US embassy cable - 03THEHAGUE3150

UNCLAS SECTION 01 OF 07 THE HAGUE 003150 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR PM/B, EUR/UBI, EUR/RPM, DOD FOR OSD/PA&E, 
OASD/ISA/EUR, OASD/ISA/NP, OASD/ISA/AP, OASD/ISA/NESA, 
OASD/ISA/BTF 
 
E.O. 12958: N/A 
TAGS: MARR, MOPS, MCAP, PREL, PGOV, NL, NATO 
SUBJECT: THE NETHERLANDS:  2004 REPORT TO CONGRESS ON 
ALLIED CONTRIBUTIONS TO THE COMMON DEFENSE 
 
REF: SECSTATE 305999 
 
1. (U)  Point of Contact is Pol-Mil Officer Nathaniel Dean, 
(31) (70) 310-9346, email DeanNP@state.gov.  Average exchange 
rate is one Euro equals 1.22 USD. 
 
------------------ 
GENERAL ASSESSMENT 
------------------ 
 
2. (U)  The Netherlands made significant contributions 
to allied goals in 2003.  Dutch land, sea, air and marine 
forces participated in allied military operations in Iraq, 
Afghanistan, the Balkans and elsewhere.  In addition to its 
military participation, the governing coalition led by PM 
Jan Peter Balkenende gave strong political support for 
Operations Iraqi Freedom and Enduring Freedom.  In the face 
of a stagnant economy, Defense Minister Henk Kamp has sought 
to manage large mandated defense cuts in a way that makes 
Dutch forces more effective and increasingly deployable, 
while 
increasing the percentage of defense expenditures on 
equipment modernization.  Throughout 2003, then FM de Hoop 
Scheffer and other members of the Dutch government argued 
strongly in support of keeping the EU's European Security 
and Defense Policy (ESDP) tied to NATO-EU Berlin plus 
agreements.  The Dutch were outspoken opponents of the 
conclusions of the so-called April 2003 "Mini-Summit" on 
European defense that called for a separate EU military 
headquarters at Tervuren, Belgium.  De Hoop Scheffer's 
strong leadership in support of allied goals and maintaining 
the vitality of the transatlantic alliance in the face of 
certain challenges culminated in his selection as successor 
to Lord Robertson in January 2004 as NATO Secretary 
General.  Finally, the Dutch served as Chairman in Office 
of the Organization for Security and Cooperation in 
Europe (OSCE) in 2003, and charted an ambitious program 
that included adoption of a strategy to address Threats 
to Security and Stability in the 21st Century. 
 
NATO issues:  PCC, NRF, PfP 
 
3. (U) The Dutch made efforts in 2003 in support of their 
Prague Capabilities Commitment (PCC) goals to acquire 
Nuclear Biological and Chemical defense vehicles, upgrade 
their theater ballistic missile defense capability and 
enhance alliance PGM stocks (see also paras 5-6).  Strong 
supporters of the NATO Response Force (NRF), the Dutch 
agreed to participate in NRF rotation one with one frigate, 
a number of staff officers and logistics support.  The Dutch 
contribution to NRF-2 will be the same augmented by six 
Dutch air force F-16s.  The Dutch-German High Readiness 
Force Corps Headquarters will participate in the NRF-4 
rotation.  The Dutch have agreed to provide an Army Brigade 
every other rotation for the near future, in addition to 
niche troops as appropriate.  The Dutch have been very 
active participants in Partnership for Peace (PfP) since 
its inception.  The Netherlands strongly supported expansion 
of NATO by extending invitations to Bulgaria, Estonia, 
Latvia, Lithuania, Romania, Slovenia and Slovakia. 
The Dutch consider such expansion important to enhancing 
security and stability on the European continent. 
 
Defense Spending and Acquisitions 
 
4. (U) The Dutch defense budget for 2003 was Euro 
7,438,900,000 
(1.57 percent of GDP).  The projected defense budget 
for 2004 is Euro 7,667,939,000.  While this seems to 
represent a nominal increase, it in fact reflects a re- 
allocation of resources following significant budget cuts. 
In June 2003, Minister of Defense Kamp announced plans for 
restructuring the Dutch military in response to severe 
mandated budget cuts which affected all government 
ministries.  His proposed budget was accepted essentially 
intact by the Parliament in October 2003.  These plans 
included significant mandated cuts to the Dutch defense 
budget (enacted under the first Balkenende government 
2002-03) of an average of 380 million Euros a year for the 
next four years.  In the period, 2004-2008, the material 
cuts include reducing Dutch frigates from 14 to ten, 
tanks from 180 to 110, Apache attack helicopters from 
30 to 24, F-16s from 137 to 108, and eliminating the Navy's 
P-3 Orion maritime patrol aircraft fleet, as well as 
delaying certain Prague commitments (i.e., increasing the 
number of Patriot missile batteries).  Personnel will be 
reduced through the elimination of 12,000 positions, 
while at the same time 5,000 new warfighter positions are 
created for younger personnel.  Overall personnel strength 
will be reduced from approximately 70,000 to 65,000. 
Finally, the bases of Valkenburg (2005), Seedorf (2005), 
Soesterberg (2007) and Twenthe (2007) are to be closed. 
Kamp called for these cuts in major operational capabilities 
and personnel to save money and to reallocate budget 
resources 
to focus on substantial new investments.  His goals include 
gradually increasing the Dutch rate of investment in new 
equipment from 15.8 percent to 21.3 percent of their total 
defense budget by 2008.  His ultimate goal is to make all 
Dutch forces deployable -- and he has stressed a preference 
for expeditionary forces as well as an interest in 
investments, such as potential future acquisition of the 
Tomahawk missile system to enhance the utility of the Dutch 
navy's four new Seven Provinces-class frigates to the NATO 
Response Force (NRF). 
 
5. (U) Kamp's spending cuts should yield sufficient funding 
to 
invest in certain ready capabilities and to sustain 
participation 
in military missions over a longer period of time.  In terms 
of 
investments, the Dutch have continued their commitment as a 
Level 
II partner in the Systems Development and Demonstration (SDD) 
phase of the Joint Strike Fighter program and are anticipated 
to begin negotiations as a partner to the Production MOU in 
2004.  They have begun modification of their F-16 fleet 
adding 
Link-16 datalink capability.  In 2003 the GONL allocated 
Euros 
78 million for replenishment, maintenance and upgrade of the 
Dutch air force's precision-guided missile capabilities.  As 
part 
of this effort, in late 2003, the GONL began the process to 
acquire 40 Joint Direct Attack Munition (JDAM) kits. 
Additionally they will spend approximately $132 million to 
begin a significant modernization of the targeting systems 
(MTADS) for their remaining fleet of Apache attack 
helicopters. 
Further to Dutch Prague Capabilities Commitments, the Royal 
Netherlands Air Force anticipates approval by February 2004 
to upgrade their current Patriot batteries to a PAC 3 
capability 
and purchase 32 Patriot PAC 3 missiles giving them a 
hit-to-kill 
capability against the ballistic missile threat. 
Additionally, 
they have allocated over Euros 140 million in an effort to 
modernize network-centric warfare operations of their air 
defense forces and their High Readiness Forces command and 
control capabilities.  In another focus on meeting Prague 
goals for strategic airlift, the RNLAF is negotiating a 
commercial purchase of a DC-10 transport to augment their 
strategic lift capacity, a mission currently fielded by 
their two KDC-10s. 
 
6. (U) The Dutch Army in accordance with Prague commitments 
concerning its chemical, biological, radiological and nuclear 
(CBRN) defense competence had begun a multi-year development 
and investment program (Euro 45 million) in CBRN capabilities 
and vehicles.  They also have made a long-term commitment to 
the Alliance Ground Surveillance (AGS) program (Euro 116 
million). 
On the Navy side, there continues to be investment in 
shipboard 
weapons and the Dutch are near to signing a trilateral 
agreement 
with Germany and the U.S. for Production and Research and 
Development of the Standard Missile (SM). The Dutch Air 
Defense 
and Command frigate (LCF) fleet conducted the first live fire 
test of SM 2 in November 2003.  The second of four LCFs will 
begin cold water trials by the end of 2003 and the third 
comes 
into service in 2004. 
 
Economic Factors, Grant Aid 
 
7. (U) Despite economic recession, the Dutch continue to be 
among the world's leading donors of Overseas Development 
Assistance and in 2003 devoted Euros 57 million and 
32 million to Afghanistan and Iraq respectively.  The 
Dutch economy slumped into recession with GDP growth 
in 2003 falling by an estimated 0.75 percent (y/y) -- 
after marginal 0.2 percent (y/y) GDP growth in 2002.  This 
is the lowest growth rate since 1982.  The labor market 
deteriorated in step, with the rate of unemployment rising 
from 3.9 percent in 2002 to an estimated 5.5 percent in 2003. 
 
Core inflation is expected to dip from 3.5 percent in 2002 
to 1.5 percent in 2003.  The European Convention remains high 
on the Dutch political agenda after failure to reach a 
compromise at the December EU Summit in Brussels.  The Dutch 
have expressed strong concerns about France and Germany's 
failure to comply with the EU's Growth and Stability Pact 
deficit criteria. 
 
Peacekeeping and Humanitarian Operations (Bosnia, Liberia) 
 
8. (U) The Dutch are long-time participants in NATO's 
Stabilization 
Force (SFOR) in Bosnia.  Currently there are 942 Dutch ground 
troops deployed with SFOR.  The Dutch task force (a 
reinforced 
mechanized infantry battalion) operates in Multinational 
Division 
Southwest in the vicinity of Vitez, Novi Travnikand, and 
Knezevo. 
On November 5, the Royal Netherlands Navy deployed the 
Loading 
Platform Dock, HNLMS Rotterdam, to the coast of Liberia as 
part 
of the UN mission to that West African Nation (UNMIL).  The 
ship 
accompanied by 257 military personnel, including a surgical 
team, 
a marine platoon, a boat company and a helicopter detachment. 
the Dutch also contribute smaller numbers of personnel to 
other 
NATO, UN and OSCE peacekeeping missions. 
 
Counter proliferation, Nuclear Threat Reduction 
 
9. (U) The Dutch strongly supported the goal of curbing the 
proliferation of missile and weapons of mass destruction as 
charter members of the Proliferation Security Initiative 
(PSI). 
In 2003 they also joined the G-8's Partnership Against 
the Spread of Weapons and Materials of Mass Destruction. 
In addition, the Dutch were the first country in the world 
besides 
the U.S. to install radiological detection gates at 
Rotterdam, 
Europe's largest container port. 
 
The Global War on Terror 
 
10. (U) Throughout 2003, the Dutch maintained a robust level 
of participation in overseas allied military deployments.  As 
of December 3, 2003 the Dutch have 2527 troops deployed in 
operations worldwide mostly in support of allied operations 
(see paragraphs 11 - 14 for further details). 
 
Iraq:  Operation Iraqi Freedom 
 
11. (U) In February, despite being in caretaker status at 
the time, the first Balkenende government offered strong 
political support for Operation Iraqi Freedom (OIF) and 
dispatched three needed Patriot missile batteries to defend 
NATO ally Turkey at a time when the alliance was deadlocked 
on the issue.  These units were deployed to Diyarbakir and 
Batman in southeastern Turkey.  They remained in Turkey from 
February 26 until May 1 with 360 Royal Netherlands Air Force 
personnel providing much needed deterrence of Theater 
Ballistic 
Missile threats and allowing U.S. and allied units to focus 
efforts elsewhere in the region.  From February 17 until May 
19, 
the Dutch provided Host Nation support for shipment of 
equipment of U.S. military units from their posts in Germany 
on to Kuwait and Turkey for operations in Iraq.  In addition, 
during 2003 the Dutch provided support (fueling, catering, 
force protection, and operational security) for over 100 
Civil 
Reserve Air Fleet (CRAF) flights ferrying approximately 
40,000 U.S. service members from the U.S. through Schiphol 
International Airport bound for Kuwait.  Since July 31, the 
Dutch have had approximately 1100 military personnel in Iraq 
as part of the Stabilization Force (SFIR) serving in Al 
Muthanna 
province as part of the UK's Multi-National Division (MND) 
SouthEast.  Their participation consists of a reinforced 
Royal 
Dutch Marine battalion supported by a Royal Netherlands Air 
Force Detachment (three CH-47 Chinook transport helicopters) 
and small units from the Royal Netherlands Army and 
Constabulary 
(Marechausee).  On November 28, the Dutch Cabinet decided to 
extend the deployment by six months and to dispatch an 
additional 
Chinook helicopter as well as a company of Dutch army special 
operations forces commandos for reconnaissance.  The Dutch 
also 
have six officers serving as part of the Polish division 
Headquarters in Al Hillah. 
 
Afghanistan:  ISAF and OEF 
 
12. (U) In Afghanistan, the Dutch began 2003 with 200 
infantry 
troops deployed in Afghanistan as part of a joint 
German-Dutch 
unit participating in the International Security Assistance 
Force (ISAF).  Beginning on February 10, the Dutch co-led 
ISAF III with Germany via the German/Dutch High Readiness 
Force Corps Headquarters employing approximately 700 Dutch 
military personnel.  The GE/NL HRF Corps headquarters handed 
over the command to NATO's AFNORTH Headquarters on August 10, 
2003.  Most recently, Defense Minister Kamp agreed to 
consider 
deploying four Dutch Apache attack helicopters in support of 
NATO's expanded ISAF mission.  As part of Operation Enduring 
Freedom, the Dutch have authorized blanket overflight and 
basing and they have sent five liaison officers to the 
CENTCOM 
staff in Tampa FL, headed by a Brigadier General.  They have 
provided maritime assets and other military assets to include 
two P-3 Orion aircraft, a tanker, a C-130, six F-16s (October 
1, 2002 - October 1, 2003), two frigates, and two 
minesweepers. 
The Dutch F-16s served as part of the European Participating 
Air Forces (EPAF) squadron, which provided combat support 
to OEF out of Manas, Kyrgyzstan. 
 
Maritime Surveillance:  Operation Active Endeavor 
 
13. (U) The Royal Netherlands Navy currently has one frigate 
and one logistics ship deployed to the Mediterranean for 
NATO Operation Active Endeavor (OAE) under the command of 
NATO's Standing Naval Forces Mediterranean.  The Dutch 
Frigate 
HNLMS Jacob van Heemskerck was the command ship for the 
STANAVFORMED from September 25, 2002 until September 25, 
2003. 
Accompanying the ships were 349 service members. 
 
Force Protection for U.S. military facilities 
 
14. (U) In terms of enhanced force protection, the Dutch also 
provided approximately 88 personnel for increased force 
protection around military facilities in the Netherlands from 
January to December 2003 at an estimated value of $1,200,000. 
 
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Direct Cost Sharing 
------------------- 
 
15. (SBU) The Dutch government spent no funds on cost sharing 
for stationed U.S. forces in CY 2003.  The U.S. currently 
maintains few facilities in the Netherlands and downsizing of 
the U.S. military presence in the Netherlands continues.  In 
September, OSD announced that two Army Prepositioned Sets 
(APS) 
sites would terminate operations on February 29, 2004.  The 
sites 
are used to store Army pre-positioned stocks.  Built in 1983, 
the 
facilities once held a brigade's worth of weapons, vehicles 
and 
equipment in case they were needed by U.S. troops to defend 
Cold 
War allies.  These closures will affect 10 U.S. soldiers, two 
U.S. civilians, eight local-national civilians and 
approximately 
400 employees of the Dutch Ministry of Defense who work at 
these 
facilities.  The closure of additional facilities is under 
discussion and is currently in the staffing phase. 
 
--------------------- 
Indirect Cost Sharing 
--------------------- 
 
16. (U) The Dutch government forgoes tax revenue, and grants 
privileges and immunities to officials working at the 
International Court of Justice (ICJ), the International 
Criminal Tribunal for the Former Yugoslavia (ICTY), the 
Iran-U.S. Claims Tribunal, and other international legal 
institutions based in The Hague although it has taken steps 
over the past two years that erode a number of these 
benefits. 
These steps have engendered increasing criticism from these 
institutions and has prompted the Iran-U.S. Claims Tribunal 
to demand arbitration of these issues with the GONL.  The UN 
pays rent for the facilities that house the ICJ and the ICTY. 
 
The Dutch provide the Iran-U.S. Claims Tribunal facility rent- 
free, although the Tribunal bears the significant costs of 
maintaining the facility.  The Netherlands also provides 
prison space, on a fee basis, to the UN for alleged ICTY War 
Criminals during pre-trial detention, trial and appeals. 
 
----------------------- 
Grant/Humanitarian Aid 
----------------------- 
 
17. (U) As one of the leading donors of international 
development aid in the world, the Netherlands continued in 
CY 2003 to provide considerable official development 
assistance to both Afghanistan and Iraq.  Total Dutch Overall 
Development Assistance (ODA) for FY 2003 stands at 
approximately EUR 3.8 billion, which includes multilateral 
and bilateral contributions. 
 
Afghanistan 
----------- 
The Netherlands is one of the major contributors to Afghan 
reconstruction and humanitarian aid.  The Netherlands seeks 
to continue to play a key role in the donor coordination 
process and appreciates frequent consultations with U.S. 
 
The Netherlands FY 2003 contributions were: 
 
Afghan Reconstruction Trust Fund (ARTF) -- USD $45 million 
 
Elections -- USD $5.9 million 
 
UNHCR -- USD $5.9 million 
 
Iraq 
---- 
 
The Netherlands continues to seek out ways to contribute 
to reconstruction efforts.  Dutch FY 2003 contributions 
are as follows: 
 
UN Consolidated Appeal (Humanitarian) -- Euros 18 million 
 
Dutch NGOs operating in N. Iraq -- Euros 3 million 
 
Police Training and Equipment -- Euros 900,000 
 
During the October 2003 Madrid Donor's Conference, the 
Netherlands pledged an additional Euros 10 million for Iraq: 
Humanitarian Aid -- Euros 5 million 
 
Multilateral Trust Fund -- Euros 5 million 
The Dutch Ministry of Foreign Affairs will also give 
Euros 300,000 to aid demining and is looking to support 
the mass graves project with personnel and funding. 
 
Stability Fund 
-------------- 
 
A new Dutch government "Stability Fund" will consist of 
Euros 64 million in FY 2004 and Euros 110 million in 
FY 2005.  It will be a combination of ODA money and other 
funds, directed to conflict-resolution and peacebuilding 
programs.  Approximately half of the money will be used 
for the continuation of existing programs, and half will 
be put toward new, as yet undesignated programs. 
 
------------ 
Peacekeeping 
------------ 
 
18. (U) NATO SFOR:  942 personnel (RNLA reinforced mechanized 
infantry battalion) part of Multinational Division Southwest 
 
NATO KFOR HQ/EUMM - two military personnel 
 
OSCE Macedonia - four military personnel 
 
OSCE Moldova - one military personnel 
 
UNMIL (Liberia):  One RNLN Amphibious Landing Platform Dock 
vessel, HNLMS Rotterdam, 257 personnel (including a surgical 
team, RNLMC platoon, RNLN boat company and RNLN helicopter 
detachment) 
 
UNTSO Middle East - 12 military personnel 
 
---------------------- 
Contingency Operations 
---------------------- 
 
19. (U) ISAF II:  Until February 200 RNLA personnel 
ISAF III:  February to August 700 (mostly RNLA) personnel, 
part of NL/GE High Readiness Corps HQ 
NATO ISAF IV:  August to date, 30 personnel in NATO ISAF HQ 
 
Operaton Display Deterrence (Turkey): 3 Patriot Missile 
Fire Units with 360 RNLAF personnel to Turkey from February 
- May 
 
Operation Iraqi Freedom:  1,100 personnel (RNLMC, RNLA, RNLAF 
and 
Royal Constabulary); four Chinook CH-47 transport helicopters 
to Al Muthanna Province as part of UK's Multi-National 
Division 
South East; six personnel to Polish Division HQ at Al Hillah 
 
Operation Enduring Freedom:  six/nine F-16s to Manas, 
Kyrgyzstan, 
January - October; one K/DC-10 air refueling tanker; one 
C-130 
transport plane; two P-3 maritime patrol aircraft; two 
frigates; 
two minesweepers to Gulf region 
 
NATO Operation Active Endeavor:  one frigate and one 
logistics 
ship, January to September; 349 RNLN service members. 
 
In addition, the Dutch joined the Proliferation Security 
Initiative (PSI) as a charter member of this effort and 
have sent personnel as observers to initial PSI exercises. 
 
--------------------- 
Counter-proliferation 
--------------------- 
 
20. (U) In addition to their participation in the PSI, 
the Dutch joined the G-8's Partnership Against the Spread 
of Weapons and Materials of Mass Destruction in the run 
up to the 2003 Evian G-8 Summit.  The Dutch currently fund 
a chemical weapons destruction facility in Russia as part 
of this effort.  To combat the illicit spread of radio- 
logical materials the Dutch were the first country in the 
world besides the U.S. to install radiological detection 
gates at 
Rotterdam, largest container port in Europe. 
 
21. (U) The Dutch play an active role in the nonproliferation 
regimes such as Nuclear Suppliers Group, the Missile 
Technology 
Control Regime, the Australia Group and other international 
counter-proliferation regimes.  The Netherlands is also the 
seat of the Organization for the Prohibition of Chemical 
Weapons (OPCW).  The Dutch served as inaugural chair in 
2003 of the Hague Code of Conduct against the proliferation 
of Ballistic Missiles which was inaugurated in November 2002 
and has been since subscribed to by over 100 states.  The 
Dutch serve on the Board of Governors' of the UN's IAEA and 
share the U.S.'s strong concerns about the Iranian nuclear 
program. 
SOBEL