CFE TREATY CALLED "SOME REASONABLE AND DECENT FENCES"

I was reading last night a new collection of essays by a very wise European, Sir Isaiah Berlin. Its title, "The Crooked Timber of Humanity," is derived from a quotation from Kant: "From the crooked timber of humanity, nothing entirely straight was ever made." All his life, Sir Isaiah has been an enemy of excess-the excess that has stemmed from two intellectual traditions, both that of the Enlightenment (e.g., from Rousseau and his intellectual progeny) and from what Sir Isaiah calls the "Counter-Enlightenment (18th and 19th Century romanticism, especially in Germany). Both traditions, in Sir Isaiah's view, have produced the intellectual underpinnings, on occasion, for zeal, excess, and-in the extreme-tyranny.

Sir Isaiah has, on the other hand, been a gentle advocate of the views of those from both of these traditions (e.g., Montesquieu and Hume from the first, Herder and Vico from the second) who have understood that one must not push intellectual theories too far. These writers have recognized, from different perspectives, that we are all made of "crooked timber" and that we need to be watched, need to be checked, need to be fenced. A distinguished American judge, Learned Hand, once described well this spirit that has drawn Sir Isaiah's approval in remarks he made to a new group of Americans, immigrants from this continent to the United States during the middle of World War II. He called it the "spirit of liberty," and summed it up as being "that spirit that is not too sure that it is right." Generally, we Americans are members, along with our other fellow North Americans, of one part of the European intellectual tradition. We are a mixed lot, but overall might think of us as somewhat idiosyncratic children of Montesquieu, who inhabit an outlying region of Europe and who, incidentally, have given to the world Disneyland and MacDonald's. (The virtues of the latter were reportedly recognized yesterday by no less a figure than the chief of the Soviet staff, General Moiseyev, himself.)

In my view, this CFE treaty is itself a product of a fine part of the European intellectual tradition-Sir Isaiah's part. What we have done in this treaty is, essentially, to build some fences around ourselves-so that if any of us, in future years, should got caught up in zeal, in excess, or even in tyranny, we won't stray as quickly or as far as we otherwise might. The essence of this treaty is thus at odds with the passionate pursuit of utopias, of whatever stripe, that has produced much of Europe's agony in this century-including both World War II and the Cold War. This treaty builds fence: of verification, of destruction and withdrawal of equipment of international guarantees-not perfect fences, but useful ones. (Since we build the fences, they are, inevitably, also hewn from crooked timber.) We may nevertheless all hope that the lines of these new fences mark the end of the most recent war, the Cold War and the beginning of something better for Europe and the world.

I am glad that we Americans, as Europeans of an idiosyncratic sort, have been able to help in the process of producing this treaty. (And I appreciate the kind words by the chairman about my own role. As is customary on these occasions, kindness leads to vast exaggeration, but the kindness is much appreciated.)

I should add that I leave these negotiations and this position with a sense of hope about the utility of these fences that we have built together. This hope is partially based on pride in the care with which we have done our work. It is partially based on the new spirit in Europe-a spirit whose transatlantic essence was most clearly demonstrated to me in December- 1989, 1 month after I came to these negotiations, when I stood on the Charles Bridge in Prague with my family and sang With Czechoslovak students some of the same civil rights songs that I had sung as a student demonstrator in Washington over a quarter of a century ago. This hope is also, in part, based on the sense of comradeship and common purpose that we have developed around this table-and the notion that this common purpose might even become a metaphor for our countries' dealings with one another in the future.

But hopes can be dashed. Fences can break down. And so hopes and notions must always be heavily seasoned with uncertainty-with the realization that we are, and work with, only crooked timber. As one of Ambassador de Brichambaut's predecessors, who walked these same halls during an earlier negotiation in Vienna, once said: "Above all, no zeal." Talleyrand was right, of course. Zeal and hope are far from being guarantees of success in international affairs. The only real guarantee in this case is a solid appreciation that we must all work continually to keep these, somewhat crooked, fences mended.

I would close by suggesting that one of the First American diplomats-and probably the most successful ever-Benjamin Franklin, once made a similar point very effectively. Toward the end of his long life, he was walking out of the final session of the Constitutional Convention in Philadelphia on a very hot summer day over 200 years ago, when a bystander shouted to him, "What sort of government is it to be, Mr. Franklin?" He replied, "A republic, sir-if you can keep it."

We have built some reasonable and decent fences here together. They will, fellow Europeans, continue for some time to help restrain our foolishnesses and excesses- if we can keep them. If we can keep them.

INTRODUCTION AND SUMMARY

On November 19, 1990, the 16 members of the North Atlantic Treaty Organization (NATO) and six members of the Warsaw Pact signed a treaty limiting conventional armed forces in Europe (CFE). This historic document, referred to as the CFE treaty, will require significant reductions in the number of conventional weapons located on European soil between the Atlantic Ocean and the Ural Mountains in the central part of the Soviet Union. Weapons held by either alliance in this region in excess of those permitted by the treaty will have to be destroyed. The Warsaw Pact, which currently controls far more weapons than does NATO, will have to destroy many more weapons and reduce its inventories by a much larger proportion. Specifically, the Warsaw Pact will have to destroy over 34,600 weapons, including tanks, armored combat vehicles, pieces of artillery, and combat aircraft representing more than 30 percent of its current arsenal. After excluding weapons once controlled by East Germany, NATO will be required to destroy about 3,700 weapons, or only 6 percent of its total arsenal. The treaty also permits each side to conduct extensive inspections of the other side's military facilities to ensure compliance with its provisions.

The treaty has not yet been submitted to the U.S. Senate for ratification because of controversy over an interpretation by the Soviet Union that certain of its weapons are not constrained by the treaty. No other parties to the treaty support the Soviet interpretation. The numbers used in this analysis are based on declarations made by the parties to the treaty at the time of its signing. Depending on the outcome of the controversy, some of the numbers could change but not enough to change the estimated savings or basic conclusions presented in this memorandum.

Last year, the Congressional Budget Office (CBO) completed three analyses dealing with the budgetary and military consequences of the proposed CFE treaty and with the costs of verifying and complying with the treaty.¹ This Staff Memorandum revises the analyses in those studies to reflect the provisions included in the signed version of the treaty. Detailed descriptions of the methods used in the analysis summarized here are contained in the earlier studies.

CBO's analysis finds that the balance of military forces in Europe is shifting sharply in NATO's favor, both because of recent political changes and because of the potential benefits of the CFE treaty. For example, measures of military capability that reflect both the quantity and quality of ground-based military equipment show that in 1988, the countries that made up the Warsaw Pact had an advantage over NATO by a factor of about 1.5 to 1. Taking into account the dissolution of the Warsaw Pact as a military entity and the CFE treaty, the ratio of NATO forces to those of the Soviet Union alone shifts to 1.7 to I in NATO's favor. The ratio of air forces also shifts in NATO's favor, though by a smaller amount.

Although carrying out the provisions of the CFE treaty would enhance the balance of military forces, it would not guarantee any significant U.S. budgetary savings. The United States could comply with the treaty without eliminating any of its military units from Europe. Instead, the United States could reduce the amount of its equipment that is now stored in Europe as reserves for replacement of wartime losses. Eliminating reserve equipment would not significantly cut costs. Indeed, the CFE treaty could result in modest added costs for verification and compliance. One-time costs for verification and compliance might amount to between $130 million and $385 million, with ongoing annual costs amounting to between $25 million and $75 million.

Because of improvements in the balance of military forces, and the reduced chance of a major war in Europe, the United States might elect to reduce its forces in Europe more than would be required by the treaty. A reduction in U.S. troops to a level of 225,000 (as President Bush recommended in January 1990) might eventually reduce the annual U.S. defense budget by about $6 billion compared with its 1991 level. Reducing U.S. troops to a level of 100,000 could lower the annual budget relative to the 1991 level by about $14 billion. The balance of military forces associated with these larger reductions would be less favorable than what would result from only those reductions needed to comply with the CFE treaty. Even with a reduction to 100,000 U.S. troops, however, the balance of forces would still favor NATO over the Soviet Union by a ratio of 1.3 to I for both ground and air forces

DESCRIPTION OF THE TREATY

The CFE treaty would limit alliance weapons holdings in five broad categories tanks, armored combat vehicles (ACVs), artillery, helicopters, and aircraft (see Table 1). During final negotiations, limits on U.S. and Soviet troops in Europe, which had been discussed earlier in the negotiations, were dropped from consideration. Thus, the treaty would not restrict the number of NATO or Pact troops in Europe.

Based on the weapons ceilings in the treaty and on current holdings of weapons, NATO, after excluding recently acquired East German weapons, would have to reduce its inventories in only two weapons categories-tanks and artillery.2 Even in these areas, NATO's reductions would be relatively small-3,615 tanks and 118 pieces of artillery-representing reductions of 16 percent and 1 percent, respective- FYI. In contrast, based on declarations submitted the day-before the treaty was signed, the Warsaw Pact would be required to destroy 13,191 tanks, 12,949 ACVS, and 6,953 pieces of artillery, representing reductions of 40 percent, 30 percent, and 26 percent in its holdings. Based on data submitted before the treaty was signed, neither alliance would need to reduce its helicopter fleet in order to comply with the treaty. (See Table A-1 in the appendix for more details.)

Effects of the CFE treaty on aircraft will be even more favorable for NATO than those on ground-based weapons. Under the provisions of the treaty, NATO will actually be allowed to increase the number of aircraft in its air forces, should it choose to do so. The Warsaw Pact, however, would have to destroy 1,572 aircraft, which represents about 19 percent of its fleet.

The United States expressed doubts concerning the accuracy of the numbers contained in the Soviet Union's declaration of its assets at the time the treaty was signed. Some NATO officials felt that the Soviet Union had understated its holdings by up to 40,000 weapons. The dispute seems to have arisen because the U.S. intelligence community was unable to keep track of the large numbers of Soviet weapons moved cast of the Urals before the treaty was signed. Three months later, revised U.S. intelligence estimates differed from Soviet declarations by less than 2,000 to 3,000 weapons.

A more serious controversy surrounds the Soviet Union's declaration that three of its divisions are part of its naval forces and outside the jurisdiction of the treaty. This dispute would apply to about 3,500 tanks, ACVS, and pieces of artillery, and would establish a precedent for exempting land-based naval units from the provisions of the treaty, an interpretation that none of the 22 parties to the treaty, except the Soviet Union, supports. U.S. Administration officials have stated that they will not submit the treaty for ratification with these disputes pending. By the time the Senate takes up the matter of the CFE treaty, therefore, these issues presumably will have been resolved.

The provisions of the treaty are to be fully in place 40 months and 10 days after the treaty is ratified by all 22 parties. To ensure compliances, the treaty permits each alliance to conduct specified inspections of the other's military facilities. For example, each alliance can inspect the other's facilities to verify that no weapons are being stored there in violation of the treaty. In addition, each alliance has the right to observe and confirm that the other side is destroying its excess weapons in compliance with the treaty.

MILITARY AND BUDGETARY EFFECTS OF THE TREATY

The treaty would significantly alter the balance of NATO and Pact military forces-or Soviet forces alone after the Pact is dissolved-in Europe. It would have only modest effects on the U.S. defense budget, however, yielding no direct savings an requiring, on average, annual expenditures of less than $200 million, or less than 0.1 percent of the Defense Department's total budget.

Once the treaty has been carried out, NATO and the Warsaw Pact will have an equal number or weapons deployed in Europe between the Atlantic Ocean and the Ural Mountains (the ATTU region). NATO's historical edge in the quality of its weapons, however, should provide it with an advantage over Pact forces. This advantage would be enhanced by U.S. reinforcements from the continental United States that are not limited by the treaty, and by the fact that the Pact will cease to exist as a military alliance on April 1, 1991.

To quantify the effects of the treaty on the military balance in Europe, CBO used analytic methods that take into account both the quantity and quality of each side's weapons. The capabilities of the ground and air forces of Pact and NATO countries were quantified based on the Army's weapons effectiveness indices/weighted unit value (WEI/WUV) and TASCFORM methodologies, respectively. Both methods rank and score individual models of weapons-foe exam le, an MI tank or an F-15 fighter aircraft-based on their capability relative to other weapons or the same type. The scores of all the weapons held by each alliance are then weighted appropriately and added up for the entire combined ground or air forces.³

These methods produce scores for the ground and air forces fielded by the members of the Warsaw Pact and NATO. Dividing the total score for Pact or Soviet forces by NATO's total score yields a ratio that is one measure of relative military capability. These ratios do not take into account losses resulting from combat; rather, they estimate the capability of forces that would be available to each side after mobilization and the arrival or all out-of-theater reinforcements, but before an attack begins. Moreover, there are important assumptions and limitations inherent in the methods that produce the ratios; these limitations suggest that the ratios should be used only as a rough guide to relative military capability.

Ground Forces. These analytic methods document the decline in military advantage of the Soviet and Warsaw Pact ground forces. Analysis of ground forces typically focuses on the key central region of Europe, where most of the fighting in any European war would take place.⁴ In 1988, before any of the military changes associated with the end of the cold war had occurred, the ground forces of the Warsaw Pact had a significant advantages ratio of roughly 1.5 to 1 -- over NATO ground forces in the central region (see Table 2).

In 1989, the Soviet Union and some of its Eastern European allies began unilateral reductions in their military forces, which reduced the Pact advantage over NATO ground forces to a ratio of about 1.2 to 1. At about the same time, the Warsaw Pact ceased to be a viable military alliance because of the movement toward democracy by many of its Eastern European members. Also, the unification of Germany, and the decision of the unified Germany to remain part of NATO, eliminated East German military forces from those available to the Warsaw Pact. These shifts are best captured by considering the ratio of Soviet to NATO forces.⁵ By that measure, there is a rough parity of ground forces in the central region of Europe.

The rough parity in capability between the ground forces available to the Soviet Union and NATO in central Europe may actually overstate the Soviet Union's ability to wage war against NATO. The Eastern European nations that have left the Soviet orbit have requested that all Soviet forces eventually leave their soil. Thus, by 1994, there should be no Soviet forces stationed in Europe outside the Soviet Union. In order to attack NATO, Soviet ground forces would have to traverse Poland, Czechoslovakia, or Hungary, where they might be opposed by indigenous forces. The need to fight their way through Eastern Europe, or merely to leave troops behind to guard their supply lines, would reduce Soviet forces available to oppose NATO.

The CFE treaty will continue the shift in military advantage away from the Pact and its sole remaining military member, the Soviet Union, and toward NATO. After the treaty is fully in place, the ratio of Soviet to NATO ground forces will be about 0.6 to I (see Table 2). Stated another way, NATO ground forces will have an advantage of about 1.7 to I over those of the Soviet Union. Furthermore, the treaty will not permit the Soviet Union to recapture any of its former advantage by increasing its weapons levels up to the level allowed for the entire Warsaw Pact: the treaty limits holdings of ground weapons by individual countries within each alliance to about two-thirds of the alliance's total ground weapons.

Although the Soviet Union could build up its forces east of the Ural mountains where the treaty does not apply, it would take time and effort to bring these weapons to bear on NATO. First, the forces would have to move more than 1,500 miles to NATO's eastern border. Second, the weapons would need to be maintained in an area where today there is not a large concentration of Soviet military units. Thus, although positioning forces for use against NATO in Soviet Asia is possible under the treaty, it may not be practical.

Air Forces. The effect of the treaty and political events on NATO's relative capability in the air will be less dramatic than for ground forces, but still will be substantial. In 1988, NATO air forces enjoyed relative parity with the Pact air forces; the ratio of capability stood at about 1.1 to I in favor of the Warsaw Pact (see Table 2). Unilateral cuts by the Soviet Union combined with the dissolution of the Warsaw Pact resulted in a ratio of 0.9 to I that favors NATO over Soviet forces. After implementation of the treaty's provisions, the ratio will move to about 0.8 to 1 in favor of NATO. Thus, after the treaty is fully in place, NATO's air forces could enjoy an advantage of 1.3 to 1 over those of the Soviet Union.

Savings Associated With the Treaty

In contrast to the large military benefit that would accrue to NATO and the United States as a result of the treaty, there is no guarantee of significant budgetary savings. Because the treaty does not limit troops stationed in Europe, the United States is not required to withdraw or disband any of its units based in Europe in order to comply with the treaty. As a result of the agreement within NATO on how to distribute reductions in weapons imposed by the treaty, the United States will be required to destroy or transfer to a NATO ally 1,898 tanks, 375 armored combat vehicles, and 109 pieces of artillery from its holdings in Europe (see Table 3). The United States could choose to remove these items from the large stocks of equipment it currently stores in Europe. These stocks are not in military units but rather are kept as reserves to replace weapons damaged in war. If U.S. stocks are reduced to comply with the treaty, the only savings associated with the treaty will be reductions in storage costs, which would not be significant.

The United States could, of course, comply with the treaty by removing military units from Europe, destroying their equipment or transferring it to a NATO ally, and eliminating them from the U.S. force structure. Indeed, some units have been withdrawn from Europe and sent to the Persian Gulf in connection with Operation Desert Storm. If these units are eventually eliminated from the force structure, there would be substantial budgetary savings. But those savings are not guaranteed by the CFE treaty.

Cost of Verifying and Complying With the Treaty

The CFE treaty includes detailed provisions delineating how countries should comply with the treaty, and how they can monitor each other's activities to be confident that all parties are in compliance with the treaty. These verification and compliance provisions include important rules for exchanging data on military, equipment-their numbers and locations, in particular-and for on-site inspections of military inventories covered by the data bases. They also stipulate how excess equipment should be destroyed or converted to civilian use.⁶

This analysis reaches no conclusions about the level of confidence that activities allowed by the treaty would provide regarding compliance with its provisions. Rather, it provides estimates only of the budgetary costs to the United States associated with verifying and complying with the treaty, which could be between $25 million and $75 million a year. In addition, there would be a one-time investment of between $130 million and $385 million.

One-Time Costs. The initial, one-time investment would be required to fund several types of operations that would take place during the first 44 months after the treaty takes effect. NATO representatives would conduct baseline inspections of Pact military facilities to verify the number of weapons the Pact declared it had at the time the treaty was signed. In addition, the United States would have to pay the costs for personnel accompanying Pact inspections of U.S. facilities in Europe for the same type of baseline verification. The United States would probably conduct about 50 to 75 inspections at Pact bases during the baseline validation period and a comparable number during the residual-level validation period. The United States will be subject to somewhat fewer inspections at its European bases during each phase (for more details, see Table 4).

Also contributing to the initial costs is the need to provide observers to watch the destruction of weapons by the Warsaw Pact and to destroy perhaps as many as 1,000 U.S. weapons.7 There would also be "challenge" inspections of sites not declared by one alliance as containing treaty-limited items, but suspected by the other alliance of doing so. Finally, an initial investment would be needed to pay for the establishment of aerial reconnaissance to supplement on-site inspections, once follow-on negotiations determine what type of equipment will be allowable for this purpose, and for research and development of technical enhancements of current methods for treaty verification and weapons destruction.

Annual Costs. The ongoing costs of between $25 million and $75 million a year associated with treaty verification and compliance would result from the need to provide hosts for about 30 on-site inspections-at U.S. bases in Europe and to conduct about 65 inspections at Pact bases. These inspections would be used to confirm that weapons systems at declared sites do not exceed the numbers assigned to them at those sites, and that no limited weapons exist at undeclared sites. Some of these inspections would be routine, and some might result from suspicions aroused by other means of observation such as aircraft or satellites. Additional costs could be incurred to support aerial reconnaissance flights to monitor compliance with the treaty (see Table 4).

Not all of these costs for verification and compliance would increase the U.S. defense budget. Some or all of the added costs could be offset by decreases in other portions of the defense budget, and some would be associated with shifting personnel from other duties rather than adding personnel. Indeed, because the provisions of the Budget Enforcement Act of 1990 limit U.S. defense spending through fiscal year 1993, any verification costs that add to the U.S. defense budget would arguably Kave to be offset by cuts in other types of defense spending.

The range of cost estimates for verification and compliance reflects uncertainty, principally about the cost of each inspection. The treaty generally specifies a maximum number of inspections, but fewer inspections may be carried out. Also, the cost of each inspection depends on how many inspections can be made during a single trip, how many personnel are involved, and how long each one takes. There is also uncertainty about how many of the inspections would be carried out by the United States and how many by other NATO allies. CBO developed the range of estimates in this memorandum based both on discussions with executive branch personnel about the possible range of costs and on experience with verification of the lntermediate-Range Nuclear Forces treaty.

OPTIONS FOR FURTHER U.S. FORCE REDUCTIONS

The United States could decide that the reduction in Soviet military capability that would result from the CFE treaty, coupled with the dissolution of the Warsaw Pact, would permit this country to reduce the number of forces it commits to NATO. Although this approach would forgo some of the reduction in military risk afforded by the-treaty, ii would result in budgetary savings. This analysis illustrates possible savings based on two assumptions about how many U.S. forces are withdrawn from Europe and eliminated from the active military.

Option I: Reduce US. Forces in Europe to 225,000

In his January 1990 State of the Union address, President Bush proposed a limit on the number of U.S. and Soviet troops that could be based in Europe but outside their home territory. Under this proposal, U.S. and Soviet troops in central Europe would have been limited to 196,000 on each side, with an additional 30,000 U.S. troops allowed outside Germany, Belgium, Luxembourg, and the Netherlands. All parties had tentatively agreed to this provision in early 1990, but it was dropped from the final version of the treaty.

This option would withdraw approximately 80,000 U.S. troops from Europe, reducing U.S. forces in Europe to the level proposed by President Bush in January 1990. Such a withdrawal could be accomplished in many ways. In order to estimate savings associated with a smaller U.S. presence in Europe, CBO constructed an illustrative withdrawal that would include two of the 5% Army. divisions and two of the eight Air Force tactical wings that were in Europe before the transfers connected with Operation Desert Storm." (An Army division of the type now in Europe consists of-about 16,000 personnel and a substantial number of tanks and other equipment. A tactical fighter wing typically consists of about 72 aircraft.) As a consequence of these reductions, about 73,300 Army and 6,200 Air Force troops would be removed from Europe and from active service. About 3,300 additional support troops based in the UnitedStates would also be eliminated.

Savings. The savings under this option would eventually reduce the annual defense budget below the 1991 level by about $6 billion in 1991 dollars of budget authority (see Table 5). Most of the savings, about $5 billion, would result from reductions in operating and support costs (assuming that all costs associate directly or indirectly-with the eliminated units are avoided). The remaining $1 billion in savings would be realized in procurement funding because of the reduced need for weapons to equip a smaller Army and Air Force. These budgetary reductions would be made only after implementation of the treaty is well under way; thus, the full savings might not be realized for several years. Nevertheless, these savings would more than offset the small annual cost associated with verifying and complying with the treaty.

The savings associated with this option result from adoption of a military force structure that is smaller than today's and are, therefore, relative to the 1991 level of defense spending. The actions assumed under this option, however, might not represent savings from the levels proposed by the Administration in the defense budget plan for 1992 through 1997 that was submitted to the Congress in February 1991. This budget plan includes the elimination of military units, some of which may be the same units that would be eliminated under this option. Since the Administration's plan does not specify which units it would eliminate, it is impossible to say how much of the $6 billion in savings associated with this option is already included in the Administration's plan.

Military Consequences. This option would negate some of the beneficial shifts in the balance of military forces afforded by the CFE treaty, but most would be retained. The option assumes that the United States reduces its forces in Europe by 80,000 troops but that reinforcing units based in the continental United States dedicated to NATO's defense would remain unchanged. The United States' NATO allies are assumed to make reductions in their forces proportional to the overall cut in the U.S. forces for NATO, and the Soviet Union is assumed to make no cuts beyond those required by the CFE treaty. Under these assumptions, the balance of ground forces would shift modestly away from NATO, but the-resulting level would still be favorable to the NATO alliance. The Soviet ground forces woufd be at leas of a disadvantage-0.7 to 1 after NATO's additional force cuts, compared with 0.6 to 1 based solely on reductions required by the treaty (see Table -2). The ratio of air forces would be virtually unchanged.

Option II. Reduce U.S. Forces in Europe So That 100,000 Troops Remain

In view of the large reductions in Pact and Soviet forces required by the CFE treaty, the dissolution of the Warsaw Pact, and the likely withdrawal of all Soviet troops from non-Soviet territory, the United States could -make much larger cuts in its European forces than those proposed by President Bush in January 1990. For example; the United States might reduce Its European troops to a level of about 100,000-roughly one-third the number of troops this country maintained during the height of the Cold War. The United States' NATO allies probably would also reduce the size of their active forces. This option assumes, therefore, that U.S. allies reduce their forces proportionally, and that the Soviet Union makes no reductions beyond those required by the CFP, treaty.

As with Option 1, CBO constructed tin illustrative withdrawal and deactivation of units from Europe designed to achieve the desired level of 100,000 U.S. troops. In this illustration, one Army corps including the equivalent of 21/3 Army divisions (that is, two divisions and one armored cavalry regiment) would be withdrawn from Europe and disbanded along with five Air Force tactical fighter wings. In addition, two individual Army brigades now stationed in Europe but Monging to divisions based in the continental United States and the brigade stationed in Berlin would be deactivated. After these reductions, the United States would have the equivalent of 2V3 Army divisions and three Air Force tactical righter wingi3 in Europe rather than the 52/3 equivalent divisions-including separate regiments and brigades-and eight wings that were in Europe before the movement of troops in connection with Operation Desert Storm.

Savings. Once fully implemented, which could be several years from now, this option could reduce annual U.S. defense Upending by as much as $14 billion (see Table 5). Most of the savings-almost two-thirds-would represent reduced funding for the Army. Considering the Army and the Air Force together, $11 billion of the total savings would be realized in operating and support costs, the remaining $3 billion tn procurement costs. As with Option 1, the actions taken under this option would represent reductions relative to the 1991 level of defense spending, but might not represent reductions relative to the reduced levels of defense spending proposed by the Administration in February 1991.

Military Consequences. The effects of this.option on the military balance would not be significantly different from those of the previous option. The ground force ratios would remain about the same, with NATO enjoying an advantage over Soviet ground forces in central Europe. NATO would also retain its edge in the capability of its air forces over those of the Soviet Union throughout the European theater.

WEAPONS IN EUROPE BEFORE AND AFTER THE TREATY
LIMITING CONVENTIONAL FORCES IN EUROPE IS CARRIED OUT

Table A-1 lists the national holdings of 20 of the 22 countries that signed the treaty on conventional armed forces in Europe (CFE). The figures reglect the declarations of current arsenals made by each country when the treaty was signed and the post-CFE national ceilings agreed to within each alliance and declared the same day. No figures are provided for Iceland and Luxembourg; although parties to the treaty, they had no treaty-limited weapons to declare.

The dispute arose shortly after signature of the Treaty on November 19, 1990. In the information exchanged among-the 22 signatories upon signature, the Soviet Union failed to count against the Treaty's numerical limits tafiks, artillery pieces and armored combat vehicles held within the area of application by its Naval Infantry units, three new Coastal Defense divisions, Strateiic Rocket Forces, Civil Defense and DOSAAF organizations, and internal security organizations.

In its corrected data (provided on February 14, 1991), the Soviets accepted that items held by DOSAAF, ind battle tanks and artillery held by internal security organizations counted against Treaty ceilings, but continued to assert that equipment held in Naval Infantry, Coastal Defense, Strategic Rocket Forces and the CI Defense Organization-a total of almost 6,500 items-was not subject to the numerical limits of the Treaty. The main argument they used was that the mandate for the CFE Negotiation stated that naval forces woula not be addressed.

Led by the United States, the Soviet position was firmly rejected by the other 21 signatories as being without foundation-in either the Treaty text or t e negotiating record of the Treaty.

The "mandate defense" was specious on two grounds:

It is important to remember that the stated objectives of the CFE negotiation-i.e., to eliminate capabilities for launching su rprise attack and for initiating large-scale offensive action-only made sense if one considered all equipment relevant to those activities. Just because a state assigned a tank based in the area of application to the navy did not make it less threatening from the standpoint of use in a land conflict in Europe.

In bilateral contacts with the Soviet Union over a period of several months, the United States sought to achieve a resolution of the Article III dispute that would: (a) not compromise the substantive provisions or objectives of the Treaty; (b) be acceptable to the other 20 signatories.

It became clear that these objectives could only be satisfied if there were a practical solution that did not require either the Soviet Union, or the United States and the other signatories to abandon their position with respect to the coverage of Arti- cle III.

Breakthroughs toward such a solution were achieved on the basis of high-level communications, including between Presidents Bush and Gorbachev, and meetings, including between Secretary of State Baker and Foreign Minister Bessmertnykh in March 1990 in Moscow and a visit to Washington by Chief of the General Staff Moiseyev in late May 1990. Agreement in principle on a solution was struck between Baker and Bessmertnykh in Lisbon on June 1. United States and Soviet teams subsequently got together in Moscow to work out the details.

On June 14, 1991, at an extraordinary conference of the 22 CFE signatories in Vienna, the Soviet Union made legally-binding commitments which:

• obligate it to cap its holdings of Naval Infantry, Coastal Defense, and Strategic Rocket Forces at their levels as of November 19, 1990, and not to equip its SRF with equipment in Treaty-limited categories other than armored personnel carriers;
• obligate it to reduce a number of conventional armaments and equipment limited by the Treaty within the area of application equal to its holdings in Naval Infantry and Coastal Defense, so that at holdings within the area of application are in conformity with all numerical limits act forth in the Treaty and pursuant to the Treaty (such as its maximum levels worked out in consultation with other former members of the Warsaw Pact);
• make clear that Naval Infantry and Coastal Defense units shall be subject to challenge inspections only, but during these, effective verification will be ensured; and
• make clear that, unless otherwise specified in the Statement, the Treaty or its associated documents, all conventional armaments and equipment of a type limited by the Treaty, regardless of subordination, will count against the Treaty's ceilings.

It was agreed that APCs in the Strategic Rocket Forces, limited to existing levels (1701) would not count against Treaty ceilings, but rather could be exempted under Article III's paragraph (F), which applies to certain equipment held by internal security organizations. This exemption was considered appropriate in light of the fact that these APCs are used exclusively for maintaining security at Soviet missile installations.

In order to meet the additional reduction obligations included in the Soviet statement, the Soviets agreed to destroy or convert 1,493 pieces of equipment in the zone, in accordance with all Treaty procedures. Another 1,492 pieces could be withdrawn from the zone, but an equal amount would be destroyed East of the Urals, with advance notification and proof that military utility had been destroyed. Another 753 APCA, all of th type "MT-LB" would be modified into armored personnel carrier look-alikes in acecorlance with existing Treaty provisions.

The Soviet statement is not a part of the Treaty, but is associated with it. It is also a separate international agreement equally as legally-binding as the Treaty itself is.

It remains the position of the other signatories that the Treaty itself, as well as the Soviet statement of June 14, cover the disputed equipment; the Soviets, no doubt, would argue that only the statement does. This is a point on which we agreed to disagree, in order to resolve the issue and move toward ratification and implementation. The result should be the same: Soviet compliance with all Treaty ceilings and other key Treuty provisions. Moreover, given the fact that-as stated in its preamble-the objective of the statement is to promote the implementation of the Treaty, the Joint Consultative Group is clearly empowered to consider compliance issues relating to it.

* * * * * *

Text of Soviet Statement, and U.S. Statement in Response (statements of other 20 signatories were identical in content to U.S. text) Attached.

The Government of the United States of America hereby agrees that the Statement of the Government of the Union of Soviet Socialist Republics of today's date provides a satisfactory basis for proceeding toward ratification and implementation of the Treaty on Conventional Armed Forces in Europe of November 19, 1990 (the Treaty).

The aforementioned Statement of the Government of the Union of Soviet Socialist Republics and this Statement of the Government of the United States of America shall be equally legally binding; they shall enter into force simultaneously with the Treaty, and shall have the same duration as the Treaty. June 14, 1991

In order to promote the implementation of the Treaty on Conventional Armed Forces in Europe of November l9, 1990 (the Treaty), the Government of the Union of Soviet Sociafist Republics states that it assumes the following obligations outside the framework of the Treaty.

I

The Union of Soviet Socialist Republics shall hold within the area of application of the Treaty conventional armaments and equipment in the Treaty-limited categories not to exceed: in Coastal Defence forces-813 battle tanks, 972 armored combat vehicles and 846 pieces of artillery; in Naval Infantry-120 battle tanks, 753 armored combat vehicles and 234 pieces of artillery; in the Strategic Rocket Forces- 1,701 armored combat vehicles, each being an armored personnel carrier as that term is defined in the Treaty.

II

Forty months after entry into force of the Treaty and thereafter, within the levels and sublevels that ensue from the obligations of the Union of Soviet Socialist Republics under the Treaty, the holdings of the Union of Soviet Socialist Republics of battle tanks, armored combat vehicles and pieces of artillery shall be less than its maximum levels for holdings, as notified in accordance with Article VII of the Treaty, by the number it will have in Coastal Defence forces and Naval Infantry within the area of application of the Treaty. For example, with regard to battle tanks, unless the maximum levels for holdinis for the Union of Soviet Socialist Republics are revised in accordance with Article VII of the Treaty, the numbers for the Union of Soviet Socialist Republics within the area of application of the Treaty, including battle tanks in Coastal Defence forces and Naval Infantry, will not exceed: 13,150 overall; 10,500 in active units overall; 7,150 in active units within the region described in Article IV 'paragraph 3 of the Treaty; and 1,850 in active units within the area described in Ariicle V, paragraph 1, subparagraph (A) of the Treaty.

III

1. The Union of Soviet Socialist Republics shall reduce, in addition to the reduction liability established for the Union of Soviet Socialist Republics under the Treaty on the basis of information it supplied its holdings of conventional armaments and equipment in the Treaty-limited categories withkn the area of application or the Treaty by the number which it had as of the date of signature of the Treaty in Coastal Defence forces and Naval Infantry, that is,by 933 battle tanks, 1,725 ar mored combat vehicles, and 1,080 pieces of artillery.

2. Such additional reduction shall be carried out by means of destruction or conversion into civilian equipment of 933 battle tanks and destruction of 1,080 pieces of artillery. Of the 1,725 armored combat vehicles to be additionally reduced, 972 armored combat vehicles shall be destroyed or converted Into civilian equipment and 753 armored combat vehicles or the MT-LB type, included in the armored combat vehicle category and belonging to the number declared as of the date of signature of the Treaty, shall be modified, in accordance with the Protocol on Existing Types, into armored personnel carrier look-alikes of the MT-LB-AT type, which are not limited by the Treaty.

3. Fifty percent of 933 battle tanks and 972 armored combat vehicles shall be destroyed or converted within the area of application of the Treaty and 50 percent of 1.080 pieces of artillery shall be destroyed within the area of application of the treaty, within the time limits and in accordance with the procedures established by the reaty. The remainder of these conventional armaments and equipment shall be withdrawn from the area of applicntion of the Treaty; an equivalent number of conventional armaments and equipment shall be destroyed or converted outside of the area of application of the Treaty within the time limits established by the Treaty and in accordance with procedures which provide sufficient visible evidence that the conventional armaments and equipment have been destroyed or rendered militarily unuspble. The States Parties to the Treaty shall be notified in advance, giving the location, number and types of conventional armaments and equipment to be destroyed or converted.

IV

The holdings of armored combat vehicles in the Strategic Rocket Forces of the Union of Soviet Socialist Republics shall not be subject to the numerical limitations of the Treaty, in accordance with Article Ill, paragraph 1, subparagraph (F) of the Treaty. These forces shall not be equipped with conventional armaments and equipment in the Treaty-limited categories, other than armored personnel carriers.

V

The conventional armaments and equipment of Coastal Defence forces and Naval Infantry in the categories subject to the Treaty within the area of application of the Treaty shall be subject to challenge inspections in accordance with the provisions of the Protocol on Insrction. Effective verification of such armaments and equipment shall be ensured. The Union of Soviet Socialist Republics shall provide separate information to all States Parties on such armaments and equipment of the same scope and with the same degree of detail as provided for in Section III, paragraph 2 of the Protocol on Information Exchange, and under the same timetable for the provision of information as provided for in Section VII of that Protocol.

VI

Unless otherwise specified (a) in this Statement, (b) in the Treaty, or (c) in the Declaration on Land-Based Naval Aircraft, all conventional armaments and equipment in the Treaty-limited categories, based on land within the area of application of the Treaty, irrespective of assignment, shall be subject to all numerical limitations of the Treaty.

VII

This Statement of the Government of the Union of Soviet Socialist Republics regarding the aforementioned obligations assumed outside the framework of the Treaty shall enter into force simultaneously with the Treaty, shall be legally binding and shall have the same duration as the Treaty.

STATEMENT OF THE CHAIRMAN OF THE
JOINT CONSULTATIVE GROUP-OCT. 18, 1991

1. I hereby record that:
1. The States Parties to the Treaty on Conventional Armed Forces in Europe of November 19, 1990. hereinafter referred to as the Treaty, acknowledge that in view of the sovereignty of Estonia, Latvia, and Lithuania, the area of application defined in Article 11 of the Treaty does not include the territories of Estonia, Latvia, and Lithuania.
2. I have today received a statement from the Representative of the Union of Soviet Socialist Republics as follows:

In order to fulfill the legally-binding obligations of the Treaty on Conventional Armed Forces in Europe and of the agreements entered into by the States Parties on June 14, 1991, the Union of Soviet Socialist Republics shall treat all its conventional armaments and equipment in the categories defined in Article 11 of the Treaty present, on or after November 19, 1990, on the territories of Estonia, Latvia, and Lithuania as subject to all provisions of the Treaty and associated documents. In particular, conventional armaments and equipment in the categories limited by the Treaty shall be notified as art of Soviet holdings arrd shall count toward the Soviet reduction liability. This statement shall be legally binding and shall have the same duration as the Treaty.

3. I have also received statements from the representatives of the Kingdom of Belgium, the Republic of Bulgaria, Canada, the Czech and Slovak Federal Republic, the Kingdom of Denmark, the French Republic, the Federal Republic of Germany, the Hellenic Republic, the Republic of Hungary, the Republic of Iceland, the Italian Republic, the Grand Duchy of Luxembourg, the Kingdom of the Netherlands, the Kingdom of Norway, the Republic of Poland, the Portuguese Republic, Romania, the Kingdom of Spain, the Republic of Turkey, the United Kingdom of Great Britain and Northern Ireland and the United States of America that, in accordance with the legally-binding statement made by the Union of Soviet Socialist Republics, all Soviet conventional armaments and quipment in the categories defined in Article II of the Treaty resent, on or after November 19, 1990, on the territories of Estonia Latvia, and Eithuania shall be treated as subject to all provisions of the Treaty, its associated documents and the legally-binding commitment entered into by the Union of Soviet Socialist Republics on June 14, 1991. In particular, conventional armaments and equipment in the categories limited by the Treaty shall be notified as part of Soviet holdings and shall count toward the Soviet reduction liability.
4. The States Parties acknowledge that arrangements for inspection of the above- mentioned conventional armaments and equipment on the territories of Estonia, Latvia, and Lithuania will require the consent and cooperation of those States.
2. This Chairman's statement, recording the above legally binding agreement among the States Parties, which will not be considered a precedent, will be recorded in the Journal, transmitted to the Depositary and deposited together with the instruments or ratification.

On October 30 in Kiev, Government delegations from Ukraine and Russia had a thorough exchange of views in connection with the development of Ukrainian-Russian relations in the context of implementing the Treaty between the Ukrainian SSR and the RSFSR of November 19, 1990, and the communique of August 29, 1991. Taking part in the negotiations were: for the Ukrainian side-Minister of Foreign Affairs A.M. Zienko, Minister of Defense K.P. Morozov, First Deputy Minister of Finance V.P. Tentyuk, Deputy Minister of the Economy Yu. A. Dvoynykh and other officials; for the Russian side-Minister of Foreign Affairs A.V. Kozyrev, State Councillor for Defense Issues K.I. Kobets, Deputy Minister of Finance C.A. Korolev and other officials.

The intention was expressed to follow a strategic course to strengthen the traditional neighborly relations between Ukraine and Russia in all areas, on the basis of complete equality, recognition and respect for the sovereignty and choice of their people.

Thoroughly discussed were questions of mutual implementation of responsibilities in the area of human rights in accordance with international standards, politico-military questions and paths to a complete reformation of the external political structure of the former Union. The sides agreed on the necessity of mutual action, together with other republics, on conducting a regulated reduction of the previous union structure in accordance with the new demands and a necessary accounting of the interests of each republic.

Both sides agreed to establish a working group with the goal of developing and strengthening the politico-legal basis of their relations, and working out corresponding agreements. They discussed means of mutually agreeable activity in this area.

The Russian delegation welcomed the resolution of the Ukrainian Supreme Council of October 24 on the "nuclear-free status of Ukraine." Both sides underscored their readiness to observe the conditions of the 1991 Treaty on Elimination and Reduction of Strategic Offensive Forces and the 1990 Treaty on Conventional Forces in Europe, in particular, the parts related to forces located on their territories. Ukraine and Russia will undertake, jointly with other interested republics, the necessary steps for early entry into force of these documents.

Both sides welcomed measures to withdraw and destroy tactical nuclear weapons. Ukrainian and Russian delegations underscored that questions of preparation and implementation on their territories of agreements in the area of arms reduction will be decided with their immediate participation and in consideration of their interests.

Both sides will provide for mutual exchange of information and will assist one an other in the realization of the interests of Ukraine and Russia in direct participa tion in the European community process and European structures.

Both sides declared a common approach to participation in international economic and monetary-financial institutions. Ukraine and Russia intend to broaden their cooperation with the International Monetary Fund, the International Bank for Reconstruction and Development, the European Bank for Reconstruction and Development and in other organizations, with the intention of joining them.

The Ministers of Foreign Affairs of Ukraine and Russia signed a protocol on cooperation and coordination of activity between the Ministry of Foreign Affairs of Ukraine nnd the Ministry of Foreign Affairs of Russia.

Between approximately January 1989 and the signature of the Treaty on November 19, 1990, the Soviet Union moved thousands of armaments in Treaty-limited categories out of the area of application to beyond the Urals-according to their own later accounting, some 57,000 tanks, armored combat vehicles and artillery pieces. lind they been left in the zone, the Soviets would have had to destroy most of the withdrawn equipment.

The holdings and consequent reduction obligations reported by the Soviets at Treaty signature were as follows:

Withdrawals prior to Treaty signature were not illegal, but many CFE participants, including the United States, found such a large withdrawal and build-up of armaments and equiipment just outside the area or application to be inconsistent with the goals of the Treaty and potentially destabilizing.

The reasons the Soviets have given for the TLE transfers are:

1. unilateral withdrawals (as announced by Gorbachev, as well as those required under bilateral agreements with Eastern European States) and residual force restructuring;
2. inadequate storage west of the Urals to accommodate units forced to leave eastern Europe much sooner than expected;
3. insufficient new industrial production to support equipment upgrades in units east of the Urals and an unwillingness to destroy still-viable equipment- particularly under tightening economic conditions; and
4. too few destruction facilities in the Treaty zone to destroy excess equipment within CFE-stipulated timelines.

The United States led diplomatic efforts to prevail upon th Soviet Union to provide assurances with regard to the use and ultimate disposition of the withdrawn equipment. These efforts were pursued over the course of approximately a year, from the summer of 1990 to June of 1991. During this period, the Soviets provided United States and other Western representatives with a gradually more-detailed accounting of their pre-Treaty transfers:

Finally, on June 14, 1991, in a statement to the CFE Joint Consultative Group which incorporated the above accounting, the Soviets provided formal assurances that:

• A certain number of armaments located beyond the Urals would be destroyed or converted between 1991-1995 (at least 6,000 tanks, 1,500 ACVS. 7,000 pieces of artillery); advance notification and "visible evidence" (i.e., visible to NTM) of such destruction/conversion would be provided.
• Additional equipment in Treaty categories would be destroyed/converted after 1995;
• Withdrawn equipment would not be used to create a strategic reserve or operational groupings-i.e., units of division size or larger;
• Information would be provided on equipment withdrawn from the zone and placed in storage; and
• These stores would gradually be depleted.

* * * * * * *

(Text of Soviet Beyond the Urals Statement Attached.)

In order to promote the implementation of the Treaty on Conventional Armed Forces in Europe of November 19, 1990 (the Treaty), I have been instructed by the Government of the Union of Soviet Socialist Republics to state the following.

1. The Union of Soviet Socialist Republics will, during 1991-1995, destroy or convert into civilian equipment no less than 6,000 battle tanks, 1,500 armored combat vehicles and 7,000 pieces of artillery from among the conventional armaments and equipment in the Treaty-limited categories beyond the Urals, in addition to the numbers of armaments subject to destruction and conversion specified in the Statement of the Government of the Union of Soviet Socialist Republics of June 14, 1.991, concerning obligations outside the framework of the Treaty.

These armaments will be destroyed or converted under procedures that will provide sufficient visible evidence, which confirms that they have been destroyed or rendered militarily unusable. Advance notification and information will be provided to the States Parties to the Treaty regarding the locations and numbers of battle tanks, armored combat vehicles and pieces of artillery undergoing destruction or conversion.

Elimination of armaments in the Treaty-limited categories will also be carried out subsequently as their operational and service life is expended.

2. The Union of Soviet Socialist Republics, in the period between January 1989 and signature of the Treaty on November 19, 1990, in connection with activities related to unilateral reductions of the Soviet armed forces, the withdrawal of Soviet troops from countries of Eastern Europe and adaption of the armed forces to the new defensive doctrine, withdrew beyond the Urals the following numbers of conventional armaments and equipment in the Treaty-limited categories: 16,400 battle tanks, 15,900 armored combat vehicles and 25,000 pieces of artillery.

Of these numbers of armaments and equipment, 8,000 battle-tanks, 11,200 armored combat vehicles and 1,600 pieces of artillery have been turned over to rnilitary units and subunits in the eastern Soviet Union for the purpose of re-equipping them and supplementing their armaments.

Another part of the conventional armaments and equipment in the Treaty-limited categories, which have been transferred beyond the Urals (8,400 battle tanks, 4,700 armored combat vehicles and 16,400 pieces of artillery), has been placed in storage. In addition, 7,000 pieces of artillery are being used for replacement and repair.

These stored conventional armaments and equipment withdrawn beyond the Urals will be used up in the process of replacing obsolete armaments and equipment that have expended their established operational and service life and, in the eastern Soviet Union, also in supplementing units.

With respect to the armaments and equipment transferred beyond the Urals before signature of the Treaty that have been placed in storage or are used for replacement and repair beyond the Urals, upon entry into force of the Treaty, information will be provided to all States Parties about the locations and numbers of battle tanks, armored combat vehicles and pieces of artillery at such locations as of July 1, 1991. Armaments in each of these categories (battle tanks, armored combat vehicles and pieces of artillery) will be stored separately.

3. The conventional armaments and equipment in the Treaty-limited categories withdrawn beyond the Urals prior to signature of the Treaty will not be used to create a strategic reserve or operational groupings, and will not be stored in a way permitting their rapid return to the area of application of the Treaty, that is, such armaments and equipment withdrawn beyond the Urals will not be stored in sets for military formations.

Military formations and units deployed within the area of application of the Treaty will be organized in line with the Soviet defensive doctrine and taking into account the sufficiency levels of armaments established by the Treaty for a single state.

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