13 Defense Policy Strategies for Serious Games

National Security as a Serious Game

Game theory provides an interesting way of thinking about defense policy. Defense policies of major world powers are interdependent. Each nation must adjust its own defense policies to reflect not only its own national objectives but also its expectations of what other powers may do. Outcomes depend on the combination of choices made in world capitals. Moreover, it is not unreasonable to assume that nations strive for rationality in defense policymaking. Nations choose defense strategies (policies) that are designed to achieve an optimum payoff even after considering all their opponents’ possible strategies. Thus, national defense policy-making conforms to basic game theory notions. Our use of game theory is limited, however, to suggesting interesting questions, posing dilemmas, and providing a vocabulary for dealing with policymaking in a competitive, interdependent world.

A rational approach to the formulation of defense policy begins with a careful assessment of the range of threats to the nation and its interests. Once major threats have been identified, the next step is to develop strategies designed to counter them and protect the nation’s interests. Once strategies have been devised, defense policymaking must determine the appropriate forces (military units, personnel, weapons, training, readiness, and so forth) required to implement them. Finally, budgets must be calculated to finance the required force levels. Thus, a rational game plan proceeds from

Threat Assessments

to

Strategies

to

Force Levels

to

Budget Requests

Of course, differences and uncertainties arise at each step in this process—differing assessments of the nature and magnitude of the threats facing the nation, the right strategies to confront these threats, the force levels necessary to implement the strategies, and the funds required to provide these forces.

Confronting Nuclear Threats

For more than four decades, following the end of World War II in 1945, the United States and the former Union of Soviet Socialist Republics (USSR) confronted each other in a superpower struggle as intense as any in the history of nations. Indeed, nuclear weaponry made the Cold War more dangerous than any national confrontation in the past. The nuclear arsenals of the United States and the former USSR threatened a human holocaust. Yet paradoxically, the very destructiveness of nuclear weapons caused leaders on both sides to exercise extreme caution in their relations with each other. Scores of wars, large and small, were fought by different nations during the Cold War years, yet American and Soviet troops never engaged in direct combat against each other.

Deterrence.

To maintain nuclear peace, the United States relied primarily on the policy of deterrence. Deterrence is based on the notion that a nation can dissuade a rational enemy from attacking by maintaining the capacity to destroy the enemy’s society even after the nation has suffered a well-executed surprise attack by the enemy. It assumes that the worst may happen—a surprise first strike against our own nuclear forces. It emphasizes second-strike capability—the ability of a nation’s forces to survive a surprise attack by the enemy and then to inflict an unacceptable level of destruction on the enemy’s homeland in retaliation. Deterrence is really a psychological defense against attack; no effective physical defenses against a ballistic missile attack exist even today. The strategy of deterrence maintains peace through fear of retaliation.

Strategic Weapons.

To implement the deterrence strategy, the United States relied on a TRIAD of weapons systems: (1) land-based intercontinental ballistic missiles (ICBMs), (2) submarine-launched ballistic missiles (SLBMs), and (3) manned bombers. Each “leg” of the TRIAD was supposed to be an independent, survivable, second-strike force. Thus, each leg posed separate and unique problems for an enemy who sought to destroy the U.S. second-strike deterrent.

Arms Control Games

The United States and the Soviet Union engaged in negotiations over strategic arms for many years. They began in 1970 under President Richard Nixon and his national security advisor, Henry Kissinger, and were originally labeled the Strategic Arms Limitation Talks (SALT).

SALT I.

SALT I, in 1972, was a milestone in that it marked the first effort by the super-powers to limit strategic nuclear weapons. It consisted of a formal treaty halting further development of antiballistic missile systems (ABMs) and an executive agreement placing numerical limits on offensive missiles. The ABM treaty reflected the theory that the populations of each nation should remain un defended from a ballistic missile attack in order to hold them hostage against a first strike by either nation. This MAD theory (mutual assured destruction) was based on the idea that no rational government would order an attack on another nuclear superpower knowing that its own population would be wiped out in a retaliatory attack.

SALT II.

After seven more years of difficult negotiations, the United States and the Soviet Union signed the lengthy and complicated SALT II Treaty in 1979. It set an overall limit on “strategic nuclear launch vehicles”—ICBMs, SLBMs, and bombers with cruise missiles—at 2,250 for each side. It also limited the number of missiles that could have multiple warheads (MIRVs). When the Soviet Union invaded Afghanistan, President Carter withdrew the SALT II Treaty from Senate consideration. However, Carter, and later President Reagan, announced that the United States would abide by the provisions of the unratified SALT II treaty as long as the USSR did so too.

START.

In negotiations with the Soviets, the Reagan administration established three central principles of arms control—reductions, equality, and verification. The new goal was to be reductions in missiles and warheads, not merely limitations on future numbers and types of weapons, as in previous SALT negotiations. To symbolize this new direction, President Reagan renamed the negotiations the Strategic Arms Reductions Talks, or START.

START.

The long-awaited agreement on long-range strategic nuclear weapons was finally signed in Moscow in 1991 by Presidents George H. W. Bush and Mikhail Gorbachev. The START I Treaty reduced the total number of deployed strategic nuclear delivery systems (ICBMs, SLBMs, and manned bombers) to no more than 1,600, a 30 percent reduction from the SALT II level. The total number of strategic nuclear warheads were reduced to no more than 6,000, a reduction of nearly 50 percent. Verification included on-site and short-notice inspections, as well as “national technical means” (satellite surveillance).

START II.

The end of the Cold War was confirmed by the far-reaching START II agreement between President George H. W. Bush and Russian President Boris Yeltsin. This agreement promised to eliminate the threat of a first-strike nuclear attack by either side. Its most important provision called for the elimination of all multiwarhead (MIRV) land-based missiles. It also called for the reduction of overall strategic warheads to 3,500, slashing the nuclear arsenals of both nations by more than two-thirds from Cold War levels (see Figure 13–1).

The Treaty of Moscow.

Strategic nuclear arms reductions progressed further with the Treaty of Moscow, signed by Russian President Vladimir Putin and U.S. President George W. Bush in 2002. This treaty calls for an overall limit of nuclear warheads at 1,700–2,200 by 2012. Each side may determine for itself the composition and structure of its strategic forces consistent with this limit. The provisions of the START treaties remain unchanged. The effect of the Moscow Treaty, together with earlier reductions in nuclear weapons under the START treaties, will be to reduce the nuclear arsenals of the former adversaries by over 80 percent from Cold War levels (see Figure 13–1).

FIGURE 13–1 Strategic Nuclear Arms Reductions

.

Post–Cold War treaties between United States and Russia have dramatically reduced the number of nuclear warheads held by both nations.

Nuclear Testing and Nonproliferation.

The United States and the former Soviet Union reached an agreement in 1963—the Limited Test Ban Treaty—that prohibited nuclear testing in the atmosphere, under water, or in outer space. The effect was to allow only underground testing, which was believed to reduce radioactivity in the atmosphere. A Threshold Test Ban Treaty was signed in 1974 that prohibited tests of nuclear weapons with explosive power greater than 150 kilotons (equivalent to 150,000 tons of conventional explosives).

In 1992 the Russian government under President Yeltsin announced that it would discontinue all nuclear testing if the United States would do the same. President George H. W. Bush declined to make this pledge, but later President Bill Clinton placed a moratorium on U.S. nuclear testing. In 1996, President Clinton signed a Comprehensive Test Ban Treaty, a multilateral agreement that prohibits all nuclear testing. Many nonnuclear-armed nations signed this treaty. But in 1999 the U.S. Senate voted against ratification. Opponents of the treaty noted that testing verified the safety and reliability of weapons, and that several other potentially threatening nuclear nations had refused to sign the treaty, including North Korea, Iran, India, and Pakistan. Russia announced that it was awaiting U.S. ratification before signing the treaty, and China continued testing nuclear weapons.

Yet another multilateral treaty, the nuclear Nonproliferation Treaty, was signed by the United States and the former Soviet Union in 1968. It prohibits nuclear-armed nations from transferring weapons and technologies to nonnuclear nations. Nonnuclear signing nations pledged not to “receive, manufacture, or otherwise acquire nuclear weapons.” But the Nonproliferation Treaty has been largely ignored, not only by nations that went on to acquire nuclear weapons (including India, Pakistan, China, and North Korea), but also by nations that have transferred nuclear technology to nonnuclear nations (including France and Russia).

Missile Defenses: The Limits of Deterrence

For over a half-century, since the terrible nuclear blasts of Hiroshima and Nagasaki in Japan in 1945, the world has avoided nuclear war. Peace has been maintained by deterrence—by the threat of devastating nuclear attacks that would be launched in retaliation to an enemy first strike. Nuclear peace has depended on rational leaders who would not endanger their own populations.

Nondeterrable Threats.

But even as the threat of a large-scale nuclear attack recedes, the threats arising from “nondeterrable” sources are increasing. Today, the principal nondeterrable nuclear threats are estimated to be (1) missiles launched by a terrorist nation, or a “rogue” nation whose leaders are prepared to sacrifice their own people to a retaliatory strike, and (2) missile launches by terrorist groups who have acquired nuclear weapons and the means of delivering them. Global nuclear and ballistic missile proliferation steadily increases over time the likelihood of these types of threats. Attacks by rogue nations and terrorist groups are considered nondeterrable because the threat of nuclear retaliation is largely meaningless.

“Star Wars.”

In 1993 President Ronald Reagan urged that instead of deterring war through fear of retaliation, the United States should seek a technological defense against nuclear missiles.

Our nuclear retaliating forces have deterred war for forty years. The fact is, however, that we have no defense against ballistic missile attack…. In the event that deterrence failed, a president’s only recourse would be to surrender or to retaliate. Nuclear retaliation, whether massive or limited, would result in the loss of millions of lives….1

Reagan’s Strategic Defense Initiative (SDI) was a research program designed to explore means of destroying enemy nuclear missiles in space before they could reach their targets. Following President Reagan’s initial announcement of SDI in March 1983, the press quickly labeled the effort “Star Wars.” In theory, a ballistic missile defense (BMD) system could be based in space, orbiting over enemy missile-launching sites. Should an enemy missile get through the space-based defense, a ground-based BMD system would attempt to intercept warheads as they reentered the atmosphere and approached their targets. SDI included research on laser beams, satellite surveillance, computerized battle-management systems, and “smart” and “brilliant” weapons systems. SDI under President Reagan was a very ambitious program with the goal of creating an “impenetrable shield” that would protect not only the population of the United States but the populations of our allies as well.

Protecting against Nuclear Terrorism.

The end of the Cold War refocused missile defense research away from a massive Russian missile attack to much more limited yet more likely threats. Today the principal nuclear threats are missiles launched by terrorist groups or a “rogue state.” President George W. Bush notified the Russians in 2002 that the United States was withdrawing from provisions of the SALT I Treaty of 1972 that prohibited the development, testing, or deployment of new ballistic missile defense systems.

Advanced testing has met with both successes and failures. Intercepting an incoming missile has been compared to “hitting a bullet with a bullet.” Even this daunting challenge is further complicated by the likelihood of enemy decoys masking the real warhead; a reliable ballistic missile defense must be able to discriminate between decoys and actual warheads. In early 2008 the U.S. Navy successfully intercepted and destroyed a falling reconnaissance satellite with a sea-based anti-ballstic missile.

The actual deployment of a limited number of ground-based and sea-based missile interceptors began in 2004. This initial missile defense capability is designed “to meet the near-term threat to our homeland, our deployed forces, and our friends and allies.”2 It is directed at potential attacks from terrorist states. Currently the U.S. has BMDs based in Alaska, presumably to defend against missiles from North Korea.

President George W. Bush proposed to deploy BMD sites in Poland and the Czech Republic in order to defend Europe against missiles from Iran. But Russia vigorously opposed such a deployment. In 2009 President Barack Obama canceled this deployment, hoping that in exchange Russian President Dimitry Medvedev would help in preventing Iran from acquiring nuclear weapons.

NATO and European Security

The preservation of democracy in Western Europe was the centerpiece of U.S. foreign and military policy for most of the twentieth century. The United States fought in two world wars to preserve democracy in Europe.

Origins of NATO.

In response to aggressive Soviet moves in Europe after World War II, the United States, Canada, Belgium, Britain, Denmark, France, Iceland, Italy, Luxembourg, the Netherlands, Norway, and Portugal joined in the North Atlantic Treaty Organization (NATO). Each nation pledged that “an armed attack against one … shall be considered an attack against them all.” Greece and Turkey joined in 1952 and West Germany in 1955. To give this pledge credibility, a joint NATO military command was established with a U.S. commanding officer (the first was General of the Army Dwight D. Eisenhower). After the formation of NATO, the Soviets made no further advances in Western Europe. The Soviets themselves, in response to NATO, drew up a comparable treaty among their own Eastern European satellite nations—the Warsaw Pact. It included Poland, Hungary, Czechoslovakia, Romania, Bulgaria, and the German Democratic Republic (the former East Germany).

Collapse of Communism in Eastern Europe.

The dramatic collapse of the communist governments of Eastern Europe in 1989—Poland, Hungary, Romania, Bulgaria, and East Germany—vastly reduced the threat of a military attack on Western Europe. The dismantling of communist governments came about as a direct result of President Mikhail Gorbachev’s decision to renounce the use of Soviet military force to keep them in power. For over forty years, the communist governments of Eastern Europe were supported by Soviet tanks; bloody Soviet military operations put down civilian uprisings in Hungary in 1956 and Czechoslovakia in 1968. The threat of Soviet military intervention crushed the Solidarity movement in Poland in 1981, yet that same movement became the government of Poland in 1989. Any effort today by a Russian leader to reimpose control over Eastern European nations would probably result in widespread bloodshed.

Germany United.

The collapse of the Berlin Wall in 1989 and the formal unification of Germany in 1990 rearranged the balance of military power in central Europe. Today Germany is the strongest military power in Western Europe. It remains a member of NATO.

Collapse of the Warsaw Pact and the USSR.

The Warsaw Pact collapsed following the ouster of communist governments in the Eastern European nations and was officially dissolved in 1991. Its former members requested the withdrawal of Russian troops from their territory; the Russian government complied, although withdrawals were slowed by economic conditions in that nation.

At the same time strong independence movements emerged in the republics of the USSR. Lithuania, Estonia, and Latvia—Baltic Sea nations that had been forcibly incorporated into the Soviet Union in 1939—led the way to independence in 1991. Soon all fifteen republics declared their independence, and the Union of Soviet Socialist Republics officially ceased to exist after December 31, 1991. Russian President Boris Yeltsin took over the offices of former Soviet Union President Mikhail Gorbachev. The red flag with its banner and sickle atop the Kremlin was replaced by the flag of the Russian Republic.

NATO and Western Europe.

If Russia, Ukraine, and the other republics of the former Soviet Union make a full transition to democracy and capitalism, the twenty-first century promises much more peace and prosperity for the peoples of the world than the twentieth century. The residual threat to Western Europe posed by Russian forces, even under a hostile regime, is very weak. However, the total withdrawal of U.S. military forces from Western Europe would probably mean an end to the NATO alliance. Proponents of a continued U.S. military presence in Europe argue that it provides reassurance and stability as democracy emerges in Eastern Europe; they note that both our old allies and new friends in Europe have urged the United States to remain involved in European security. Opponents counter that the Western European nations are now quite capable of shouldering the burden of their own security.

NATO Expansion.

Despite Russian objections, NATO extended its membership eastward in 1997 by admitting Poland, Hungary, and the Czech Republic. Proponents of NATO expansion argued successfully that a historic opportunity existed to solidify freedom and democracy in Eastern Europe by admitting those nations to NATO. Russia was reassured that it would be “consulted” on NATO policies, but was given no veto powers over these policies or no guarantee that other Eastern European nations might also be admitted to NATO in the future. Indeed, in 2003 NATO admitted seven former Communist countries of Eastern Europe—Estonia, Latvia, and Lithuania, together with Bulgaria, Romania, Slovakia, and Slovenia. NATO now includes a total of 26 nations (see Figure 13–2).

NATO and Ethnic Conflicts in the Balkans.

Traditionally, NATO forces were never deployed outside of Western Europe. Yet ethnic wars in the former communist nation of Yugoslavia, and the media coverage of the hardships endured by the people there, inspired NATO to intervene and deploy troops to Bosnia in 1995 to halt conflict raging among Serbs, Croats, and Muslims. The United States provided about one-third of the ground troops deployed in Bosnia as “peacekeepers.” Yet some argued that U.S. national security interests were not at stake in southeastern European ethnic conflicts and therefore American troops should not be exposed to the dangers of intervention.

FIGURE 13–2 NATO Nations of Europe

NATO was originally created to protect the nations of Western Europe from Soviet expansion; the collapse of the Soviet Union in 1991 has led to the expansion of NATO into Eastern European nations formerly dominated by the old Soviet Union.

*NATO members United States and Canada not shown.

NATO again acted militarily to halt ethnic conflict in Kosovo in 1999. NATO’s objective was to force Serbian troop withdrawal from the largely Muslim province. NATO relied exclusively on bombing from the air to force the Serbian withdrawal. Despite some controversy, even among NATO nations, as well as denunciations from Russia and China, NATO aircraft and missiles hit targets in both Kosovo and Serbia itself. (Even the Chinese embassy in the Serbian capital of Belgrade was bombed, apparently by mistake.) Eventually, Serbian troops were withdrawn from Kosovo.

NATO in Afghanistan.

The United States turned over command of its military forces in Afghanistan to NATO in 2003. NATO created an International Security Assistance Force, officially under UN auspices, “to assist the Islamic Republic of Afghanistan in creating a stable and secure environment for the people of Afghanistan.” Some thirty-seven nations contribute troops to this Force, but the U.S. contributes the largest number. To date NATO forces have failed to capture Osama bin Laden and failed to eliminate Taliban forces from Afghan mountainous regions along the Pakistan border. (See “Using Military Forces: Afghanistan,” page 302.)

When to Use Military Force?

All modern presidents have acknowledged that the most agonizing decisions they have made were to send U.S. military forces into combat. These decisions cost lives. The American people are willing to send their sons and daughters into danger—and even to see some of them wounded or killed—but only if a president convinces them that the outcome “is worth dying for.” A president must be able to explain why they lost their lives and to justify their sacrifice.

To Protect Vital Interests.

The U.S. military learned many bitter lessons in its long, bloody experience in Vietnam. Secretary of State Colin Powell was among the younger officers who served in Vietnam. Later General Powell became national security adviser to President Ronald Reagan and then chief of staff during the Gulf War under President George H. W. Bush; still later he would serve as secretary of state under President George W. Bush. The lessons of Vietnam were summarized by the “Powell Doctrine”:4

• The United States should commit its military forces only in support of vital national interests.

• If military forces are committed, they must have clearly defined military objectives—the destruction of enemy forces and/or the capture of enemy-held territory.

• Any commitment of U.S. forces must be of sufficient strength to ensure overwhelming and decisive victory with the fewest possible casualties.

• Before committing U.S. military forces, there must be some reasonable assurances that the effort has the support of the American people and their representatives in Congress.

• The commitment of U.S. military forces should be a last resort, after political, economic, and diplomatic efforts have proven ineffective.

These guidelines for the use of military force are widely supported within the U.S. military itself. Contrary to Hollywood stereotypes, military leaders are extremely reluctant to go to war when no vital interest of the United States is at stake, where there are no clear-cut military objectives, without the support of Congress or the American people, or without sufficient force to achieve speedy and decisive victory with minimal casualties. They are wary of seeing their troops placed in danger merely to advance diplomatic goals, or to engage in “peacekeeping,” to “stabilize governments,” or to “build democracy.” They are reluctant to undertake humanitarian missions while being shot at. They do not like to risk their soldiers’ lives under “rules of engagement” that limit their ability to defend themselves.

In Support of Important Political Objectives.

In contrast to military leaders, political leaders and diplomats often reflect the view that “war is a continuation of politics by other means”—a view commonly attributed to nineteenth-century German theorist of war Carl von Clausewitz. Military force may be used to protect interests that are important but not necessarily vital. Otherwise, the United States would be rendered largely impotent in world affairs. A diplomat’s ability to achieve a satisfactory result often depends on the expressed or implied threat of military force. The distinguished international political theorist Hans Morganthau wrote: “Since military strength is the obvious measure of a nation’s power, its demonstration serves to impress others with that nation’s power.”5

Currently American military forces must be prepared to carry out a variety of missions in addition to the conduct of conventional war:

• Demonstrating U.S. resolve in crisis situations

• Demonstrating U.S. support for democratic governments

• Protecting U.S. citizens living abroad

• Striking at terrorist targets to deter or retaliate

• Peacemaking among warring factions or nations

• Peacekeeping where hostile factions or nations have accepted a peace agreement

• Providing humanitarian aid often under warlike conditions

• Assisting in international efforts to halt drug trafficking

In pursuit of such objectives, recent U.S. presidents have sent troops to Lebanon in 1982 to stabilize the government (Reagan), to Grenada in 1983 to rescue American medical students and restore democratic government (Reagan), to Panama in 1989 to oust drug-trafficking General Manuel Antonio Noriega from power and to protect U.S. citizens (Bush), to Somalia in 1992–1993 to provide emergency humanitarian aid (Bush and Clinton), to Haiti in 1994 to restore constitutional government (Clinton), and to Bosnia in 1995 for peacekeeping among warring ethnic factions and to force Serbian withdrawal from Kosovo in 1999 (Clinton) (see Table 13–1).

Proponents of these more flexible uses of U.S. military forces deny any intent to be the “world’s policeman.” Rather, they argue that each situation must be judged independently on its own merits—weighing the importance of U.S. goals against expected costs. No military operation is without risk, but some risks may be worth taking to advance important political interests even though these interests may not be deemed “vital” to the United States. The media, particularly television, play an influential role in pressuring the president to use military force. Pictures of torture and killing, starvation and death, and devastation and destruction from around the world provide a powerful emotional stimulus to U.S. military intervention. Generally a president can count on an initial “rally’ round the flag” surge in popular support for a military action, despite overall poor public knowledge of international politics. But if casualties mount during an operation, if no victory or end appears in sight, then press coverage of body bags coming home, military funeral services, and bereaved families create pressure on a president to end U.S. involvement. Unless the U.S. military can produce speedy and decisive results with few casualties, public support for military intervention wavers and critical voices in Congress arise.

TABLE 13–1 Major Deployments of U.S. Military Forces since World War II Every president since World War II has found it necessary to deploy U.S. troops abroad.

In Support of the War on Terrorism.

The War on Terrorism creates new conditions for the use of military force.6 Currently U.S. forces are prepared for:

• Direct attacks against terrorist forces to capture or kill them. These operations are usually carried out by highly trained Special Operations Forces.

• Attacks on nations that harbor terrorists, allow terrorists to maintain bases, or supply and equip terrorist organizations. In 1986, the United States struck at Libya in a limited air attack in response to various Libyan-supported acts of terrorism around the world. In 1993, the United States struck Iraq’s intelligence center in Baghdad in response to a foiled plot to assassinate former President George H. W. Bush. In 2001, the United States relied principally on Special Forces working in conjunction with tribal forces in Afghanistan to attack Al Qaeda terrorists and to topple the Taliban government that had harbored and supported Al Qaeda (see below).

• Preemptive attacks on regimes that threaten to use weapons of mass destruction—chemical, biological, or nuclear weapons—against the United States or its allies, or to supply terrorist organizations with these weapons. Preemptive military action represents a reversal of traditional U.S. policy. Historically, the United States acted militarily only in response to a direct attack on its own forces or those of its allies. But it is argued that the terrorist attacks of 9/11 initiated the current War on Terrorism and that American military actions in the Middle East, including those in Afghanistan and Iraq, are related to the 9/11 attacks on America. The argument for preemptive military action was summarized by President Bush’s National Security Adviser Condoleezza Rice: “We cannot wait until the smoking gun becomes a mushroom cloud.”

Threats, Strategies, and Forces

Overall, military force levels in the United States should be threat-driven, that is, determined by the size and nature of the perceived threats to national security. It is true that particular weapons systems or base openings or closings may be driven by political forces such as the influence of defense contractors in Congress or the power of a member of Congress from a district heavily affected by defense spending. And not everyone in the White House and Congress, or even the Defense Department, agrees on the precise nature of the threats confronting the United States now or in the future. Yet defense policy planning and the “sizing” of U.S. military forces should begin with an assessment of the threats confronting the nation.

The End of the Cold War.

The end of the Cold War rationalized deep cuts in military forces and defense budgets in the 1990s. Active duty military personnel declined from 2.1 million to 1.4 million. The Army was reduced to ten active combat divisions and the Air Force to twelve fighter wings (a U.S. Army division includes 15,000 to 18,000 troops; and a Air Force fighter wing includes approximately 70 combat aircraft). The Navy was reduced to twelve and later eleven carrier battle groups (a carrier battle group typically includes one aircraft carrier with sixty-five to seventy-five aircraft, plus defending cruisers, destroyers, frigates, attack submarines, and support ships). The Marine Corps retain all three of its Marine expeditionary forces (each MEF includes one Marine division, one Marine air wing, and supporting services) (see Table 13–2). National Guard and Reserve forces were assigned a larger and more active role. There are an additional 1.2 million persons in the Army, Navy, Air Force, and Marine reserve forces. Military deployments in Iraq and Afghanistan required many of these reserve units to be called to active duty.

The Army continues to maintain the equivalent of ten active duty divisions. However, the Army has been reorganized into thirty-eight Brigade Combat Team (BCTs). Each BCT includes about 3,500 soldiers; BCTs may be armored (tanks), mechanized infantry, airborne (paratroopers), air assault (helicopter borne), or Stryker (combined arms). The Air Force has been reorganized into ten Aerospace Expeditionary Forces (AEFs). Each AEF combines bomber, fighter, attack, refueling, and reconnaissance aircraft.

Confronting Regional Threats.

Following the Gulf War in 1991, U.S. military planning focused on the possibility of two regional aggressors attacking at the same time. If U.S. troops were heavily engaged in one regional conflict similar to the Gulf War, defense strategists worried about a second aggressor taking advantage of the U.S. military commitment to launch its own military action elsewhere against the United States or its allies or interests. The most common scenario for simultaneous regional threats was a heavy U.S. military involvement in the Middle East, and the possibility that an Asian regional power would be tempted to take advantage of that commitment to launch its own aggression (for example North Korea against South Korea, China against Taiwan). While officially recognizing the “Two Major Theaters of War” threat as late as 2002, the U.S. never possessed the forces to prevail in major conflicts in the Middle East and Asia simultaneously. Current force levels make it unlikely that the U.S. could do more than “hold” in one conflict while pursuing victory in another, and then later shifting forces to the second conflict. The United States is most deficient in airlift and sealift forces—the cargo, supply, and weapons and troop-carrying capability required to move combat forces around the world.

Table 13–2 Military Force Level Military force levels declined rapidly after the end of the Cold War, igniting criticism that American troops are spread “too thin.”

SOURCE: Office of the Secretary of Defense.

Note: BCT 5 Brigade Combat Team; AEF 5 Aerospace Expeditionary Forces.

Fighting Terrorism.

Confronting terrorism brought a new emphasis in defense policy on nonconventional forces and tactics. Special Operations Forces played a central role in ousting the Taliban regime from Afghanistan. Special Operations Forces on the ground, together with manned and unmanned surveillance aircraft in the skies, provided the targeting intelligence for U.S. air attacks from carriers in the Arabian Sea, attack aircraft based in the Middle East, and even long-range bombers based in the continental United States. These attacks allowed Afghan forces opposed to the regime to capture the capital, Kabul, two months after the initiation of Operation Enduring Freedom.

Asymmetrical Warfare of the Future.

Traditionally the U.S. structured its military tactics and forces to confront conventional threats—national armies with heavy armor, tanks and artillery, mechanized infantry, and combat aircraft. During the Cold War, U.S. forces were designed to confront heavy Soviet armor and artillery in Central Europe, in a manner similar, albeit more violent, to the armies that fought in World War II. The Gulf War in 1991 demonstrated the superiority of American forces in large-scale conventional operations.

The war on terror requires the U.S. to reshape its military planning to confront unconventional (or asymmetrical) wars—lightly armed irregular enemy forces engaging in tactics such as ambushes, hidden explosives, suicide bombings, and hostage takings. America’s enemies are fully aware of the overwhelming firepower of conventional U.S. military forces. Consequently they seek to minimize U.S. advantage in firepower in a variety of ways. They choose terrain that inhibits the use of conventional tank artillery and air power—jungles and mountains where these conventional forces cannot operate as effectively as in open country. They also choose built-up urban areas where civilian populations inhibit U.S. forces from employing their full firepower. They avoid direct confrontations with large American units, blending in with the population and seeming to disappear in the presence of U.S. combat forces.

Asymmetrical warfare is the approach of a weaker foe trying to overcome the advantages of a force that is superior in conventional forms of warfare. Traditionally, the U.S. Army preferred that its opponents face it and massed formations on conventional battlefields where overwhelming American power could be brought to bear to destroy the opponent. But an inferior opponent would be foolhardy to cooperate in its own destruction by fighting the war that Americans prefer to fight. Guerrilla warfare, which United States encountered in Vietnam, is one form of asymmetrical warfare. Terrorism is another, which includes consciously targeting civilians.

“In the future the United States is likely to confront a new and radically different form of warfare:

“in the future there will be no distinctions between civilians and military forces in terms of targeting: society is the battlefield in the new environment. There will be an absence of definable battlefields or fronts, and the places where fighting occurs will be disbursed and undefined: everywhere and nowhere is the front lines…. The goal will not be traditional military defeat but instead the internal political collapse of the opponent and its will to continue. The manipulation of the media will be a skill that is highly sought by practitioners [of this kind of warfare], and the targets of much of this activity will be popular support for the government or whatever force against which the campaign is waged.”6

Counterinsurgency Emphasis.

Secretary of Defense Robert Gates expressed his belief that “asymmetric warfare will remain the mainstay of the contemporary battlefield for some time.” The experiences in Afghanistan and Iraq are currently shaping U.S. military planning. Among the current developments:

• Expansion of the size of the Army and Marine Corp in recognition of the need for more “boots on the ground.”

• Transformation of a division-based Army into one organized in Brigade Combat Teams.

• Heavier reliance on Army Reserve and National Guard units. (Some of these units were called for multiple tours of duty in Afghanistan and Iraq.)

• Introduction of new equipment, including mine resistant and ambush protection vehicles (MAPVs) and unmanned aerial vehicles (UAVs), capable of both reconnaissance and attack missions.

• Overhaul of the counterinsurgency doctrine to shift operations away from “enemy-centric” armed conflict toward a “population-centric” approach emphasizing political goals and the importance of social and cultural factors in military operations.

While many military leaders agree with the new emphasis on asymmetrical threats, others argue that the true lesson of Afghanistan and Iraq is that U.S. forces should avoid protracted commitments to “peacekeeping” and “nationbuilding” and instead undertake only those military operations that promise rapid, decisive results.

Peacekeeping.

U.S. military forces are currently deployed in more than 120 countries around the world. The largest deployments are in Iraq, South Korea, and Afghanistan, but large numbers of U.S. forces are deployed in Qatar, Bahrain, Saudi Arabia, Kuwait, Bosnia, Kosovo, Philippines, Japan, Cuba (Guantanamo), Colombia, Honduras, and the NATO countries, including Great Britain, Germany, Italy, Ireland, and Turkey.

Traditionally U.S. military forces were trained for combat, not “peacekeeping.” Currently, however, the U.S. military is tailoring more of its training, doctrine, and equipment to its peacekeeping missions. This means increasing the numbers of military police, civil affairs units, local force trainers, and humanitarian relief supply units.

Stretched Too Thin?

Over the past decade, U.S. military forces have been assigned increasing numbers of war-fighting and peacekeeping missions. Yet force levels have remained minimal.

Experience has taught the U.S. military that casualties can be kept low only when overwhelming military force is employed quickly and decisively. Lives are lost when minimal forces are sent into combat, when they have inadequate air combat support, or when they are extended over too broad a front. Current numbers of Army and Air Force combat units and the limited transport and support services available to the military are inadequate for two major regional conflicts. Potential regional foes—for example, Iran and North Korea—deploy modern heavy armor and artillery forces. Commitments of U.S. troops to peacekeeping and humanitarian missions divert resources, training, and morale away from war-fighting. Morale is also affected when U.S. military forces are deployed abroad for long periods of time; this is especially true for National Guard and Reserve troops.

Using Military Force: The Gulf War

Saddam Hussein’s invasion of Kuwait in August, 1990, was apparently designed to restore his military prestige after a long and indecisive war against Iran; to secure additional oil revenues to finance the continued buildup of Iraqi military power; and to intimidate (and perhaps invade) Saudi Arabia and the Gulf states, thereby securing control over a major share of the world’s oil reserves. Early in the crisis President George H. W. Bush committed U.S. forces to the Gulf region for the military defense of Saudi Arabia. The president described the early U.S. military deployment as “defensive.” But he soon became convinced that neither diplomacy, UN resolutions, nor an economic blockade would dislodge Saddam from Kuwait. He ordered his military commanders to prepare an “offensive” plan that would force the withdrawal of Iraqi forces from Kuwait.

The top military commanders—including the Chairman of the Joint Chiefs of Staff, General Colin Powell, and the commander in the field, General Norman Schwarzkopf—were reluctant to go into battle without the full support of the American people. If ordered to fight, they wanted to employ overwhelming and decisive military force; they wanted to avoid gradual escalation, protracted conflict, target limitations, and political interference in the conduct of the war. Accordingly, they presented the president with a plan that called for a very large military buildup. More than 500,000 U.S. military personnel were sent to the Gulf region.

In November 1990, Secretary of State James Baker won the support of the UN Security Council for a resolution authorizing the “use of all necessary means” against Iraq to force its withdrawal from Kuwait. Following a lengthy debate in Congress, in January 1991, President Bush won a similar resolution in the House (250–183) and in the Senate (52–47). President Bush succeeded in putting together a large coalition of nations in support of military action. The British and French sent significant ground combat units, and smaller units from Gulf Arab states also participated.

From Baghdad, CNN reporters were startled on the night of January 16, 1991, when Operation Desert Storm began with an air attack on key installations in the city. After five weeks of air war, intelligence estimated that nearly half of Iraq’s tanks and artillery had been destroyed, that demoralized troops were hiding in deep shelters, and that the battlefield had been isolated and prepared for ground operations. On the night of February 24, the ground attack began. Marines breached ditches and minefields and raced directly to the Kuwait airport. Army helicopter assaults lunged deep into Iraq; armored columns raced northward across the desert to outflank Iraqi forces and attack them from the West; and a surge in air attacks kept Iraqi forces holed up in their bunkers. Iraqi troops surrendered in droves, highways from Kuwait City became a massive junkyard of Iraqi vehicles, and Iraqi forces that tried to fight were quickly destroyed. After one hundred hours of ground fighting, President Bush ordered a cease-fire.

The United States had achieved a decisive military victory quickly and with remarkably few casualties. The president resisted calls to expand the original objectives of the war and to go on to capture Baghdad or to kill Saddam, although it was expected that his defeat would lead to his ouster. President Bush chose to declare victory and celebrate the return of American troops. But the results of the war were mixed. In retrospect, the president’s decision to end the war after only one hundred hours of ground operations appears to have been premature. With his surviving forces, Saddam maintained his cruel grip on the country and proceeded to attack his regime’s opponents brutally, even using chemical weapons against the Kurdish minority in northern Iraq. Tens of thousands of Iraqis were killed in Saddam’s retribution following the departure of American troops.

Using Military Force: Iraq

At the end of the Gulf War in 1991, the Iraqi regime of Saddam Hussein agreed to destroy all of its chemical and biological weapons and to end its efforts to acquire nuclear weapons. United Nations inspectors were to verify Iraqi compliance with these conditions. But Saddam’s regime refused to cooperate: in 1998 he ordered the inspectors out of the country. Over a twelve-year period Iraq violated at least a dozen UN resolutions. Following a U.S. military buildup in the region in late 2002, Saddam allowed UN inspectors to return but continued to obstruct their work. On March 19, 2003, after giving Saddam a forty-eight-hour warning to leave Iraq, the United States and Great Britain launched air strikes designed to eliminate Saddam and his top command.

Operation Iraqi Freedom.

At different times President George W. Bush stated the purposes of Operation Iraqi Freedom as (1) the elimination of Iraq’s weapons of mass destruction, (2) a “regime change” for Iraq to end the threat that Saddam posed for his neighbors and to free the Iraqi people from his oppressive rule, and (3) to ensure that Saddam would not harbor or assist terrorist organizations. But President Bush and Secretary of State Colin Powell failed to secure UN Security Council approval for military action. Among the permanent members of the Security Council, only the British, with the strong support of Prime Minister Tony Blair, were prepared to offer significant military support for the war against Saddam. Public opinion in America supported military action, but public opinion in Europe opposed it. France and Germany led the diplomatic opposition; Turkey refused to let U.S. troops use its territory to attack Iraq; and the U.S. was obliged to rely primarily on Kuwait, Qatar, and the other smaller Gulf states for regional support.

The U.S. military wanted to wage war in the fashion of the successful Gulf War—a period of heavy air bombardment to “prepare the battlefield,” followed by a massive ground attack using overwhelming military force. But Secretary of Defense Donald Rumsfeld wanted a “leaner” fighting force in Iraq. He deployed fewer than half of the air, ground, and naval forces that had been used in the Gulf War. And he began the air and ground attacks simultaneously.

American and British soldiers and Marines took just twenty-one days to sweep the 350 miles from the Kuwait border to downtown Baghdad. The British 3rd Armored Division with Australian support captured the port city of Basra; the U.S. 3rd Infantry Division moved up the west side of the Euphrates River; and the U.S. 1st Marine Division moved up the east side. Special Operations Forces together with elements of the 101st Airborne Division joined Kurdish forces in northern Iraq. Special Operations Forces also acted quickly to secure Iraq’s oil fields and prevent their destruction. At first, progress was hindered by the requirement that soldiers wear heavy chemical protection gear and carry decontamination equipment. But neither chemical nor biological weapons were used against U.S. forces. The advance on Baghdad was speeded up and the city was captured with precious few casualties.

President Bush announced “the end of major combat” on May 1, 2003, but the real war in Iraq had just begun.

What Went Wrong in Iraq?

The war in Iraq was a “preemptive” strike against terrorism, consistent with the declarations of the Bush administration about the necessity of fighting terrorists on their own ground rather than on American soil. American, British, and other intelligence services reported that Iraq had chemical and biological weapons and was in the process of acquiring enriched uranium for the construction of nuclear weapons. Initially public opinion in America supported military action. Yet much of what had been learned at a high cost in Vietnam and summarized by the Powell Doctrine (described above) was ignored.

Limits on the Number of Troops.

Early on, Defense Secretary Donald Rumsfeld decided to place severe limits on the number of troops sent to Iraq. This decision was part of his broader vision of a “lean” military force. And indeed, this force was able to quickly capture Baghdad. Within weeks, however, an insurgent movement developed that soon inflicted far more casualties on U.S. troops than were experienced in the capture of Iraq’s capital. U.S. troops were stretched so thin across Iraq that they could not hold cities or neighborhoods after they had been captured. Supply lines could not be defended and the insurgents quickly learned to plant IEDs—improvised explosive devices—along routes commonly used by U.S. troops. More casualties were inflicted by these devices than by any other means; the U.S. did not have enough troops to guard supply routes.

FIGURE 13–3 Religious and Ethnic Groups in Iraq.

Iraq encompasses multiple religious and ethnic groups. The principal divisions are between Sunni, Shia, and Kurds.

SOURCE: Iraq Study Group Report (2006).

American Troops Used for “Nation Building.”

The American occupation of Iraq started out poorly and proceeded over time to become worse. Planning for postwar Iraq appeared nonexistent. The U.S. administrator for Iraq, Paul Bremmer, began by dismissing the entire Iraqi Army, sending thousands of well-armed, unemployed young men into the streets. The U.S. promised to restore infrastructure—water, electricity, roads, etc.—yet Bremmer pursued a policy of dismissing virtually all Iraqi managers and technicians on the grounds that they had been Baathists (Saddam’s ruling party members). Later, the U.S. would be obliged to begin recruiting and training an Iraqi Army and police force and bringing in U.S. contract workers, managers, and technicians. Bremmer was fired after one year.

Soon, Iraqi street mobs that had earlier torn down Saddam’s statue began demonstrations against the American presence. An insurgent movement seemed to surprise Secretary of Defense Donald Rumsfeld. He steadfastly refused to send additional U.S. troops to Iraq to handle the insurgency and insisted that a new Iraqi government could eventually recruit and train enough troops to contain the insurgency.

No weapons of mass destruction were found despite an intensive search. Saddam himself was captured and turned over to the Iraqis. After a bizarre show trial, he was convicted of mass murder and executed by hanging.

Iraq held its first nationwide election in fifty years in 2003, despite violence and threats of violence. Nearly 60 percent of the population participated, many proudly displaying their blue-inked thumbs to signal that they had voted. The result was a new constitution that was approved in a second vote that year. However, a substantial number of Sunnis boycotted the elections, fearing a loss of their power and the ascendancy of the Shiites. The United States officially turned over sovereignty to a new Iraqi government in 2004.

Involvement in Civil Strife.

The population of Iraq is composed of three major factions: the Kurds, who occupy most of northeastern Iraq; the Shiites, who occupy most of southern Iraq; and the Sunnis, who occupy central Iraq. Baghdad itself Is divided between Sunni and Shiite neighborhoods (see Figure 13–3). The Sunnis have long dominated Iraq. Saddam’s family was Sunni. Yet the Shiites are the largest faction, with more than half of the total population of Iraq. Over the years, the Kurds have fought for a separate outcome strongly opposed by neighboring Turkey.

By 2006 most of the violence in Iraq was occurring among various factions; thousands of Iraqi were victims of sectarian killings. The Shiites, the majority of Iraq’s population, gained power for the first time in more than 1000 years. Above all, the Shiites are interested in preserving that power. The Sunnis fear displacement and the loss of their traditional position of power in Iraq. The Kurds seek at a minimum quasi-independence and control over the oil resources in their region. The Shiites also seek control over oil in southern Iraq. But the areas with the largest Sunni population lack oil resources, so the Sunni fight to maintain control of all of Iraq. Corruption is rampant throughout Iraq, the judiciary is weak, oil production is down, and the U.S.-backed government is unable to produce an acceptable plan of national reconciliation.7

FIGURE 13–4 Changing Public Opinion about the War in Iraq

Support for the war in Iraq among the American people declined over time.

SOURCE: www.pollingreport.com .

Costs to the U.S. Military.

American military forces suffered a gruesome toll in lives and limbs. By 2006 over 4,000 American troops had been killed, many from “improvised explosive devices.” U.S. Army and Marine forces approached the “breaking point.” Nearly every Army and Marine combat unit, and several National Guard and Reserve units, were rotated into Iraq more than once. The strain on U.S. forces worldwide became clearly evident, with both personnel and equipment wearing down.

“Clear Hold and Build.”

U.S. policy in Iraq focused primarily on security. The key phrase was “clear, hold, and build.” U.S. military forces were to clear neighborhoods, cities, towns, and regions of insurgents, then hold the cleared areas with U.S. trained and equipped Iraqi army and police forces; and then to begin to rebuild infrastructure. U.S. forces were able to “clear” many areas, but there were too few troops to “hold” these areas. Iraqi forces were unable or unwilling to halt insurgents from reoccupying these areas after American troops left. Very little “building” took place. Many members of the Iraqi security forces remained loyal to their sectarian—Shiite or Sunni—goals, rather than the agenda of the national government. Many of these units simply refused to carry out assigned missions.

Nevertheless, President Bush continued to argue that the war in Iraq was central to the worldwide war against terrorism. He argued that an abrupt withdrawal (“cut and run”) would encourage radical Islamic terrorists around the world.

Failure is not an option. Iraq would become a safe haven from which terrorists could plan attacks against American interests abroad, and our allies. Middle East reformers would never again fully trust American assurances of support for democtacy in human rights in the region Iraq is the central front in the global war on terror.8

The “Surge.”

The sweeping Democratic victory in the congressional elections of 2006 was widely attributed to popular disaffection with the war in Iraq. Democrats gained control of both the House and the Senate. Many of their supporters expected them to end the war by cutting off funds for the prosecution of the war. At a minimum, opponents of the war wanted Congress to set a timetable for the reduction of U.S. troops in Iraq. But when staring directly at the prospect of cutting off funds for troops in the field, Congress blinked. Resolutions to end the war failed, as did effects to set a timetable for troop withdrawal.

Instead, President Bush announced a “surge” in troop strength designed to improve security in Iraq and allow the Iraqi government to reach “benchmarks” in resolving civil strife. The “surge” involved increasing U.S. troop levels in Iraq from roughly 138,000 to 160,000. In January 2007 the president appointed a new commander for Iraq, General David Petraeus. Petraeus was unanimously confirmed by the Senate, but Congress stipulated that in September, 2007, the general was to report on progress in Iraq.

Petraeus reported to Congress that the “surge” was working, that progress was being made in stabilizing Iraq and training Iraqi forces, that U.S. troop levels could be reduced to pro-surge levels, but that some U.S. forces may be needed in Iraq for ten years or more. He argued that a timetable for troop reductions would be counterproductive.

Loss of Public Support.

Americans demand quick victory in war. With the exception of World War II, American public support for wars, notably Korea (1950–53) and Vietnam (1965–73), declined steadily as casualties rose and no end appeared in sight. The initial “rally round the flag” support for military action begins to wane after the first year of combat Quick victories with few casualties, as in the Gulf War (1991), inspire support for the president and his decision to go to war. Prolonged stalemates with mounting casualties gradually erode public support for war.

Shortly after the war in Iraq began, most Americans thought Iraq was worth going to war over. Indeed, this opinion climbed to 76 percent immediately following the capture of Baghdad. But as American casualties mounted and no end to the fighting appeared in sight, mass opinion in support of the war declined rapidly. By late 2004 the majority of Americans believed that Iraq was “not worth going to war” (see Figure 13–4).

Withdrawal of Combat Forces.

In the presidential campaign of 2008, Barack Obama pledged to end the war in Iraq “responsibly.” He warned against “an occupation of undetermined length, with undetermined costs and undetermined consequences.” Upon taking office in January 2009, Obama ordered the U.S. military to plan for a phased withdrawal of American combat forces from Iraq. The expectation was that the U.S. could “redeploy” combat brigades at a pace of one to two per month over a sixteen-month period, ending in the summer of 2010. A “residual force” was to remain in Iraq—to conduct targeted counterterrorism missions against Al Qaeda and to protect American diplomatic and civilian personnel. This residual force would continue to train and support Iraqi security forces “as long as Iraqi leaders move toward political reconciliation and away from sectarianism.”9

FIGURE 13–5 Afghanistan

The thrust of U.S. policy in Iraq was to shift from military to diplomatic efforts. The phased withdrawal itself was expected to encourage Iraqis to provide for their own security and to work toward real political reconciliation among the factions. The political tasks expected of the Iraqis included compromises on oil revenue sharing, equitable provision of services, continued reform of security forces, and the elimination of corruption in government.

Obama pledged to try to achieve comprehensive stability in the region by negotiating with Iran and Syria. The objective would be to secure Iraq’s borders, isolate Al Qaeda, support reconciliation among Iraqi factions, and provide support for reconstruction and development.

Using Military Force: Afghanistan

The military phase of the war on terrorism began October 7, 2001, less than one month after September 11. U.S. Air Force and Navy aircraft began attacks on known Al Qaeda bases in Afghanistan and U.S. Special Forces organized and led anti-Taliban fighters, including several tribal groups calling themselves the Northern Alliance, in a campaign against the Taliban regime. A coalition of nations participated in Operation Enduring Freedom; some, including Britain and Canada, contributed troops, while others, including Pakistan, Saudi Arabia, and Uzebekistan, informally allowed U.S. forces to base operations on their territory. Kabul, the capital of Afghanistan, was occupied by anti-Taliban forces on November 13, 2001.

President Bush made it clear that the United States was prepared to act militarily against governments that harbored or gave sanctuary to terrorists. The Taliban regime was ousted from power. By April 2002—six months into Operation Enduring Freedom—Al Qaeda and Taliban forces had been scattered into small groups in the mountainous areas of Afghanistan and neighboring Pakistan (see Figure 13–5). Osama bin Laden himself, however, escaped capture.

A meeting in Bonn, Germany, of various Afghan political and military groups produced general agreement on the installation of a new government in Kabul, headed by Hamid Karzai. The Karzai government has less than full control over Afghanistan various tribal military chiefs, or “warlords,” exercise independent power throughout the country.

Al Qaeda Resurgence.

While campaigning for the presidency in 2008 Barack Obama drew a sharp distinction between the war in Iraq and the war in Afghanistan. Iraq, he claimed, had diverted America’s attention away from the greater dangers posed by Al Qaeda and Taliban forces in Afghanistan. It was Al Qaeda that was responsible for the September 11, 2001, attacks on the New York Trade Center and the Pentagon, and it was the Taliban regime in Afghanistan that provided Al Qaeda with safe haven. And evidence was mounting of a resurgence of Al Qaeda and its Taliban allies in the southern and eastern mountainous areas of Afghanistan and across the border in neighboring Pakistan.

Shortly after entering the White House, President Obama ordered a strategic review of the situation in Afghanistan and Pakistan. The review concluded that the situation was “increasingly perilous,” with Al Qaeda and its Taliban allies controlling large sections of both Afghanistan and Pakistan. Additional combat brigades were to be sent to the region as well as thousands of trainees for Afghanistan army and police forces. The U.S. was also to make a heavy financial investment in the economic development of both countries.

Counterinsurgency Operations.

The announced goal of U.S. policy is to “disrupt, dismantle, and defeat” Al Qaeda in both Afghanistan and Pakistan. The policy suggests that Al Qaeda will no longer find safe haven across the border in Pakistan. Economic and military aid to Pakistan is to be contingent upon that country’s commitment to its own security and its willingness to “confront violent extremists.” Afghanistan will offer a test of the U.S. military’s concept of asymmetrical (counterinsurgency) warfare.

Limited Objective.

U.S. policy recognizes that Afghanistan’s 25 million people are divided along ethnic lines. The central government in Kabul exercises little control over a country the size of Texas. U.S. strategy appears to be to win over local tribes and leaders, including Taliban forces that are not allied to Al Qaeda. The objective of U.S. policy is not necessarily to bring Western-style democracy to Afghanistan, but rather to ensure that the country does not become a safe haven for Al Qaeda and its terrorist allies.

SUMMARY

Decisions about defense policy in Washington and in other capitals are interdependent—strategies, force levels, and spending decisions depend on perceived threats posed by other major powers. Game theory provides a way of thinking rationally about decision making in competitive, interdependent situations.

1. During the long Cold War, deterrence strategy prevented nuclear war by making the consequences of a nuclear attack unacceptable to a rational enemy. Deterrence emphasized second-strike capability—the ability of a nation’s forces to survive an attack and inflict unacceptable levels of destruction on the attacker in retaliation.

2. The end of the Cold War resulted in a decline in overall strategic nuclear forces by two-thirds. The START agreements slashed total nuclear warheads on both sides and required the elimination of all land-based MIRV missiles. The resulting force levels on both sides virtually eliminated the possibility of launching a rational first strike.

3. Current strategic debate focuses on nondeterrable threats—missiles launched by terrorist nations or by terrorist groups. Global nuclear proliferation increases the likelihood of these threats. President Ronald Reagan began a large-scale research program, the Strategic Defense Initiative (SDI), or “Star Wars,” to develop a capability to intercept and destroy incoming ballistic missiles. President George W. Bush redirected missile defense from large-scale Russian attacks to smaller attacks by terrorist nations. He withdrew the United States from the SALT I Treaty banning the deployment of missile defenses. The U.S. currently deploys limited land-based (Alaska) and sea-based anti-ballstic missiles.

4. In the NATO alliance the United States and Western European nations pledged that an armed attack against one would be considered an armed attack against all. A joint NATO military command is designated to implement this pledge. The collapse of communist governments in Eastern Europe, the unification of Germany, and the dissolution of the Soviet Union greatly diminished the threat to European security. NATO has expanded to 28 countries including countries formerly in the Soviet orbit.

5. The end of the Cold War rationalized drastic reductions in Army and Air Force combat units. Navy and Marine combat units, traditionally designed for regional wars, endured less drastic cuts. The end of the Cold War also brought dramatic reductions in defense spending.

6. The United States has never adopted clear policy guidelines regarding when to use military force. Most military leaders argue that troops should be used only to protect vital national interests, with clearly defined military objectives, and with the support of Congress and the American people. Furthermore, military force should only be used with sufficient force to achieve speedy and decisive victory with minimum casualties, and only as a last resort.

7. In contrast, many political and diplomatic leaders argue that troops may be used in support of important political objectives and humanitarian goals. These may include demonstrating U.S. resolve in crisis situations, U.S. support for democratic governments, peacemaking among warring factions or nations, peacekeeping where hostile parties have agreed to a settlement, and the provision of humanitarian aid.

8. The war on terrorism added to the responsibilities of the military, including direct attacks against terrorist forces and attacks against nations that harbor terrorists or that seek to develop weapons of mass destruction. These responsibilities envision preemptive attacks.

9. The attack on Afghanistan in 2001 was successful in dislodging the Taliban government that had aided and assisted Al Qaeda terrorists. But Al Qaeda and Taliban forces regrouped in the mountainous border area with Pakistan.

10. The war in Iraq, beginning in 2002, was expected to eliminate weapons of mass destruction (WMDs), end the regime of Saddam Hussein, and ensure that Iraq would not threaten its neighbors or become a haven for terrorists. Following the rapid capture of Baghdad, however, no WMDs were found and an insurgency grew that eventually caused far more casualties among U.S. and British troops than the capture of Baghdad. Conflict between Shia and Sunni sects threatened civil war.

11. By 2004, a majority of Americans had turned against the War in Iraq, declaring in polls that it was “not worth” the sacrifice in American casualties. A troop “surge” in 2007 appeared to reduce overall violence. Following victories in the 2006 congressional elections, Democrats tried but failed to set dates for the withdrawal of U.S. troops from Iraq.

12. Upon taking office, President Barack Obama ordered the phased withdrawal of American combat forces from Iraq over a sixteen-month period. A residual force was expected to remain to conduct counter-terrorist missions, protect American personnel, and train Iraq security forces.

Dye, Thomas R. Understanding Public Policy Vitalsource eBook for Ashford University, 13th Edition. Pearson Learning Solutions. VitalBook file.

Expanding the life-cycle model: Precautionary saving and po

Hubbard, R Glenn;Skiooer, Jonathan;Zeldes, Stephen P

The American Economic Review ; May 1994; 84, 2; ProQuest Central pg. 174

WHY DO PEOPLE SAVE?t

Expanding the Life-Cycle Model: Precautionary Saving and Public Policy

By R. GLENN HUBBARD, JONATHAN SKINNER, AND STEPHEN P. ZELDES*

One of the key puzzles in understanding saving behavior is not so much why people

conclude by speculating about government policies that may be most effective at en­

save-the title of this session-but why people don't save. According to the familiar life-cycle model, households should accu­ mulate wealth to provide for their retire­ ment consumption. The surprising result from the data is the sizable fraction of the population who have accumulated so little, even among those nearing retirement. Given that earnings will almost surely decline when households retire, such behavior can imply poor living standards for the elderly.

Some might interpret the low wealth ac­ cumulation as being evidence of myopia, irrationality, or a failure of households to enforce "mental accounting" (Richard Thaler, 1994), while others might view the low level of wealth accumulation as evi­ dence of high individual rates of time pref­ erence. Determining the underlying causes of low wealth is crucial for public policies that seek to alleviate low aggregate saving rates in the United States, as well as poli­ cies that seek to buttress the adequacy of financial resources for the elderly. In this paper, we outline what we believe to be the

couraging saving.

Much of the research examining levels of consumption, saving, and wealth, as well as their responsiveness to policy, has been done using a life-cycle model with the simplify­ ing assumption of perfect certainty. Alan Auerbach and Laurence Kotlikoff (1987), for example, developed a model with 55 overlapping generations of individual life­ cycle "households," each with empirically plausible age-earnings profiles and utility parameters, and used the model to address tax policy and demographic issues in a regime in which all households are identical within a generation, and all generations know future earnings and interest rates.

More recently, a line of inquiry has exam­ ined the effects of uncertainty on saving, generally in the context of highly stylized models. This research has shown that, in these models, uninsured earnings uncer­ tainty can alter optimal saving behavior in a variety of important ways. (For a partial review of this "precautionary saving" litera­ ture, see Hubbard et al. [1994).)

causes of why many people do not save. We

In two recent papers (Hubbard et al., 1993, 1994), we have combined these two

tDiscussants: Christopher Carroll, Federal Reserve

strands of the literature by examining the implications of a life-cycle model of con­ sumption, saving, and wealth accumulation

Board; John B. Shoven, Stanford University; Laurence Kotlikoff, Boston University.

*Columbia University, New York, NY 10027, Uni­

subject to what we think are the three most important sources of uninsured idiosyn­ cratic risk facing households: uncertainty

versity of Virginia, Charlottesville, VA 22901, and The Wharton School, University of Pennsylvania, Philadel­ phia, PA 19104-6367, respectively. This research has been supported by the Harry and Lynde Bradley Foun­ dation and the National Science Foundation. Major computational work was conducted using the Cornell National Supercomputer Facility.

about earnings, medical expenses, and length of life. Our intent has been to create a realistic model in which families live for many periods, working for part of their lives and retiring later in life. To parameterize the uncertainty facing families, we estimate

174

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

VOL. 84 NO. 2 WHY DO PEOPLE SAVE? 175

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

the stochastic processes using available cross-section and panel data sets on house­ holds. In addition, we include asset-based means-tested public welfare programs (e.g., Aid to Families with Dependent Children, Food Stamps, Supplemental Security In­ come, and Medicaid). In this research pro­ gram, we are looking at how close a model with rational optimizing consumers can come to matching a wide range of empirical facts about consumption and wealth. 1

The improvements to the life-cycle model under certainty or perfect markets come in three forms. First, adding uncertainty, even in cases where it does not change the opti­ mal decision rule for saving, introduces het­ erogeneity in wealth and saving when households differ in the realizations of seri­ ally correlated earnings and health ex­ penses. Second, we assume household pref­ erences that do not generate "certainty equivalence," so that the introduction of uncertainty changes household decision rules in important ways. Third, many house­ holds face a high implicit tax on saving should they become eligible for AFDC, Medicaid, or Food Stamps. These social insurance programs with asset-based means-testing alter in significant ways the incentives to save.

In Hubbard et al. (1993), we show that the combination of these factors can explain much of the observed cross-sectional het­ erogeneity in wealth holdings in the 1984 Panel Study of Income Dynamics (PSID), including the presence of a substantial num­ ber of households with low levels of assets at retirement. In this paper, we follow up on these households; we use data from the 1989 PSID to examine transitions in wealth holdings between 1984 and 1989. Our model

1In Hubbard et al. (1994), we show that, using realistic parameter values, our model replicates empiri­ cal regularities in (i) aggregate wealth and the aggre­ gate saving rate, (ii) cross-sectional differences in con­ sumption-age profiles by lifetime-income group, and

(iii) short-run time-series properties of consumption and income. In Hubbard et al. (1993), we analyze the effects of a social insurance program with asset-based means testing and show that our model helps explain the observed cross-sectional distribution of wealth.

implies that in many cases saving rates will be low among those with low initial levels of wealth (i.e., that low wealth may be an "absorbing state" over a lengthy period of time). We find that this is consistent with evidence from the PSID. More broadly, the results of our 1993 and 1994 papers indicate that our model can explain the saving be­ havior of "savers" and "nonsavers" alike.

I. Life-Cycle Models of Saving Decisions

We begin by presenting a simple descrip­ tion of our general multiperiod model with multiple sources of uncertainty (readers in­ terested in a more comprehensive descrip­ tion should see our 1994 paper). Consumers maximize expected lifetime utility, given all of the relevant constraints. At each age t , the consumption chosen maximizes

T

(1) E, L, Dp( Cs) / ( 1+ 5 ) s -t

subject to the transition equation

(2) As = As _ 1( l + r )

+ Es + TRs - Ms - Cs

plus the additional constraints that

(3) As O V s.

The first expression describes the opti­ mization in which consumption excluding medical expenses, C,, is selected to maxi­ mize expected lifetime utility (where E is the expectations operator conditional on in­ formation at time t ), discounted based on a rate of time preference 5. To allow for a random date of death, Ds is a state variable equal to unity if the individual is alive and zero otherwise, and T is the maximum pos­ sible length of life. The household begins

1

period s with assets from the previous pe­ riod plus accumulated interest, As _ 1(1 + r ), where r is the nonstochastic real after-tax rate of return. It then receives exogenous

176 AEA PAPERS AND PROCEEDINGS MAY 1994

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

earnings Es , pays out necessary medical ex­ penses Ms, and receives government trans­ fers TRs. It is left with

(4) Xs = As -1( l + r ) + Es - Ms + TR.

which, following Angus Deaton (1991), we denote as "cash on hand."

Given Xs, consumption is chosen, and what remains equals end-of-period assets, A•. We assume that no utility is derived from medical expenditures, as these costs only offset the damage inflicted by ill health. The borrowing and terminal constraints in equation (3) prevent negative assets in any period. Since the setup includes a govern­ ment-guaranteed level of consumption, bor­ rowing constraints rule out borrowing in one period, defaulting, and receiving the guaranteed consumption in the subsequent period.

For simplicity, we specify a generic trans­ fers function including income-based and asset-based means testing, as well as pay­ ments tied to medical expenses:

(5) TR.= max[O, (C + M.)

-( A 5 _ 1( l + r ) + E.)] .

The mm1mum level of consm,!!ption guar­ anteed by the government is C (the "con­ sumption floor"). Transfers equal this con­ sumption floor plus medical expenses minus all available resources (if that amount is positive, and zero otherwise). Simply put, transfer payments guarantee a minimum standard of living after medical expenses equal to C. The one-for-one reduction in transfer payments in response to increases in assets or current earnings captures in a stylized fashion the penalty on saving of asset-based means-tested programs. Be­ cause eligibility is conditional on having as­ sets less than some specified amount, such programs place an implicit tax rate of 100 percent on assets above the limit. We dis­ cuss these incentives in greater detail in our 1993 paper.

Given our interest in individual as well as aggregate saving, we allow for heterogeneity in life-cycle saving decisions across different lifetime-income groups. Using educational attainment as a proxy for lifetime income, we specify three groups: households whose head does not have a high-school degree, households whose head is a high-school graduate, and households whose head has a college degree.

Solving the model requires a functional form to describe household utility, an em­ pirical characterization of the sources of uncertainty, a description of the consump­ tion floor, and assumptions regarding the rate of time preference and real interest rate. We assume that the period utility function is isoelastic, and we experiment with alternative values for both the coeffi­ cient of relative risk aversion and the rate of time preference. Mortality probabilities are taken from official data. We estimate func­ tions for earnings (and Social Security and private pension receipts) and out-of-pocket medical expenses using micro data. Residu­ als from log-earnings and log-medical­ expenses regressions are used to estimate education-group-specific AR(l) processes to account for exposure to risk of fluctuations in earnings and medical expenses. We esti­ mate a consumption floor of $7,000 in 1984 dollars. We solve numerically the dynamic­ programming problem; this yields the opti­ mal state-contingent consumption function.

In what follows, we will compare our re­ sults to those from an alternative approach in the same spirit that also examines the effects of uncertainty on optimal intertem­ poral consumption decisions. Deaton (1991) and Christopher Carroll (1992) reconcile the life-cycle model's predictions with the em­ pirical finding of low levels of wealth accu­ mulation by many households by assuming a high rate of time preference (relative to the real interest rate). In this case, absent un­ certainty, households would like to borrow against future income. With earnings uncer­ tainty (and in some cases borrowing con­ straints), households maintain a "buffer stock" or contingency fund against income downturn, but households' impatience keeps buffer stocks small.

VOL. 84 NO. 2 WHY DO PEOPLE SAVE? 177

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II. Why Don't People Save?

TABLE 1-TRANSITIONS BETWEEN ASSET CATEGORIES OVER A FIVE-YEAR PERIOD,

ACTUAL AND SIMULATED DATA

A central prediction of the life-cycle

framework is that households accumulate substantial assets for retirement. An impor­ tant empirical puzzle, however, is that many households have very low levels of accu­ mulated wealth over their life cycle. In Hubbard et al. (1993), we use 1984 data from the PSID to show that a significant fraction of households with low lifetime earnings (represented by educational attain­ ment) have preretirement wealth accumula­ tion much too small to be consistent with the perfect-markets version of the life-cycle model. However, households with higher lifetime earnings (as proxied by a college degree) exhibit saving behavior more consis­ tent with the predictions of the life-cycle model in the sense that most households have substantial assets near retirement.

In this section, we extend these results to consider what happened to these "low wealth" households in 1984 over the subse­ quent five years. The empirical evidence comes from the 1989 wave of the PSID, which asked detailed questions about wealth holdings similar to those in the 1984 survey. The simulated evidence comes from draw­ ing random shocks from the distributions of earnings and out-of-pocket medical ex­ penses, which, together with the optimal consumption function, are used to generate artificial "life histories" of consumption and wealth for a large number of simulated households. To contrast the predictions of our generalized life-cycle model with the "buffer-stock" alternative, we also generate simulated consumption, wealth, and earn­ ings panels using the assumption of a high time-preference rate (10 percent) and a very low consumption floor.

We analyze movements of household as­ sets between 1984 and 1989 for households headed by an individual aged 65 years or younger in 1984. We grouped assets into four classes according to whether the level of assets A is such that A $1,000;

$1,000 < A $5,000; $5,000 < A $25,000;

or A > $25,000 (all figures are in 1984 dol­ lars). The top entry in each cell in Table 1 reports the proportion of households with a

Final assets

Initial assets

< $1,000

$1,000- 5,000

$5,000- 25,000

> $25,000

< $1,000

56.16

15.38

18.83

9.63

60.23

20.15

16.43

3.19

6.76

33.71

51.09

8.44

$1,000-

24.80

22.35

35.77

17.08

5,000

15.11

20.24

48.39

16.26

0.90

15.18

71.34

12.58

$5,000-

19.98

12.70

38.38

37.95

25,000

4.62

5.20

32.45

57.73

0.14

0.81

35.63

63.43

> $25,000

1.19

1.27

6.06

91.48

0.16

O.Q7

1.47

98.30

0.09

0.15

1.24

98.52

Notes: The numbers reported above are the percent­ age of those households with given initial assets ending up after five years in the designated final asset bracket (each row, therefore, sums to 100). The top entry, in bold type, is calculated from the Panel Study of In­ come Dynamics using the 1984 and 1989 wealth sup­ plements. The middle entry is drawn from our simula­ tion model with uncertainty about lifespan, earnings, and out-of-pocket medical expenses, and a consump­ tion floor of $7,000. The bottom entry, in italics, comes from simulations of our uncertainty model with a rate of time preference equal to 10 percent and a $1 con­ sumption floor. All figures are in 1984 dollars.

given level of assets in 1984 with given levels of assets in 1989. These transition calcula­ tions reveal that, even over a five-year pe­ riod, there is substantial persistence of low wealth in households. For example, of those with less than $1,000 total wealth in 1984, 56 percent still had less than $1,000 total wealth in 1989.

The second entry in each cell of Table 1 is drawn from simulations of our model with uncertainty over lifespan, earnings, and out­ of-pocket medical expenses under the as­ sumptions that the annual rate of time pref­ erence and the interest rate are both

3 percent and the consumption floor is

$7,000. The transition matrix from the simu­ lated data matches the actual data quite closely. For example, 60 percent of simu­ lated households (compared to 56 percent

178 AEA PAPERS AND PROCEEDINGS MAY 1994

of actual households) who initially hold less than $1,000 in assets still have less than

$1,000 in assets five years later. The simu­ lated transition probabilities at other levels of wealth also match the actual data reason­ ably well.

There are two reasons why our model implies a high degree of persistence in low wealth. First, the simulated earnings and medical expenses exhibit considerable per­ sistence (based on empirical parameters), so that a significant adverse shock to either of these two variables signals an adverse real­ ization in the future and generates contin­ ued low consumption and low wealth. Pre­ liminary results using a certainty-equivalent life-cycle model (i.e., one in which the household recalculates optimal consump­ tion each period given the shocks to earn­ ings and medical expenses but makes deci­ sions as if all future variables were known with certainty) suggests that, even near re­ tirement, roughly one-tenth of the popula­ tion may exhibit low levels of wealth be­ cause of bad earnings or health shocks.

The second reason for the strong persis­ tence in low levels of wealth is the existence of asset-based means testing of welfare pro­ grams. Low wealth holdings are likely to be an "absorbing state," in the sense that low levels of wealth increase the likelihood of receiving the consumption floor; saving while receiving transfers is discouraged by the implicit tax associated with means test­ ing. By contrast, households with higher lev­ els of wealth are less likely to qualify for social insurance programs, so that saving is less discouraged for this group.

The third entry in each cell of Table 1 is drawn from simulations of a "buffer-stock" model with a time preference rate of 10 percent, interest rate equal to 3 percent, and a negligible consumption floor of just

$1. The buffer-stock model predicts much less persistence of low levels of wealth than experienced by households in the PSID. The intuition is that, in the buffer-stock model, wealth accumulation serves primarily to in­ sulate consumption against a bad draw in disposable income. Should a household ex­ perience low wealth because of an unusu­ ally bad draw, the household is careful to

rebuild the buffer stock. Under the buffer­ stock model, there are fewer than 7 percent of households with initial wealth less than

$1,000 in "1984" who still have low wealth five years later.

III. Conclusions and Implications for Public Policies Toward Saving

The perfect-markets version of the life­ cycle model has directly or indirectly con­ tributed much of our intuition about effects of public policies on household saving deci­ sions. While the findings of our research project cast doubt on the applicability of the standard, perfect-certainty version of the life-cycle model for policy analysis, we con­ clude that a well-specified optimizing life­ cycle model with uninsured idiosyncratic risks and social insurance can explain many empirical observations, including the saving behavior of much of the population. It is therefore likely to be a useful tool for ana­ lyzing the effects of government policy on saving behavior. We briefly consider two examples below.

In the traditional perfect-markets version of the life-cycle model, the taxation of capi­ tal income has a significant impact on ag­ gregate saving. The policy implications stemming from such models-that con­ sumption taxes are more efficient than income taxes, for example-are largely predicted on the high interest elasticity of saving in the basic model. Recent research by others (see e.g., Eric Engen, 1993) has shown that, in a setting with uninsurable idiosyncratic risk, the after-tax rate of re­ turn exerts a smaller impact on saving. While this is a topic for future research, taking seriously uncertainty and imperfect insur­ ance and lending markets is likely to yield tax-policy implications quite different from conventional life-cycle models.

The failure of perfect-markets versions of the life-cycle model to explain the negligible wealth accumulation by many households, particularly those with low lifetime incomes, has stimulated interest in models of saving that can account for such behavior. Our approach has addressed this question and has emphasized that expenditure policy,

VOL. 84 NO. 2 WHY DO PEOPLE SAVE? 179

such as the design of social insurance pro­ grams, may exert as large an effect on sav­ ing behavior as tax policy. The asset-based means testing of AFDC, Supplemental Se­ curity Income, and Medicaid may ultimately affect the consumption and saving choices of low-income households by more than even extreme variations in explicit marginal income tax rates. Raising the asset limit for AFDC and food stamps from below $3,000 to $10,000, a proposal put forth by Jack Kemp, the former Secretary of Housing and Urban Development, could increase saving among those least likely to save for retire­

Carroll, Christopher D. "The Buffer Stock Theory of Saving: Some Macroeconomic Evidence." Brookings Papers on Eco­ nomic Activity, 1992, (2), pp. 61-135.

Deaton, Angus. "Saving and Liquidity Con­ straints." Econometrica, September 1991,

59(5), pp. 1221-48.

Engen, Eric M. "Precautionary Saving and the Structure of Taxation." Mimeo, Uni­ versity of California-Los Angeles, 1993.

Hubbard, R. Glenn; Skinner, Jonathan and Zeldes, Stephen P. "Precautionary Saving and Social Insurance." Mimeo, University of Virginia, 1993.

ment. Whether the increased saving justifies . "The Importance of Precautionary

the revenue cost of the enhanced program is, of course, a question for future research.

REFERENCES

Auerbach, AJan J. and Kotlikoft', Laurence J. Dynamic fiscal policy. Cambridge: Cam­ bridge University Press, 1987.

Motives in Explaining Individual and Ag­ gregate Saving." Carnegie-Rochester Con­ ference Series on Public Policy, 1994 (forthcoming).

Thaler, Richard H. "Psychology and Savings Policies." American Economic Review, May 1994 ( Papers and Proceedings ), 84( 2),

pp. 186-92.

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