RFG: SENIOR RESOURCE BOARD JUNE 28 & 29 PLENARY

C O N F I D E N T I A L USNATO 000383

SIPDIS

SIPDIS

STATE FOR EUR-RPM (MONAHAN)
DEFENSE FOR OASD/ISA (EURO-NATO); USDAT&L/DUSD-IE (VAUGHT);
OASD/NII (HANSEN); EUCOM J4-EN ENGINEER DIV (MC) (CAPT
JACKSON); CENTCOM-J4-E (COL FLANAGAN); JOINT STAFF J-4 (MR
MACKIE),J-5 (LTC SEAMON)

E.O. 12958: DECL: 01/01/2011
TAGS: AORC MARR NATO
SUBJECT: RFG: SENIOR RESOURCE BOARD JUNE 28 & 29 PLENARY

REF: A. SRB-A(2007)0008

B. PO(2005)0098

C. SRB-N(2005)0010-ADD13

D. SG(2006)0839+AS1

E. SG(2007)0413

F. SRB-N(2007)0040

G. SRB-N(2007)0019

H. CMCM-0004-2007

I. SG(2007)0396

J. SRB-N(2007)0041

K. SRB-WP(2007)0001-REV4

L. MCM-0052-2007

M. SRB-N(2007)0030-REV1

N. SRB-D(2007)002+COR1

O. SRB-D(2007)0005

Classified By: ACT DEFAD JOHN HOAG. REASON 1.4.(B/D)


1. (C) The Senior Resource Board (SRB),meeting in Brussels
on June 28 and 29, will consider the draft of the 2008 to
2012 Medium Term Resource Plan (MTRP),the proposed funding
policy for Pakistan's participation in NATO Training courses,
and endorsement of the capability packages (CP) for
deployable air command and control (C2) ground based sensors
and vital security projects for command facilities. The
Board will hear status reports on the outsourcing of the
Kandahar Air Field (Afghanistan) operations and the force
generation of the intelligence, surveillance, and
reconnaissance (ISR) to support the International Security
Assistance Force (ISAF) operations; the resource aspects of
the current operations in Afghanistan, Iraq, Kosovo, and
Darfur; and the establishment of the new NATO Office of
Resources (NOR). The Board will hear status reports and
consider the way ahead for any outstanding work for: the
funding of transportation for short-notice deployment of the
NATO Response Force (NRF),funding implications of NATO
participation in humanitarian operations, the NATO Command
Structure (NCS) peacetime manning review, the Combined Air
Operations Center (CAOC) Transition Plan, the protection
against cyber attacks, the Missile Defense Feasibility Study,
the Air Command and Control System (ACCS) implementation, the
funding for Defense Against Terrorism (DAT),and the economic
benefit assessment for resource burdensharing. The Board
will hear briefings on implementation of the NATO Security
Investment Program (NSIP) and on Allied Command
Transformation,s (ACT) research and technology activities
and resource management structure. Unless otherwise directed
by OOB June 28, Mission will take the positions detailed
herein. END SUMMARY AND REQUEST FOR GUIDANCE.


2. (C) Mission has reviewed reference documents for the June
28 and 29 SRB meetings (Ref A agenda) and recommends the
following U.S. positions:

RESOURCE PLANNING AND POLICY ISSUES

ITEM I. CRISIS RESPONSE OPERATIONS AND MISSIONS RESOURCE
UPDATES


A. ISAF: The Board will receive status reports from
the NATO Military Authorities (NMAs) and the Chairmen of the
implementing committees (Infrastructure and Military Budget)
regarding the force generation process, investment, O and M,
and outsourcing for the Afghanistan operation. Mission
recommends noting the updates.

SHAPE will report on the status of outsourcing support
services at the Kandahar Aerial Port of Disembarkation (APOD)
to enable NATO to assume responsibility for the APOD this
summer. The Military Budget Committee (MBC) recently
requested the Board,s guidance regarding establishing a
financial ceiling for the Kandahar air operations
contractor,s liability. The Board recently requested a
legal opinion from the NATO legal advisor. Mission
recommends noting the update and supporting further
discussion in a preparatory session upon receipt of the legal
opinion.

The NMA's will also report on the ISR offers from the recent
force generation conference, on the Military Committee (MC)

deliberations of the ISR Minimum Military Requirement (MMR),
and whether outsourcing should still be considered. Current
estimates for ISR are 28 MEURO per year if provided by a lead
nation and 93.2 MEURO per year, if fully outsourced. IAW
agreed ISAF funding arrangements (Ref B),the SRB must
approve any outsourcing. Mission recommends supporting
outsourcing of the portions of the ISR capability not
fulfilled by the force generation offers.


B. BALKANS: The Board will receive status reports from
the NMAs and the Chairmen of the implementing committees on
common funded investment, O and M, and outsourcing for the
Balkans operations. SHAPE will provide a specific report on
the Kosovo transition plan, the periodic mission review, the
results of the Camp Nothing Hill establishment, Kosovo audit,
and the Camp Butmir NATO and European Union (EU) cost shares.
Mission will note the updates.


C. NATO TRAINING MISSION IRAQ (NTM-I): The Board will
receive status reports on the force generation process,
common-funded investment and O and M, and trust funding, from
the NMAs, the IS, and the Chairmen of the implementing
committees. At France,s request, SHAPE will brief the
resource development plan (RDP) which includes
infrastructure, CIS and budgetary requirement projections for
the next 12 months and forecasts for the next three years.
In previous preparatory sessions, France, supported by
Belgium, objected to SHAPE,s assumption in the RDP that the
NTM-I mentors and advisors were eligible for common funding.
The US, supported by the UK, Canada, and Italy advocated that
the mentors and trainers were part of the HQ element (similar
to NATO HQ Sarajevo) and thus eligible for common funding.
As no agreement was reached by the Board, France will likely
block common funding for the mentors and advisor in the MBC
2007 mid year review and the 2008 budget screening. Should
this occur, Mission recommends advocating in the MBC, a
request for an SRB eligibility determination. The Board will
also note an IS trust fund report that includes the U.S.
pledged and provided funds of 390 KEURO ($500K) in 2005 and
794.16 KEURO ($1,000,000) in 2006 (Ref C, not yet issued).


D. NATO LOGISTICAL SUPPORT TO THE AFRICAN UNION MISSION
IN SUDAN (AMIS). The Board will hear briefings from SHAPE on
mission progress and potential mission expansion, and from
the Chairmen of the implementing committees on common funded
expenditures. Mission is unaware of any funding issues and
will note the briefings.

ITEM II. REPORT ON ISSUES WITH CURRENT OR FUTURE RESOURCE
IMPLICATIONS. The Chairman will update the Board on the
status of the following issues with resource implications,
seek initial views, and consider the way ahead:


A. Short-Notice Deployment of the NRF. The NAC agreed
the compromise proposal to provide financial support for
short-notice deployments of the NRF for a two year period
(Ref D). The compromise proposal stipulates a flat rate of
reimbursement to nations, below actual costs, that would only
be available to those nations that have put in motion ways to
meet their air-lift needs, such as ownership of aircraft,
participation in SALIS or the C-17 consortium or purchasing
the A400M. In agreeing the proposal, the NAC tasked the MC
to define the meaning of short notice deployments to ensure
that common funding covered only genuinely urgent
requirements and in this context to advise on the appropriate
balance of air-lift and sea-lift. Despite months of
discussions, the MC was unable to agree a definition to short
notice deployments. On June 14, Defense Ministers tasked the
SRB and MC to urgently work in parallel on the funding of
short notice deployment of the NRF and to report conclusions
in one month (Ref E). An informal meeting was held on June
21 to discuss the recent Ministerial tasking and consider the
I.S. non-paper (forwarded to Washington agencies). The Board
agreed that it was practical to proceed with some financial
aspects of the tasker despite not having an agreed definition
of short notice deployment. Due to time constraints, nations
were requested to submit written comments to the paper for an
early I.S. revision.


B. Funding Implications of NATO participation in
Humanitarian operations. The NAC tasked the SRB to develop a
report on the funding implications of NATO's participation in
humanitarian operations on the basis of the final MC and
SCEPC reports on lessons learned from the Pakistan earthquake
relief operation and the assistance to the U.S. following
Hurricane Katrina. Based upon the Board's informal
discussions, the IS will prepare a document that proposes
that the current principles of eligibility for common funding
be maintained and trust funds should be used to support
engineering projects and the transportation of humanitarian
supplies for these operations (Ref F, not yet issued).
Mission will forward the document to Washington Agencies upon
receipt and propose a way ahead.


C. Update on the Peacetime Establishment (PE) Review
of the NATO Command Structure (NCS). On December 7, 2006,
the Leader of the International Military Staff (IMS) Review
Task Force briefed the Board and the Executive Working Group
(EWG) on the proposed options for an adapted NCS which range
from maintaining the current structure with some internal
rebalancing to full closure of some geographical command
locations. The IMS drafted a report for MC consideration
which recommends the closure of three component commands in
ACO, the relocation of some ACT Staff Element Europe
personnel from Mons to Brussels, and a five sector CIS
structure for NCSA for consideration by the MC. The Board
considered the potential resource implications of the IMS
proposal and concluded that it is not possible at this stage
to provide reliable and detailed cost analysis of the
proposal under discussion in the MC (Ref G). In May, the MC
Chairman sent an interim report to the NAC on Phase I
confirming that nations are in agreement on the proposals for
ACT, NCSA, and to a peacetime establishment of 12,500
personnel, but noting that agreement could not be reached for
the ACO command structure. The NAC considered, but was unable
to agree, the MC Chairman,s proposal for a new ACO
structure: maintain four component commands, two air at
Ramstein and Izmir, one maritime at Northwood, and one land
at Heidelberg; establish six deployable joint staff elements
(DJSE),three within the command structure (Naples, Madrid
(affiliated with JC Lisbon),and Heidelberg (affliated with
JFC Brunssum)),and three provided by nations from the force
structure (Ref H and I). The Board will meet jointly with
the EWG on June 22 to discuss the way ahead. During the
plenary meeting, the Chairman will update the Board on the
MC, NAC and Ministerial deliberations.


D. CAOC Transition Plan. SHAPE will report on the
status of the development of the resource estimates and
implementation timelines for the MC approved Interim CAOC
Structure for the ACCS Implementation which collocates four
existing legacy CAOCs with four planned NCS CAOCs (Uedem,
Poggio Renatico, Finderup/Karup and Larissa). Upon
activation, the four NCS CAOCs will be international entities
and enable the parallel running of the legacy NATINADS
operations and the ACCS testing and training until ACCS
reaches Full Operational Capability. Mission recommends
noting the status and encouraging early completion of the
estimates and schedules.


E. Protection against Cyber Attacks. At the June
Ministerial meeting, the Defense Ministers noted the recent
cyber attacks against Estonia,s electronic infrastructure
and indicated that urgent work is needed to enhance the
ability to protect information systems of critical importance
to the Alliance against cyber attacks. The Board will hear a
report on the Ministerial deliberations and determine if any
action by the Board is warranted.


F. Missile Defense. The Council tasked the Board to
provide a preliminary assessment of the affordability of the
recommendations of the Missile Defense Feasibility Study for
a NATO-wide architecture and one mid-course interceptor. In
preliminary discussions, many nations preferred to include
the possible contribution of the potential US site in Poland
and the Czech Republic in the cost analysis and the Board
tasked the IS to prepare a report outlining the resource
issues of the potential NATO Missile Defense program (Ref J,
not yet issued). Recently, the NAC tasked the EWG, MC, and
CNAD to assess the political, military, and technical
implications of the proposed U.S. missile defense system in
Europe. The Board will hear an update on the status of the
report. Mission recommends supporting consideration of
affordability at an early preparatory session.


G. ACCS. During the April plenary meeting, the UK rep
requested that the I.S. present a full briefing on ACCS
covering hardware, software, and manpower. The Board will
hear status reports on the development of the briefing.


H. Funding for Defense Against Terrorism. The Council
tasked the Board to consider possible funding sources for the
DAT activities and submit a report by January 19, 2007. The
Chairman advised the Private Office that the Board would not
be able to meet the Council remit timeline as it is awaiting
the MMR. The NMAs will report on the status of the MMR
development. Mission will note the update.

ITEM III. BURDEN-SHARING DISCUSSIONS ECONOMIC BENEFIT. In
July 2005, the Council agreed the SRB-proposed new cost-share
arrangements for the NATO budgets, i.e., future changes in
cost shares, to have them more closely align with Gross
National Income (GNI) (with the U.S. excepted),and tasked
the SRB to continue its work in reviewing burden-sharing
arrangements to identify more equitable and stable
mechanisms. The Board agreed, as a first part of the
burden-sharing arrangements, the detailed mechanism to be
used to assess the nationally provided manning of NATO
critical operational activities. The Chairman will report on
the status of the follow-on burden-sharing work to review
economic benefits nations derive from NATO common funding.
Mission will note this effort, which will not include the U.S.

ITEM IV. NATO HEADQUARTERS RESOURCE REFORM. In April 2006,
the NAC agreed that the SRB should assume a lead policy and
planning role in all military resource areas and that the MBC
and IC should be oriented towards implementation. In
February 2007, the Council agreed to establish a NATO Office
of Resources (NOR) and new terms of reference (TOR) for the
resource committees which establishes a heirarchical
structure, i.e. the IC and MBC reporting to the SRB. On
April 4, the Board agreed to again revise the IC TOR to
designate that the future IC chairman will be nationally
sourced in lieu of a member of the I.S. Mr. Peltier (US),
the current international Director NOR, will update the Board
on the establishment of the NOR.

The MBC Chairman requested the Board's advice on the
interpretation of the recently agreed terms of reference with
respect to level of approval (MBC, SRB or NAC) for PE
changes, audit reports, personnel appointment extensions, and
accrediation of centers of excellence. At a June 21 informal
meeting, the Board considered a I.S. non-paper (forwarded to
Washington agencies) which advocated reducing the approval
levels. Mission supported the lowest level of approval (e.g.
MBC and IC) consistent with proper oversight. France, the
Netherlands, and Spain were unable to agree the proposal and
as such, many nations pressed for an interim solution until
the issue could be resolved. The I.S. will draft interim
solution for the Board's consideration which will recommend
that the MBC approval requests be subject to SRB endorsement
prior to submission to the NAC.

ITEM V. ACT TRANSFORMATION UPDATE. ACT will brief on the
ongoing research and technology activities at the Command and
on ACT,s resource management organisation structure and
functions. Mission will forward the briefings upon receipt.

ITEM VI. NSIP IMPLEMENTATION. During the presentation of
the 2006 SRB annual report to Council, the NAC invited the
SRB to provide a broad analysis of the reasons for the
decline in NSIP expenditures over the last four years and the
delays in deployable command, control and consultation
projects, and possible actions to rectify the situation. The
I.S. will brief the Board on this issue and Mission will
forward the briefing upon receipt and recommend a way ahead.

ITEM VII. 2008-2012 MEDIUM TERM RESOURCE PLAN. The Board
will consider the draft of the draft 2008 to 2012 MTRP (ref
K) to include the establishment of the 2008 contribution
ceilings for the NSIP and military budget. The MC provided a
consolidated impact statement at zero nominal growth (Ref L)
and an assessment of the requirements for the period of the
MTRP. For the NSIP, the NMAs conclude that the current
ceiling of 640.5 MEURO will be adequate for 2008, but would
need to be increased in the later years to accommodate
emerging requirements. The NMAs expressed concern about the
low implementation rate of the program affecting the delivery
of critical capabilities.

For the Military Budget, substantial increases will be
required for CRO/Missions as a result of Afghanistan mission
increases and the expansion of common funding eligibility for
operations. The NMAs recommended that the ISAF ISR be funded
under the NSIP in lieu of Military Budget funding, however,
the Board in preparatory session did not support this
recommendation. SHAPE submitted estimates for ISR
capabilities provided by a lead nation (28 MEUROs) and
through outsourcing (93.2 MEUROs). The recent force
generation conference fully sourced the aircraft collection
requirements, and thus Mission recommends supporting the lead
nation figure of 28 MEUROs for a total ISAF budget of 229.4
MEUROs. ACO submitted a requirement for 41.5 MEUROs for ACO
participation in the strategic airlift capability (SAC) which
is above and beyond the airlift requirements identified to
support ongoing operations. In preparatory meetings, no
other nation expressed a willingness to support funding for
this requirement in 2008, pending an endorsement of the MMR
and an eligibility determination.

The NMAs concluded that the NAEW&C should be funded at 270.6
MEUROs, however, at the MBC's recommendation, the Board
concluded that an additional 1 MEUROs should be added to
cover the requirements identified in the recently agreed CP
Addendum which provides additional facilities and equipment
for the NAEW& C. The NMAs recommended funding levels for
ACO, ACT, and ALTBMD of 125 MEUROS, 322.5 MEUROs, and 6.2
MEUROs respectively (a total of 98 MEUROs above the 2007
allocation). The ACO figure includes additional funding of 6
MEUROs for additional requirements from ACCS implementation.
For NCSA, actually part of the ACO budget, an additional
12.5 MEURO annually is require to fund the
civilianization/contracting of unfilled military billets per
the Spearhead Study, which mission supports. Mission
recommends supporting the following 2008 budget ceilings:

NSIP 640.5 MEURO (ZNG requested level).

MILITARY BUDGET 1179.8 MEURO (broken down as follows):

Pensions 68.4 MEURO (requested level)
NAEW&C 271.6 MEURO (requested level 1 M)
CRO/Missions 289.4 MEURO (includes ISR, excludes SAC)
Headquarters: Inflation 2% (ZRG)
ACO 311.4 MEURO (ZRG 6 M for ACCS)
ACT 124.2 MEURO (ZRG 3%)
IMS 34.1 MEURO (ZRG)
NCSA 72.4 MEURO (ZRG 12.5 M Spearhead)
NACMA 2.1 MEURO (requested)
ALTBMD 6.2 MEURO (ZRG 3.2 M)
--------------
HQ Total 550.4 MEURO


MISSION COMMENT: Mission does not anticipate agreement on
the ceilings at the plenary. Nations are likely to support
the proposed amounts for NAEW and pensions, and we believe a
consensus is forming on the NSIP ZNG and the CRO figure of
289.4 MEURO. The headquarters budget remains the most
contentious issue: while all nations appear to be ready to
fund ZRG (523.6 MEUROs),a few nations object to any funding
beyond this figure even to include additional NCSA funding
per the Spearhead Study which most nations place as the
highest priority additional requirement. Any increase beyond
ZRG for ACT is problematic. It is generally accepted that
ACT must do a better job of showing meaningful results from
their previously funded efforts, or ACT will not receive
increased funding, particularly in view of the necessity for
nations to fund considerably more CRO costs. For ACO, any
funding beyond the ZRG will be difficult to achieve. END
MISSION COMMENT.

ITEM VIII. FUNDING POLICY FOR PARTICIPATION OF PAKISTANI
PERSONNEL IN NATO TRAINING COURSES. The Board considered
under silence procedure expiring June 11, the proposed
funding policy for Pakistan; participation in NATO training
courses which recommends common funding of Pakistan,s
participation at the NATO schools in the same manner as
participation of Partnership for Peace (PfP) and
Mediterranean dialogue nations (Ref M). France broke the
silence, advocating trust funding in lieu of common funding.
In further preparatory discussions, the US, supported by UK,
CA, IT, DK, NL and LA insisted that the Pakistani initiative
was in direct support of the ISAF mission, thus should not be
dependent on trust funding. Mission recommends to maintain
this position and if agreement can not be reached, advocating
a Chairman's report to the Private Office.

ALLOCATION OF RESOURCES CAPABILITY PACKAGE AND STAND-ALONE
PROJECTS.

ITEM IX.A. I.S./IMS CAPABILITY PACKAGE OVERVIEW: The Board
will receive the regular IS/IMS status report on the active
and pending capability packages. Mission will note the
briefings.

ITEM IX.B. SACT CAPABILITY PACKAGE 9A0202 DEPLOYABLE GROUND
BASED SENSORS FOR AIR C2 SURVEILLANCE AND IDENTIFICATION.
The Board will consider endorsement of this CP (Ref N),which
will provide the deployable ground based sensors to support
the deployable ACCS elements. The CP has a priority of 2 and
the required capabilities are categorized as Essential 1.
The NSIP investment costs included in this CP are 212.6 MEURO
(not including 20.7 MEUROs in NACMA administrative expenses);
annual O and M costs are estimated at 8 MEUROs; and 174 new
military manpower posts are required by 2013. The CP is
based on an assumption that nations (Germany, Denmark and
Czech Republic) can make available three deployable air
defense radars and one deployable passive tracker by 2010.
The MC is considering endorsement of the CP under silence
procedure expiring June 27. Mission recommends supporting
endorsement of the CP, subject to MC endorsement.

ITEM IX.C. SHAPE RECOMMENDED CAPABILITY PACKAGE 5A0150 VITAL
SECURITY PROJECTS FOR NATO COMMAND FACILITIES. The Board will
consider endorsement of this CP (Ref O),which will provide
the vital security projects for NATO command facilities.
This CP contains the force protection, health and safety
projects contained in the proposed SHAPE, JFC Brunssum, JC
Lisbon, and JFC Naples headquarters CPs, for which
consideration is deferred pending the finalization of the PE
Review (see item II above). The CP has a priority of 2 and
the required capabilities are categorized as Essential 1.
The NSIP investment costs included in this CP are 16.2 MEURO;
there are no additional O and M costs nor manpower
requirements. The MC is considering endorsement of the CP
under silence procedure expiring June 25. Mission recommends
supporting endorsement of the CP, subject to MC endorsement.

NULAND