 04 WELLINGTON 000449

SIPDIS

NOFORN
SIPDIS

STATE FOR D (FRITZ),EAP/FO, AND EAP/ANP
NSC FOR VICTOR CHA
SECDEF FOR OSD/ISD LIZ PHU
PACOM FOR JO1E/J2/J233/J5/SJFHQ

E.O. 12958: DECL: 05/29/2016
TAGS: PGOV PREL PMIL NZ
SUBJECT: THINLY STRETCHED NEW ZEALAND MILITARY AIMS HIGH,
BUT CAN IT DELIVER?

Classified By: Ambassador William McCormick,
for Reasons 1.4 (b) and (d)


1. (C) Summary: The New Zealand Defense Force (NZDF) is
being rebuilt after decades of neglect. The Labour
Government, ideologically drawn to a peace-keeping role for
the NZDF, has nonetheless proved willing to deploy small
expeditionary forces around the world. Given that the entire
military is the size of a single U.S. base, even after the
build-up is complete there will be limits to what the NZDF
can do. Some capabilities will actually decline temporarily
as new equipment is introduced and old equipment is refitted.
For these reasons, the United States should continue to
encourage New Zealand to work with us and Australia on fewer,
smaller scale operations where NZDF can be most effective,
such as helping to maintain order in small, destabilized
countries in the Pacific and assisting Afghanistan's
reconstruction. New Zealand's practice of sending one or two
military liaisons to a variety of operations, while in
keeping with the country's image as a good world citizen, is
of less benefit to us, and may be depriving NZDF of the
middle management it needs at home to rebuild. End Summary.

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Background: A "Seismic Shift" in Role of NZDF
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2. (C) The current growth of the military comes after a
series of government reports and initiatives undertaken since
the late 1990s, when the then National Government initiated a
review of defense policy. The Labour Government's report
arising from that study, the June 2000 "Defence (sic) Policy
Framework," provided the basis for later decisions on the
appropriate capabilities, resources, and funding of the
country's defense forces. One of the decisions the
Government made as part of the early review process was to
dismantle the Air Combat wing in 2001. The move was not just
designed to save funds, but also to reorient the NZDF from a
combat into a peacekeeping force in line with the goals of
Labour. It was arguably a costly decision, as military
personnel left in significant numbers, many to join military
forces in Australia, the UK and elsewhere.


3. (C) In 2002, the Labour Government launched a "Long Term
Development Plan," which (together with its subsequent
updates) began to address the needs to upgrade military
equipment. However, personnel continued to leave NZDF, which
also faced trouble recruiting in a tight labour market.
These gaps, combined with the need to pull people offline for
training and introduction of new hardware, reached a crisis
point in 2004. In May 2005, Labour launched the Defense
Sustainability Initiative (DSI),designed to enhance
recruitment and retention, including by increasing salaries
and upgrading facilities.

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What the Build-up Entails
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4. (C) NZDF currently has about 13,100 personnel, including
about 8,700 regular force (active duty),2,275 territorial
force (reserves),and 2,134 civilian staff. Of these, about
7,000 are in the army, and 2,700 each in navy and air force,
the rest being in NZDF and Joint Forces NZ headquarters.
Major units include two infantry battalions, 2 logistical
battalions, a Special Forces Group (SAS),artillery and
engineer regiments, a health services battalion, and a
signals squadron. Currently, the navy has just two
ANZAC-class frigates, having decommissioned two others in
2005 and earlier this year. The navy also has a supply ship
and a number of small patrol boats. Since 2001, the Air
Force no longer has combat capabilities, but instead is
assigned to patrols (including of fisheries around New
Zealand and Antarctica) by its six P-3 Orions as well as
transport by its two Boeing 757s, five C-130s and 14 UH-1
helicopters.

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5. (C) In the 2006 budget announced in May, defense spending
makes up about 3% of the total NZD 52.3 budget, or about NZD
1.7 billion (about USD 1 billion). This is up from recent
years but still well below the 10% or more spent on defense
in the 1960s or 5% from the mid-seventies to mid-eighties.
(By comparison, GNZ's "Working for Families" and other family
support payments will cost the Government NZD 1.7 billion
this fiscal year, and forgiveness of interest on student
loans will total NZD 1 billion.) Included in this year's
defense outlay is about NZD 305 million in new spending for
capital equipment under the Long Term Development Plan, and
about NZD 72 million in spending on personnel and other
operating costs under SDI. New Zealand's defense spending is
equivalent to about 1% of total GDP and 1.7% of per capita
GDP, compared to Australia's defense budget equivalent of
2.7% of per capita GDP.


6. (C) Under the Long Term Development Plan (LTDP),NZDF has
already procured two Boeing 757 aircraft, which are being
refitted to allow for cargo shipments on top of their
existing troop transport and emergency evacuation
capabilities. The sensors and mission management systems of
the 6 P-3 Orion maritime patrol craft are being upgraded to
improve surface surveillance, which NZDF says will better
enable it to meet its Pacific search and rescue obligations,
conduct surveillance for Pacific Island states, and meet its
obligations under agreements with Australia and Five Power
Defence Arrangement partners. The avionics and aircraft
systems of the five aging C-130 Hercules will also be
upgraded and refurbished to extend their life. A multi-role
vessel, essentially a refitted European ferry boat designed
to provide tactical sealift for NZDF and support for disaster
relief, peacekeeping, and training, will arrive in New
Zealand later this year, as will two offshore and four
inshore patrol vessels. (NB: The purchase of the seven
vessels is cumulatively called "Project Protector.") NZDF
has also purchased 105 Light Armored Vehicles LAVs) and 308
Light Operational Vehicles (LOVs) for the Army and Special
Forces, as well as funded a new building for the Ministry of
Defence, which is due to open later this year but is already
too small to house all offices. There are also plans to
replace 14 Iroquois and 5 Sioux training helicopters, though
this project has been hit hard by an 11% decline in value of
the New Zealand Dollar over the past year.


7. (C) The objectives of the 10-year, NZD 4.6 billion (about
USD 2.9 billion) Defense Sustainability Initiative are to
increase personnel and training and help retention, maintain
and improve the infrastructure of camps and bases, increase
the reserve stocks of equipment and spares, improve
administrative capabilities, and cover the depreciation of
defense assets. According to Deputy Secretary of Defence
Chris Seed, the Defense Sustainability Initiative is on track
and there have been modest improvements in retention this
first year of the program. Seed did not provide numbers, but
said if trends continue, NZDF is on track to increase
personnel by 15% (to about 15,000) over the next ten years.
(FYI: The last time NZDF personnel came close to this level
was in 1998, when they numbered 15,512. By 2003, the number
had dropped by almost 17%, to 12,904)

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No Quick Fix
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8. (C) Even if both the LTDP and DSI proceed as planned, it
will take time for the military to significantly improve its
level of capability. Indeed, over the short-medium term,
some capabilities may decline. For example, aircraft sent
for upgrades over the next few years will obviously be
unavailable during these periods. Seed admitted that it may
be hard to train enough personnel for the new Project
Protector ships, and there may not be enough adequate port
facilities for them. Only about NZD 104 million has been
budgeted for the first two years of DSI. Ministry of Defence

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and NZDF officials have confided to us that this is because
there is no capacity to absorb more funding. In the last
five years of the initiative, once the program reaches
critical mass and sufficient improvements have been made to
infrastructure, the bulk of the remaining allocated money
will be spent.

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What We Can and Can't Expect
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9. (C) The upgraded force's primary role will remain
peacekeeping, at least as long as the Labour Government
remains in power. But NZDF will be able to provide some of
its own transport, both for air and sealift and to assist
deployments on the ground. While more expensive for the
Government, at least high profile problems such as the need
for the Australian Defense Force to transport SAS troops into
Afghanistan during OEF and the breakdown of P-3 Orion during
tsunami relief work should disappear. In GNZ's eyes, this

SIPDIS
will make NZDF contributions more effective and more valuable
for the success of an operation. Size will remain a limiting
factor in New Zealand's global defense contributions even
after upgrades, but even more so over the short-medium term.
More than one NZ official has told us that had Fiji had a
political crisis after elections, it would be hard for NZDF
to get involved given current increased deployments to the
Solomon Islands and E. Timor. Nor would not expect NZ's
defense budget to increase more than projected for the
foreseeable future. Although the government currently has an
operating surplus of NZD 8 billion, there is already an
outcry among many voters that none of these funds are being
returned as tax cuts. Labour will be very unlikely to
increase military spending substantially under the
circumstances. And even if a National Government is elected
in two years and seeks to increase military spending, it will
still face the NZDF's capacity/absorption constraints over
the near term.


10. (C) On top of the limitations of NZDF's size and role,
the government's objectives and priorities for deployments at
times seem to lack focus. The five key objectives laid out
in the 2000 Defense Policy Review and repeated in this year's
NZDF Statement of Intent, are to:

-- defend New Zealand and to protect its people, land,
territorial waters, EEZ, natural resources and critical
infrastructure;

-- meet (New Zealand's) alliance commitments to Australia by
maintaining a close defense partnership in pursuit of common
security interests;

-- assist in the maintenance of security in the South Pacific
and to provide assistance to (New Zealand's) South Pacific
neighbors;

-- play an appropriate role in the maintenance of security in
the Asia-Pacific region, including meeting (New Zealand's)
obligations as a member of the Five Power Defense
Arrangements; and

-- contribute to global security and peacekeeping through
participation in the full range of UN and other appropriate
multilateral peace support and humanitarian operations.

For a force as small as New Zealand's, assigning enough
weight to each priority is a challenge. At times, however,
GNZ seems most heavily focused on the last priority, despite
statements by the Prime Minister, Defense Minister, and
Foreign Minister about the importance of regional stability
(especially in the Pacific Islands) to the country's national
security interests. As of June 3, almost nine percent of New
Zealand's defense force were overseas, about 500 on
operational duty and about another 290 on training exercises
or diplomatic or exchange missions. Before the recent

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deployments to East Timor and the Solomons (162 and 124
personnel, respectively),the majority were on the Te Mana
frigate on a mission to SE Asia and India (175),and
Afghanistan (134, including the 123-member Provincial
Reconstruction Team). Deputy Defense Secretary Seed believes
that it is the "far away" issues that GNZ considers crucial
for security. For this reason, he believes NZDF will remain
in Afghanistan for the foreseeable future, well after the
current commitment ends in September 2007.


11. (C) But there are arguably other reasons for the
emphasis on "far away" deployments. Contributing forces
farther from home is in keeping with New Zealand's identity
as a global good citizen, always ready to pitch in (reftel).
(Strikingly, the entire defense outlay this year is included
in the portion of the budget entitles "national identity.")
Many times this means sending a few military
liaisons/advisors, such as the 11 now in Bosnia and the three
in Sudan. Matt Paterson, a Policy Officer in the Security
Policy Division at the Ministry of Foreign Affairs says that
GNZ maintains that even though the numbers of military
personnel committed is small, they are of a higher quality
than forces from many other countries. The Embassy would
add also that these small deployments give New Zealand a
presence in key world events, as well as access to U.S. and
other training and intelligence.


12. (C) Even when New Zealand focuses more closely to home,
its view on regional security threats is very different from
ours and Australia's. Phil Goff's recent speech to the
National Defense University in Washington only mentioned
Pacific Island instability as a source of concern for New
Zealand's own security. He did not mention the potential for
conflict in the Taiwan straits, North Korea, or China/Japan
tensions as his US counterparts would have. This may in part
be because he and other GNZ officials are generally averse to
publicly criticizing their future Free Trade Agreement
partner China. But it is also a sign that New Zealand tends
to see itself as isolated from most world dangers except
those closest to its shores. Even instability in the Pacific
Islands is viewed mostly as a potential threat for the
country's law enforcement and immigration policies. The
Ministry of Defense still sees NZDF as an expeditionary
force. In a very real sense, for the past thirty years, NZ
officials have seen all of the country's military engagements
as optional.

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Comment
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13. (C) Recent experience has shown New Zealand can and will
play useful roles in "niche" areas such as its SAS and PRT
contributions in Afghanistan. Given the NZDF's small size
and resource limitations over the next several years, U.S.
interests will best be met by encouraging New Zealand to also
maintain its focus on working with Australia to help
stabilize Pacific Island countries, where even small
deployments make a difference and New Zealand's
cultural/diplomatic expertise gives it the edge.

McCormick