NDVA Committee Report

CHAPTER 2: THE LIMITS OF CURRENT POLICY

A.     1994 Defence White Paper

The 1994 Defence White Paper is still official government policy. However, we have heard calls, some from officialdom, to the effect that it is time to revisit some of its assumptions. Our Committee would certainly welcome such an initiative and do all it could to ensure its success. The ’94 White Paper was itself the government response to a report of the Special Joint Committee on Canada’s Defence Policy (1994). The Special Joint Committee’s review was one of three broad policy reviews carried out in the wake of the 1993 Liberal election victory — the others being foreign and social policy.

The Committee’s report — entitled Security in a Changing World — was wide ranging though hardly iconoclastic. It did little to bruise departmental dogma, but did call for an increase of 3,500 in Regular Land Force personnel levels. This was largely in recognition of the increased peacekeeping duties faced by the Canadian Forces. Although the report called for a 25% reduction of resources dedicated to fighter aircraft and recognized the need for “fiscal responsibility,” it also argued for the need to maintain a combat-capable multi-purpose armed forces. It further concluded that the CF needed an increased capability in air and sea transport to support increased activity by Canadian troops abroad. Finally, the Committee also recommended that headquarters units be reduced by one-third and the number of headquarters personnel by 50%.

In the White Paper, the government made a commitment to increase the army’s field force by 3,000, but these were not to be new personnel. As well, the overall force was to be reduced to 60,000. The Special Joint Committee had declared that 66,700 was “…the minimum capability required for Canadian Forces to play a meaningful role at home and abroad.” With the 3,500 it called for in addition to the Land Forces, this meant that the Committee considered an appropriate personnel level to be approximately 70,000.

The White Paper reduced spending on the fighter force by 25% and cut back the resources committed to headquarters functions by one-third. From a military perspective, this meant that the CF would be expected to contribute the following in multinational deployments either through NATO, the United Nations (UN) or a coalition of like-minded states:

B.     Critics

The 1994 White Paper was generally regarded as a “measured,” though somewhat status quo, response to the changing strategic environment of the time. Reductions were inevitable and Canada was not the only country downsizing. However, many argued that Canada had reaped its peace dividend long before the end of the Cold War.

The government had barely brought its new policy into being when questions began to be asked as to whether even its minimalist commitment could be sustained. Could such a small budget sustain a modern multi-purpose combat force — one equipped and trained to be able to “fight alongside the best against the best?”

It wasn’t long before a growing consensus began to emerge to the effect that the Canadian Forces could no longer sustain themselves and their missions without a significant infusion of funds. Between 1993 and 1998, the defence budget fell by 23% and the Department’s real purchasing power fell by more than 30%. In 1998, the Auditor General (AG) argued that an additional $5-6 billion was required in the capital account over the next five to ten years to replace worn-out equipment. In 2000, the AG pegged the annual deficit for the DND Operations and Maintenance account at $750 million. In 2001 the AG revised this shortfall upward to $1.3 billion.

The increase is consistent with the findings of recent studies done by the Conference of Defence Associations (CDA), including Caught in the Middle: An Assessment of the Operational Readiness of the Canadian Forces. During the period 1999 to 2006 the government will have increased DND funding by $5.1 billion. However, only $750 million of that total will comprise an increase to the budget base, and is therefore far short of alleviating the Capital and Operations and Maintenance shortfalls. CDA studies also show that between $2 to $3 billion of the DND annual budget of some $12 billion is not available for expenditure on military capabilities, being committed instead to objectives such as provincial disaster relief, pension contributions, transfer payments, employment insurance and so on. This “flow through” money adds nothing to our military capabilities and overstates what is in fact a very limited budget.

The Council for Canadian Security in the 21st Century also raised concerns over funding shortages and “rust out.” In its 2001 report entitled To Secure a Nation, the Council recommended increasing the defence budget as quickly as possible. This year, the Standing Senate Committee on National Security and Defence tabled its report, Canadian Security and Military Preparedness, in which it called for an immediate injection of $4 billion into the defence budget.

Those who had taken the time to examine the state of the Canadian Forces invariably came to the same conclusions:

We are now in a situation where we will either have to increase funding or significantly restructure the CF. Or, we may simply decide to limit future commitments. However, limiting commitments for the sake of cost savings may not be that easy. Given our preference for multilateralism, the current focus on Africa, and our alliance responsibilities, the CF will, in all likelihood, be called upon to do more rather than less. The general principles underlying the White Paper are, we believe, still sound. The 1994 policy statement identifies three broad tasks for the CF:

These are not only reasonable tasks; they are essential ones. What will change from time to time is the emphasis we place on each. We have an obvious hierarchy of taskings. What will prove increasingly important in relation to the first two will be the dictates of homeland defence. At the same time, our contributions to international security are proving far more onerous than when the White Paper was written. The choices we make in regard to these tasks will have a necessary bearing on our force structure.

As a nation, we can choose the amount of effort and money we are willing to contribute to our foreign security involvement, but we cannot choose the kind of foreign security environment that we operate within. Few would agree that the world is safer now than it was ten years ago. This environment is becoming more complex and will, in all likelihood, demand much of the CF: perhaps more than it is presently capable of delivering. The CF is a small force, and so we must ensure that we have a force structure that yields high strategic leverage. Our tradition has always been to fight alongside allies and this will not likely change. At the same time, it is also important that Canada’s forces make a military difference when deployed and that they be widely recognized as doing so.

To be a meaningful participant requires a balanced, well-equipped combat capable force — one that can deploy rapidly and that is interoperable with its major allies. As a Committee, we are convinced and cannot emphasize strongly enough that we are not spending sufficient funds to ensure this commitment. The Canadian Forces need stability and predictability in their funding. We therefore recommend that:

RECOMMENDATION 1

The government increase the annual base budget for the Department of National Defence to between 1.5% to 1.6% of GDP, with the increase to be phased in over the next three years, and continue to move towards the NATO average.

Such levels should ensure that the Canadian Forces can recoup and confidently plan for the future. While our GDP may fluctuate somewhat, such a funding guarantee would nonetheless make predictability in planning far easier than what it has been to date.

As well, when looking at average percentage of GDP expenditures, we find that the bottom one-third of NATO countries spends an average 1.3% of GDP. The top two‑thirds spends an average 2.6% of GDP. We believe it is reasonable to assume that Canadians take little pride in our languishing in the bottom third. Canada today spends 1.1% of its GDP on defence. At the same time, we should also point out that we agree with statements made by the Minister of National Defence, Art Eggleton, that we get much in return for that investment. Canadians probably get more for outlays in defence dollars than any other NATO country; this largely due to the experience and dedication of our military personnel.

While the foregoing would allow DND to plan for the long term, there is still the problem of “catch up.” We therefore recommend that:

RECOMMENDATION 2

In order for DND to be able to purchase necessary capital equipment, in a timely fashion, the annual shortfalls identified by the Auditor General, be made up as quickly as possible.

We might also note that, while we found the report of the Standing Senate Committee on National Security and Defence, to be insightful and extremely useful, we would hesitate to argue on behalf of an immediate injection of $4 billion to the defence budget. We are not convinced that the Department of National Defence could effectively absorb such a large and immediate increase.

C.     The Link Between Foreign and Defence Policy

Serious errors in defence policy can take many years to correct and to suddenly throw huge sums of money at defence, in the absence of a foreign policy and defence review, could prove somewhat premature, if not irresponsible. When it comes to defence planning, it is always wise to hasten cautiously. Foreign and defence policy, while necessarily linked, are very different in nature. Foreign policy guides the external affairs of the state and, because it is by nature a “higher or first order” activity provides guidance to a host of policy instruments. Defence policy is, by its very nature, largely guided by foreign policy — defence policy is “declaratory.”

A further point to bear in mind, and one often forgotten, is that foreign policy can quite easily be changed, whether by way of substance or emphasis. Such may be the consequence of a new minister, a new government, a shift in national interest, or domestic demand. However, to carry out a radical change with regard to our air or maritime forces would take several years, especially if it required the acquisition of new equipment. Thus, any serious mistake in defence policy will not be easily fixed.

Foreign policy has a variety of instruments at its disposal, and one of these is the CF. When called upon, the Canadian Forces help promote foreign policy goals and the national interest by influencing the behaviour of others in ways favoured by Canada. They help provide for the extension and expression of Canadian values abroad.

Thus, our force structure must take the nature and scope of foreign policy objectives very much into account. And, foreign policy planners, when contemplating change, should look over their shoulders to make sure that the military is capable of, and equipped for, the tasks at hand.

An ambitious and active foreign policy will require an appropriate military as one of its instruments. And if there is one thing our Committee has learned over the years, it is that we cannot afford to sacrifice the men and women of our armed forces on the altar of overly ambitious foreign policy goals or ventures. When foreign policy commitments outstrip our military capabilities, the consequences could prove disastrous.

A defence review needs to be pursued judiciously. Today, it is much more difficult to make defence policy than it was in 1994 and, therefore, much easier to get it wrong. A proper review will be one that is transparent, wide ranging and one that gives access to public opinion and concern. It should also be based on a clear understanding of foreign policy objectives on whose behalf the CF is to act as instrument. We therefore recommend that:

RECOMMENDATION 3

Any future defence review have significant parliamentary and public input.

As already noted, a defence review need not be an act of transcendence. While basic questions need to be addressed, a review may emerge as little more than a guidance check; an attempt to provide assurance that we are still on the “right track.” However, the alternative to a review — the continuance of reactive incremental decision making — means that the larger questions remain unanswered and the institution continues to founder. Once institutional direction is lost, individual units begin to loose their sense of purpose and finally, individuals begin to ask themselves “why it is that they are doing what they are.” In the end, the CF cannot provide its own justification.

Governments seek stability in policy, especially when confronted with a rapidly changing environment. A defence review should therefore not be undertaken in the absence of a settled foreign policy. There must be a coherence between foreign and defence policy. A poor understanding of what is happening in the international environment, and of the implications thereof, will likely generate an ill-advised defence policy. But, when all is said and done, the direction that defence policy should take will ultimately be a political decision.

D.     Intelligence

One of the most important tools in meeting the challenges of asymmetric threats is sound and timely intelligence. Such knowledge can help one to neutralize threats before they materialize thereby saving countless lives. Several of our witnesses argued that it might be appropriate for Canada to establish its own foreign intelligence gathering agency or, at least, to significantly increase its current abilities to assess intelligence.¹¹

When considering an enhanced intelligence capacity, it is important to note that expanding such capabilities only to collect more data would prove futile. What is required, along with intelligence gathering, is “…a very robust and high quality analysis and assessment office or bureau.”¹² In the end, it is the soundness of the analysis that will persuade the user — or so one hopes. Without analysis, the information gathered is little more than “white noise.”¹³

An intelligence product is one that uses open source data (press releases, newspapers, the Internet, technical publications, etc.) as well as covert sources and satellite imagery, signal analysis and more. While recognizing the importance of good intelligence, we might also ask why we need to enhance our capabilities when we already enjoy extensive intelligence sharing arrangements with the United States and other allies. Anthony Forster offers the following for consideration:

However, before the government can reform the intelligence community, it needs to carefully examine its foreign policy goals and defence concerns. The conclusions reached will go a long way to establishing priorities for whatever agency or aggregation of agencies comes first.¹⁵ In light of this, the recent caution by the Deputy Prime Minister, John Manley, that the creation of a new agency is not something to be rushed into and that “…it is one of those deeper issues which requires a lot more careful thought and consideration,” is well taken.¹⁶

The purpose of a foreign intelligence gathering and assessment capability is to provide accurate, timely, and impartial all-source intelligence products to assist the Cabinet and the Prime Minister in the formulation of national and international policy. Canada already does some foreign intelligence gathering. The Communications and Security Establishment (CSE), the Canadian Security and Intelligence Service (CSIS) as well as the Department of Foreign Affairs and International Trade (DFAIT) and Military Intelligence all perform this function to varying degrees.

When considering intelligence gathering, it is always important to bear in mind the distinction between “security intelligence” and “foreign intelligence.” The Canadian Security Intelligence Service Act defines security intelligence as “threats to the security of Canada”. As defined in the Act, these threats include:

While the Canadian Security and Intelligence Service (CSIS) is allowed to collect security intelligence both in Canada and abroad, the information collected must be directly related to these threats.

Foreign intelligence is different from security intelligence in that it is concerned with information about the intentions and activities of foreign governments and individuals or other non-state actors. The information sought may relate to a host of factors. These may be economic, military, criminal, technological, or political. In the final analysis, foreign intelligence would encompass anything the Canadian government deemed to be in the national interest.

As already noted, CSE and CSIS already do a degree of foreign intelligence gathering. CSE, through its electronic eavesdropping operations may target individuals or delegations possessing economic or political information that would fall outside of CSIS’s security intelligence mandate. CSIS, for its part, may collect intelligence from friendly security agencies, with which it has exchange agreements, or from human sources. However, both CSE and CSIS can only target foreign individuals or entities to collect foreign intelligence.

There are those who argue that we can glean enough information from “open sources” to satisfy our foreign intelligence needs. Indeed, the vast majority of information and data used by government decision makers comes from open sources. Intelligence may be a small value added in terms of percentage. However, it can prove of critical importance when it comes to either confirming or rejecting analyses based solely on open sources. Clandestine intelligence, due to its sensitivity and timeliness, can be of inestimable value. Clandestine and open source intelligence should then best be viewed as complementary.

In today’s increasingly open and complex global environment, governments require sound intelligence. It would be folly to assume that open source information could provide all that is required for informed decision making. Canadian military deployments to conflict zones overseas require effective national intelligence. In both Somalia in 1993 and Zaire in 1996, effective pre-deployment intelligence information was likely inadequate. This, of course, makes us ask, “why is Canada the only G-8 country without a foreign intelligence agency?”

Our role as international peacekeeper/peacemaker, our struggle against international crime and terrorism, and our desire for an independent foreign policy ― one representing Canadian national interests ― all tend to suggest the need for a Canadian foreign intelligence agency. Independent decision making requires an independent base for judgement; this cannot be assured if the preponderance of our foreign intelligence is provided by others, even though they may be our closest allies. Our closest military allies are also our strongest economic competitors. Economic intelligence is increasingly important and here, the lack of a foreign intelligence agency definitely leaves us at a disadvantage.

If we are to improve our foreign intelligence gathering capabilities, we might then wish to consider the establishment of a Foreign Intelligence Agency (FIA). In 1981, the Macdonald Royal Commission on the activities of the RCMP security services suggested that such an agency be created. However, because the matter was not within the Commission’s mandate, no formal recommendation was made.

The Commission had concluded that the lack of a FIA placed Canada in a position of considerable dependence on its allies. At the same time, it was also argued that the dual responsibilities of security intelligence and foreign intelligence should not be placed within the same agency. Whereas a security intelligence agency must adhere to the rule of law, a foreign intelligence agency requires a degree of flexibility.  Getting sound intelligence on matters such as terrorism, economic issues, the proliferation of weapons of mass destruction, illegal immigration, etc. requires a combination of signals (SIGINT) intelligence and human intelligence (HUMINT) ― intelligence on the ground. An objective source of the latter can only be guaranteed through our own international intelligence agency.

If we continue primarily to rely on CSE and CSIS for our intelligence gathering, then our ability to respond to new threats, and to protect our vital national interests, will remain limited. Governments confronted with international security issues, and whose economies are based primarily on trade, need an independent foreign intelligence capability. Our ability to gather foreign intelligence needs to be expanded to deal with these matters. The importance of sound intelligence cannot be overestimated. In the wake of September 11th we heard how the tragedy might have been avoided had it not been for a failure of intelligence ― a failure of intelligence on the ground.

While we did not set foreign intelligence gathering as a major focus of our study, we did hear enough, in the way of evidence, to have us conclude that it is increasingly important. As a sovereign nation we must have an independent basis for foreign intelligence assessment. Cooperation with our allies is essential and productive, but we would be foolhardy to assume that our allies always view events through the same lens we do or that their national interests are always in harmony with ours.

Given the realities of the post-Cold War strategic environment, and the need for Canada to have an independent foreign intelligence gathering capability, we recommend that:

RECOMMENDATION 4

The government review the existing security and intelligence structure with a view to determining whether or not open source and foreign intelligence are being effectively coordinated and to determine whether or not an independent foreign intelligence agency should be established in order to ensure that Canada’s vital national interests are being served.