Nato growth to cost pounds 20bn

Britain will have to pay about pounds 200m a year as its share of funding Nato's expansion into central and eastern Europe, according to researchers. The British-American Security Information Council (Basic), a non-governmental organisation, said its estimate was based on figures supplied by the Clinton administration to Congress in a report last month.

It was one of the first efforts at calculating the financial cost of Nato enlargement to Britain, traditionally one of the main paymasters of the alliance. "The question for Ken Clarke and Gordon Brown is, will the pounds 200m a year for Nato expansion be paid for by cutting other defence items, by cutting domestic spending or by increasing public borrowing?" Daniel Plesch, Basic's director, said.

Concern about the financial and diplomatic costs of Nato enlargement has risen in the United States and Western Europe since the alliance announced last year that it was setting a target date of 1999 for embracing new members. One of this century's most highly respected US diplomats, George Kennan, has questioned the need for enlargement, as have an increasing number of commentaries in influential US and German newspapers.

The Clinton administration report to Congress indicated that the Czech Republic, Hungary, Poland and perhaps Slovenia were expected to become Nato's newest members. It estimated the cost of expansion at $27bn-$35bn (pounds 16.9bn-pounds 21.9bn) over a 13-year period lasting until 2009.

Out of this figure, Nato's European members and Canada would be expected to pay $12.5bn-$15.5bn, with the US and the new member-states picking up the difference. According to Basic, Britain's individual contribution over the next 13 years would be $3.24bn-$4.02bn - a figure derived from the fact that, after excluding the US contribution, Britain paid 25.93 per cent of Nato's budget in 1994.

Based on an exchange rate of $1.50 to the pound, the cost to Britain over 13 years would therefore be pounds 166m-pounds 206m a year. If the present exchange rate of $1.60 to the pound is used, the bill falls to an annual pounds 156m- pounds 193m.

Some of the main costs associated with Nato enlargement are those of making the command-and-control and communications systems of new member- states compatible with those of existing members. Military strategists say it will also be necessary to upgrade the equipment of new members, especially that of their ground forces.

Despite such costs, the alliance's official line, spelled out in Washington last Monday by Malcolm Rifkind, is that Europe will be far worse off if Nato fails to expand eastwards. "We would have a line down the middle of Europe, just like the Iron Curtain ... Instead, we should be doing away with the division of Europe forever," the Foreign Secretary said.

He warned that, unless Nato absorbed new members, "local and regional alliances would spring up, in a frightening facsimile of pre-Second World War Europe".