d. Defence structures The share allocated by Luxembourg to investment expenditure has systematically exceeded 30% of its average multi-year defence effort and has followed an increasing trend: a significant ability to invest is the dominant feature of the Luxembourg Defence and its primary advantage for engaging in multinational capability cooperation. Defence policy and defence effort planning are defined, managed and implemented on various levels: • The Minister of Defence defines and implements Luxembourg’s defence policy. Luxembourg’s defence effort comprises several elements, the most important being the budget of the Army, the budget managed by the Defence Directorate and the Military Equipment Fund – the principal instrument for defence investment. This is supplemented by expenditure made by other ministries but having military relevance and purpose. • The Defence Directorate advises and assists the Minister in the development of defence policy and performs and supervises its implementation; it defines and implements capability strategy and exercises supervision and control of the administrative and budgetary management of the resources (human and financial) of Luxembourg’s Army. The Defence Directorate is incorporated within the Ministry of Foreign and European Affairs. One of the major challenges in particular is having the necessary budgetary flexibility to acquire complex capabilities in the context of major, long-term multinational programmes. Planning in such circumstances depends not only on Luxembourg, but also on how the programmes progress, on disbursement scheduling and on other factors that can be difficult to predict and that require budgetary adjustments throughout a project’s life cycle and great responsiveness. The long-term ambition is to achieve budgetary stability based on fixed or multi-year expenditure. • Luxembourg’s Army is placed under the responsibility of the Chief of Staff and performs in-service support for the resources allocated by the Government in connection with missions falling within the legal framework. It manages the employment of the forces and assists in providing strategic advice to the Government on conditions for the utilization of forces and on capability development. All other things being equal, and based on the growth forecasts available in early 2017, the defence effort will exceed 410 million current euros in 2020 so as to reach the target of 0.6% of GDP at that point. For the years 2017 - 2020, the Luxembourg Defence will thus have a total investment margin of some 310 million current euros. Beyond 2020, the Government has decided to plan for a constant increase in defence effort. The various evolutions described in these Guidelines have revealed the need to adapt the defence management structures to ensure they are furnished with the necessary human resources (adequate in number and background), as well as the decision-making processes needed to implement an evolving defence policy and to properly manage the defence effort. Luxembourg’s commitment to increase its defence effort illustrates our willingness to shoulder our responsibilities as a European Ally and to continue improving our contribution to solidarity-oriented burden sharing. A long-term resources and capabilities investment plan shall serve to sustain the defence effort, taking international requirements into account. The task of setting the time line and credible objectives commensurate with our country’s wealth will fall to future governments. To that end, a new organizational chart for the defence structures was adopted in September 2016 (see annex). This arrangement will provide for efficient implementation and monitoring of the Luxembourg Defence Guidelines and Master Plan. At the heart of this organizational chart lies an organizational rapprochement between the Defence Directorate and the Army Staff. • Increased staff numbers and the adoption of a new internal organization within the Defence Directorate make for better definition of tasks and better implementation of defence policy. Staffing levels have been increased at every level, particularly in capability investments planning and management, relations with the Army and legal review of the many dossiers involving the Army and international relations. The evolution of the defence effort must form a part of a sustained approach that also involves the gradual establishment of suitable structures. But given the complexity of the factors leading to the current security threats, simply increasing defence expenditure is an inadequate response. Continued investment in development cooperation is required to push forward action on conflict prevention. It is also necessary to spend better and to promote European cooperation initiatives in the area of equipment. Besides the financial criteria, other quantitative and qualitative aspects must be factored in to measure the real contributions made. Luxembourg will also continue to advocate an overarching and more differentiated view of national efforts in terms of contributions to stability and security, to include using Gross National Income (GNI) instead of Gross Domestic Product (GDP) when calculating the defence effort, GNI being more representative of Luxembourg’s economic reality. • Regarding the Army, the new organizational chart has made it possible to finalize the reorganization initiated in 2007, which sought synergies between the Defence Directorate and the Army Staff and an optimized internal organization of the Army. The chart reflects evolutions in the field of defence and will enable the Army to branch out into new areas in the future. 35