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C O N F I D E N T I A L SECTION 01 OF 04 WELLINGTON 000449 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
STATE FOR D (FRITZ), EAP/FO, AND EAP/ANP 
NSC FOR VICTOR CHA 
SECDEF FOR OSD/ISD LIZ PHU 
PACOM FOR JO1E/J2/J233/J5/SJFHQ 
 
E.O. 12958: DECL: 05/29/2016 
TAGS: PGOV PREL PMIL NZ
SUBJECT: THINLY STRETCHED NEW ZEALAND MILITARY AIMS HIGH, 
BUT CAN IT DELIVER? 
 
Classified By: Ambassador William McCormick, 
for Reasons 1.4 (b) and (d) 
 
¶1.  (C) Summary:  The New Zealand Defense Force (NZDF) is 
being rebuilt after decades of neglect.  The Labour 
Government, ideologically drawn to a peace-keeping role for 
the NZDF, has nonetheless proved willing to deploy small 
expeditionary forces around the world.  Given that the entire 
military is the size of a single U.S. base, even after the 
build-up is complete there will be limits to what the NZDF 
can do.  Some capabilities will actually decline temporarily 
as new equipment is introduced and old equipment is refitted. 
 For these reasons, the United States should continue to 
encourage New Zealand to work with us and Australia on fewer, 
smaller scale operations where NZDF can be most effective, 
such as helping to maintain order in small, destabilized 
countries in the Pacific and assisting Afghanistan's 
reconstruction.  New Zealand's practice of sending one or two 
military liaisons to a variety of operations, while in 
keeping with the country's image as a good world citizen, is 
of less benefit to us, and may be depriving NZDF of the 
middle management it needs at home to rebuild.  End Summary. 
 
--------------------------------------------- 
Background: A "Seismic Shift" in Role of NZDF 
--------------------------------------------- 
 
¶2.  (C) The current growth of the military comes after a 
series of government reports and initiatives undertaken since 
the late 1990s, when the then National Government initiated a 
review of defense policy.  The Labour Government's report 
arising from that study, the June 2000 "Defence (sic) Policy 
Framework," provided the basis for later decisions on the 
appropriate capabilities, resources, and funding of the 
country's defense forces.  One of the decisions the 
Government made as part of the early review process was to 
dismantle the Air Combat wing in 2001.  The move was not just 
designed to save funds, but also to reorient the NZDF from a 
combat into a peacekeeping force in line with the goals of 
Labour.  It was arguably a costly decision, as military 
personnel left in significant numbers, many to join military 
forces in Australia, the UK and elsewhere. 
 
¶3.  (C) In 2002, the Labour Government launched a "Long Term 
Development Plan," which (together with its subsequent 
updates) began to address the needs to upgrade military 
equipment.  However, personnel continued to leave NZDF, which 
also faced trouble  recruiting in a tight labour market. 
These gaps, combined with the need to pull people offline for 
training and introduction of new hardware, reached a crisis 
point in 2004.  In May 2005, Labour launched the Defense 
Sustainability Initiative (DSI), designed to enhance 
recruitment and retention, including by increasing salaries 
and upgrading facilities. 
 
------------------------- 
What the Build-up Entails 
------------------------- 
 
¶4.  (C) NZDF currently has about 13,100 personnel, including 
about 8,700 regular force (active duty), 2,275 territorial 
force (reserves), and 2,134 civilian staff.  Of these, about 
7,000 are in the army, and 2,700 each in navy and air force, 
the rest being in NZDF and Joint Forces NZ headquarters. 
Major units include two infantry battalions, 2 logistical 
battalions, a Special Forces Group (SAS), artillery and 
engineer regiments, a health services battalion, and a 
signals squadron.  Currently, the navy has just two 
ANZAC-class frigates, having decommissioned two others in 
2005 and earlier this year.  The navy also has a supply ship 
and a number of small patrol boats.   Since 2001, the Air 
Force no longer has combat capabilities, but instead is 
assigned to patrols (including of fisheries around New 
Zealand and Antarctica) by its six P-3 Orions as well as 
transport by its two Boeing 757s, five C-130s and 14 UH-1 
helicopters. 
 
WELLINGTON 00000449  002 OF 004 
 
 
 
¶5. (C) In the 2006 budget announced in May, defense spending 
makes up about 3% of the total NZD 52.3 budget, or about NZD 
1.7 billion (about USD 1 billion). This is up from recent 
years but still well below the 10% or more spent on defense 
in the 1960s or 5% from the mid-seventies to mid-eighties. 
(By comparison, GNZ's "Working for Families" and other family 
support payments will cost the Government NZD 1.7 billion 
this fiscal year, and forgiveness of interest on student 
loans will total NZD 1 billion.)  Included in this year's 
defense outlay is about NZD 305 million in new spending for 
capital equipment under the Long Term Development Plan, and 
about NZD 72 million in spending on personnel and other 
operating costs under SDI.  New Zealand's defense spending is 
equivalent to about 1% of total GDP and 1.7% of per capita 
GDP, compared to Australia's defense budget equivalent of 
2.7% of per capita GDP. 
 
¶6.  (C) Under the Long Term Development Plan (LTDP), NZDF has 
already procured two Boeing 757 aircraft, which are being 
refitted to allow for cargo shipments on top of their 
existing troop transport and emergency evacuation 
capabilities.  The sensors and mission management systems of 
the 6 P-3 Orion maritime patrol craft are being upgraded to 
improve surface surveillance, which NZDF says will better 
enable it to meet its Pacific search and rescue obligations, 
conduct surveillance for Pacific Island states, and meet its 
obligations under agreements with Australia and Five Power 
Defence Arrangement partners.  The avionics and aircraft 
systems of the five aging C-130 Hercules will also be 
upgraded and refurbished to extend their life.  A multi-role 
vessel, essentially a refitted European ferry boat designed 
to provide tactical sealift for NZDF and support for disaster 
relief, peacekeeping, and training, will arrive in New 
Zealand later this year, as will two offshore and four 
inshore patrol vessels.  (NB: The purchase of the seven 
vessels is cumulatively called "Project Protector.")  NZDF 
has also purchased 105 Light Armored Vehicles LAVs) and 308 
Light Operational Vehicles (LOVs) for the Army and Special 
Forces, as well as funded a new building for the Ministry of 
Defence, which is due to open later this year but is already 
too small to house all offices.  There are also plans to 
replace 14 Iroquois and 5 Sioux training helicopters, though 
this project has been hit hard by an 11% decline in value of 
the New Zealand Dollar over the past year. 
 
¶7.  (C) The objectives of the 10-year, NZD 4.6 billion (about 
USD 2.9 billion) Defense Sustainability Initiative are to 
increase personnel and training and help retention, maintain 
and improve the infrastructure of camps and bases, increase 
the reserve stocks of equipment and spares, improve 
administrative capabilities, and cover the depreciation of 
defense assets.  According to Deputy Secretary of Defence 
Chris Seed, the Defense Sustainability Initiative is on track 
and there have been modest improvements in retention this 
first year of the program.  Seed did not provide numbers, but 
said if trends continue, NZDF is on track to increase 
personnel by 15% (to about 15,000) over the next ten years. 
(FYI: The last time NZDF personnel came close to this level 
was in 1998, when they numbered 15,512.  By 2003, the number 
had dropped by almost 17%, to 12,904) 
 
------------ 
No Quick Fix 
------------ 
 
¶8.  (C) Even if both the LTDP and DSI proceed as planned, it 
will take time for the military to significantly improve its 
level of capability.  Indeed, over the short-medium term, 
some capabilities may decline.  For example, aircraft sent 
for upgrades over the next few years will obviously be 
unavailable during these periods.  Seed admitted that it may 
be hard to train enough personnel for the new Project 
Protector ships, and there may not be enough adequate port 
facilities for them.  Only about NZD 104 million has been 
budgeted for the first two years of DSI.  Ministry of Defence 
 
WELLINGTON 00000449  003 OF 004 
 
 
and NZDF officials have confided to us that this is because 
there is no capacity to absorb more funding.  In the last 
five years of the initiative, once the program reaches 
critical mass and sufficient improvements have been made to 
infrastructure, the bulk of the remaining allocated money 
will be spent. 
 
---------------------------- 
What We Can and Can't Expect 
---------------------------- 
 
¶9.  (C) The upgraded force's primary role will remain 
peacekeeping, at least as long as the Labour Government 
remains in power.  But NZDF will be able to provide some of 
its own transport, both for air and sealift and to assist 
deployments on the ground.  While more expensive for the 
Government, at least high profile problems such as the need 
for the Australian Defense Force to transport SAS troops into 
Afghanistan during OEF and the breakdown of P-3 Orion during 
tsunami relief work should disappear.  In GNZ's eyes, this 
 
SIPDIS 
will make NZDF contributions more effective and more valuable 
for the success of an operation.  Size will remain a limiting 
factor in New Zealand's global defense contributions even 
after upgrades, but even more so over the short-medium term. 
More than one NZ official has told us that had Fiji had a 
political crisis after elections, it would be hard for NZDF 
to get involved given current increased deployments to the 
Solomon Islands and E. Timor.  Nor would not expect NZ's 
defense budget to increase more than projected for the 
foreseeable future.  Although the government currently has an 
operating surplus of NZD 8 billion, there is already an 
outcry among many voters that none of these funds are being 
returned as tax cuts.  Labour will be very unlikely to 
increase military spending substantially under the 
circumstances.  And even if a National Government is elected 
in two years and seeks to increase military spending, it will 
still face the NZDF's capacity/absorption constraints over 
the near term. 
 
¶10.  (C) On top of the limitations of NZDF's size and role, 
the government's objectives and priorities for deployments at 
times seem to lack focus.  The five key objectives laid out 
in the 2000 Defense Policy Review and repeated in this year's 
NZDF Statement of Intent, are to: 
 
-- defend New Zealand and to protect its people, land, 
territorial waters, EEZ, natural resources and critical 
infrastructure; 
 
-- meet (New Zealand's) alliance commitments to Australia by 
maintaining a close defense partnership in pursuit of common 
security interests; 
 
-- assist in the maintenance of security in the South Pacific 
and to provide assistance to (New Zealand's) South Pacific 
neighbors; 
 
-- play an appropriate role in the maintenance of security in 
the Asia-Pacific region, including meeting (New Zealand's) 
obligations as a member of the Five Power Defense 
Arrangements; and 
 
-- contribute to global security and peacekeeping through 
participation in the full range of UN and other appropriate 
multilateral peace support and humanitarian operations. 
 
For a force as small as New Zealand's, assigning enough 
weight to each priority is a challenge.  At times, however, 
GNZ seems most heavily focused on the last priority, despite 
statements by the Prime Minister, Defense Minister, and 
Foreign Minister about the importance of regional stability 
(especially in the Pacific Islands) to the country's national 
security interests.  As of June 3, almost nine percent of New 
Zealand's defense force were overseas, about 500 on 
operational duty and about another 290 on training exercises 
or diplomatic or exchange missions.  Before the recent 
 
WELLINGTON 00000449  004 OF 004 
 
 
deployments to East Timor and the Solomons (162 and 124 
personnel, respectively), the majority were on the Te Mana 
frigate on a mission to SE Asia and India (175), and 
Afghanistan (134, including the 123-member Provincial 
Reconstruction Team).  Deputy Defense Secretary Seed believes 
that it is the "far away" issues that GNZ considers crucial 
for security.  For this reason, he believes NZDF will remain 
in Afghanistan for the foreseeable future, well after the 
current commitment ends in September 2007. 
 
¶11.  (C) But there are arguably other reasons for the 
emphasis on "far away" deployments. Contributing forces 
farther from  home is in keeping with New Zealand's identity 
as a global good citizen, always ready to pitch in (reftel). 
(Strikingly, the entire defense outlay this year is included 
in the portion of the budget entitles "national identity.") 
Many times this means sending a few military 
liaisons/advisors, such as the 11 now in Bosnia and the three 
in Sudan.  Matt Paterson, a Policy Officer in the Security 
Policy Division at the Ministry of Foreign Affairs says that 
GNZ maintains that even though the numbers of military 
personnel committed is small, they are of a higher quality 
than forces from many other countries.   The Embassy would 
add also that these small deployments give New Zealand a 
presence in key world events, as well as access to U.S. and 
other training and intelligence. 
 
¶12.  (C) Even when New Zealand focuses more closely to home, 
its view on regional security threats is very different from 
ours and Australia's.  Phil Goff's recent speech to the 
National Defense University in Washington only mentioned 
Pacific Island instability as a source of concern for New 
Zealand's own security.  He did not mention the potential for 
conflict in the Taiwan straits, North Korea, or China/Japan 
tensions as his US counterparts would have.  This may in part 
be because he and other GNZ officials are generally averse to 
publicly criticizing their future Free Trade Agreement 
partner China.   But it is also a sign that New Zealand tends 
to see itself as isolated from most world dangers except 
those closest to its shores.  Even instability in the Pacific 
Islands is viewed mostly as a potential threat for the 
country's law enforcement and immigration policies.  The 
Ministry of Defense still sees NZDF as an expeditionary 
force.  In a very real sense, for the past thirty years, NZ 
officials have seen all of the country's military engagements 
as optional. 
 
------- 
Comment 
------- 
 
¶13.  (C) Recent experience has shown New Zealand can and will 
play useful roles in "niche" areas such as its SAS and PRT 
contributions in Afghanistan.  Given the NZDF's small size 
and resource limitations over the next several years, U.S. 
interests will best be met by encouraging New Zealand to also 
maintain its focus on working with Australia to help 
stabilize Pacific Island countries, where even small 
deployments make a difference and New Zealand's 
cultural/diplomatic expertise gives it the edge. 
 
McCormick