(Adds Panetta speech, quotes)
* Libya exposes shortcomings among Europeans
* U.S. defence budget under severe pressure
* NATO pushing allies to adopt "Smart Defence"
By David Brunnstrom
BRUSSELS, Oct 5 The United States warned its
NATO allies on Wednesday that sharp cuts in military spending on
both sides of the Atlantic risked "hollowing out" the alliance
in a way that could be devastating to U.S. and European
Ahead of his first meeting with NATO defense ministers, new
U.S. Defense Secretary Leon Panetta said NATO needed to learn
the "lessons of the past" and avoid weakening their militaries
by trying to maintain a force they can no longer afford.
The two-day NATO meeting comes as the 28-member alliance is
close to concluding an air-and-sea campaign in Libya that saw
Muammar Gaddafi overthrown without a single NATO casualty.
"After World War One, after World War Two, after Korea,
after Vietnam, after the fall of the Iron Curtain, we made the
mistake of hollowing out our forces. That cannot happen again,"
Panetta said in a speech to the Carnegie Europe think tank.
"Similarly, NATO nations need to send a strong signal of our
determination not to hollow out this alliance," he said. "We
need to use this moment to make the case for the need to invest
in this alliance to ensure it remains relevant to the security
challenges of the future."
NATO remains bogged down in a hugely expensive war in
Afghanistan, where 10 years of Western fighting has failed to
subdue a Taliban insurgency, and officials say the extra effort
in Libya has exposed limits that must be addressed.
In the lead-up to a NATO summit in Chicago in May, alliance
Secretary-General Anders Fogh Rasmussen wants members to
identify projects in which they can cooperate to make best use
of resources at a time of severe economic austerity.
"Improving our capabilities is not only necessary -- it is
vital," he told a briefing on Monday, adding that Libya and
Afghanistan had shown shortcomings among non-U.S. allies in key
areas such as unmanned surveillance drones, intelligence
gathering and air-to-air refuelling.
"We must spend on priorities and spend together, by
financing shared projects that make us all safer."
Rasmussen champions "Smart Defence," saying this does not
mean spending more, "but spending more effectively." However,
the bid to cut duplication and waste faces foot-dragging by
governments anxious to project domestic defence industries.
Pressure is growing now that the United States, which spends
far more on defence than its NATO allies combined, faces the
prospect of having to cut its spending by as much as $1 trillion
over 10 years.
So far, U.S. President Barack Obama and Congress have
approved $350 billion in cuts to national security spending. If
a Congressional "super committee" fails to reach a deficit deal
by the year-end, automatic across-the-board cuts could take
another $600 billion from that budget.
This has raised questions about the future of expensive
cooperative projects, such as a U.S.-led missile defence
initiative, and some in the U.S. Congress have argued for
further cuts in the 79,000 U.S. military personnel in Europe.
Panetta underscored the fact that U.S. defence cuts are
coming, saying the Pentagon faced "cuts in defence that would be
devastating to our national security and to yours as well".
A senior NATO diplomat said the "time in which Europe could
rely on the United States to do everything; that era, if it ever
existed, now is clearly coming to a close.
"That is why it's so important that we begin a serious
discussion about how we can meet our core requirements and field
the capabilities we need by working more together. The United
States is not going to be filling the gaps forever."
Among the joint NATO projects the United States is
particularly keen to see progress this week is Alliance Ground
Surveillance, a system that will employ drones to provide a
picture of ground conditions from high altitude.
The project, to which 13 countries have committed, would be
based around the Global Hawk RQ-4B drone produced by U.S. firm
Northrop Grumman . However it has been under discussion
for a decade and NATO states have yet to agree how to jointly
fund its operation, maintenance and support.
(Editing by Myra MacDonald/Maria Golovnina)
(Reporting By David Brunnstrom)