Defence Business: Force structure - A Defence hedging strategy | ADM Mar 2009
By Peter Layton
There is a dilemma at the core of Australian defence thinking: should the ADF be structured for fighting intra-state conflicts typical of the last 20 years, or instead for rare major interstate conflicts against sophisticated enemies.
The intra-state conflicts are wars of choice with Australia becoming involved for humanitarian reasons, or to assist in policing the international order.
Interstate wars, though, have become quite rare. An attack on Australia - a war of necessity - is commonly viewed as being very unlikely for the foreseeable future.
Much has been written about restructuring the ADF to fight other people's intrastate wars, but Australia cannot ignore the possibility of becoming involved in a war of necessity; the stakes are too high.
However, budget realities prevent any nation from preparing for all conceivable wars and so it seems Australia must take a punt on what the future might hold.
The experience of the last 20 years has revealed that a military structured for an intrastate war is quite different to one structured for conventional operations during an interstate war.
The former requires an emphasis on numerically large land forces with appropriate language and cultural skills for the current conflict, engineer, medical and constabulary units, civil reconstruction specialists and considerable patience and time.
The latter requires high technology combat with networked forces employing sophisticated mechanized forces, air defence, long range strike and undersea warfare.
How can this dilemma be reconciled?
A solution is to hedge against the unlikely resumption of interstate warfare, while developing and sustaining forces sufficient for the intrastate wars of choice that Australia determines are in its national interest to become involved in.
The forces for intrastate wars do not necessarily have to be sufficient to win by themselves; these wars will in most cases involve coalition operations, the few scenarios that do not are in relatively small countries.
The operations in Timor and the Solomon Islands are representative of the conflicts Australia may be involved in alone, whereas Iraq, Somalia and Afghanistan are not.
Coalition operations
Australia is part of the US-led coalition that is fighting Al-Qaeda and the Taliban, and has ongoing operations supporting troubled regional states.
Both these roles have attracted much interest and debate, however this article discusses the rather less examined issue of hedging for a future interstate conflict.
Australia's future military strategy could be succinctly described as ‘helping weak states while hedging against the return of interstate conflict'.
This article concentrates on this latter summation in examining the strategic level rationale for hedging.
A hedging strategy
Hedging strategies are appropriate in times of strategic uncertainty, such as now.
During the Cold War, the capabilities of potential adversary forces were known and the ADF could be structured accordingly, with well-understood qualitative and quantitative benchmarks.
Now however, it is not necessarily evident that there will be a major conventional war in the near or medium future.
Instead the concern is that equipment acquired in large numbers today for such an improbable situation may draw funding and resources away from preparing for contemporary operations, or those that are much more likely to occur.
Worse, by the time a major conventional threat reappears - if it ever does - the equipment acquired may be obsolescent, given the rapid pace of technological change.
The use of hedging strategies gives a force structure the ability and the means to develop to meet new circumstances as they emerge.
Hedging strategies aim to minimize expenditures and long-term commitments, spending only limited funds and resources until the end-point becomes more certain.
When evidence accumulates that the international system is developing in worrying ways, then the overall force development strategy can be modified to counter this - by either expanding or contracting particular hedging sub-strategies as appropriate.
A hedging strategy is a compromise between cost and warning time.
Hedging would be unsuitable if, like during the Cold War period, there were short warning times of major conflicts starting.
For such situations, large, costly and readily available military forces are necessary.
Today's much longer warning times allow hedging to be a practical option for managing the improbable threat of major conventional war, while allowing scarce resources to be spent on forces appropriate for more immediate and pressing threats.
Importantly, a hedging strategy is dynamic, not static, and requires constant monitoring of the strategic environment for changes in the international system.
A robust package of hedging sub-strategies should be considered a portfolio of real options and just as with financial options, the greater the uncertainty, the greater their value.
However, hedging is not free; some expenditure may ultimately prove unnecessary, as not all hedges will prove useful as the international system evolves.
Budgetary aspects
Hedging is particularly appropriate when budgets are constrained.
In an ideal world, limitless defense expenditure would allow very large force structures to be sustained that can counter all possible circumstances.
However, national security and national prosperity are interdependent.
A sophisticated approach is needed to ensure sufficient defence capabilities and capacities to meet ongoing operational demands, while not adversely affecting long-term economic growth and the nation's fiscal strength.
Wider economic and security interests are best served by a force structure that is able to prevail, but that is affordable over the longer term.
A constrained defence budget has quite limited "optional" funding to be redirected to current operations, to restructure, or to manage the cost escalation when estimates of new acquisition costs prove inaccurate.
Generally, the major budget segments of operating costs or personnel cannot be easily reduced.
Often the only way to generate savings is by cutting the numbers of new weapon systems being acquired.
In this regard, fighting the Afghanistan war, or peace support operations in Australia's region, is less of an optional activity than acquiring large numbers of new high-end conventional warfighting weapon systems absent a major state-based threat.
Given defence budget constraints, and the uncertainty of when (and if) a state-based threat will emerge, a hedging strategy would emphasize maintaining and introducing leading-edge technology that outclasses potential adversaries, but only acquiring relatively small operational fleets of this new equipment.
The switch in budget priorities from fighting in Afghanistan, and contributing to the stability of local weak states, to funding large scale procurement of such equipment would only be made when a significant state based threat clearly emerged.
Until then, the numbers of new high-technology weapon systems acquired would be more driven by the limited funding available than by sustaining a specified force size.
When necessary, a larger force structure best suited to the circumstances could be quickly acquired based on the array of in-service alternatives.
A necessary component of this strategy is therefore a capacity for quickly switching to timely acquisition and/or manufacture.
Sounds good however . . .
With all strategies there are potential shortcomings that require careful management. Critically, such hedging strategies rely upon adequate warning of a major state-based threat developing, to give time to expand the force sufficiently.
In this regard, intelligence organisations and systems would need to be adequately resourced to focus over the long term on monitoring the force structures of major and emerging states.
A marked shift in the capabilities these states were developing should trigger changes in the hedging strategy.
Significant offensive capabilities would need to be fielded to challenge Australian sovereignty and these should be highly visible, and more easily assessed by national technical means than intent.
A shift in Australian doctrine from having sufficient capability to win quickly, to having the capability to convince any potential adversary that it cannot prevail in a conflict, might also be appropriate.
Given resource constraints, risks can be accepted in the force structure needed to counter improbable major conventional wars to allow the more pressing threats from global terrorism or regional instability to be addressed.
This risk management approach reflects the judgment that there is a large difference in costs between building a force structure that wins major wars quickly, and one that can deter an adversary through being manifestly able to stop him winning.
The force structure for the later case can be significantly smaller and more affordable, although still large enough to contribute niche units to an Allied force.
In the hedging strategy envisaged, a small part of the force will employ the latest new-generation technology.
This is a change from the current approach of seeking to acquire large numbers of platforms through full-scale production of a design frozen at a technology level several years old.
Having even a small force element that employs innovative, leading edge technology, though can ensure the whole force wins convincingly.
In the 1940 Battle of France, only 10-15 per cent of the German Wehrmacht was mechanized and well-equipped.
The remainder of the Army relied on horse drawn wagons and equipment reminiscent of World War I, but this was of no matter; the numerically small, technologically advanced mechanized units won the battles for the remainder to fill in behind.
Conclusion
The uncertainty of both future strategic circumstances and defence budgets favours using a hedging strategy that makes the overall force structure adaptable and responsive to strategic changes, while being able to meet contemporary challenges.
However hedging has risks and requires monitoring the emerging strategic environment and adjusting force structures as challenges arise; it is not a "set and forget" strategy.
Peter Layton is a RAAF Group Captain with extensive experience in force development and acquisition; he was recently on the faculty of the National Defense University in Washington DC. The views expressed are the author's own.