MESSAGE OF THE SECRETARY OF DEFENSE

In the year that has passed since the Department's last Annual Report, momentous events have continued to reshape the world. The United States fought and won a major war in the Persian Gulf. Thousands of miles away, the dissolution of freedom's most powerful adversary, the Soviet Union, brought an end to the Cold War that dominated the international security environment for more than a generation.

Both of these events demonstrate the importance of America's commitment to deploy the military capability needed to defend freedom and preserve security. That capability has now put us in position to help shape a new security environment for the post-Cold War era. We must take advantage of these new opportunities to reduce and restructure our military, as well as to ensure we remain able to maintain our security and interests.

In the Gulf, more than half a million servicemen and women, both active-duty and reserve, carried out an historic campaign to liberate Kuwait and stop a ruthless aggressor from dominating this region and its global energy lifelines. The high quality of our forces and their superb training, advanced weapons technologies, well-organized logistics and support, and outstanding military leadership and planning contributed to a swift victory with unprecedentedly low casualties. Our commitment to leadership won us the confidence and support of the world. More than 30 nations provided forces for the Gulf Coalition, and many others gave financial and diplomatic support.

Now, less than a year later, the Gulf War is long past. Saddam Hussein has been discredited, and his nuclear weapons program cannot blackmail the world. Instead, Kuwait is independent, the Gulf is at peace, American hostages in Lebanon have been returned, and a new Middle East peace process has begun. Across the world, our leadership is respected, and nations from every continent honor their veterans of Operation DESERT STORM. All those developments are the direct result of America's ability and willingness to marshal the forces needed to defeat aggression and protect the interests of freedom.

The Gulf War sends a powerful message to potential aggressors that belligerence will not pay. Lessons learned from Operation DESERT SHIELD/STORM are provided in a separate report pursuant to title V of Public Law 102-25.

The second momentous event of the past year

the collapse of the Soviet Union - closes out a critical period in history. After more than 40 years of tension, the East-West confrontation is over. For decades, expansionist Soviet foreign policies, combined with a massive build-up of Soviet military power, had forced America and its allies to maintain a significant commitment to defense. Our refusal to be intimidated by the Soviet military build-up, our willingness to match that build-up, and our deployment of forces forward in Europe and the Pacific, all provided a shield against Soviet aggression that allowed democracy to develop and flourish in many parts of the world.

As this Annual Report attests, our capable defense in the Cold War and in the Persian Gulf the first conflict of the post-Cold War era has earned us a position of unprecedented security

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and strength. There is no country capable of mounting a global military challenge to our security, except with respect to strategic nuclear forces. No country is our match in conventional military technology and the ability to apply it. There are no significant alliances hostile to our interests, and the strongest and most capable countries in the world are our friends. No region of the world critical to our interests is under hostile, nondemocratic domination. With the defeat of Saddam Hussein, near-term threats in these regions are small, relative to our capabilities and those of our allies.

The success of our defense investment over the years has given America's strategic position significantly greater depth than at any time in the postwar era. We have a longer time before serious threats could arise, strong alliances in every region to help keep the peace, and the quality forces and technological edge to prevail over potential aggressors.

The years ahead still pose significant uncertainties. We have already seen that regional tensions, such as the conflict in the Gulf, can pose serious threats to our national interests. In the former communist countries, the road to stable democratic institutions and prosperous free markets will not be an easy one. People are struggling with the communist legacy of economic failure and political stagnation. Without democratic traditions for the peaceful resolution of political conflict, some new democracies have been threatened with civil violence, unrest, and war.

Massive Soviet nuclear arsenals, including some 30,000 tactical and strategic weapons, also remain a serious concern. A loss of central control, or the proliferation of these and other weapons of mass destruction beyond the borders of the former Soviet Union, would pose great threats to peace and stability.

Today, some 15 nations have ballistic missiles — in less than a decade, as many as 20 countries may possess these systems. Nuclear, chemical, and biological weapons, as well as advanced conventional systems, can make distant conflicts a worldwide concern. Other threats, including terrorism, illegal drugs, and low-intensity conflict, can weaken the fabric of democratic societies.

The uncertainty of those developments is the essence of the defense challenge in the years ahead. That uncertainty requires us to plan carefully if we are to take advantage of current opportunities for a less costly defense while preparing for the new security environment.

Long before the collapse of the Soviet Union, the United States had already begun to shape its military planning on the assumptions of a sharply reduced Soviet threat. Those assumptions, which events have borne out, have enabled us to adjust our strategy and force structure to meet near-term threats, like regional contingencies, as well as enabling us to focus our resources on high-priority long-term investments.

With the former Soviet Army pulling out of Eastern Europe, with the end of the Warsaw Pact, and with the dismantling of the Soviet Union, we no longer have to focus on global war originating in Europe. We can adjust our posture for the range of regional contingencies we most expect in the years ahead.

The new defense strategy has been successful, not only in responding to Soviet change, but in positioning the United States to meet the demands of the new world order from dealing with regional contingencies to managing the global transition out of Cold War.

The new strategy rests on four basic requirements. First, an effective strategic deterrent, including a diverse mix of survivable, highly capable strategic nuclear weapons, is still essential to national security. In addition, it is clear that in a world of increasingly sophisticated arsenals, the need for strategic defense is greater than ever.

Second, we must also retain a forward U.S. military presence, in smaller numbers, to enable us to act quickly to meet crises that affect our security. Such a forward presence enables us to support our security interests and continues to be critical to stability and world confidence in America's leadership. We do not and cannot stand alone. Our alliances remain essential. American freedom and security are best protected when other nations share our democratic values and join us in defending these principles.

Third, U.S.-based contingency forces are needed to ensure we can respond rapidly to crises that affect our security.

Lastly, we can safely reduce total forces only if we are prepared to reconstitute the force structure as necessary to meet a newly emerging global threat. A decade ago, in 1981, no one predicted the kind of change we saw last year, and no one can comfortably predict what the world will look like 10 years ahead. Yet today, due to the length of time it takes to build a credible defense capability, we are creating the force we will have to rely on at that future time.

For near-term requirements, we must maintain an effective Base Force the minimum required to ensure our security against a broad array of potential threats. But we must also maintain the ability to reconstitute our forces in future years, should changes in the international security environment make that necessary. Reconstitution means preserving those elements of our security that take a long time to establish or build — from defense infrastructure, to large weapons platforms, to the highly trained personnel on whom our military depends.

Our new strategy provides the guideposts by which we can safely restructure and reduce our military forces. As this Annual Report makes clear, we are now in the midst of one of the most profound defense reductions in American history.

Last year, even given the need to meet Operation DESERT STORM requirements, the long-term force structure cuts were already well under way. Today, in many areas, we are at or below pre-Cold War levels. The U.S. military has fewer active-duty personnel than at any time since before the Korean War. In the past year, more than 40 ships have been decommissioned. The number of Navy battle force ships is now below 500 and is planned to drop below 450. We have inactivated four Army divisions, including two in Europe, and are in the process of inactivating two more. Over the past three years, we have cut more than 1,000 aircraft from total Air Force inventories. The number of aircraft in the active duty force is lower now than at any time since before the Korean War.

With a smaller force, we need fewer bases and military facilities. We are therefore in the process of closing or withdrawing from more than 700 worldwide. With a restructured force, we can also reduce weapons procurement. In the past two years, we have canceled or terminated more than 100 military systems and weapons programs.

In addition, a new acquisition strategy has resulted in significant changes in our weapons production programs. The value of our technological edge was clearly demonstrated in the

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