BRUSSELS U.S. Defense Secretary Leon Panetta warned NATO allies on Wednesday that spending cuts on both sides of the Atlantic risked weakening the alliance's military capability in a way that could be devastating to U.S. and European security.
In Brussels for his first meeting with NATO defense ministers, Panetta pointed to this year's war in Libya as an example of NATO's vital role in responding to global military crises.
The 28-member alliance is close to concluding an air-and-sea campaign in Libya that saw Muammar Gaddafi overthrown without a NATO casualty.
However, 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.
"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 before meeting his NATO counterparts.
"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 Secretary-General Anders Fogh Rasmussen called on NATO ministers to identify ahead of an alliance summit in Chicago in May projects in which they can cooperate to make best use of resources at a time of economic austerity.
"To remain indispensable, we need to respond quickly and effectively to new challenges. And we need have access to the full range of capabilities," he told ministers.
Rasmussen said Libya had shown shortcomings among non-U.S. allies in areas such as unmanned surveillance drones, intelligence gathering and air-to-air refueling.
"It is vital that the capacity of this type are available more broadly within our alliance. And in times of austerity, it is necessary that we get a better return for the money we spend on defense," he said.
Rasmussen says his vision of "Smart Defense" means "spending more effectively." However, the bid to cut duplication and waste faces foot-dragging by governments anxious to protect domestic defense industries.
German Defence Minister Thomas de Maiziere said NATO had to deal with the fact it was facing new security challenges at a time when defense budgets were stagnant or shrinking.
"It won't be possible for us to compensate for what the Americans can no longer afford for our security," he said. "We have to concentrate on what is really necessary.
"The challenge, as difficult as it may sound, is to become smaller but more effective. It's also about a new form of burden sharing, but not by pushing forward and backward between the U.S. and Europe, but by joint projects."
The United States, which spends far more on defense 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 some expensive existing cooperative projects, such as a U.S.-led missile defense initiative based in Europe. Some in the U.S. Congress want more cuts in the 79,000 U.S. military personnel in Europe.
Panetta said the cuts could be "devastating to our national security and to yours as well."
A senior NATO diplomat warned this week that 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."
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 Janet Lawrence)