06-1-teachnote-mod6ex-TighterFist08R0002.pdf

18 Jan 06

PASS 06-1 Module 6 Exercise Tighter Fist

TEACHING NOTE

OBJECTIVE

The objective of the exercise is to arrive at a force structure and a defense budget as well as a national fiscal plan for the next fiscal year (2007) for the country of Marislova. (See exercise documentation.) The force structure and budget are approved by the government and ultimately accepted by the defense leadership. They are arrived at, however, through a process of negotiation. The negotiation process is essentially a confrontation between defense needs, as seen by the defense leadership, and other national goals, as seen by the government. The defense leadership must make the best case it can for a particular force structure and a defense budget, drawing upon the recently published National Security Strategy and National Military Strategy (described in the exercise documentation). The government must trade defense needs against other national goals and do so with full recognition of the political, economic and security contexts in which Marislova finds itself.

ORGANIZATION

Half of each seminar will be designated as a Government Team and the other half as a Defense Team. Please note that this is a role-playing exercise and therefore requires that players understand the objective of the exercise and their own role in it. You may have to prod some participants into expressing the views and opinions attributed to them in the exercise documentation.

OUTLINE OF PLAY

The exercise is played in three sessions.

Prior to play the Prime Minister should briefly address a joint meeting of both teams on his general goals and priorities for the coming fiscal year. His major concern will of course be to get re-elected. This of course does not and should not, as in real life, dissuade other players from furthering their own assigned agendas.

Session I. Using all of the information at its disposal, and taking into consideration the agreed National Security Strategy, the Government Team will prepare its draft budget for the next fiscal year. The Defense Team will simultaneously prepare its proposed force structure, including equipment replacement projects, and its proposed budget options for the next fiscal year.

In order to get as many seminar members as possible involved in the exercise, the Government Team will work in two sub-teams: the Defense and Security Committee and the Social and Economic Committee. Each will prepare a proposed national budget for the next fiscal year. Likewise, the Defense Team will also work in two sub-teams: the Civilian Ministry Staff and the Military Staff. Each of these sub-teams will prepare a proposed force structure, including equipment replacement projects, and its proposed budget request for the next fiscal year.

Session II. During the second session, the two sub-teams in the Government Team will come together to agree on a total budget proposal. The objective for the Government Team at this stage is to arrive at a national budget that will reasonably provide not only for the economic and social goals of the government but also for an adequate defense.

Similarly the two sub-teams of the Defense Team will come together to agree on their force structure and defense budget proposal. The objective for the Defense Team at this stage is to arrive at a force structure and defense budget that will have some reasonable possibility of being acceptable to the Government Team.

At the end of this session, the Minister of Defense will provide the Deputy Minister of Defense with the Government Team’s budget proposal. The Deputy Minister of Defense will in turn present the Defense Team proposals to the Minister, who will convey them to the Government Team. All proposals will be in the form of printed spreadsheet documents.

Session III. During this session both the Government Team and the Defense Team will meet jointly under the chairmanship of the Prime Minister. Each side will select a representative to present the results of its deliberations during the previous sessions.

Using these positions as a starting point, the two teams will negotiate a compromise force structure and defense budget. At the end of this session, the two teams will have jointly produced a national budget, a defense budget, and a force structure and will formally present these results to the Seminar Leader.

TIMINGS

Monday, 27 February 2006 Assign exercise roles. Encourage students to continue experimenting with the spreadsheets on their own computers. Feed back from students suggests that they want to receive role assignments and exercise documentation several days before the exercise.

Thursday, 2 March 2006 0830-1000 My lecture on the economics of defence planning and budgeting.

Friday, 3 March 2006 Seminars 1-6 (Suggested schedule) 0830-0845 Prime Minister’s briefing on government goals and priorities 0845-0945 Exercise Session I (individual sub-teams meet in individual seminar rooms) 0945-1000 Break 1000-1050 Exercise Session II (individual teams meet in individual seminar room) 1050-1100 Break 1100-1200 Exercise Session III (joint meeting of both teams in home seminar room) 1200-1230 Brief to Seminar Leader and Seminar Leader debrief.

Seminar 7-11 (Suggested schedule) 1300-1315 Prime Minister’s briefing on government goals and priorities 1315-1415 Exercise Session I (individual sub-teams meet in individual seminar rooms) 1415-1430 Break 1430-1520 Exercise Session II (individual teams meet in individual seminar room) 1520-1530 Break 1530-1630 Exercise Session III (joint meeting of both teams in home seminar room) 1630-1700 Brief to Seminar Leader and Seminar Leader debrief.

PREPARATION

1. It is vitally important that all participants read the exercise documentation prior to the exercise. Participants who show up with the documentation unread and an unclear view of their own role in the exercise will be less than useless. Experience suggests that they slow up the play and waste the time of those who have prepared. This is not a difficult exercise, but to make it as realistic as possible, and hence to make it a useful learning experience, there is a considerable amount of detail that has to be digested.

2. Stronger seminar members should be selected for the leadership roles of Prime

Minister, Minister of Finance, Minister of Defense and the Chief of the Defense Staff.

3. The exercise has been designed for seminars of size fifteen. If you have fewer than fifteen, then roles should be combined or eliminated. For example, for the Defense Team, the roles of Director of Finance and Personnel and the Director of Maintenance and Procurement roles could be combined. For the Government Team, the role of the Deputy Minister of Finance could be eliminated. If you have more than fifteen, assign assistants to the chairmen of the two sub-teams of your seminar as necessary. Name tents will be provided.

4. Because you will still have only one interpreter at a time working your seminar and because you will have as many as four sub-teams working in two different seminar rooms at the same time, it is strongly advised that you organize your sub-teams along language lines as much as possible and to use the interpreter as required where you can’t.

5. A second seminar room has been assigned for this exercise. Government Teams should remain in the home seminar room. Defense Teams will be distributed as follows:

Seminars 1-6 Seminars 7-11 (0830-1230) (1300-1700) Seminar 1: 219 Seminar 7: 320

Seminar 2: 319 Seminar 8: 216 Seminar 3: 316 Seminar 9: 119 Seminar 4: 217 Seminar 10: 220

Seminar 5: 317 Seminar 11: 117 Seminar 6: 320

6. Within each room, the two sub-teams can be assigned one of the two computers for the first session. Note that the wireless keyboard is used with Computer 1 while the wired keyboard is used with Computer 2.

7. Spreadsheet and documentation files are available in the Exercise Library on the

PASS 06-1 Website, and on the PASS Student Site. Access is simplified if these spreadsheets are loaded on the desktop of the appropriate computers. Hard copies of the exercise documentation will also be distributed.

8. Please encourage your students to go to the Student Site in the days prior to the exercise and to experiment with the spreadsheets as they wish. They cannot hurt anything and obviously the more familiarity they have with the spreadsheets prior to the exercise, the more effective the exercise itself will be. Note that only spreadsheet cells highlighted in yellow can be changed.

9. The computer instructors are aware of this exercise and will do what they can to offer some simple introduction to spreadsheets. Those undergoing very basic computer instruction (like learning to type) will in all likelihood have had no exposure to spreadsheets.

10. I will be available at any time for any assistance or clarification needed prior to the exercise. During the exercise I will be moving around seminars or you can leave a message at “Exercise Central” – my office (103/101) – at 440-2346.

11. Please ensure that all spreadsheets saved on Defense Team and Government Team computers are deleted before the end of the exercise.

12. I would much appreciate receiving an electronic copy of the final spreadsheet solutions from each seminar.

SUGGESTIONS

1. You should encourage your students to be explicit in identifying the tradeoffs available to them and to be aware of all of the consequences associated with each.

2. Permit corridor discussions among any participants.

3. Considerations for the Defense Team:

a. The appropriate force structure required to implement the National Military Strategy.

b. Service budget shares: Navy, Army, and Air Force. (you might want to encourage some inter-service rivalry)

c. Budget expenditure distribution: Personnel, O&M, and Investment.

d. The distribution of personnel by type of service: regular, conscript and reserve.

e. The elimination of conscription.

f. Reduction of force structure to permit modernization.

g. Cost savings in O&M from replacing old equipment.

h. Restructuring of headquarters, particularly the savings that would accumulate by eliminating single service headquarters.

i. Increasing pay levels.

j. The preparation of alternative budgets: the A budget, which they will attempt to get from government; the B budget, which they will, if they have to, claim to be the absolute minimum they can live with; and, an X budget, what they will take, again if they have to.

4. Considerations for the Government Team:

a. The pressure from the IMF to attain a balanced budget.

b. The negative political effects of any increase in taxes and the positive effects of a decrease.

c. The negative political effects of any reduction in pension benefits and the positive effects of an increase.

d. The long-term goal of modernizing the economy through increased investment in infrastructure and public education.

e. The need to restore some sanity to the public accounts. The high level of the public debt means that a large share of government revenues must go to servicing that debt. As a consequence, the government is seriously constrained in meeting its other commitments. Moreover, this high debt and doubts about the government’s ability to service it, means that the currency could come under pressure at any time. This would likely lead to higher interest rates, increasing the service charges on the national debt and almost certainly leading to reduced investment and consumer expenditure. As a result unemployment would increase. The only way to reduce the debt is to reduce expenditures or increase taxes, or some combination of both. Your team should strive for a surplus in the coming year, which, of course, would mean some debt reduction in the subsequent year.

f. The military threat – is it immediate or longer term?

g. Existing force structure – is it too much, is it too little, should it be changed?

h. Are their other instruments of national security that might be more cost-effective than military power?