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DEFENSE NEWS OUTLOOK 2016

CONTRIBUTORSBYRON CALLAN P. 26 Managing director, Capital Alpha Partners, Washington

GEN. JOHN F. CAMPBELL P. 17 Commander, US Forces-Afghanistan

ASH CARTER P. 4 US defense secretary

AMIT COWSHISH P. 20 Distinguished fellow with the Indian Institute for Defence Studies and Analyses; former financial adviser (acquisition), Ministry of Defence

SITKI EGELI P. 21 Defense and security analyst, Izmir University of Economics

MICHAEL FALLON P. 6 UK secretary of state for defense

MARILLYN HEWSON P. 24 Lockheed Martin chairman, president and CEO; incoming chairman of the Aerospace Industries Association’s board of governors

FRANK KENDALL P. 23 US undersecretary of defense for acquisition, logistics and technology

MAHMOOD SHARIEF MAHMOOD P. 19 Head of research and constancy, Institute for Near East and Gulf Military Analysis

GEN. DENIS MERCIER P. 16 NATO Supreme Allied Commander Transformation

SEYED HOSSEIN MOUSAVIAN P. 18 Princeton University research scholar; former spokesman for Iran’s nuclear negotiators

MASANORI NISHI P. 13 Japan’s former vice minister of defense

JAN PIE P. 25 AeroSpace and Defence Industries Association of Europe’s secretary-general

ROBERTA PINOTTI P. 10 Italy’s defense minister

RUSLAN PUKHOV P. 14 Director, Center for Analysis of Strategies and Technologies, Moscow

INE MARIE ERIKSEN SØREIDE P. 7 Norway’s defense minister

JENS STOLTENBERG P. 5 NATO secretary-general

SU HAO P. 11 Professor/director, Center for Strategic and Peace Studies, China Foreign Affairs University

MOSHE YA’ALON P. 8 Israel’s defense minister

Global Crises Spill Into New Year

The coming year is going

to be one dominated by

all the crises that made

headlines in 2015. Terrorism,

great power politics, the

White House race, bud-

get battles and structural

reforms will lead the defense

agenda worldwide as nations

grapple with how best to

respond to a fast-changing

world.

And after a string of deadly

attacks directed or inspired

by radical groups like al-Qa-

ida and the Islamic State

group, or ISIS, the world

is bracing for a far more dangerous 2016.

Western leaders are vowing to crush ISIS,

but it’s unclear how, exactly, they intend to

achieve that aim with a group that is fast

spreading its tentacles worldwide.

It will be in 2016 that passionate rhetoric

will have to be matched by a meaningful,

global strategy to counter an increasingly

dangerous group that has a region from

North Africa to Afghanistan in turmoil.

Meanwhile, great power politics are in

full swing, with Moscow and Beijing play-

ing their parts to set entire regions on edge.

Russia remains involved in Ukraine and is

now embroiled in Syria while continuing

to threaten Europe, fanning tensions from

north to south.

In Asia, China’s sweeping claims com-

bined with its island-building program and

more active military are

worrying neighbors that ei-

ther claim or administer the

territories Beijing wants.

All this uncertainty has

been good for defense

spending. Budgets in

Europe and Asia are rising

to match growing threats.

The scourge of terrorism

has spurred Europeans to

boost support for security

spending while in Asia, na-

tions worry about their giant

neighbor’s intentions.

In America, still the

world’s leading power, a

budget deal appears to have averted anoth-

er fiscal fiasco, but the Pentagon continues

to live with budget caps as it seeks to mod-

ernize its force while driving technological

innovation and revamping its workforce.

As we did last year, Defense News asked

government, military, think tank and indus-

try leaders from America to Europe and

from the Middle East to Asia for their per-

spectives about their region. Their charge

was simple: Look at the events of 2015 and

what they tell us about what’s to come —

and needs to be done — in 2016.

The result is this comprehensive col-

lection of 19 views to shape the coming

debate.

VAGO MURADIAN Editor, Defense News

EDITOR’S NOTE

4


As secretary of defense, it is my responsi-bility to ensure that the United States mil-itary is well-prepared to fight the fights of today while at the same time taking steps to ensure our institution will succeed long into the future. We have the finest force the world has ever known, and I am committed to ensuring that my successors will be able to say the same thing. Maintaining this per-spective is paramount to confronting the complex challenges our nation faces.

Building on some of the decisions we made early this year, we have significantly accelerated our campaign against ISIL. We have built out new special operations capabilities in Iraq and Syria, stepped up our air campaign, and are working with local, capable, motivated ground forces to pressure ISIL strongholds from multiple directions at once.

Following the attacks in Paris, NATO allies Germany, the United Kingdom and France have all brought additional capa-bilities to the coalition. I have personally reached out to nearly 40 allies and partners around the world, asking them to step up their contributions. Together, ISIL is an evil that we must and will deliver a lasting defeat.

Russia and China have presented new challenges that demand our attention. We have built a new playbook with NATO allies that is both strong and balanced in the face of Russia’s aggressive actions — confront-ing threats ranging from hybrid warfare to nuclear saber-rattling — while also holding the door open for Russia to get on the right side and work with the US and Europe on common challenges. We have made cybersecurity an even higher priority, both in defending our networks and in partner-ship with our closest allies like the United Kingdom, Israel and the Republic of Korea. In the Asia Pacific, we’re bolstering support for allies and partners dealing with unprec-edented land reclamation — predominantly by China — in the South China Sea. Peace

and stability in the Asia Pacific, underwrit-ten by decades of American military power, has allowed all nations to rise, prosper and win. We aim to keep it that way by further-ing our investments in the region.

As we address these challenges here, we can’t lose sight of tomorrow’s opportuni-ties. A sound national defense strategy de-mands we have perspective in both space and time. That means ensuring we maintain our technological edge well into the next century and that we continue to recruit and retain the best people America has to offer.

A generation ago, most technology of consequence came from America and much of it from the Department of Defense. To-day, the technology base is more commer-cial and the competition is global. In this new era, we must find ways to reinforce our essential defense partnership with American innovators, scientists and tech-

nologists both in and outside the traditional defense industrial base. That’s why we’re building bridges between the Pentagon and innovation hubs like Silicon Valley and Bos-ton to leverage advances in cyber defense, big data analytics and biosciences. This goal is central to our mission to defend the nation because the US must maintain its advantage in science and technology to protect our people.

Technology will continue to be critically important to our military, but above all, our most enduring advantage is our people. I am committed to building the force of the future by attracting and competing for the best talent from new generations and drilling holes in the walls that separate government and the private sector so smart people can contribute their expertise to our mission of national defense. We must be open to the broadest possible pool of talent, which is why I recently announced the opening of all remaining military occu-pations and positions to women. We have an all-volunteer force, so for us to keep re-cruiting and retaining the best, the military has to continue to be recognized for what it is: the most rewarding and honorable place highly capable young men or women work and serve.

The decisions we will make over the course of 2016 will be vital for the long-term health of the Department of Defense and our alliances. Now that we have secured a multiyear budget agreement, we are looking to Congress to provide critical flexibility so we can make the most of this opportunity. We are looking to our allies to lean forward and uphold their share of responsibilities for defending the world order. And we are looking across the indus-trial base for leaders willing to work with us to make our nation stronger. Thanks to our strategy, technology and people, the United States is in a strong position — the US military will stand watch in every time zone and domain to make sure it stays that way next year and beyond.

By US Secretary of Defense ASH CARTER

We Will Deliver ISIL a ‘Lasting Defeat’

5


Estonia and Poland have

now reached this mark [of

spending 2 percent GDP

on defense], the UK is

increasing its defense

spending in real terms, and

other allies have laid out a

road map to do the same.

In November, terrorists struck at the heart of Paris. Such attacks are meant to terrify, but they will only strengthen our resolve.

We are facing the biggest security chal-lenges in a generation. They are complex, interrelated and come from many direc-tions. The promise of the Arab Spring has been replaced by violence and extremism. Russia has illegally annexed Crimea, con-tinues to destabilize eastern Ukraine and has now entered the war in Syria.

NATO is adapting to this changed world.Last year, we took the decisions needed

to keep our nations safe by increasing our readiness and investing more in our defense. The year 2015 has been one of action. We are completing the implementa-tion of NATO’s Readiness Action Plan, the biggest increase in our collective defense since the Cold War.

We have increased our military pres-ence in Central and Eastern Europe. We are setting up eight small headquarters to support planning, training and reinforce-ments. We have more than doubled the size of the NATO Response Force to over 40,000 troops. At its core is the new high-read-iness Spearhead Force, ready to deploy within days to wherever needed. This year, NATO allies are holding some 300 exercis-es, including the largest in over a decade, recently conducted in southern Europe.

To respond effectively to hybrid threats, NATO must be able to monitor, assess, react and respond in real time. So we are improving our intelligence and early warn-ing, speeding up our decision-making, and enhancing our cyber defenses.

But many of the challenges we face can-not be tackled by military means alone. So we are working with the European Union and other partners to project stability in our neighborhood, but we need to work even more closely together.

NATO is actively engaged in the fight

against terrorism and extremism. All NATO allies contribute to the global coalition to counter the Islamic State group. We are sharing analysis, information and intelli-gence. We are also helping our partners to better defend themselves and to contribute to regional stability, through defense capac-ity-building in countries such as Iraq and Jordan, and our mission in Afghanistan.

In our eastern neighborhood, we are supporting countries like Ukraine, Georgia and Moldova to become stronger.

In December, we invited Montenegro to begin accession talks to become the 29th member of the alliance. We expect Montenegro to continue reforms and to further build public understanding of NATO membership and support for it. Montene-gro’s NATO membership will contribute to stability in the western Balkans and send a clear signal that the door of our alliance remains open.

We are also reviewing our relationship with Russia. There is no contradiction between having a strong NATO and engag-ing with Russia. On the contrary, the best basis for a constructive dialogue is a strong defense.

So now is the time to invest in our de-fense. We have seen some progress toward each NATO nation spending 2percent of gross domestic product on defense. Estonia and Poland have now reached this mark, the UK is increasing its defense spending in real terms, and other allies have laid out a road map to do the same.

In the last couple of years, our world has become more dangerous. But in the same period, NATO has adapted to make sure we are still able to keep our countries and our people safe. This is what we are deter-mined to do as we prepare for our summit next July in Warsaw.

By NATO Secretary-GeneralJENS STOLTENBERG

NATO Chief: ‘Time To Invest in Our Defense’

6


Britain is not shying away,

we’re projecting our power.

... [We’re] defying Russian

aggression in the Baltic and

confronting ISIL in Iraq.

2015 has been a tough year. It began with the appalling attack on Charlie Hebdo and ended with the worst attacks in Paris since World War II. Many more innocent people lost their lives to terror — on a Tunisian beach, on a Russian airliner and in a Malian hotel.

Besides the curse of the Islamic State group, also known as ISIL, we’ve seen a resurgent Russia undermine Ukrainian sov-ereignty and mass migration spilling into the Mediterranean.

The diversity, complexity and concur-rence of these events has been unprece-dented, placing strain on our internation-al-rules-based system.

The UK is responding with bigger, stron-ger defense. As a new government, we were elected to deliver economic security and national security. So we’ve chosen to increase our defense budget year-on-year. We’ve upped our planned equipment spend by £12 billion (US $18 billion) to £178bil-lion ($268 billion). And our new Strategic Defence and Security Review (SDSR) pro-vides a more assertive blueprint for action in the years ahead.

First, it gives us greater flexibility to deal with the unexpected. Our potent, new Joint Force 2025 doesn’t just mean more planes, more ships and better-equipped special operations forces. It gives us two strike brigades able to take on multiple missions at short notice. And it upgrades our cyber and strategic communications capability to counter the extremist narrative with a faster truth.

Second, it nails our colors to the innova-tion mast with a significant investment in innovation over the next decade. The US offset strategy recognizes that fifth-gener-ation technology, weapons proliferation

and cheap tech threaten the West’s leading edge. We’re investing in big data, robot-ics and miniaturization to keep ahead of the curve. Back in October, US Defense Secretary Ash Carter and I challenged our brightest brains to do more to develop game-changing disruptive technology.

Third, we’re becoming international by design — working with allies and partners to deliver our national security goals and tackle global threats. NATO remains the cornerstone of our defense. We’re commit-ting to NATO’s 2 percent target [of spending 2 percent of gross domestic product on defense] and leading its new high-readiness Spearhead Force in 2017. Bilateral partner-

ships are critical too, and our special rela-tionship with the US remains pre-eminent. Our recent investments in F-35, carriers, maritime patrol aircraft and our deterrent — areas of shared interest — offer further reason to tighten our ties.

So Britain is not shying away, we’re pro-jecting our power.

In 2015, our brave service men and women have again been in action — de-fying Russian aggression in the Baltic and confronting ISIL in Iraq. They’ve been par-ticipating in 21 operations in 19 countries. Now we’re making the case to beat back the terrorists in their Syrian strongholds. UN Security Council Resolution 2249 called on states to take “all necessary measures” to prevent and suppress ISIL’s terrorist activities. Seventy years on from victory in Europe, the terror threat has changed but we’re still standing together in solidarity.

In 2016, I’ll be focused on delivering our SDSR plans. I’ll also be preparing for July’s NATO Warsaw summit, where our focus is delivering the military capability and investment agreed at the last sum-mit in Wales; establishing a 21st century deterrence posture; and driving further adaptation to tackle threats from the east and south. Above all, I’ll be making sure we do everything in our power to protect our people and our way of life.

The message is clear: Britain is back.

By UK Secretary of State for DefenceMICHAEL FALLON

‘Britain Is Back’ With ‘Bigger, Stronger’ Defense

7


NATO needs a coherent

and robust long-term

strategy to deal with the

new security environment.

A key element of that

strategy must be maritime

power and presence.

This has been another demanding year for Europe. The Islamic State group’s ter-rorism has reached Europe in a devastating way. We are facing the largest refugee crisis since World War II. As we are entering 2016, we are also beginning to grasp the long-term consequences of the tumultuous events of 2014. Russia’s actions continue to affect its neighbors, including a number of NATO allies and partners.

To deal with the scale, scope and acute-ness of the new security situation, trans-At-lantic unity is more important than ever. US leadership is both desired and necessary, but Europe must also take more responsi-bility for its own future. In times like these, trans-Atlantic solidarity and cohesion — with NATO at its core — remains vital.

Norway has a special interest in the strategic climate in the North. There is an increase in maritime activities across NATO’s area of responsibility, from the North Atlantic to the Black Sea, the Baltic Sea and the Mediterranean. We are facing military-strategic changes with potentially far-reaching, long-term consequences. Rus-sia has developed new high-end military capabilities, including strategic submarines and aircraft, and long-range, high-preci-sion missiles. Russia has also expanded its military infrastructure in the Arctic. While Norway does not consider Russia a military threat today, we cannot discount that these military capabilities can pose a challenge to trans-Atlantic security in the future.

We need to raise NATO’s profile in the maritime domain. This requires maritime power and presence. Regular training and exercises are also necessary to give us the knowledge and skills we need to operate in this domain. NATO’s maritime forces need to be able to establish sea control in

NATO’s area of responsibility to ensure freedom of navigation. They also need to ensure that sea lines of communication are open for supply and reinforcements in crisis or war.

This requires high-end maritime capa-bilities, situational awareness, updated con-tingency plans and collective contributions to NATO forces in the Atlantic.

Furthermore, reassurance initiatives in the East are important and have had a stabilizing effect, but we should develop a strategic framework for deterrence and reassurance beyond the temporary means.

Deterrence and reassurance are back as key concepts in our security policy.

For NATO to be politically credible it needs to be militarily capable. Given the new security environment, we need to be able to operate in air, on land and at sea. The way forward is doctrinal and techno-logical interoperability among systems, domains and countries.

As we prepare for the 2016 NATO summit in Warsaw, we must assess the new secu-rity environment as it is, not as we wish it were; we must think strategically while acting immediately; and we must revitalize the trans-Atlantic link in both political and military terms.

In short, NATO needs a coherent and robust long-term strategy to deal with the new security environment. A key element of that strategy must be maritime power and presence.

By Norwegian Minister of DefenseINE MARIE ERIKSEN SØREIDE

Strategic Shift in the North: A Call For NATO Maritime Power, Presence

8


Sixty-seven years have passed since the founding of the State of Israel; 67 years of continuous security and diplomatic challenges stemming from a vehement opposition to our very existence by our neighboring Arab states and their sup-porting organizations. In the past, the flag bearers of this opposition fueled the con-flict with nationalistic pan-Arab ideology (Nasserism, Ba’athism, pan-Arabism). Their use of conventional armed forces to attack Israel was defeated time and again, as the Israel Defense Forces increasingly gained a substantial military advantage based on advanced technology and professional abil-ities. This, in turn, led the Arabs to focus on achieving non-conventional capabilities — challenging Israel with rockets, missiles, guerrilla warfare and terror.

As the star of pan-Arabism/Arab nation-alism faded, radical Islam (both Shia and Sunni) rose in its place. This new ideology is driving the current wave of terror that aims to harm Israel and its citizens, in various ways — within Israel, along its borders and across seas. This wave of ter-ror, be it sponsored by Palestinian Islamic organizations like Hamas and Palestinian Islamic Jihad or sponsored by regional/international radical forces like Hezbollah and Global Jihad (Daesh and al-Qaida), has turned Israel into the front line of the free world in the battle against this murderous terror that aims to kill as many infidels as possible — which is how they view citizens of democratic, free countries.

The battle against radical Islamic terror will be the greatest challenge facing the family of nations, under the leadership of the United States, in the coming years. Isra-el, the sole democracy in the Middle East, is an inseparable part of this family of na-

tions and will push for greater cooperation, in both intelligence and operational capac-ities, among the free world’s countries. If the terrorists and their operators will not be stopped at their points of origin, where they are indoctrinated with murderous ideology and receive vigorous training, they will reach the capitals of every nation in the free world where they will brutally murder citizens, exporting their reign of terror. This is what happened in Paris and what can easily happen in other global cities.

The ability of the free world’s intelligence organizations to effectively cooperate is crucial to the success of the war on terror. The ability of every nation to contribute intelligence information is a major factor

in foiling terror attacks and destroying the terror infrastructure. Israel will continue to support these efforts to the best of its abilities and will continue to share all intel-ligence information it has in this regard, as well as its significant operational experi-ence.

This is a war over our core values and our way of life. This is a war of cultures. On one side is a culture that values death and destruction and kills hundreds of thou-sands of innocent civilians, including wom-en and children — a culture that conducts cruel suppression of ancient Christian com-munities, stages public hangings of homo-sexuals and holds a complete disregard for women’s basic rights. On the opposing side, there is our culture — that of the Western world that places highest value on freedom and equality for all, regardless of religion, race, gender or sexual orientation.

The driving force behind this opposing, evil culture is Iran. To clarify, the nuclear agreement signed with Iran will not reduce the threat of this regime on the entire free world. On the contrary. The merciless Iranian regime, which typifies Israel as the “Little Satan” and threatens to obliterate it from the map, holds equal discontent

By Israeli Defense Minister MOSHE YA’ALON

If the terrorists and their

operators will not be stopped

at their points of origin …

they will reach the capitals

of every nation in the free

world where they will brutal-

ly murder citizens, exporting

their reign of terror.

Don’t Be Fooled by Iran’s ‘Charm Offensive’

9


toward the United States, termed the “Great Satan.” As Iran gains power in the post-agreement era, Israel is faced with an additional substantial challenge.

Iran is the chief instigator of terror and instability in the Middle East, employing Hezbollah, the Quds Forces of the Revolu-tionary Guards and its support of a variety of terror organizations to this end. How-ever, one would be mistaken to think this is the extent of Iran’s evil aspirations and activities. Currently, Iran operates dormant and active terror cells throughout Europe, the Americas, Africa and the Far East. Its proxies are busy planning vicious attacks, collecting intelligence on Western targets and stockpiling arms in various hideaways scattered throughout global capitals.

The agreement with Iran and the lifting of sanctions enable Iran to continue to sponsor, train, arm and operate terror organizations in the Middle East and across the world. Thanks to this agreement, Iran is able to do so without the heavy weight of the sanctions — while it continues to aspire toward nuclear capabilities, even if they

remain 10 to 15 years in the future. This is a huge danger to the Western world and an immediate challenge during the com-ing year. It is essential to say, in the most clear-cut manner, that Iran is completely and utterly on the dark side. Not only that, but they sit at the helm of the forces of evil. We should not be fooled by their deceitful charm offensive. Iran remains a huge threat to the Western world and the security of its citizens.

The coming year, especially, and the years to follow, are crucial for Israel and the Israel Defense Forces. We continue to build and strengthen our defenses while keep-ing an open eye on the dramatic changes transpiring throughout the Middle East. The IDF in the coming years will be a very different force compared with that of 20, 30 and 40 years ago. It will be, and I may say it already is, a force that combines tremen-dous firepower coupled with the ability to mobilize and operate elite forces on land, in the air, at sea, and even underground. The IDF also employs super advanced war machinery that can suddenly strike at any

point in the Middle East, supported by highly sophisticated cyber and intelligence capabilities.

Our closest ally and greatest friend, the United States, is providing essential sup-port — both quantitatively and qualitatively — to this reshaping of the IDF. The unusu-ally close relationship between the defense establishments, militaries and intelligence corps of the United States and Israel serve as the cornerstone of our national security.

It is essential to say, in the

most clear-cut manner, that

Iran is completely and utter-

ly on the dark side. Not only

that, but they sit at the helm

of the forces of evil. We

should not be fooled by their

deceitful charm offensive.

10


The idea of remaining

indifferent, of not trying

at all costs to save the

lives of these people

... is inconceivable for a

country like Italy.

The problem of migrants seeking to cross the Mediterranean, from different places and for different reasons, started five years ago and has since exploded.

The majority of these people are pushed to migrate for economic reasons that are linked to the poverty and hunger that continues to characterize many areas in the Southern Hemisphere, accentuated in many cases by the collapse of states or by political and military crises.

Others are escaping from countries di-rectly involved in conflicts or from repres-sion that puts their lives at risk. There is, consequently, a certain amount of overlap between the two groups which makes it more difficult to calculate how many have the right to be considered “refugees” under international law.

The two groups mix on the boats, but, above all, they all risk death and this is the key aspect that has been a primary concern for Italy from the very start. The idea of remaining indifferent, of not trying at all costs to save the lives of these people — in-cluding women and children — is incon-ceivable for a country like Italy.

At the same time, pushing the boats back to their ports of departure was, and still is, impossible, because most risk sinking, be-cause where they come from is uncertain, or worse, because they come from places where the migrants risk being killed.

The current phenomenon cannot be compared to other, international experi-ences, with the possible exception of the boat people who fled Vietnam 40 years ago. It is no coincidence that the Italian Navy organized its first humanitarian mission at that time, saving 900 lives.

When a similar situation arose with the collapse of the communist regime in

Albania, it did not last long because the boats that set out were blocked by the new Albanian government, with help from the Italian government.

That brings us back to the current migration in the central Mediterranean. Now that internal political crises have been overcome in Tunisia and Egypt, sailings are more or less coming from Libya.

It is evident that this problem will not be solved until Libya has a new government that takes control of the country, and above all the coast.

This year the pressure has eased up a bit, as many people have chosen to travel through the eastern Mediterranean, Greece

and the Balkans, which is a longer, but less risky route.

But the frontier closures decided by many European states may push more migrants toward the central Mediterranean route.

Italy has been calling for many years for more attention to be paid to the Libyan question and the entire Mediterranean region. It has pushed for this at NATO, including at the Wales summit last year, at the European Union and at conferences of heads of government, foreign ministers and defense ministers.

Thanks to the launch of the Italian naval operation Mare Nostrum — which helped 156,000 migrants and continues in the form of a second operation, Mare Sicuro — as well as the European operation Triton and the successive launch of the EUNAVFOR MED operation, a first important step in this direction has been taken.

The next step must be stabilizing Libya and stopping it becoming a no-man’s land where Islamic terrorism can triumph. This is the main objective of the Italian govern-ment in the region.

By Italian Defense MinisterROBERTA PINOTTI

Instability in Libya Exacerbates Refugee Crisis

11


By SU HAO, professor and director of the Center for Strategic and Peace Studies at China Foreign Affairs University, Beijing

China’s Clout Stabilizes Asia-Pacific As the largest developing country and an

emerging political and economic power, China is playing an increasingly important role in the international arena.

In terms of its rejuvenation, China fol-lows neither the power politics of the West in implementing its diplomacy, nor does it confine itself in the rigescent manner of ideology politics of the 20th century. It re-turns to the tradition of Chinese civilization via a “Great Reverse of History.” It is the path that China followed in 2015 when it played a significant role in the international community through a variety of diplomatic activities.

The basis of Chinese diplomacy is found-ed on the current international order. China is not a revisionist of the current order, instead, employing “improvement diploma-cy,” China has instilled equity and just ideas and norms to make the current internation-al order more benign and reasonable.

Hence, at the UN conference in New York commemorating the end of World War II, President Xi Jinping explicitly emphasized China would like to continue to uphold the international order and system under-pinned by the purposes and principles of the UN Charter. To maintain the current international order laid down since WWII is obviously the foundation of China’s diplomacy.

As a big Asian nation, a priority of China’s diplomacy has been to strengthen friendly cooperation with neighboring countries. The proposition of “One Belt, One Road” has endowed China’s neighboring policy with a new connotation. China’s neighbor-ing foreign policy contains the four circles of East Asia, Central Asia, South Asia and North Asia, as well as two big regional frameworks of the Pacific and Asia.

In 2015, the Chinese government pro-moted bilateral cooperative partnerships with neighbors through visits to countries including Pakistan, Kazakhstan, Vietnam,

Singapore and South Korea.At the same time, through regional mul-

tilateral platforms, China is making great efforts to promote regional integration. In July, at the Shanghai Cooperation Organi-sation’s Council of Heads of States meeting held in Russia, Xi urged member states to make a common decision to connect “The Silk Road Economic Belt” with each nation’s development strategy and the Eur-asian Economic Union.

With Prime Minister Li Keqiang partic-ipating, leaders from China, Japan and South Korea met in Seoul, thus providing significant impetus for East Asia coopera-tion. Furthermore, he attended East Asia leaders’ meetings in Malaysia, and promot-ed an economic integration process based on development and security.

Later, Xi attended the Asia-Pacific Eco-nomic Cooperation summit in Manila and promoted the construction of an “Asia-Pa-cific Community of Common Destiny,” and the implementation of a “Free Trade Area of the Asia-Pacific.”

This year, through a series of diplomat-

ic efforts, the Chinese government has actively tried to cool hot-spot issues. Under China’s coordination, a comprehensive Iran nuclear issue agreement has been reached. The resumption of high-level visits between China and North Korea effectively calmed tense relations. A meeting between the leaders of China and Japan alleviated the tense situation in the East China Sea.

There is one point worth mentioning: The South China Sea situation became more complicated due to the direct intervention of the US. China expressed the position that it was protecting its own maritime rights and interests on various occasions. Meanwhile, through cautious self-con-straint, China prevented the tense situation in the South China Sea from worsening.

It should be noted that the entry of the destroyer USS Lassen from the US Pacific Fleet into waters near relevant islands and reefs of China’s Nansha Islands is an intended provocation. With its compre-hensive military capacity in the South China Sea, China is not afraid of a military showdown in this area. However, to protect the friendly cooperation between China and the US and the overall peaceful, stable situation, China tactfully conveyed its determination to protect its own interests while preventing the occurrence of friction.

As for the land reclamation projects on China’s Nansha islands, they will lay a foun-dation for China to provide international public good in dealing with non-traditional security challenges in the South China Sea.

Following the general situation of peace and stability in 2015, next year China’s

With its comprehensive

military capacity in the South

China Sea, China is not afraid

of a military showdown in

this area.

12


diplomacy will probably have the following focuses:

First, promoting the strategic connectivi-ty along the route of “One Belt, One Road.”

Second, to stabilize the overall peaceful situation in neighboring countries and make cautious responses to the possible complex situation in the South China Sea. It’s necessary that China be prepared in sophisticated ways for further provoca-tion by the US in the South China Sea. It’s more important for China to encourage the

concerned parties to continue negotiations over a code of conduct based on the reality in this area and to explore the possibility for the claimants’ cooperation in the South China Sea.

Third, to further promote the stable state of US-China relations and coordination with other powers.

Fourth, to boost good global governance processes under the framework of trans-re-gion and inter-regional cooperation.

The South China Sea situ-

ation became more com-

plicated due to the direct

intervention of the US. China

expressed the position that

it was protecting its own

maritime rights and interests

on various occasions.

13


2015 was a fruitful year for Japanese security policy; the coming year will be an absolutely critical one for the region.

The Guidelines for the Japan-US Defense Cooperation were significantly revised in April, the Ministry of Defense organization was streamlined in June with the new Acquisition Technology & Logistics Agency (ATLA) becoming operational on Oct. 1 and — most importantly — new regulations for security policy were passed by the Diet in September.

It is important to note that Japan over the decades has regularly reinterpreted its Constitution to match its changing securi-ty environment. The guidelines were first adopted in 1978 to draft joint Japan-US operational plans for the first time after the nations concluded their bilateral security treaty in 1952. They were revised in 1997 to meet the new security environment after the end of the Cold War together with the emerging threat of a nuclear North Korea.

The new guidelines make alliance management smoother by introducing the new bilateral consultation mechanism to meet the evolving security situation in the Far East. For the first time, they include cooperation in joint research, development, production, and testing and evaluation of equipment; and in mutual provision of components of common equipment and services.

Since April 2014 Japan can have codevel-opment of weapon systems with allies, like highly capable conventional submarines with Australia.

The “Legislation for Peace and Security” enabled the Abe administration to modestly expand the concept of “collective self-de-fense” to enlarge Japan’s role and options in the region through its alliance with the

US. The goal is to improve Far East stabili-ty and security.

The New National Defense Program Guidelines, scheduled to be revised in 2018, will present a new concept for the defense of Japan.

Unfortunately, the security environment in East Asia is not peaceful. An issue causing great security anxiety is North Korea’s development of nuclear and missile capabilities. Although this has not escalat-ed to cause an urgent crisis, it is of growing concern.

China’s land-reclamation activities in the South China Sea are another difficult issue that most likely will stay unsolved in 2016. How China will respond — other than with

strong words — to the USS Lassen’s recent freedom of navigation operation near one of these “islands” is not clear yet.

Closer to home, we have concerns with Chinese challenges regarding the Senkaku Islands in the East China Sea.

China is very anxious about taking any action that would or might lead to a serious deterioration of relations with the US. De-spite tough talk, Beijing has tended to avoid direct conflict and preferred to respond indirectly. How, exactly, remains unclear, but it is worth looking at its island-building as a guide. After China declared a large air defense identification zone over the East China Sea in 2013, Washington sent a B-52 bomber through the “blind” part of the zone. Learning lessons from that case, China is building islands in the South China Sea on which to put radars and air defense missiles, an initiative that might be for a future ADIZ announcement in the South China Sea.

It is important that Tokyo, Washington and our allies coordinate and adjust day-to-day, as what China will do next is beyond our imagination. China is continually test-ing boundaries. In this escalating game, we must be vigilant.

An equally major concern is the slow-down of the global economy that will have serious implications for China and might still shake the global economy. The US Federal Reserve is going to raise interest rates in the near future and this will have some impact on China. The 1997 Asian fiscal crisis teaches an important lesson on how closely the economy and security are related.

To end on a positive note, I hope that 2016 will see the Trans-Pacific Partner-ship agreement become a reality, and a demonstration of American and Japanese leadership and cooperation.

By MASANORI NISHI, Japan’s former vice minister of defense

Japan, Allies Must Remain Vigilant in South China Sea

14


Russia is increasingly relying

on its strategic nuclear de-

terrent to counter the West-

ern military threat — which

makes any strengthening of

conventional forces in Eu-

rope pointless.

Russia entered 2015 burdened by a con-frontation with Ukraine and the Western countries, which had thrown their weight behind Kiev. Western hostility took the form of painful economic sanctions against Moscow. Nevertheless, the collapse of oil prices that began in the second half of 2014 proved a bigger challenge for the Russian economy by baring its deep-seated structur-al problems. As a result of the plummeting oil prices and sanctions, the Russian ruble lost almost half of its value in the winter of 2014-2015, and the country entered a period of economic depression.

A year on, it has become clear that the Russian economy has weathered these problems better than many had expected. The economic downturn has proved not too deep, and the economy has reached a degree of stability. A major financial and banking crisis has been averted. Parts of the Russian economy have even benefited from the currency devaluation and from the mutual trade restrictions introduced by Russia and the West, which have spurred import substitution and exports in some sectors.

Throughout 2015, one of President Vlad-imir Putin’s key priorities was to wipe the Ukrainian crisis off the board on relatively favorable terms in order to normalize relations with the West. In early 2015, the pro-Russian rebels in eastern Ukraine, sup-ported by a limited regular Russian force, inflicted painful blows on the Ukrainians at Donetsk Airport and the town of Debaltse-vo, forcing Kiev to sign the Second Minsk Accords in February. As a result, military tensions in the region subsided, and the situation remained relatively calm for most of the year.

Russia’s economic problems have proved quite manageable; they have had little effect on Russian military spending, which remained on target in 2015 and will face only minor nominal cuts in 2016. The coun-try’s ambitious armaments program has not faced any significant disruption. It has run into trouble in some individual sectors (especially shipbuilding) because imports of some types of engines and components from Ukraine and the Western countries have stopped, forcing Russian defense contractors to turn to domestic or Chinese suppliers. The Russian defense industry is still awash in cash from government con-

tracts, and Russian defense exports remain steadily high.

Meanwhile, Defense Minister Sergey Shoygu has been pressing ahead with large drills of the armed forces and sudden un-announced deployments to test readiness. He has also made efforts to increase the conventional forces’ numerical strength. The MoD has begun to deploy several new Army and Air Force units (especially in western Russia, as well as Crimea, which is being rapidly militarized). The government has also announced an ambitious program of doubling the size of the elite Airborne Troops (the VDV service). The Air Force has been restructured to become the Aero-space Forces. This was done to achieve greater integration among the Russian air strength, air defenses, missile defenses and space capabilities.

Russia has an unresolved and chronic problem with filling all the vacancies in its armed forces, so the deployment of new units represents a serious challenge.

At the same time, the anti-Russian ramping up of NATO’s military activity in Eastern Europe, which the NATO countries do not even trouble to disguise, has not led to any tangible changes in Russian military planning so far. This leads us to believe

By RUSLAN PUKHOV, director of the Center for Analysis of Strategies and Technologies, Moscow

Russia Must Walk a Fine Line With West Amid Crises

15


President Putin will face

a very serious problem of

keeping the military confron-

tation in the region with the

NATO countries from spiral-

ing even further, while also

preventing Russia from be-

coming deeply entangled in

the Syrian conflict.

that Moscow does not consider a major military confrontation with the West a real possibility. Russia is increasingly relying on its strategic nuclear deterrent to counter the Western military threat — which makes any strengthening of conventional forces in Europe pointless. In essence, Russia is tac-itly adopting a version of America’s massive retaliation doctrine of the 1950s and 1960s. That could potentially give the nuclear fac-tor an even greater role in Russian strategic planning.

The unprecedented Russian military operation in Syria launched in September should also be viewed in the context of President Putin’s efforts to achieve a broad settlement with the West. That operation is the first major Russian military interven-tion outside former Soviet territory in the post-Soviet period. The Russian cam-paign in Syria is accompanied by a major propaganda drive and a demonstration of Russia’s increased military and techno-logical prowess, such as ship-based and air-launched cruise missiles, high-precision bombs and UAVs.

It remains unclear, however, whether the

Russian intervention in Syria will bring the results Moscow is hoping for — such as stabilizing the Assad regime, weakening the Islamic State group and achieving at least a partial restoration of partnership with the West from a position of strength. So far, the Russian military campaign has failed to yield any significant military results — but it has further complicated Moscow’s relations with the United States and several regional players, especially Turkey.

The unprecedented downing of a Russian Su-24M bomber by Turkish fighter jets has brought relations between Russia and Tur-key to the brink of military confrontation. In 2016, President Putin will face a very serious problem of keeping the military confrontation in the region with the NATO countries from spiraling even further, while also preventing Russia from becoming deeply entangled in the Syrian conflict as a whole.

The complexity of the Syrian situation is compounded by the ever growing confron-tation with Ukraine. Kiev is openly sab-otaging the Minsk Accords and wants an escalation in the Donbass so as to attract

more international attention and sympathy, and thereby persuade the West to ramp up its pressure on Russia.

In 2016 Moscow will face the prospects of growing crises on two fronts at the same time. In both cases, the objective for President Putin will be to walk a fine line between protecting Russian interests and preventing an even greater confrontation with the West.

16


Destabilizing actions,

whether executed as part

of hybrid strategies or

conducted by terrorist

groups taking advantage

of weak states, are aimed

at the alliance as a whole.

A major shift has taken place in our geo-political and security environment. In and around the Euro-Atlantic area, the breadth of instability encountered today encom-passes a number of challenges whose level of complexity and simultaneity has not been seen since the end of the Cold War.

As threats and crises grow ever more interconnected, the traditional distinction between NATO’s Eastern and Southern flanks appears less relevant: destabilizing actions, whether executed as part of hybrid strategies or conducted by terrorist groups taking advantage of weak states, are aimed at the alliance as a whole.

Its ability to adapt and confront new geostrategic contexts has always been one of NATO’s greatest strengths. It has allowed our alliance to maintain its military and technological edge throughout its history, while responding to all kinds of challenges. One of NATO’s two strategic commands, Allied Command Transformation (ACT), leads the adaptation of the alliance by enhancing its military credibility in order to cope with current and future challenges.

A culminating demonstration of NATO’s level of ambition in joint modern warfare, this year’s Trident Juncture 2015 exercise involved 36,000 troops, 140 aircraft and 60 ships in Italy, Portugal and Spain. As the largest NATO exercise conducted in more than a decade, it proved to be a perfect example of interoperability amongst allied forces and a useful laboratory for the experimentation of new concepts and capabilities.

Next year’s summit in Warsaw will chart the course for the alliance’s adaptation to the new security environment. However, this is only a first step in improving NATO’s deterrence and defense posture to face 21st

century challenges.Such a posture will have to be credible

at both the military and political levels. At the military level, we must develop the right mix of conventional, nuclear and missile defense forces, with the appropriate level of readiness and the responsiveness required to rapidly deploy and sustain operations.

At the political level, our credibility will depend upon our ability to demonstrate our strength through a robust exercise program; a robust and innovative defense industry on both sides of the Atlantic; the

development of ambitious partnerships; and national and allied resilience.

These efforts must be underpinned by the clear political will to provide the appro-priate resources to sustain and continuous-ly enhance this posture over the long term.

Today’s unstable security environment, the rapid evolution of technological changes and the increased interconnec-tions between the civil and military worlds leave us no other choice but to reconsider our current way of thinking and how we conduct warfare. Only through perma-nent adaptation will our alliance be able to transform its forces and strengthen its posture, to give the nations the capacity needed to face and shape the future.

By GEN. DENIS MERCIER, NATO Supreme Allied Commander Transformation

NATO Must Adapt To Evolving Geostrategic Threats

17


Commitment to ANDSF Is WorkingNo insurgent group is

gaining or holding ground

in Afghanistan, and the

Taliban have failed to

achieve their strategic

objectives.

Over the last year, the government of Af-ghanistan experienced multiple transitions within itself, the coalition, enemy forces and the region. The National Unity Govern-ment formed after a prolonged election, allowing for a peaceful transfer of power from President Karzai to President Ghani. The government also proved to be a unique political arrangement in Afghanistan’s history, establishing a president and chief executive.

Resolute Support supplanted the Interna-tional Security Assistance Force mission, focusing on training, advising and assisting the Afghan National Defense and Security Forces (ANDSF). The influx of militants pushed into Afghanistan by successful Pakistani operations exacerbated an al-ready volatile insurgent environment. New alliances and fissures within the Taliban fol-lowing the July announcement of the death of Mullah Omar, a persistent al-Qaida, and the continued emergence of the Islamic State-Khorosan Province, or Daesh, also changed the landscape.

In the wake of the coalition’s drawdown, the ANDSF and insurgents both accept-ed that this year could be decisive. The fighting has been near continuous, casual-ties on both sides have risen, and violence has moved beyond traditional Taliban strongholds. Although the ANDSF experi-enced setbacks, such as in Kunduz in early October, they quickly regrouped and retook ground in a matter of days or weeks. No in-surgent group is gaining or holding ground in Afghanistan, and the Taliban have failed to achieve their strategic objectives.

The ANDSF have improved in many re-spects, but still require assistance in close-air support capabilities, logistics and force generation. They have initiated reforms to address corruption, promote human rights and gender equality, and for the first time are developing a comprehensive winter

campaign. In a greatly contested environ-ment, they have held firm, are motivated and demonstrate significant professional-ism.

President Obama’s decision to extend current force structure and basing through January 2017 has been well-received here. Operationally, the decision gave NATO the opportunity to display similar flexibility and resolve in maintaining our persistent regional presence. It is through this pres-ence that we will maintain our influence and continue building the ANDSF. Strate-gically, this decision provided the Afghans with a psychological boost and undermined the insurgencies’ narrative that they can, and are, driving us out. Our commitment shows that insurgents cannot win militarily,

and that the only end to this conflict will come from peace talks and reconciliation.

The Resolute Support Coalition has demonstrated more cohesion, resilience and effectiveness than any other of its size in recent history. The ANDSF understand the importance of 2016 and are dedicated to improving. We stand firm in support of them and the Afghan government, while seeking out those who wish harm on our homelands. I am confident we will prevail and remain optimistic about the future of Afghanistan. To see this mission through is the greatest legacy we can create in honor of our fallen and their families.

By GEN. JOHN F. CAMPBELL, commander of the Resolute Support Mission and US Forces–Afghanistan

18


By SEYED HOSSEIN MOUSAVIAN, research scholar at Princeton University and a former spokesman for Iran’s nuclear negotiators

On July 14, after 12 years of crisis and ne-gotiations, Iran and six major world powers agreed on the Joint Comprehensive Plan of Action (JCPOA), which marked a peaceful settlement of the Iranian nuclear dispute. The JCPOA is the most comprehensive agreement ever achieved on nonprolifera-tion; containing the most intrusive trans-parency and verification mechanisms ever implemented in the history of the nuclear nonproliferation treaty (NPT). It shuts down all possible “pathways” to a nuclear weapon and prevents any potential covert weapons programs as well. There is no doubt that this agreement represents the most important diplomatic and nonprolifer-ation achievement in several decades and that the global nonproliferation regime is stronger as a result of this deal.

However, this deal is only a step toward a goal that should be imperative: a Middle East without nuclear weapons. This is an idea which in fact was first advanced by Iran in 1974 as part of the country’s Middle East Nuclear Weapon-Free Zone initiative. The JCPOA is a template that could serve as a shortcut toward realizing a nuclear weapons-free Middle East. 2016 should be the year that the international community pushes for all states in the Middle East to help make this vision a reality by adopting provisions of the JCPOA. Furthermore, 2016 is an important year because of the 2016 Nuclear Security Summit, which is due to be held in Washington. The Obama administration can cement the achieve-ments of the JCPOA and strengthen nuclear policy mechanisms by inviting Iran to participate in this conference.

This past year also saw a breakthrough in the negotiations over the Syrian conflict, with the world powers finally accepting that without Iran, diplomacy could not succeed in resolving the conflict. The nu-clear deal certainly helped in this regard by

facilitating a shift in the US position with respect to Iran’s regional role.

The Vienna negotiations between global and regional powers in late October, which included Iran for the first time, led to all sides agreeing on nine principles to end the Syrian conflict. On Nov. 14, these same talks made unprecedented progress after it was announced an agreement was reached for there to be a transitional period in Syria and for new elections to be held within 18months. The positive implications of this development include the prospect for broader cooperation between Iran and world powers in 2016 on addressing the Syrian conflict and beyond, from drug trafficking, organized crime, the refugee crisis and the fight against the Islamic State group, or ISIS.

ISIS and similar terrorist groups will remain the world’s No. 1 security threat in 2016. There were 13,463 terror attacks across the globe in 2014, according to the

US State Department, with 1,122 each month and an average of 37 per day. In No-vember alone: A Russian passenger jet was blown up over Egypt, making it the biggest terrorist operation conducted abroad since 9/11; Beirut experienced its deadliest sui-cide bombing in 25 years; and terrorist at-tacks turned Paris into a bloodbath, killing 129 and making it the worst mass killing in Paris since the 1961 massacre of Algerian war protesters.

More disastrous terrorist attacks should be expected in 2016 if the overarching strat-egy of major world powers in fighting ISIS is not corrected. This will require a critical step be taken. The time has come for a “coalition of the coalitions,” meaning that the US-led coalition of countries launching airstrikes against ISIS should develop a coherent, comprehensive and cooperation strategy with the coalition comprised of Russia, Iran, Iraq, Syria and Hezbollah to effectively confront and destroy ISIS.

It is now clear for most in the United States and the West that their own allies such as Turkey and Saudi Arabia are the source for much of the support and even ideology of ISIS and groups like it. Iran, on the other hand, is a natural partner to fight such terrorist organizations. It is thus vital for the US/West to adopt a new strategy that aims to engage Iran in the fight with terrorism and push back on the support US allies have been giving terrorist groups. Furthermore, the West needs to convince its dysfunctional and unrepresen-tative allies in the Middle East to address the widespread vulnerability and poverty among their youth, which is one of the fun-damental roots of much of the chaos and extremism in the region.

‘Coalition of Coalitions’ Must Fight ISIS

19


In Syria, the international co-

alition against ISIL is expect-

ed to intensify its operations

in 2016. This will result in the

weakening of Daesh posi-

tions primarily in Syria but

will also strengthen the Syri-

an regime’s hold on power.

By MAHMOOD SHARIEF MAHMOOD, head of research and constancy, and adviser at the Institute for Near East and Gulf Military Analysis, Dubai

How a Coalition Ground, Air Campaign Could Mostly Defeat Daesh

The Arabian Gulf region is facing a num-ber of significant threats, led by the Iranian influence in its internal affairs. When the globally imposed sanctions on Iran are lifted, the Islamic Republic’s grip on Syria, Iraq and Lebanon will intensify in 2016.

However, Yemen will be the exception. Expectations are that the Iranian influence and support in the country will de-escalate due to the strong military engagement of the Saudi Arabia-led operations in which the UAE plays a primary role.

The Islamic Republic of Iran will have to assert its role as the main regional player. To do so it will have to pursue a balanced policy toward its Arab neighbors. On one side, it will have to deal with the contain-ment of its activities, and at the other side it will have to play as a positive influencer.

In 2016, the Saudi-led coalition will seal Yemen’s fate toward its own advantage. The victory will translate into a political settlement dictated by them. The indicators for a coalition victory are attributed to the fact that it now controls 70 percent of the Yemeni geopolitical map. Furthermore, the advancement made by UAE land forces — accompanied by the Sudanese Armed Forc-es — has resulted in the besiegement of the Houthi-controlled capital, Sanaa, from three directions: Ma’rib in the east, Taez in the south and Al Hudaiba in the west.

Militant groups sympathetic to Daesh [another name for the Islamic State group or ISIL] are hoping to fill vacuums left be-hind by the coalition in al-Qaida-controlled southern Yemen. However, serious joint Saudi and UAE nation-building initiatives are taking place to counter that.

In Syria, the international coalition

against ISIL is expected to intensify its operations in 2016. This will result in the weakening of Daesh positions primarily in Syria but will also strengthen the Syrian regime’s hold on power.

It’s highly unlikely that a credible, enduring substitute for the Syrian regime will emerge in 2016. The regime will be the dominant power next year, backed by the Russian force and Iranian determination reinforced by the lack of military and politi-cal support for the Free Syrian Army.

The fight against Daesh will evolve to include a high-intensity air campaign, Western special forces on the ground plus ground troops from states including

Jordan, Iran, Russia, Sudan and possibly Egypt. A coordinated group of international special forces composed mainly of Western troops will be deployed in northern and southern Syria. The operation will aim first at cutting all supply routes on the Turk-ish-Syrian border that are providing man-power, military supplies and ammunition as well as economic means to Daesh.

Ground forces from Jordan, Sudan, Egypt and some members of the Gulf Coopera-tion Council will be stationed in Jordan near southern Syria. Other ground forces comprising Russian and Iranian troops will be stationed in Latakia.

As the military, financial and manpow-er capability of Daesh is exhausted, the ground invasions will start. The invasion will start simultaneously from the south from Jordan, headed by the Arab coalition, and from the coastal areas, headed by Rus-sian and Iranian forces.

Such an operation will significantly reduce Daesh’s military and security threat, but it will not eliminate them. The most important gain won’t be on the military front but on the political front as Daesh’s political agenda of establishing an Islamic caliphate will end.

20


Tough Neighborhood, Modernization Needs Drive India

Three perennial problems beset Indian defense: relations with some immediate neighbors, especially Pakistan; human resource management; and armed forces modernization. Defense preparedness is largely contingent upon government adroit-ness inmanaging these challenges.

The 18 months since the National Demo-cratic Alliance’s spectacular rise to power have seen a fair amount of oscillation in how these critical determinants of defense preparedness are handled.

Inviting the heads of neighboring govern-ments to the new government’s swearing-in ceremony was a master stroke. It had the potential of generating a refreshing cordial-ity in relations with neighbors, particularly Pakistan.

Some of this advantage seems to have dissipated. Though some efforts are being made to arrest the drift, there is no denying that the relations between India and Paki-stan lately have been in a free fall. Some of the statements from the top leaders of Nepal are disconcerting. Except for the historic land swap agreement with Ban-gladesh, if there has been any qualitative improvement in India’s relations with other neighbors, it is not quite visible.

To say the least, India will need to recalibrate its regional policy to arrest fast-deteriorating relations with some neighbors, adjust to the new developments in countries like Myanmar and consolidate relations with Afghanistan.

Human resource management remains another area of concern. While there are no more unseemly confrontations such as when a former Army chief dragged the government to court, it would be naive to

By AMIT COWSHISH, Distinguished fellow with the Indian Institute for Defence Stud-ies and Analyses and a former Ministry of Defence financial adviser (acquisition)

believe that things are back on track.The Seventh Pay Commission was

expected to address the real, or perceived, grievances of the armed forces concerning remuneration and decline in status vis-à-vis the civilian bureaucracy, but that does not seem to have happened. The government will have to brace itself for a long haul as implementation of the pay commission rec-ommendations could open the proverbial Pandora’s box, not the least because of its financial implications.

Ex-servicemen, of course, continue to be agitated about the one-rank-one-pension (OROP) package announced by the govern-ment. There are reports of the OROP issue being taken to court. That may actually be a blessing in disguise since a court verdict could settle this emotional issue once and for all.

Larger issues of higher defense manage-ment remain unresolved. The question of creating a chief of Defence Staff or a per-manent chief of the chiefs of staff commit-tee — seen by many as a kind of a panacea for all ills besetting the system — continues to hang fire.

As for modernizing the armed forces, developments since last summer have not improved either the pace of equipment acquisition or the procedure for such acquisitions. The sobriety of this important issue has been engulfed by the rhetoric on “Make in India.” There is not much clarity on how this catchphrase is going to play out in defense.

The Defence Acquisition Council has given in-principle approval for defense acquisitions, probably adding up to US $40 billion. But such approvals have been given in the past; the real challenge is to make sure the process that follows goes smooth-ly and the contracts are signed in time.

The experts committee the Ministry of Defence set up to suggest ways to improve procurement policy and procedure submit-ted its report in July. While some incremen-tal changes have been made in the foreign direct investment and the offset policy, the much-awaited simplified procurement pro-cedure, including the new offset guidelines and how the development projects would be executed, is still awaited.

The pragmatism the government showed in scrapping the Medium Multirole Combat Aircraft (MMRCA) program negotiations, and instead starting the government-to-gov-ernment route for acquisition of a variety of equipment from other countries, is fading because of the time it is taking to sign the deals.

The government has its task cut out for the coming months.


21


Growing Threats Reorient Turkish Military, Industry By SITKI EGELI, defense and security analyst at Turkey’s Izmir University of Economics

The past year brought multiple, diverse security challenges for Turkish policy-makers. It opened with Turkey gradually becoming a primary target of Islamic State group (IS) suicide bombers. This included the bloodiest terrorist attack in Turkey’s history, when two IS human bombs ex-ploded themselves in Ankara and took the lives of more than 100 on Oct. 10.

What has been evident for security ana-lysts and international observers became a priority for the general public: Turkey’s porous border with Syria allowed for two-way movement of terrorist groups, some of which posed a direct danger for the country. Turkey’s recurring statements over the years to tighten and seal its borders to the south and east gained new momentum, and its patchy and piecemeal border security programs could finally be expected to make some true progress.

Another result of the IS bombings has been to push Turkey solidly toward the an-ti-IS coalition. Turkey had already allowed its Incirlik airbase to be used by the US for unarmed UAV and reconnaissance flights inside Syria. Throughout 2015, not only did those flights gradually expand to cover bombing raids conducted by an increasing number of US combat aircraft, but the Turkish Air Force has also joined in with airstrikes of its own against IS targets.

These threats and possible conflict with Russia will mean growing orders for domestic industry in certain critical fields. Apparently, the Turkish Air Force prefers precision-guided munitions for those air raids, signifying a dramatic increase in demand and orders for guided aircraft bombs and missiles, some of which have already begun arriving. Turkish industry has a number of local designs to satisfy

those requirements, but not all achieved high-volume serial production, therefore, the slack is certain to be taken up by inter-national suppliers.

Further complicating Turkish policy-makers’ task has been the breakdown of the fragile cease-fire with the Kurdistan Workers’ Party (PKK), an insurgent group that Turkey and the U.S. have listed as a terrorist group. From July onward, hundreds of soldiers and policemen lost their lives when ambushed by improvised bombs that were apparently placed by the PKK during the elusive cease-fire.

Rocket-propelled grenades and in a few instances anti-tank guided weapons have taken their toll on Turkish armored vehicles. In Turkey’s southeast, security forces rely heavily on their wheeled ar-mored vehicles for operations, but Turkish operators are learning first-hand that the protection provided by bare armor is not always sufficient.

High demand should be expected for technologies and add-on kits to improve vehicle survivability. Likewise, high-tech ISR assets and capabilities to identify and combat terrorist activity are certain to score high on the wish list of Turkish security forces.

The closing months of 2015 brought what could be viewed as the most dramat-ic turnabout in Turkey’s security environ-ment since the Cold War ended: confron-tation and real possibility of an armed conflict with Russia. The latter’s deploy-ment in September of combat aircraft in western Syria was followed by airstrikes on groups opposed to President Bashar al-Assad’s rule, some of which turned out to be the insurgents and opposition forces assisted, replenished and trained by Tur-key and its Western and Gulf allies.

The unease felt with the target set of

The closing months of 2015

brought what could be

viewed as the most dramatic

turnabout in Turkey’s security

environment since the Cold

War ended: confrontation and

real possibility of an armed

conflict with Russia.

22


After a 25-year lull, the

renewed prospects of a

conventional, old-style

military confrontation

with a major military

power like Russia will have

repercussions not only on

Turkey’s procurement plans

and priorities, but also on

her geostrategic positioning

and orientation.

Russian air raids was magnified by re-curring violations of Turkish airspace by Russian jets. The tragic outcome of this dangerous escalation was the shooting down of a Russian jet by Turkish fighters on Nov. 24. Russia’s very strong reaction was not confined to economic and politi-cal spheres, but also included deployment of some of its most sophisticated military assets inside Syria. Those included S-400 air defense systems whose range extend well into Turkish airspace, and some of Russia’s most capable surface combatants deployed directly across from Turkey’s southern shores.

After a 25-year lull, the renewed pros-pects of a conventional, old-style military confrontation with a major military power like Russia will have repercussions not only on Turkey’s procurement plans and priorities, but also on her geostrategic positioning and orientation.

An early victim was the famous (or

infamous?) T-LORAMIDS program aimed at acquiring a long-range air and missile defense system, whose tender two years ago favored a Chinese manufacturer, and this, at the expense of US, European and Russian contenders.

The US and NATO made no secrets of their unease with the decision and de-clared that they would not allow integra-tion of a non-Western system into NATO’s command-control and air/missile defense architecture.

Shortly after the dramatic downturn of relations with Moscow, Ankara canceled the tender and announced that systems in this category would be developed by Turkish industry, with assistance from foreign parties. Against the background of Turkey’s totally altered security circum-stances, those “foreign parties” are most unlikely to be Russian or Chinese.

Likewise, early rumors of a British con-tender as being selected as the technology

partner for Turkey’s F-X indigenous fighter aircraft could be seen as yet another sign of this new direction and orientation.

23

‘Specter of Sequestration ... Will Haunt Us’

As we enter 2016, my most significant concern remains eroding US military technological superiority, particularly in our ability to project power against a high-er-end potential adversary. This concern is becoming more widely understood and appreciated, and I am encouraged by the support that Secretary Ash Carter and Dep-uty Secretary Bob Work are providing and that the Congress is providing. Neverthe-less, I feel strongly that at current budget levels, especially research and development spending levels, the trends are still running in the wrong direction. I cannot make the point strongly enough that this is a real and present problem, not just something we may have to worry about in the future. We tend to cut research and development more or less proportionately along with other accounts, but R&D is a fixed cost; without adequate R&D we will deprive ourselves of future capabilities, in any quantity.

The budget situation has improved in the short term, and the relative stability we can look forward to in Fiscal Year ’16 and FY ’17 is highly welcome. The FY ’17 numbers are well below our planning assumptions, however, and will dictate some difficult choices and reductions that will fall disproportionately on our modern-ization accounts. The specter of seques-tration is alive and well, and will haunt us as we prepare the FY ’18 budget next year. One impact of the uncertainty is that it motivates the retention of force structure that may ultimately be unaffordable in a balanced defense portfolio, and it does so at the expense of modernization, creating a deficit for the future force.

The department’s efforts to improve ac-quisition performance will continue as we

By FRANK KENDALL, US undersecretary of defense for acquisition, logistics and technology

implement the various Better Buying Pow-er initiatives with a focus on innovation and technical excellence in BBP 3.0. There is strong, even compelling, evidence that the efforts of the last five years are paying off. Cost growth on our major program con-tracts for development and early produc-tion has been on a steep decline and is at a 35-year low — a testament to the success of Better Buying Power and to the terrific work by the department’s professional ac-quisition workforce and our industry part-ners. Notably this has been accomplished without a reduction in the profit margins

industry is experiencing. A number of metrics in the latest annual DoD Report on the Performance of the Defense Acquisition System confirm that we are headed in the right direction when it comes to controlling cost and schedule growth. Cycle times are also moving downward. There will not be a Better Buying Power 4.0 in 2016; we have plenty to do with the implementation of the initiatives we have in place. The data says we are on the right track; we need to continue our efforts while always looking for other opportunities to improve.

I’m positive about the progress we are achieving. We are becoming more efficient and productive, and with the resources we have, we are doing our best to get everything we can out of our technology investments and to identify and develop new sources of innovative militarily import-ant technology that we can bring into our weapons systems. At the end of the day, however, there is no acquisition magic that can make up for inadequate capital and inadequate investments in our new product pipeline. We must remove the threat of sequestration, which was always intended to be an unacceptable outcome. Seques-tration has an irrational impact on defense spending, which should be driven by a thoughtful consideration of the threats we face now and in the future. Those threats are growing, and we are not keeping pace.

There is no acquisition

magic that can make up for

inadequate capital and

inadequate investments in

our new product pipeline.


24

What’s Needed To Support Defense Tech Breakthroughs

We live in a world today of unparalleled opportunity — one where new technolo-gies and innovative ideas have the potential to change the way we live, work and even travel to other worlds. The aerospace and defense industry is leading the way as a ma-jor contributor to US innovation, economic growth and quality of life.

In today’s world of slow but steady economic recovery, coupled with an increasingly challenging global security en-vironment, our industry — with more than 604,000 talented men and women — is also responsible for driving security, stability and technological breakthroughs.

As CEO of Lockheed Martin, I continue to seek opportunities to apply our technology and expertise to the challenges that will define the 21st century. Launching satellites that will give cars the data they need to drive themselves, creating aircraft that can travel around the world faster than ever, using remotely controlled aircraft to fight forest fires, and even establishing a human presence on Mars — all of these innovative breakthroughs are made possible by the ingenuity of today’s aerospace and defense industry.

However, even a cursory reading of the news today, with escalating tensions throughout the world, from the streets of Paris to the international trade routes in the South China Sea, reinforces the need for sound, strategic and reliable investment in national security. With these challenges in mind, the Aerospace Industries Associ-ation (AIA) is focused on four key goals to help ensure the US remains the leader in aerospace and defense while delivering the

By MARILLYN A. HEWSON, Lockheed Martin chairman, president and CEO, and vice chairman and incoming chairman of the Aerospace Industries Association’s board of governors

technological and economic benefits of our industry.

First, we want to promote policies and budgets that strengthen our vital industry and grow the US economy. This means working to promote robust, balanced and stable US defense spending, something that has taken a significant step forward this year. While the recent budget agreement falls a bit short on overall funding levels, it is a welcome step in providing some budget stability and relief from sequestration for the next two years.

Second, we need to improve our indus-try’s infrastructure and find ways to retain and enhance our nation’s critical base of industry. On a global level, we will continue to advocate for interoperability, integration and synchronization — the ability to work

better together enhances performance and safety across the industry. This is critical to protecting lives — and our nation’s techno-logical edge at a time when adversaries are investing significantly to close that gap.

Third, we must achieve a level playing field for US industry in the global market-place. As an industry leader who spends significant time meeting with international customers, I continue to see impediments to US industry in the overseas markets. We must find ways to improve industry-govern-ment collaboration in support of aerospace and defense trade globally.

And fourth, we are committed to enhanc-ing the safety and security of the products our industry produces. AIA intends to work with the FAA to accelerate and streamline the FAA’s certification process for aviation products going to market and to shorten the review process. We will also continue to push for better coordination between relevant government agencies and AIA members — all with the goal of promoting a truly global commercial market.

By focusing on these priorities, we can keep our nation and its economy strong, while delivering the benefits of our innova-tive technologies to our customers around the world. And that’s just good business for everyone.

Even a cursory reading

of the news today, with

escalating tensions

throughout the world ...

reinforces the need for sound,

strategic and reliable invest-

ment in national security.


25


By JAN PIE, secretary-general of the AeroSpace and Defence Industries Association of Europe

2015 was not a good year for Europe-an defense. As the security environment around Europe has continued to deterio-rate, the EU has made very little progress to strengthen its Common Security and Defence Policy (CSDP). It is true that some member states have reversed the downward trend in defense spending; as to European cooperation, however, results have been poor.

This was particularly evident last June when European heads of state and govern-ment came together to assess progress and give further guidance on European defense. The comparison with the last EU defense summit in December 2013 is striking: Two years ago, the council conclusions on defense were six pages long and contained more than 30 initiatives; this year’s conclu-sions were one page long and contained a single concrete initiative — to finalize, by June 2016, a global security strategy.

“Defense matters” was the explicit theme of the European Council in December 2013. The implicit message of June 2015 was that defense is still not a priority.

Given the other crises Europe has had to face this year (the risk of Greek exit from the euro zone, refugees influx, terrorist at-tacks), it is understandable that European leaders consider defense less urgent. How-ever, if the political standstill continues at the European level, we will soon see the effects with further weakening of military capabilities and an eroding industrial and technological base.

Interestingly, after the June summit, defense has not actually disappeared from the discourse of Europe’s political leaders. In September, Federica Mogherini, the EU’s high representative for foreign affairs and

security policy, brought up the idea to com-plement the future global security strategy with a sub-strategy specifically on defense, which could take the form of a European defense white paper.

Some weeks later, the European Com-mission announced in its work program of 2016 a defense action plan to strengthen European defense markets and industries.

These announcements are welcome since they indicate an awareness of the need to act. Equally, however, they imply a risk since there is a tendency in Brussels and member states to consider declarations and documents as achievements. We have seen numerous action plans and road maps in recent years, but little determination and few attempts to fill them with substance and translate them into concrete action. Words are, indeed, important and can be

powerful, but only if they are followed up. 2016 will be another test case.

The only initiative on which we have seen tangible progress is the preparatory action (PA) on CSDP-related research. The PA is particularly important, since it will hopefully pave the way toward a full-fledged EU research program in the next multi-annual financial framework (MFF) for 2021-27. 2015 was the year of consulta-tion and stakeholder engagement (Group of Personalities, workshops, etc.). In 2016, things will become more formal with the establishment of governance structures and budgetary approval by the European Council and Parliament.

All this is important, but we must not forget that the PA is not an end in itself. In parallel with the implementation of the PA, we must reflect on the organization of the follow-on program in order to be ready to prepare the next MFF, which will start no later than 2017-18.

The biggest challenge in this respect will be to find a governance structure that ensures market uptake for EU-sponsored research via new cooperative procurement programs.

A global security strategy along with a possible defense white paper, a defense action plan and the PA will be the key ele-ments of the debate on European defense in 2016 and beyond. They are opportunities to make progress, provided they are not considered as an end in themselves. It is time to act, and the AeroSpace and Defence Industries Association of Europe is deter-mined to make this happen.

Time for Europe To Turn Words Into Actions

26


It’s far more likely that

pressure to engage with

commercial firms will further

increase in 2016-18. The

October budget deal ...

entails that DoD will likely

make cuts to its FY ’17

research, development,

test and evaluation budget.

Innovation emerged as the new defense mantra of 2015. The “Defense Innovation Initiative” was unveiled in late 2014 by then-US Defense Secretary Chuck Hagel, but then embraced and further promoted by Secretary Ash Carter’s 2015 visits to Sili-con Valley, the opening of the DIU(X) office in Mountain View, California, and his Force of the Future initiative. This has not just been a US trend. Innovation was addressed in the UK’s just-released Strategic Defense and Security Review. Last July, China held a “First Military and Civilian Industries In-tegration Expo” in Beijing, whose purpose was in part to open its defense market to more commercial enterprises.

Innovation emerged as a concept for de-fense establishments to change as a result of the twofold realization that US defense technology dominance is fast eroding and that commercial technology investment has far outstripped research and development budgets of the government and indepen-dent research and development conducted by the largest defense contractors.

An example of the later shift is that in 2014, Northrop Grumman spent $569 million in independent R&D on sales of just under $24 billion. In contrast, three public US cybersecurity companies — FireEye, Fortinet and Palo Alto Networks — in their latest fiscal years spent $512 million on re-search and development. Combined, these three companies reported sales of $2.2 billion — less than 10 percent of Northrop Grumman. Of course, independent R&D is only part of Northrop Grumman’s total R&D but the rest is provided by govern-ment contracts.

The signature effort of DoD’s outreach to commercial technology firms was the open-

ing of the DIU(X) office in Mountain View. This effort appears to have gotten off to a very slow start and has been met with a great deal of skepticism. Industry attitudes may well be that innovation and outreach to commercial sectors will be a passing fad that could evaporate with a new presiden-tial administration in 2017.

However, it’s far more likely that pres-sure to engage with commercial firms will further increase in 2016-18. The October budget deal Congress reached entails that DoD will likely make cuts to its FY ‘17 research, development, test and evaluation

budget. There is no sign that commercial firms are slowing their pace of investment in technologies that have military and security relevance. Global competitors are not evidencing slackened investment in weapons and capabilities that will further challenge US dominance.

For industry and government, multiple changes could emerge in 2016. For DoD, the Innovation Initiative needs to become an imperative. DIU(X) will need to be re-crafted and not viewed as an embassy in a foreign land. Giving it funding to invest will get more attention. Acquisition and profit policy needs to be agile to attract in-novation where it’s most needed, and DoD has to fund new programs so that industry has an incentive to invest. Heritage defense firms rightfully are stepping up to highlight they are innovative, too. However, they may need to more carefully assess where they are willing to invest and take risk and where they could face greater competitive pressure from new entrants with very dif-ferent business models.

By BYRON CALLAN, managing director of Capital Alpha Partners, a Washington-based strategic policy research firm

For Government and Industry, It’s All About Innovation

27

A Recipe for Prospering Within Better Buying Power 3.0

The U.S. Department of Defense (DoD) has been working to improve its pro-curement practices for over 40 years, undertaking more than 27 major studies. Nevertheless, procurement today still does not meet the DoD mandate to “do more without more.” But with defense spending at its lowest percentage of GDP in modern history, change finally seems inevitable. A critical driver for this is the DoD’s Better Buying Power (BBP) initiative, begun in 2010 and now in its third phase as BBP 3.0.

Clearly, such massive change creates challenges. First, both the DoD and private industry need to be open to changing a government-industry “relationship” steeped in decades of tradition. Second, a key goal of BBP is to reduce cost through “firm fixed price” rather than “cost-plus” contracts, meaning that development costs are now largely the responsibility of contractors rather than the government. Third, a key tenet of BBP 3.0 is the adoption of open systems architectures. This should drive wide-ranging benefits and create a competi-tive bidding environment unprecedented in defense procurement.

Mercury Systems is a strong supporter of BBP 3.0 including firm fixed-price contracts and open systems architectures, as these encourage manufacturers to function much like their commercial counterparts that either succeed or fail based on their ability to innovate. By the same token, it’s rea-sonable for defense suppliers to ask what they will get in return for shouldering the burden of development costs. The answer is that by providing the keys to reduced costs while simultaneously creating more viable products through innnovation, they will be rewarded with profitable long-term contracts.

Unfortunately, previous DoD directives focusing on adoption of open systems ar-chitectures have inadvertently discouraged investment in true open systems because of their heavy emphasis on cost reduction

By MARK ASLETT, President and CEO, Mercury Systems, Inc.

and fixed (or heavily constrained) profit margins. This has relegated the benefits of faster technology insertion enabled by proven “pre-integrated” technology solutions to secondary status, despite the resulting products being provided at a much higher level of technology readiness and lower cost.

Today, however, we see this perspective changing as the DoD is making modular, open systems architectures a critical technology requirement rather than solely a way to foster competition to reduce costs. We believe the result will be not only less costly systems, but faster tech-nology insertion, more successful platform development, and ultimately higher mission success rates.

To successfully address the challenges and mandates within BBP 3.0, Mercury

Systems has developed a unique next-gen-eration defense electronics business model. The first principle of the model requires commercial technology to be quickly and affordably adapted for use in the unique environment of defense applications -- not an easy task, but certainly achievable. The second principle centers on investing in more internal research and development to speed development of more advanced solutions. While this approach may seem ambitious in today’s tight economic envi-ronment, it results in innovative, modular systems that can be reconfigured and reused with little modification, rather than requiring lengthy and expensive redesigns. Savings accrue through the amortization of investment cost over many programs.

Finally, we create pre-integrated solu-tions based on modular building-block architectures so that customers can use open application programming interfaces to easily and quickly configure solutions to meet mission-specific requirements, reduc-ing cost and time to market.

More detailed information about Mer-cury’s next-generation business model is available their white paper entitled “Driving a Next Generation Business Model in De-fense Electronics” that can be downloaded at www.mrcy.com.

Both the DoD and

private industry need

to be open to changing a

government-industry

“relationship” steeped in

decades of tradition.

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