Nonetheless, NATO recognizes that it must make greater efforts to enhance its conventional capabilities if it is to continue to deter the Soviets from calculating that they can fight and win a war in Europe. The Conventional Defense Improvements (CDI) within NATO is intended, in part, to identify emerging technologies that will enable us to improve the conventional balance. This is an example of how we are focusing our efforts, when possible, on Soviet weaknesses and enduring Western strengths. The CDI enables us to apply our technological strengths to gain the most benefit from them. This is the essence of the competitive strategy approach I have initiated within the Department of Defense (see Section I.D.4). It has additional applicability within the framework of the NATO alliance. I intend to continue supporting this initiative in discussions with our NATO allies and urging them to do the same.

One aspect of conventional defense enhancements deserving immediate attention is defense against the increasing threat posed by Pact surface-to-surface missiles. Both our department and the NATO alliance are actively addressing this problem and we hope to develop shortly some specific near- and long-term solutions.

Additionally, we and our allies are undertaking efforts to increase the level of arms-production cooperation to get more from our collective defense dollar. We have made considerable progress in this critically important field, and I intend to continue emphasizing this approach during the remainder of my tenure as Secretary of Defense. We need to recognize that this can result in more arms purchases for foreign manufacturers, and more joint ventures. But since the result can be more and better weapons at lower cost, it is most important to make this effort succeed.

In sum, although the trends in the military balance in Europe are adverse, we see opportunities for reversing these trends if we focus our efforts on key areas, maintain a consensus within the alliance on improving our conventional defense capabilities, and ensure the maintenance of a credible, modernized nuclear deterrent.

b. The East Asian Balance

The Soviets continue expanding and modernizing their forces in East Asia. They are upgrading the equipment of their more than 50 divisions deployed in the Far East. Their more than 40 tactical air regiments stationed there are receiving newer aircraft. The latest generation of interceptor aircraft are also entering the regional inventory. Backfire aircraft continue to augment the older inventories of Badgers, and the Soviets are deploying modified Bear aircraft in areas from which they can support Far East operations. The Soviet Pacific Ocean fleet is the largest in the Soviet navy. It contains two of the Soviet Union's three vertical/short-takeoff and landing (V/STOL) aircraft carriers, over 80 principal surface combatants, and more than 80 submarines. These conventional forces are supplemented by a substantial number of short- and intermediate-range nuclear forces, including the land-mobile SS-20.

Outside the Northeast Pacific, the Soviet naval and air presence in the South China Sea now comprises approximately 30 ships and submarines, and 40 aircraft. Operating from Cam Ranh Bay, Vietnam, these and other support forces pose a significant threat to Southeast Asian sea lines of communications, and highlight close and continuing Soviet support for the Vietnamese regime in its aggressive action in Cambodia.

The Sino-Soviet military balance continues to favor the Soviet Union. It will continue to do so as Chinese emphasis on economic growth which reduces funds available for immediate defense improvements in its long-term modernization programs. Although China continues to make incremental improvements in reorganizing and streamlining its military, Beijing still relies on its large population and resource base, and geographical size as the heart of its conventional deterrent.

Even though the Soviets maintain an enormous strategic nuclear superiority over the Chinese, China's extensive use of camouflage, concealment, and mobility is likely to preclude a disarming Soviet first strike against China's relatively small nuclear force. Slow growth over the next five years will likely include the introduction of a small number of SLBMs. The effectiveness of China's strategic forces will be reduced by ongoing Soviet upgrades to its missile defense systems.

The second significant regional balance, between North and South Korea, is of critical interest and concern to the United States. The military preparedness of the Republic of Korea, coupled with North Korea's perception of America's resolve, have been instrumental in keeping the peace for nearly 34 years. North Korea persists in its efforts to modernize its large armed forces, despite the devastating effects on its notoriously weak economy. It is also deploying these forces forward that reduces the warning time for South Korea. Current estimates indicate that North Korea carries a defense burden exceeding 20 percent of its gross national product. North Korean modernization programs include continued reorganization and forward deployment of its army, and development of the second largest special operations forces in the world. All these forces are postured to attack in ways that maximize the opportunity of surprise.

The Republic of Korea, with U.S. assistance, has also been modernizing its forces, balancing these efforts within a strong, growing economy that is roughly four times the size of North Korea's. This economic asymmetry makes the long-term prospect for the Korean balance favorable. Nevertheless, in the face of Pyongyang's aggressive actions, and in view of the potential for Soviet intervention that would quickly upset the balance, our current efforts to assist South Korea in redressing specific military problem areas must continue.

Southeast Asia is the locus of the remaining significant regional balance. Vietnam fields the world's third largest army. With direct financing from the Soviets, it continues to occupy Cambodia, threatens Thailand and the overall stability of ASEAN, and poses a constant menace to China by deploying some 700,000 troops along the Chinese border. In exchange for base rights, the Soviets provide military equipment and continue to support the failed Vietnamese economy. Containing this threat requires our continued attention.

Although some aspects of the regional balance favor the Soviets, there are many important theater-wide considerations that favor the United States and its allies. Japan plays a significant role in bolstering democratic defenses in the region. By virtue of its key location, improving capabilities, modernizing self-defense forces, and its assumption of new missions, Japan provides a major part of its own defense and offers essential infrastructure support to U.S. forward-deployed forces. The Soviet deployment of SSBNs in bastions close to the Soviet Union magnifies the strategic importance of islands that dominate the entrances to the Sea of Japan and the Sea

of Okhotsk. The inclusion of Japan in this Soviet "sea-control" area underscores the Soviet threat to Japan.

The rapid economic development of Japan and the newly industrialized countries of the East Asian rim, together with the growth of the Chinese economy, continue to broaden the basis for developing the self-defense capabilities of friendly regional countries. The United States is pursuing economic and security policies that tie our countries more closely together, while assuring that technology transfer does not redound to the West's disadvantage.

In view of these positive economic trends in East Asia, with the notable exception of Soviet allies or clients, the long-term regional trends appear favorable from our perspective.

The Middle East/Southwest Asia region's critical geostrategic location, its considerable petroleum resources, and its proximity to the Soviet Union combine to make it an inviting target for Soviet expansionism. The Soviets maintain significant ground and tactical air forces in their military districts contiguous to the region and have been active in developing support bases for Soviet navy presence in the Indian Ocean. Since 1979, the Soviets have been using military force in their attempt to subjugate the Afghan people.

The immediate Soviet threat to the region in a global conflict consists of 30 active ground divisions, including some 5,450 tanks, over 1,400 fixed and rotary wing tactical aircraft, and numerous mobile missile launchers. Long-range bombers from air and naval units stationed outside the Southern Theater of Military Operations could also be directed to interrupt our projection of forces to the region. Soviet proximity to Southwest Asia provides them with a significant advantage in the balance, but the determination of the regional states to maintain their independence and the extremely difficult terrain partially offset these advantages. Furthermore, we estimate that the long lines of communications the Soviets would have to maintain to control the region's oil-producing facilities would be vulnerable to both air and unconventional ground interdiction, and would require a substantial investment in personnel to ensure local security.

As with other regions, our national security objectives in the Middle East and Southwest Asia include: deterring and, if necessary, defending against Soviet aggression; countering Soviet moves to gain power and influence; and protecting free world access to resources. Since 1981, we have improved our capability for projecting military forces to the region. We have built our potential force allocation to more than six ground divisions and over 600 tactical aircraft, and we now have the capability to deploy rapidly about four divisions (largely through our acquisition of U.S.-based fast sealift and maritime prepositioning in the Indian Ocean). To test these forces and our rapid-deployment concepts, we have conducted a number of successful exercises with friendly regional states. Part of our continuing plan to assist regional states defend more effectively against Soviet aggression calls for the forward deployment, in peacetime, of certain Central Command forces. To date, political problems and access limitations have limited our success. Regional states' awareness of the range of threats to their security, however, has

made them receptive to our military assistance programs, foreign military sales, and military exercises.

Our improved capability to project significant forces quickly into the region helps to deter Soviet attack. Should deterrence fail, we could successfully defend the region with substantially fewer ground forces than the Soviets would need to seize and occupy it, provided our forces are heavily supported by tactical air. We would need to be supported against a common foe by our friends and allies in the region and elsewhere by nations whose very existence depends on the West's continuing access to the oil fields. We would need to come to rapid accord with them regarding access and host nation support, and the continued flow of defensive military strength for our defensive military operations.

6. The Maritime Balance

The Navy's capability to protect our sea lines of communications and to project power remains crucial to Western security. Almost any type and level of conflict involving U.S. interests will require movement of forces by sea. Although the Soviets seem intent upon improving their naval forces and capabilities, our substantial shipbuilding program and use of effective strategies to exploit Soviet operational concepts result in an overall maritime balance favorable to the United States.

The Soviet navy concentrates on protecting its SSBN forces and destroying opposition nuclear-capable forces, such as U.S. SLCMequipped submarines and surface ships, and aircraft carriers. As Western platforms are becoming more numerous, capable, and dispersed, the Soviet capability to find and attack U.S. and Western SSBNs and SLCM-platforms will likely decline.

The Soviets continue to modernize their SSBN force and upgrade the quality of their attack and cruise missile submarines. By the mid-1990s, these improved submarines and the more capable surface combatants now being built will represent a significant percentage of the Soviet navy. The land-based contingent of Soviet naval aviation (SNA) continues to receive new Backfire missile-carrying aircraft, and Soviet air force Backfire and Bear-G aircraft continue to augment the SNA's antiship capability. It is likely that Fencer and followon tactical ground attack aircraft will enhance Soviet antiship forces in areas closer to land. The sea-based leg of naval aviation is pursuing V/STOL aircraft development, both with Kiev-class carriers operational now, and probably with a follow-on carrier that may be operational in the early 1990s. The new carrier may eventually support the introduction of conventional take-off and landing aircraft into the Soviet navy. The continuing development of Soviet high-performance antiship cruise missiles on their submarines, surface ships, and aircraft will stress our fleet defenses, but similar Western systems will severely complicate Soviet defensive problems as well.

Maritime superiority is critical to the United States because of our need to deploy and support forces by sea in almost any contingency. It is at least as critical for the Western alliance as a result of the role of reinforcement from the United States in the NATO plans. U.S. programs enhance our maritime capabilities in several key areas. The 600-ship Navy program as currently structured will provide 15 deployable aircraft carriers; substantial numbers of Aegis air-defense cruisers and destroyers; more, and more capable,

Los Angeles-class submarines, with the Seawolf-class in the mid 1990s; more amphibious lift in newer and more capable ships; new mine warfare ships; and new ocean surveillance platforms. The modernization of land- and sea-based naval aircraft continues, as does the effort to enhance cooperation between the Services to improve the effectiveness of maritime operations, notably by providing aerial tanking and surveillance support. The addition of these carefully balanced forces will greatly improve our ability to deal with the evolving Soviet threat.

The Soviet navy's major roles and missions are to assure that Soviet SSBN forces will be able to launch their missiles, and to deny the West access to sea areas from which forces can be projected into the periphery of the Soviet Union. These "sea-denial areas" have been expanding as the Soviet navy has grown, and now include the southern Norwegian Sea and northwest Pacific. The force-projection missions of the United States and its allies, and the sea-denial missions of the Soviets and Warsaw Pact are therefore quite asymmetrical, and our apparent force structure differences more readily explained.

The Soviet navy's predominant character as a navy designed to support submarine warfare in a sea-denial role is one result of this mission asymmetry. This emphasis will continue, though the size of the Soviet submarine force will decline slightly. The new platforms and support forces will actually improve the overall capabilities of the submarine force at the same time the Soviets are enhancing surface and air/mission forces.

Though the overall balance is favorable today, thanks to our naval expansion and the significant maritime contributions of our NATO allies, it is becoming more complex. The antisubmarine warfare picture will be complicated by the improved platforms on both sides, with a declining U.S. ASW advantage. Fleet air defenses will be increasingly challenged by improved antiship missiles entering both inventories. The United States, however, will retain significant advantages. The Soviet emphasis on the mission of SSBN protection limits forces available for other tasks. Despite improvements in the Soviet submarine force, the United States currently maintains an ASW edge. The U.S. Navy will continue to hold considerable advantages in tactical air and sustainability at sea, and in its ability to operate the new and more sophisticated ships entering the inventory. Continued pursuit of these competitive advantages and attention to changes in Soviet naval forces and strategy are necessary to preserve a favorable maritime balance in the future.

7. The Power-Projection Balance

Deterring war across the conflict spectrum, assuring war outcomes that do not compromise our interests, and improving, or at least maintaining, alliance cohesion are all goals that depend upon our ability to project force. With respect to areas outside the periphery of the Soviet homeland, our capability to project forces remains superior to the Soviet capability. However, the Soviets' continental location and large military establishment give them an advantage in applying force in Western Europe and along the Soviet periphery, while U.S. forces, in almost any type and level of conflict, would have to "project" from the continental United States (CONUS).