Defense Aerospace and the New World Order

WILLIAM J. PERRY

Fundamentally the ''new world order'' results from the new freedom in Eastern Europe and the Soviet Union. The spirit of this new freedom is captured by a memorable statement that Victor Hugo made about 100 years ago, "More powerful than the tread of mighty armies is an idea whose time has come."

In 1989 the idea of freedom came to Eastern Europe. In 1991 it came to the Soviet Union, and in both cases it proved to be more powerful than the mighty Red Army. In each case, we have a powerful symbol of freedom. In December 1989, there was a student sitting on top of the Berlin Wall with a pickax in one hand and a bottle of champagne in the other. In August 1991, it was Boris Yeltsin standing on a tank with a microphone in his hand denouncing the coup leaders.

But this new order is more than symbols; it also has substance. Just two months after Boris Yeltsin stood on the tank, President Bush announced a unilateral reduction in the nuclear arms of the United States, a move that essentially eliminates all the ground-based and sea-based tactical nuclear weapons in the U.S. forces. A week later, President Gorbachev made a reciprocal announcement. Subsequently, we have begun discussions with the new Russian government on how to cooper-



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The Future of Aerospace Defense Aerospace and the New World Order WILLIAM J. PERRY Fundamentally the ''new world order'' results from the new freedom in Eastern Europe and the Soviet Union. The spirit of this new freedom is captured by a memorable statement that Victor Hugo made about 100 years ago, "More powerful than the tread of mighty armies is an idea whose time has come." In 1989 the idea of freedom came to Eastern Europe. In 1991 it came to the Soviet Union, and in both cases it proved to be more powerful than the mighty Red Army. In each case, we have a powerful symbol of freedom. In December 1989, there was a student sitting on top of the Berlin Wall with a pickax in one hand and a bottle of champagne in the other. In August 1991, it was Boris Yeltsin standing on a tank with a microphone in his hand denouncing the coup leaders. But this new order is more than symbols; it also has substance. Just two months after Boris Yeltsin stood on the tank, President Bush announced a unilateral reduction in the nuclear arms of the United States, a move that essentially eliminates all the ground-based and sea-based tactical nuclear weapons in the U.S. forces. A week later, President Gorbachev made a reciprocal announcement. Subsequently, we have begun discussions with the new Russian government on how to cooper-

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The Future of Aerospace ate in operating ballistic missile warning systems and how to cooperate in the development of ballistic missile defense systems. How things have changed! For more than four decades we have lived with the threat of nuclear war hanging over our heads like a dark cloud, and now that cloud is drifting away. We are truly entering a new era. This era is characterized in Russia by their second great revolution this century. It is characterized by the end of the Cold War—and confrontation with the Soviet Union being replaced by cooperative security with Russia. Paraphrasing Albert Einstein, we may now say about our national security that "everything has changed except the way we think." How must our thinking change to accommodate the changes in the world? In this new world order, we breathe easier because of the removal of the nuclear threat, and we welcome a decline in the defense burden and the chance for a "peace dividend." But it is critical for our future how this decrease in defense spending is made. As we scale down defense spending, we need to do it in such a way that we don't cripple our ability to deal with regional military threats, that we don't lose our ability to reconstitute our military forces if a superpower threat reemerges, and that we don't damage our commercial aerospace business. Let us consider what kind of challenges these three criteria pose. About three years ago, in an article in Foreign Affairs, I pointed out that the Soviet Union had a new leader who seemed to be serious about introducing new thinking to foreign policy. I suggested that this new thinking would lead to an end of the Cold War, but that it would very likely lead to an increase in regional wars; that as a result, there would be a decline in our defense budget and a restructuring of our defense forces so that they could be more effective in regional wars, and that would lead specifically to an emphasis on three technologies: stealth technology, C3I (command, control, communications, and intelligence) technologies, and technologies associated with precision-guided weapons. The forecast at that time seemed radical. Today it seems timid. All of these things have happened. The Cold War has ended, the regional wars have started. The changes occurred sooner and more intensely than was expected when that article was written. The war with Iraq demonstrated

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The Future of Aerospace that the central problem for U.S. security into the next century will be dealing with regional conflicts. One of the particular issues for the Defense Department is the effectiveness in regional conflicts of a military capability that was developed for an entirely different scenario, namely, war with the Soviet Union in central Europe. PLANNING AN UNFAIR ADVANTAGE In the late 1970s when I was in the Pentagon, and before that time, we saw the threat from the Soviet Union as a shortwarning attack of armored forces in Europe, and we estimated that we would be outnumbered two or three to one in such an attack. It was politically and financially unrealistic to try to deal with that threat on a tank-for-tank basis, and therefore we developed the "offset strategy." Basically the offset strategy called for putting primary emphasis on air power for the protection of our military forces, but not simply better aircraft. The key was to give those aircraft what we thought of as an "unfair competitive advantage" arising from the support equipment that was supplied them: C3I, defense suppression, and precision-guided weapons. Those systems, which were developed in the 1970s and produced and deployed in the 1980s, were used for the first time in Operation Desert Storm. They demonstrated that forces with that capability have an advantage over forces that do not have it—comparable to the advantage a tank army has over a horse cavalry. In short, they simply outclass the opponents so that there is no contest. The first critical component of this new capability is C3I. In Desert Storm we pulled together a combination never before used in war. We used our reconnaissance satellites, which were developed originally for national intelligence, for combat support. We employed AWACS to get a continuous order-of-battle of all air vehicles, and for the first time used a system called JSTARS for a continuous order-of-battle of all ground vehicles. We made extensive use of night vision. We made extensive use of global positioning satellites to locate our forces on the ground. All of this gave our commanders superb "situation awareness"; that is, they knew precisely where enemy

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The Future of Aerospace forces were located, where friendly forces were located, and where they themselves were located. At the same time, very early in that campaign, our forces essentially destroyed the Iraqi C3I system. In effect, while our battlefield commanders were uniquely capable of knowing what was going on in the battlefield, the Iraqi commander's situation awareness was what he could learn by looking out of the top of his bunker. That was the first and most crucial component of this new military capability. The second was the use of precision-guided weapons. The F-117 attack bomber conducted 1,300 sorties and dropped 2,100 laser-guided bombs. Of these, 1,700 bombs landed within 10 feet of the designated aim point and destroyed 90 percent of their targets. There is no precedent for that sort of performance in any previous use of air power. The final component was defense suppression. To appreciate the accomplishment of our defense suppression system, it is necessary to understand that the Iraqis had a modern, dense, netted, hardened air defense system. The air defense around Baghdad in some ways was denser than the air defense around Moscow. Historically, we could expect attrition losses of 1 to 2 percent, going against that sort of an air defense. With the 3,000 sorties a day we were conducting, if we had suffered 1 to 2 percent attrition rates, we would have been losing 30 to 60 airplanes every day, and over a 30-day campaign we would have lost 1,000 to 2,000 airplanes. Instead of losing 30 to 60 airplanes a day, we lost about one a day. We had about one-thirtieth of 1 percent attrition rate. This is a result of the introduction of Stealth (the F-117 and the Tomahawk missile) and the use of antiradiation missiles. The combination of these three essentially destroyed the Iraqi air defense electronics subsystems. As a consequence, that air defense did not have radars or command and control, and the Iraqis were left simply with guns, which they could fire visually or in a barrage. It was a combination of visual and barrage fire that gave them the one-thirtieth of 1 percent attrition results. Equally important as these three separate components was the synergism among them. The effectiveness of the defense suppression depended on the precision-guided weapons. The

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The Future of Aerospace effectiveness of the precision-guided weapons depended on the reconnaissance systems to know where to target. The very survivability of the reconnaissance systems depended on the defense suppression. NEW CHALLENGES AFTER THE COLD WAR Thus, the decisive factor in this war was an application of U.S. technological capability, especially the truly extraordinary application of air power deployed in what I would call a system of systems. This system of systems was designed, developed, and produced in the United States aerospace industry. It was not designed, developed, or produced in government arsenals. Our aerospace industry, partly because of its own success, is now in danger of being dismantled, much as we began to dismantle it in the period between the end of World War II and the beginning of the Korean War. Therefore, defense planners and aerospace industry leaders face two major challenges today. The Cold War was the stimulus for the U.S. aerospace industry's development of the world's most effective military capability; now that the Cold War is over, along with its stimulus for defense spending, will we allow our capability to deal with regional threats to erode? The Cold War also provided the stimulus for defense R&D, which provided the technological edge for our commercial aerospace industry and the infrastructure that supported this industry and contributed substantially to U.S. world leadership in this field. Over the last decade, the commercial aerospace industry contributed more than $150 billion to a net positive balance of trade for the United States. With the defense decline, will we allow this leadership to erode? It is fair to ask how well our present defense plan meets these two challenges facing the aerospace industry today. Simply stated, our present defense plan consists of bringing the forces down about 25 percent, maintaining R&D at nearly the present level, phasing down most of our production lines, and letting market forces determine what happens to the aerospace industry. Although this oversimplifies a complex picture, I do not think I've misrepresented it.

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The Future of Aerospace PROBLEMS AHEAD FOR THE AEROSPACE INDUSTRY In my judgment, this strategy will not meet the challenges I have described. I see serious problems ahead for the aerospace industry. This strategy could very well lead to the collapse of the industrial military capability developed over the past four decades, and it could lead to some decline in our commercial capability as well. The first problem is that the plan to sustain the R&D level will not be easy to execute. We have through the last four decades maintained leadership in high-energy physics, in manned space, in computers and software, in microelectronics and advanced materials. Defense R&D played an important role in that leadership position, but in all cases that R&D was supported and defended on the basis of the Cold War. In the absence of the Cold War and the presence, of very real economic problems in this country, it will be very difficult politically to maintain defense R&D, which has supplied an infrastructure not only for the aerospace industry, but for other industries as well. Even if we can maintain defense R&D at present levels, there is still a problem with this strategy. The problem is that R&D on the shelf is not so easy to take off the shelf. The notion that one can tie a blue ribbon around an R&D program and set it on a shelf for use when needed three or four years later is a misconception of how engineering is done. The third problem with an R&D-only strategy is that manufacturing skills are as important to our success as technology skills. I do not see any emphasis in the Defense Department's strategy on maintaining a manufacturing base. CONSIDERING ALTERNATIVES My consideration of alternative strategies would start by confirming the strategy of sustaining the defense technology base. It should be maintained, not because we want to put designs on the shelf, but because we want to keep engineering teams at the state of the art, and this is a way to do it. It will be difficult to justify for that reason, but that is, in my judgment, the reason to sustain defense R&D at present levels.

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The Future of Aerospace The reassembling and retraining of engineering teams Will certainly be the longest lead time in any reconstitution of our military capability. So maintaining engineering teams at readiness is a necessary, but by no means sufficient, condition for reconstitution. In addition, it will be important to maintain a small but modern production base for systems that are "defense unique." It is easy to make up a short list of such systems: fighter aircraft, submarines, air-to-air missiles, antitank missiles, for example. Many of the components in those systems can be made in the commercial field, but the systems themselves have no commercial counterpart; therefore we cannot count on market forces to maintain them. If we do not maintain production lines at some level, we will simply forget how to build fighter aircraft and submarines. It is hard to imagine how we are ever going to reconstitute that capability in any reasonable time. My third and final recommendation is for the government to take vigorous action to integrate the defense industrial base with the commercial industrial base. We can no longer afford the luxury of maintaining two separate bases. They have to be brought together. To do that, we have to break down three critical barriers. The first is the security barrier, the second is the specification barrier, and the third is the procurement barrier. These barriers have been set up through the decades based on the assumption that it was a good idea to have two separate bases. Now the barriers are so successful that it is almost impossible to work across them in an integrated facility. The most crucial of these, I think, is getting rid of military specifications. We have to create a single set of military and industrial specifications if there is ever any chance of reconstituting our military capability, because the base from which we reconstitute it will be our commercial industrial base, not our defense industrial base. DIRECTIONS FOR DEFENSE AEROSPACE What should defense aerospace companies be doing at this time? We have about twice the capacity we now need or are likely to need at any time in the foreseeable future. Therefore, there is going to be a substantial consolidation in the aerospace industry. It is exceedingly unlikely that the government is

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The Future of Aerospace going to take any action to guide or facilitate that consolidation. Some aerospace companies will go out of business, some will merge out, some will hunker down, and some will diversify. Only the strongest will be able to diversify and continue to grow by entering other markets. It is very difficult to diversify into commercial markets because of the unique culture and the unique facilities that have been set up in defense companies. It is difficult but not impossible. There are a few rules that can guide that diversification, based on a history of previous diversification attempts. The trick is to try to generalize from the many failures and the few successes of these earlier efforts. The first generalization is that each company needs to stick to its knitting in doing what it is really good at doing. If it is a systems company, it had better stay in the systems business. If it is a component company, it had better stay in the component business. Companies that try both to diversify into new markets and to break away from the things that they have been doing well for decades are asking for trouble. The second generalization is that defense companies would do well to stay away from consumer product markets. Instead, they should seek markets where the customers are measured in the dozens, not in thousands or millions. That still is quite a large market. The whole infrastructure of the United States—transportation systems, telecommunications systems, air traffic control systems, energy systems, environmental systems—is made up of large projects dealing with relatively sophisticated customers. The third generalization is that defense companies, as they go into commercial diversified markets, would do well to enter into partnerships or joint ventures with companies that already have the required marketing skills, instead of trying to do it independently. Graham Greene once said, "There always comes a moment in time when a door opens and lets the future in." A door has opened and the future is coming in, whether or not the aerospace industry is ready for it. Our task is to get out in front to shape this future instead of being shaped by it.