Second, we must avoid unilateral reductions in the baseline posture that we consider appropriate to our interests; in a period of transition and uncertainty, reductions should result from international agreement rather than from temporary budgetary exigencies or the impulse to set a good example for the other side. Third, we should nonetheless continue to strive for the utmost efficiency in the use of our scarce defense dollars and, as long as our baseline force requirements are not fully met, continue to convert excess overhead and support into increased combat power.

Fourth, our planning should abide meticulously by the spirit as well as the letter of existing arms control agreements and guidelines; in fact, we should plan toward the Vladivostok goals and our desire for other equitable agreements. To proceed otherwise and particularly to engage in unilateral force reductions-will not foster further detente and arms control. Instead it will simply create the kind of weakness that invites miscalculations, probes, tests, and the risk of disaster. Despite frequent use of the term "arms race," the United States has not engaged in the life-or-death competition that occurred among the European powers in the 1930's; and our defense budget, both as a percent of GNP and in its decline (in constant dollars), is a clear reflection of that fact. Indeed, we have been engaged in the rather peculiar process of reducing our defense budget in real terms while the Soviets have been raising theirs.

That, unfortunately, is the problem confronting us. We may be facing a situation where the Middle East is the potential tinderbox that the Balkans actually were in 1914, and where our international economic problems bear some resemblance to the 1930s, when international financial institutions and economic structures deteriorated and the Western powers turned inward and became weaker. In such an era, civility is essential, but it should be armed civility joined with prudence. Thus, while we should take other capabilities into account, our planning objectives should be to:

Assure that no potential adversary achieves unilateral advantage over the United States.

Leave unchallenged the Soviet capability for deterrence provided that our interests are respected and the traditional norms of international behavior are accepted.

In the present era, with so many sources of possible conflict, these principles and objectives-we believe-constitute the only prudent bases for planning. 4. Toward Long-term Deterrence

In the period prior to World War II, we could think of deterrence as based essentially on one type of capability-our non-nuclear forces. Even then we believed in a strong "forward defense" symbolized by a Navy second to none (and insisted on the principle of parity with Great Britain in the Washington Naval Treaty of 1922), a small regular army, and a mobilization base on which to build and equip major land and air forces. But because of distance, powerful friends in Europe, and the assumption that we should have the time to mobilize, we could afford a defense budget that constituted no more than 2% of the GNP. Now, however, all that has changed. The role of the United States has grown dramatically since World War II. Perhaps even more important, the technology of warfare has undergone a dramatic transformation. After 30 years, we are still struggling to adapt our concepts of conflict and its deterrence to nuclear weapons that range in yield from the sub-kiloton to the multi-megaton; to delivery system that can travel intercontinental distances in 30 minutes; and to improving accuracies that apply to short-range as well as long-range delivery systems and to high explosive as well as to nuclear warheads.

In the 1950's, some nations in the Western Alliance, including the United States, made the intriguing and convenient discovery that there was a phenomenon called deterrence, painless in that it would supposedly work without the unpleasant necessity of anyone being seriously prepared to fight. Even more miraculously, it turned out (or so it was alleged) that deterrence was low in cost-in contrast to defense. This observation led to the advocacy by some of reduced defense capabilities. Churchill himself spoke of safety as "the sturdy child of terror, and survival the twin brother of annihilation." Even now, deterrence is distinguished from defense and described as "the means of inflicting unacceptable damage in case of aggression . . ."

At base, however, this is nothing but a dangerous illusion, and most serious students of the subject have recognized it as such as the nuclear predominance of the United States has disappeared. Deterrence is not a substitute for defense;

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defense capabilities, representing the potential for effective counteraction, are the essential condition of deterrence. This simple truth becomes especially evident in a crisis, when forces designed only for "deterrence" are increasingly found to be lacking in credibility both to opponents and to their potential users. Deterrence, in other words, is not something free-floating that exists independently of a credible, implementable threat. It requires the most careful structuring of forces that is fully consistent with an agreed-upon strategic concept. By contrast with the 1950's, when the great nuclear superiority of the United States concealed any basic deficiencies in strategic analysis and force structure, it is now evident that deterrence does not simply derive from a pile of nuclear weapons-a pile which one anticipates, at least, will frighten one's opponents as much as the people it is designed to protect.

In the 1950's, you may also recall, there was some misunderstanding of the need for balanced military forces as opposed to simple reliance on nuclear retaliation. The "Fifties", if nothing else, were a period during which many institutions became excessively intrigued with the novelty of nuclear explosives. There is some evidence that the academic community has not recovered from the novelty yet.

More recently, illusions somewhat similar to those of the "Fifties" regarding deterrence have emerged about detente. Only detente exercises an even more powerful magic since it is believed somehow to obviate the need for both deterrence and defense. But we should make no mistake about it: there is no conflict among detente, deterrence, and defense. They are inextricably bound up with one another in the maintenance of an equilibrium of power.

A relatively closed society like the Soviet Union has no difficulty in pursuing detente and simultaneously strengthening its defense efforts. Under such circumstances, this nation should be under no illusions about the need to maintain a military balance and all the capabilities that go with it. If indeed we are to maintain a military posture second to none, there is no substitute for the hard, costly, and unremitting effort required to keep up the nation's defense.

For more than a decade now, it has become generally accepted (regardless of administration or party) that credible deterrence must, among other factors, rest on a TRIAD of capabilities-strategic nuclear, theater nuclear, and nonnuclear forces. Each component serves as a deterrent to its opposite number and, together, they interact to enhance deterrence over the spectrum of possible conflicts. If we do not have the full TRIAD, in other words, an opponent might be tempted to exploit the gaps in our deterrent.

The main components of our deterent forces will be discussed in detail later on in this Report. Here, I simply want to review three key military balances: the strategic nuclear balance, the military balance in Central Europe, and the worldwide maritime balance. The importance of our strategic mobility forces should also be underlined.

5. The Worldwide Military Balance

These three main balances do not cover all of the elements that we must consider in assessing the worldwide military balance that is the objective of U.S. and allied military programs. Of increasing importance, for example, is the comparative U.S. and Soviet capability to project military power into potential crisis areas. Until recently this comparison did not concern us because Soviet capabilities to deploy and support military forces at some distances from its borders were negligible. The issue will be a matter of increasing interest to us in the years ahead as the strategic mobility of Soviet forces improves.

Another aspect of any comprehensive assessment of the worldwide balance is the contribution of U.S. overseas deployments outside of Europe, for example in Korea. These forces help maintain local balances and form U.S. strongpoints in the worldwide balance.

To assess all of these balances with confidence is difficult. U.S. and Soviet forces are different in many ways. Organizational, doctrinal, and weapon assymmetries have developed as a result of differences in historical experience, weapons design philosophy, relative resource scarcities, geography, and other factors. In the case of the three key balances that will be reviewed, there are larger and larger asymmetries as one passes from strategic nuclear forces, to the conventional forces in NATO (in which the Center Region receives so much attention), to the air and naval forces. Simple comparisons based on counting numbers of weapons and men, even if qualified by the differing technological quality of the weapons, tell only part of the story.

6. The Strategic Nuclear Balance

Credible strategic nuclear deterrence depends on the satisfaction of four major requirements. First, we must maintain an essential equivalence with the Soviet Union in the basic factors that determine force effectiveness. Because of uncertainty about the future and the shape that the strategic competition could take, we cannot allow major assymmetries to develop in throw-weight, accuracy, yieldto-weight ratios, reliability and other such factors that contribute to the effectiveness of strategic weapons and to the perceptions of the non-superpower nations. At the same time, our own forces should promote nuclear stability both by reducing incentives for a first use of nuclear weapons and by deterring and avoiding increased nuclear deployments by other powers.

The second requirement is for a highly survivable force that can be withheld at all times and targeted against the economic base of an opponent so as to deter coercive or desperation attacks on the economic and population targets of the United States and its allies.

The third requirement is for a force that, in response to Soviet actions, could implement a variety of limited preplanned options and react rapidly to retargeting orders so as to deter any range of further attacks that a potential enemy might contemplate. This force should have some ability to destroy hard targets, even though we would prefer to see both sides avoid major counterforce capabilities. We do not propose, however, to coucede to the Soviets a unilateral advantage in this realm. Accordingly, our programs will depend on how far the Soviets go in developing a counterforce capability of their own. It should also have the accuracy to attack-with low-yield weapons-soft point targets without causing large-scale collateral damage. And it should be supported by a program of fallout shelters and population relocation to offer protection to our population primarily in the event that military targets become the object of attack.

The fourth requirement is for a range and magnitude of capabilities such that everyone-friend, foe, and domestic audiences alike-will perceive that we are the equal of our strongest competitors. We should not take the chance that in this most hazardous of areas, misperceptions could lead to miscalculation, confrontation, and crisis.

Our current and programmed capabilities continue to satisfy these four requirements of strategic balance and deterrence. The forces which fulfill these objectives are a triad of bombers, ICBMs and SLBMs. Each leg of the triad is not required to retain independently a capacity to inflict in a second strike unacceptable damage upon an attacker. Instead, the three legs of the triad are designed to be mutually supporting. Our sea-launched ballastic missile (SLBM) force provides us, for the foreseeable future, with a high-confidence capability to withhold weapons in reserve. However, some of the POLARIS submarines are nearing the end of their useful life, so we must now plan for their gradual replacement. In doing so, we should make certain that we are insured against major improvements in antisubmarine warfare (ASW) by improving the performance of both the successor submarines and the missiles that will replace the POLARIS A-3 and the POSIEDON C-3. The TRIDENT program provides that hedge and deserves continued support.

The ICBM force, the heart of which is the MINUTEMAN series, continues to give us the accuracy, flexibility, and control necessary to deal with and thereby deter a wide range of attacks on military targets. It provides the most reliable source of limited response options so essential to nuclear deterrence under conditions of nuclear parity. The combination of silo-upgrading and a new understanding of the problems the Soviets would face in mounting a preemptive counterforce strike-the so-called "fratricide" effects-holds the promise of extending the period in which we can feel confident of the survivability of our ICBM force. This assumes that the Soviets exercise restraint in their own developments and deployments.

The Soviets have already begun what will be a very substantial indeed unprecedented, deployment of large new ICBMs in the first quarter of this year. However, if the principles and spirit of Vladivostok prevail, our response can be quite restrained. We should continue improvements in our command and control systems to enhance the flexibility and responsiveness of our startegic systems. For credibility in limited options, we should make modest improvements in the accuracy of the MINUTEMAN III by taking advantage of the capability inherent in its current guidance system. And we should increase the range of yields available for our nuclear warheads, in part to compensate for the uncertainties that

always surround the accuracies of all-inertial guidance systems when used under real-world conditions.

The most tried and tested of our strategic retaliatory forces-the heavy bombers-continue to interact with our ICBMs to heighten the survivability of both. At the same time, they provide us with a hedge against failures in our other retaliatory capabilities and complicate the Soviet defense problem. For some years, we kept 50% of the force on a very high alert; subsequently we reduced it to 40%. Now, unless the Soviets prove remarkably aggressive in their offensive and defensive programs, we can reduce the alert rate still further-to 30%and transfer some of the tanker force to the reserves.

The last B-52 was produced in 1962. It should be clear, therefore, that if the heavy bombers are to continue their contribution to deterrence, we must plan for their modernization and the replacement of at least some portion of the B-52 force. Accordingly, continued but measured development of the B-1 is essential as a basis for any future production decision. Such a decision does not need to be made for at least another year. A special contribution of the bomber is the massive complications it introduces into any attack plan directed at U.S. strategic forces. Survivable aircraft render unattainable any credible coordinated surprise strike against U.S.-based systems. In addition, bombers complicate Soviet force management decisions, resulting in substantial air defense expenditures. Air defense is the aspect of Soviet defense programming which this nation finds least disquieting. Our modest but productive civil defense program also warrants continuation. I say this not because we plan to embark on any grandiose program of damagelimiting; the ABM treaty effectively precludes such an effort in any event. The value of the current program is that it contributes to deterrence in a crisis and offers the prospect of saving American lives in the event that limited and coercive nuclear attacks should actually occur.

Finally, because no significant long-range bomber threat to the United States now exists, and because-with the ABM treaty-we have recognized the difficulty of implementing a full-scale damage-limiting posture, we can rely on a reduced CONUS anti-bomber defense capability. At the same time, as a hedge, we can draw on our tactical theater-defense training forces for CONUS defense in an emergency since, for the most part, they are based in the United States rather than overseas.

There are several aspects of this overall strategic posture, and the programs that go with it, that deserve attention:

While it contains some counterforce capability, neither that capability nor the improvements we are proposing for it should raise the specter in the minds of the Soviets that their ICBM force is in jeopardy.

In addition, this improved hard-target-kill capability will not threaten the growing Soviet SLBM force.

It follows that we do not have and cannot acquire a disarming first-strike capability against the Soviet Union. In fact, it is our decided preference that neither side attempt to acquire such a capability.

To sum up the existing situation, we have a good second-strike deterrent, but so does the Soviet Union. Although the two forces differ in a number of important respects, no one doubts that they are in approximate balance. There are, in short, no immediate grounds for fears about bomber or missile gaps. To go further, however, we would welcome reductions in these forces provided that the Soviet Union were willing to reciprocate in an equitable fashion.

As we convert the principles and guidelines of Vladivostok into the specifics of a 10-year agreement, this basic situation should continue to prevail. However, there are two uncertainties against which we should continue to carry insurance. A major uncertainty is the manner in which the Soviets will attempt to exploit their throw-weight advantage. The throw-weight of the Soviet ICBM's will continue to exceed that of the U.S. MINUTEMAN force by a very substantial amount-perhaps by as much as a factor of six (unless the United States also increases its ICBM throw-weight). This throw-weight, combined with several thousand high-yield MIRVS and rapidly improving accuracies, could come to jeopardize the survivability of our fixed, hardened ICBM force.

Such developments would not give the Soviet Union anything approximating a disarming first strike against the United States. One reason for this is that less than 25% of the U.S. strategic deterrent capability measured in terms of missile and bomber warheads resides in fixed ICBMs. But such a development could bring into question our ability to respond to attacks in a controlled, selective, and deliberate fashion. It could also give the Soviets a capability that we our

selves would lack, and it could bring into question the sense of equality that the principles of Vladivostok so explicitly endorse. Worst of all, it could arouse precisely the fears and suspicions that our arms control efforts are designed to dispel. Thus it is important that we continue to pursue programs that will permit us various options for responding to the growing Soviet counterforce threat against our fixed ICBMs.

You will recall in this connection that last year's program of strategic "initiatives" was justified on three major grounds. First, great uncertainty then existed as to the nature of any follow-on to the Interim Offensive Agreement of 1972 that we might be able to achieve. Second, essential equivalence was established as a fundamental criterion in the design of our strategic forces. Third, how far we went with these "initiatives" should depend on the evolution and pace of the Soviet strategic programs.

There now are fewer uncertainties about a successor to the Interim Offensive Agreement. But the other reasons for pursuing these "initiatives" remain strong, as I shall indicate later.

With a continuation of these "initiatives", and with the other programs outlined herein, I am confident that we can maintain a balance with the Soviet Union and assure a highly credible second-strike strategic deterrent within the framework of existing and future SALT agreements. Without these programs, however, I can give no such assurance.

The Balance of Power in Central Europe

Last year I pointed out that we plan our general purpose forces on the assumption that, in conjunction with our allies, we should be able to deal simultaneously with one major attack and one lesser contingency. The major contingencies that we consider for force planning purposes are attacks in Central Europe and Northeast Asia, although we do not ignore such areas as the Middle East. In addition, I believe that collective security and deterrence require us to maintain an initial defense capability primarily in our active forces, a long-war hedge in our reserves, and several strong points or deployments overseas from which our forces can move rapidly to deal with such threats to our interests as might arise. Central Europe is the most important of these deployments, in large part because of the powerful forces from the Soviet Union and its allies that lie in such close proximity to it.

Our association with NATO now dates back more than a quarter of a century and there is general agreement that we should continue it. Despite occasional differences among allies, most of us recognize that Western Europe, Canada, and the United States are inextricably linked by a number of political, economic, and cultural ties. Despite the failures of the 1920s and 1930s, we share a common interest in collective security and the deterrence of aggression. What tends to be at issue is not the importance and continuing desirability of the association, but the continued presence of a large U.S. military contingent in Europe combined with the capability to reinforce these ground and air forces substantially on very short notice.

In an age of essential nuclear parity, few of us would be happy with a concept for the defense of Western Europe that was heavily dependent on an early recourse to nuclear weapons. Most of us would agree, once having looked at the facts, that a non-nuclear defense of Western Europe is feasible. It also is desirable, from the standpoint of deterrence, that such a defense should be backed up and reinforced at all times by theater nuclear forces. The existence of deployed conventional and theater nuclear forces in sufficient strength reduces whatever temptation there may be for the Warsaw Pact to probe the cohesion and determination of the Alliance.

Nevertheless, while the reasons for it vary, some form of proposal to withdraw at least a portion of our forces from Western Europe has become an annual event. The arguments for withdrawal are now familiar. Our forces have been deployed in Europe for nearly a generation. Our Allies, in the aggregate, have become prosperous and are amply endowed with manpower.

In fact, while it is true that the deployment of U.S. forces to Europe has contributed to the U.S. balance-of-payments deficit in the past, the major cause of that deficit has been the difficulty with our commercial account. Nevertheless, we have encouraged the Allies to offset our military balance-of-payments in Europe and the Allies have responded favorably. The United States recently concluded one of several two-year bilateral offset agreements with the Federal Republic of Germany which-when coupled with other Allied purchases of military-related