History counsels that defeat and victory are the two deadliest moments in the life of alliances. Defeat is nature's way of telling an alliance that it does not work, that its reason for being has vanished. Surrender is the end, dissolving both bonds and obligations. And so no coalition has ever survived capitulation.

But alliances also die when they win. The European-wide league against Napoleon had unraveled by 1822 if not sooner. The Western compact against Imperial Germany was a dead letter by 1920. The Soviet-American partnership of World War II survived victory by only a few months. These were not mere accidents of history. For victory, too, robs coalitions of their raison d'tre. When the great threat disappears, so does the glue that binds nations in alliance. Worse, once partners no longer need to worry about their common enemy they begin to worry about one another: How will yesterday's comrade-in-arm use his unshackled power tomorrow? With nothing to absorb his might, will he not turn it against me? Rivalry resumes as the victors turn to face one another.

True, NATO still endures even in the year 6 A.C., (After the Cold War). No member has moved to dissolve it, none has even intimated a desire to abscond. Everything is still in place: the Brussels headquarters and the secretary-general, the infrastructure and the training, the doctrine, and the maneuvers. Nonetheless, the longest-lived alliance of free nations cannot escape the question that confronts all victorious coalitions: What is its reason for being if the threat that spawned and sustained it is gone?

This article proceeds in three parts. First, it will define the problem of an alliance that remains all dressed up but with no place to go. Second, it will look at two solutions to the quandary of victory that have not worked, and explain why. Third, it will conclude by suggesting a modest remedy that might yet carry this indispensable institution into ripe old age.

The Curse of Victory

The problem may best be described in the language of micro-economics. NATO finds itself in the position of a firm that, having been an exemplar of excellence for decades, suddenly faces a severe downward shift of the demand curve for its traditional wares. In nato's case, the problem is the drastic decline of the strategic threat, and hence of the demand for its two best products: deterrence and defense. Faced with an ailing cash cow, what does such a company do?

There are four, and only four, basic choices:

A. The firms sells its remaining assets and closes its doors.

B. The company downsizes pari passu with the decline in demand, hoping to regain an equilibrium between costs and revenues to keep shareholders from defecting.

C. It develops new products for its classical market in order to replace yesterday's "cash cow" with new "shooting stars."

D. The ailing firm tries to conquer new markets for its old product.

The last two of these four are precisely the strategies NATO has pursued in the past three years, but the returns have ranged from meager to downright negative.

New Products, New Markets

"Out-of-area or out-of-business:" Peacekeeping and peace enforcement in Europe, that is, in Bosnia, are the new products of strategy C, as reflected in this slogan. Hardly had the Cold War ended with Moscow's capitulation than a vast new security market opened up in southeast Europe. Demand for the new product emerged with Serbia's intervention against Croatia and Slovenia in 1991, leaping upward with the tripartite war that broke out in Bosnia in 1992. Yet no matter how high the demand, it soon became evident that NATO could not deliver on the supply.

For a while, it looked as if a few newly designed goods would somehow satisfy the demands of the Bosnian security market. NATO bombed a bit, symbolically rather than tactically, let alone strategically, and the Bosnian Serbs retracted a bit.

But in the spring of 1995, a murderous gap opened between the meager security supply trickling off nato's production lines and the burgeoning demand generated by the escalation of Serbian violence. Instead of intimidation, NATO reaped retaliation and provocation. An American warplane was shot down, UN forces were taken hostage, Tuzla was attacked in the most vicious manner, with seventy-one civilians killed in a single gruesome explosion. Nor did escalation end there. In July of this year, the ultimate (so far) provocation occurred when Serbian forces, taking UN soldiers prisoners on the way, broke into Srebrenica, a UN-designated safe haven for forty thousand starving inhabitants and refugees. Yet this time too, NATO did not act.

In short, what NATO had to offer in the way of defense and deterrence was woefully inadequate to the demand. The explanation for the failure comes in three parts, in rising order of importance and generality. First, by acting as "subcontractor" to the UN, NATO has imposed on itself an absurd chain of command: unprofor must decide that it wants air support; that demand goes to Yasushi Akashi, the UN bureaucrat on the spot; thence it travels to Boutros Boutros-Ghali, the secretary-general of the United Nations, who will either do nothing or consult the Big Five; the Five, given China and Russia, will not agree; ergo, NATO cannot act.

Which leads to the second level of the explanation: Russia. After a brief period of retraction, even of subservience to the West, Russia began to act as tacit protector of the Serbs. The motive is not "pan-Slavism," the alleged bond of kinship with the Serbs. That familiar explanation does not wash. Where was that volkish tie from 1948, when Stalin had Yugoslavia expelled from the Comintern, to the break-up of the Titoist construction --essentially a Serb-dominated state--circa 1990? In those forty-odd years, enmity and fear, not ethnic comradeship, shaped the relationship.

Great-power politics offers the better explanation. Having emerged from the shock of defeat in the Cold War, Russia has reverted to a posture of rivalry. And so Russia rediviva will not allow the West to dominate a region where competition with the West has been the rule since the last third of the nineteenth century. Russia will play the not-so-tacit patron of the Serbs and exert itself to undo whatever military option the West seeks to develop.

Faced with taking on Russia, which the West still wants to "socialize" into a cooperative relationship, the West has in effect granted Moscow a veto power in the Balkans. The most recent example was the "rapid reaction force" of ten thousand that Britain and France designed for use in the Bosnian theater. In obeisance to Russian cues, the force was formally subsumed under prevailing UN mandates for Bosnia. While it is more seriously armed than unprofor, it is not supposed to act on its own.

The third, and most general reason, why NATO was bound to fail in the manufacture of the new peacekeeping product has to do with the very nature of this alliance. We must ask: Why was the alliance so successful in the past? What enabled it to grow into the longest-lived of voluntary coalitions? There is a simple answer: because it did not have to do anything. In the affairs of men and nations, there is a world of difference between a passive and an active posture, a negative and a positive strategy, a deterrent and a compellent stance.

nato's classic strategy withstood the vagaries of time because it was passive, negative, and deterrence-bound. It was "negative" in the sense that NATO was designed to prevent something: an attack on its members grouped within a tightly demarcated periphery. It was "passive" in the sense that the alliance--like Mount Everest--merely had to be there; the sixteen member nations did not have to decide anew on their common purpose as the sun rose each day. The objective was both simple and enduring: to preserve the status quo along the Elbe River, and the means was deterrence rather than compellence--having military power, not using it.

In other words, NATO was like a mutual-savings society that never had to hammer out a unanimous decision on how actually to spend its assets for this or that venture, a task at which sovereign nations rarely excel. To be a member in good standing, allies merely had to pay their dues in the form of appropriate defense budgets and dispositions; they did not have to go out and fight.

The basic point--the reason for nato's endurance--need not be labored. For nations in alliance it is vastly more comfortable to agree on the status quo than to concur on its change. To stay in place is easier than to strike out a new road, especially if along that path lurk the incalculable risks of actually using force. Above all, NATO was built around an interest that was powerful, permanent, and all-embracing: the deterrence of Soviet aggression.

Even so, NATO had to forge iron walls that would ward off the deadly bane of any alliance: defection. By its force posture, the West made sure that nobody could bolt at the moment of truth. There was the "layer-cake" in West Germany--the troops of seven nations--plus thousands of American nuclear weapons. These physical arrangements added certainty to the commitment and subtracted options from national policy--above all, the option of defection. The silent signal to the Soviets was that an attack across the Elbe would indeed be an attack on all. And the message to members was that there was virtually no chance for second thoughts or back-door exits. Thus the common purpose was assured, nay, enforced for decades.

In Bosnia, however, the reverse is true on all counts. Here, NATO was asked to assume an active, positive, and compellent posture. And this made all the difference in the world. Now the alliance had to decide what to do with its savings. Now it had to contemplate real risks and costs, not in an abstract future, but in the immediate present. Now it had to create consensus anew each day. And now, the members quickly realized that their interests were not alike.

The drama of divergent interests began in 1990-91 when Germany (with Austria in tow) took on the United States, Britain, and France over the recognition of the two break-away republics of Croatia and Slovenia. This skirmish (which Bonn won) was but a harbinger of worse to come. As force projection crept to the top of the agenda, the two key members of the alliance, the United States and Germany, simply opted out. While Germany claimed that its history and constitution forbade out-of-area operations, above all in the Balkans, the United States was only too happy to hear from the European Union (in the heady days of 1992) that Bosnia was Europe's business alone.
The painful irony was yet to follow. By the winter of 1994, nato's mere attempt to open up a new branch for out-of-area business rocked the very core of the company. (Compare this to IBM's venture into the PC market, which delivered a nasty blow to its traditional mainframe line.) As Congress threatened "lift and strike," Britain and France stridently accused the United States of betrayal and abandonment. Lifting the embargo, London and Paris claimed, would expose their UN contingents to murderous crossfire--making extraction impossible without American intervention. Yet--so their diplomats shouted from the rooftops--the United States would add indifference to injury by refusing to cover the retreat. Then they demonstratively assembled ˆ deux in Chartres to establish a joint air force command for peacekeeping.

The slogan "out-of-area or out-of-business" thus turned into the opposite: "Out of area and we shall go bankrupt." Indeed, we have only to recall the Suez Crisis and the Vietnam War to find similar alliance-poisoning ventures. The underlying cause of conflict among brethren was the same in each case. The Western alliance does not fare well when the principals shift from deterrence in the central theater to compellence in a peripheral theater (Britain and France in Suez, the United States in Vietnam). For this is where another bane of all alliances begins to work its insidious ways: the fear of entrapment. Nations are loath to be dragged into conflicts not their own. And peripheral arenas, where interests by definition are not alike, are tailor-made for the entrapment syndrome, which is as corrosive of coalitions as is the fear of abandonment.

nato's principals did not come together in Bosnia because their interests did not converge. Or more apropos, their interests converged only in the tacit conviction that Bosnia was not worth the risks and the costs in the face of overwhelming odds of failure. But that, too, merely confirms the basic point. NATO cannot deliver on the supply that the out-of-area business demands.

"Grow or Die." What about the fourth strategy, strategy D: selling the old product in a new market--that is, enlarging the realm of security and deterrence to the new democracies in the East? Though by mid-decade, all principal members were talking publicly as if NATO enlargement were only a matter of "when," and no longer of "whether," NATO as we know it will not be extended eastward. If it is so expanded, it will not be the "Real Thing," but a sweetish concoction with only a faint resemblance to "Classic Coke."

One key reason is again an old one: Russia. As long as there is the shred of a possibility that Russia can be socialized, the West will act on the implicit premise that Moscow is more important than Prague, Bratislava, Budapest, and Warsaw. Hence, the West will yield to Russia the tacit veto power Moscow has been demanding ever more stridently since late 1994. And should that last shred ever disappear, it will be too late. In a neo-Cold War setting of explicit and harsh rivalry, nobody in the West will dare enlarge. Changing the geopolitical status quo on the brink poses too many incalculable risks.

Also, there are intrinsic reasons for hesitation that will move to center stage as NATO approaches the moment of truth. Alliances must think coldly, and so they will have to consider seriously whether enlargement is actually a net gain. When they do so, they will realize that the costs are certainly impressive. To list but a few:

--With twenty or more members, NATO will lose cohesion, especially since nations like Hungary and the Czech Republic, as a careful reading of their pronouncements will reveal, hardly relish the idea of "all for one, and one for all" when it comes to the prospect of using force. (At a recent meeting in Washington, the Czech ambassador was heard to muse whether his country would really want to go to war for Turkey.)

--These nations do not feel threatened by Russia; at least they do not articulate such fears. They have other concerns at the top of their agendas. Above all, they want to be part of the Western democratic and economic club. With the possible exception of Poland, their main quest is not for military security and the onerous obligations that entails.

--Who will pay the tens of billions of dollars required to bring the new armies up to NATO standards? The new democracies do not have the money, and the old ones do not relish exporting eastward the alleged "peace dividend" resulting from the speedy rush to disarmament.
--What about tangible guarantees, especially nuclear guarantees? Surely NATO will not move troops to a forward position on the eastern border of Poland. And we cannot look forward to the Article 5 debate in the U.S. Senate.

--What about those nations--the Baltics, Ukraine--that are most vulnerable but that will be left out? Whatever new line NATO draws in the East will in practice mark off new areas of influence. To do so will be a silent signal, indeed a veritable invitation to Russia to absorb the rest--from the Baltics to Bulgaria--into its sphere of power.

A cold reading of the facts reveals that (again with the possible exception of Poland) NATO will be taking in security consumers rather than producers, diluting whatever cohesion it still has. That prospect will hardly galvanize the enthusiasm of the old members, especially given the lengthening shadow of Russia and the overarching desire to forestall a new power contest in and over Europe.
What if NATO, driven by past commitments, bureaucratic momentum, and East European pressures, enlarges nonetheless? If NATO does move east, it will not purvey the "Real Thing," the security community that it has so successfully marketed in its traditional realm of business.

For one thing, Russia's consent to such an extension is only conceivable under two circumstances. One is that the core product is not sold in the Eastern market, meaning tangible guarantees like forward deployment and the insertion of nuclear weapons into the enlarged security equation. (In any case, neither purveyors nor recipients would happily countenance such a move.) That has of course also been true in the case of long-time members such as Norway. But add three, four, or more ˆ la carte members to the alliance, and you end up with two different animals in the same barn. In one corner will be the "real" alliance, in the other a soi disant one. And that will not be NATO as we know it, a system where members used to bear the same obligations and enjoy the same succor.

The more serious threat flows from the additional compensation Russia would exact for its consent. Russia would only concur if NATO closed down its core business: a deterrence and defense structure arrayed against the one country that has been and remains too "big" for Europe. We have known Russia's price for decades. Whatever the guise, from Stalin to Yeltsin, the proposals all boiled down to exchanging the existing collective defense system (A plus B against X) for a collective security system (A plus B with X, the enemy not being pre-designated and a member of the set).

The new Russia's policy is not very different from that of the old Soviet Union. The basic thrust is to dissolve the Western alliance into a wider, "overarching" structure for the sake of amity, cooperation, and understanding. Yet apart from the fact that collective security never works when needed, such a system is the very opposite of alliance. It lacks the commitment and the certainty that makes for cohesion. We might still call it "NATO," but if Russia becomes a member, whether tacit or formal, it will be but the old name attached to a new thing.

Let us return to the business analogy. Conglomerization--the adding of new branches to the parent company--is not a guarantee of higher profits or resurgent growth. The expected synergistic effect frequently comes out negative because knowledge gained in the traditional sector does not travel well to unfamiliar ones; absorbing new firms, especially shaky ones, diverts resources from the core business. How does this apply to NATO? Enlargement is a noble goal, but its underlying thrust has little to do with the alliance's traditional purpose. The idea is to spread the blessings of democracy and the market to the East; the new democracies want a home and a community, and we want to extend it to them.

These are laudable objectives, but they have nothing to do with the necessities of a cohesive and effective alliance. Take another example, that of a university which decides that it has failed the community. It will lower tuition and admissions standards in order to, say, get youths off the street and the underprivileged into the class room. What happens next? First, the university ends up with a much larger student body but fewer resources per student. Then it will have to lower standards of performance to keep the drop-out rate down. As the quality of the product declines, the best teachers and students will leave; the flow of income from research grants and alumni pockets will decline. The moral? Having shifted into new goods--community solidarity, social justice, education for the masses--the university finds that it has sacrificed its traditional and foremost function: excellence in education.

And so with NATO. The critical problem of enlargement is a set of tasks that are not just alien, but noxious to the classic purpose of alliance. Bringing in new members that seek a home rather than a fort will dilute the compact. Paying the requisite compensation to Russia will more than just dilute; it will destroy. Whatever the nature of the deal--ˆ la carte, second-rate membership for the ex-satrapies, or an inside role for Russia--NATO as we have known and cherished it will not survive enlargement.

If the new product ("peacemaking") fails woefully short of the demand, and if the new market (enlargement) holds out more poison than profit, what is left as the alliance faces the deadly threat of a downward-shifting demand curve? Where is the future of NATO, if any?
Downsizing For Survival

Given the lackluster record of strategy C ("peacemaking") and the dubious prospects of strategy D (enlargement), what about strategies A (folding up) and B (downsizing)? We must forcefully dispatch A and opt for B.

That we should not close up shop should be self-evident. First, there is the residual risk stemming from a threat by the name of Russia that requires a well-oiled defense machinery. Second, pulling down the production lines will require much higher start-up costs in the next round than are involved simply in keeping them going. Third, NATO has bequeathed a precious tradition of cooperation (a huge amount of "social capital," if you will), and closing up shop will necessarily entail the re-nationalization of Western defenses--perhaps even the return to the older game of nations that has brought so much grief to Europe in the past.

Which leaves strategy B: downsizing--that is, producing what NATO has done best, but on a lower scale that is tailored to the reduced demand. What is nato's classic product? Again, we must invoke the immortal phrase of Lord Ismay, the alliance's first secretary-general: "Keep the Russians out, the Americans in, and the Germans down." These three functions, suitably modernized, still deliver a potent rationale for the alliance.

Keep the Russians out. Russia will be neither fully democratic nor pacific for a long time. Indeed, the process seems to be reversing ever so slowly. Russia is trying to reconstitute the former Soviet empire: peacefully where possible, violently where necessary. In the Balkans and in the Gulf, it has reverted to a competitive stance. Whatever its domestic constitution, Russia is simply too "big" for Europe; it remains, as in the Tsarist and Bolshevik past, a problem in the European balance. And a downsized NATO with a rapid reconstitution capability remains a critical counterweight in the equation. Indeed, the better nato's shape, the more it can radiate security outward into Eastern Europe, to those very states that may not become members.

Keep the Americans in. This role, too, remains vital. Even with a reduced strategic threat, it is not at all clear that European security can prevail without Atlantic security. Europe has flourished because the United States has essentially become a European power--and Europe did not so flourish in this century when American power was not part of the balance. Moreover, everybody from Lisbon to Lodz wants the Americans in, even the cranky French who, deep in their heart, want them as counterweight to German and Russian power.

Keep the Germans down. Evidently, this function has changed long ago to "keeping the Germans integrated." But even in the new setting, this function has not lost its claim on the future. Germany, though the model of pacificity and liberal democracy, is again fully sovereign, Number One, and in the middle. It is again too big to be left alone, and not big enough to go it alone. But the good news this time is that the Germans know it. Multilateralism and community are unwritten articles of their constitution. The Germans know full well that NATO and the United States reassure everybody else by shortening the shadow of German power. It follows that to remain integrated, to produce security collectively, is good for Europe and good for Germany, and the Germans will accept and cherish such a setting as long as it is available.

Let us generalize the argument: deep in their hearts, all the Europeans dread the "re-nationalization" of their defenses. The Atlantic Alliance has spared the Europeans the need for autonomous defense policies, one of the most powerful causes of conflict and war. They know that non-autonomy, the integration of their defense policy under a powerful outsider, provided the benign stage on which they could forget their ancient rivalries and link hands in economic and political community. And deep in their hearts, the Europeans suspect that they may not live as harmoniously without their big brother across the sea.

In sum, the old functions, suitably modernized, can still serve as the new rationale for the alliance as it moves toward the ripe old age of fifty, an age which no previous alliance has ever reached. But the middle aged should not do more than their constitution permits. The attempt at new products and new markets has not re-energized the NATO enterprise; indeed, the attempt has dramatized inherent conflicts among the sixteen shareholders. Which is why the classical, but downsized product line, plus a rapid reconstitution capability, mark out the best strategy as the alliance faces the twenty-first century.