The North Atlantic Treaty Organization (NATO) has been the cornerstone for transatlantic security and defense cooperation since its founding in 1949. As NATO continues to evolve to confront emerging regional and global security challenges, the 112 th Congress could play an important role in determining the future direction of the alliance and U.S. policy toward it. This includes addressing key issues that are expected to be discussed at NATO's upcoming summit in Chicago. Issues of importance to Congress could include ongoing NATO operations in Afghanistan, off the Horn of Africa, and in the Balkans; the development of allied military capabilities and a NATO territorial missile defense system; NATO's nuclear force posture; NATO's relations with non-NATO members; and implementation of NATO's 2010 Strategic Concept. Since the last NATO summit in Lisbon, Portugal, in November 2010, the alliance has recorded some important achievements and faced considerable challenges in pursuit of its agreed strategic goals. In Lisbon, the allies adopted a new Strategic Concept in an effort to clarify NATO's role in the 21 st century security environment. The new NATO blueprint outlined three core tasks: collective defense; crisis management; and cooperative security. On the issue of collective defense, the allies have committed to maintaining an appropriate mix of nuclear and conventional forces to defend alliance territory and to developing a ballistic missile defense capability based largely on the U.S. European Phased Adaptive Approach (EPAA, discussed in more detail below). Some issues remain divisive, however. For example, some allies continue to question the utility of U.S. non-strategic nuclear weapons deployed in Europe, while others have argued that a continued focus on large-scale "out-of-area" operations and unconventional security threats could compromise the alliance's ability to defend the territory of NATO member states. With respect to crisis management, ongoing operations in Afghanistan and the Balkans as well as the alliance's 2011 operation in Libya demonstrated NATO's capacity to respond simultaneously to multiple security crises. At the same time, each of the missions also exposed significant shortfalls in allied military capabilities. Calls from some allies for an accelerated transition away from combat operations in Afghanistan and the fact that no more than 14 of 28 allies participated in the Libya operation have also prompted many observers to question alliance solidarity and to express doubts about the appetite for future "out-of-area" operations, particularly on the scale of the Afghan mission. On the issue of cooperative security, NATO has sought to enhance its relations with non-NATO member states and other multilateral institutions to allow for stronger regional political and military cooperation and increased partner participation in alliance operations. However, NATO's relations with some key partners, including Russia, continue to be marked by disagreement and deadlock. The global economic downturn and ongoing European debt crisis and the budgetary constraints facing many allied governments on both sides of the Atlantic may pose one of the biggest challenges to alliance capabilities and solidarity. Most European allies have enacted far-reaching budget cuts, including to what had already been declining national defense budgets in most cases. Some observers worry that alliance members will be unable or unwilling to contribute and develop the military capabilities necessary to meet allied security objectives and that this, in turn, could lead to a diminished ability to meet NATO's collective security goals. Others argue that current fiscal constraints only heighten the importance of pooling scarcer resources at the alliance level and cooperating to realize common defense and security objectives. In any case, most observers agree that the current transatlantic burden-sharing situation, with the United States accounting for over two-thirds of alliance defense spending, could be unsustainable. Far-reaching defense budget cuts in the United States and the planned withdrawal of two of the U.S. Army's four Brigade Combat Teams based in Europe have also raised questions within the alliance about future U.S. commitments to European security. NATO's 2012 summit of alliance heads of state and government is scheduled to take place in Chicago on May 20-21. U.S. and NATO officials have outlined what they expect to be the Summit's three main agenda items: Defining the next phase of formal transition in Afghanistan and shaping a longer term NATO commitment to the country after the planned end of combat operations by the end of 2014; Securing commitments to maintain and develop the military capabilities necessary to meet NATO's defense and security goals, including through a new "Smart Defense" initiative; and Enhancing NATO's partnerships with non-NATO member states. The allies also plan to consider the results of an ongoing Deterrence and Defense Posture Review (DDPR), for which they called at the Lisbon Summit. Although NATO is not expected to issue membership invitations to any of the four countries currently seeking NATO membership, they could reaffirm their commitment to do so in the future. In Chicago, alliance leaders are expected to further develop plans for the transition of full responsibility for security to Afghans by the end of 2014 and to define NATO's role in the country after the changeover. The transition would mark the end of what has been the largest and longest combat operation in NATO's history. According to NATO Secretary General Anders Fogh Rasmussen, 22 non-NATO partners that have an interest in stabilizing Afghanistan will attend the Summit. Some analysts point out, however, that the possible absence of Pakistan—one of the region's most influential actors—from the Summit could be emblematic of the significant challenges NATO faces as it seeks to secure the cooperation of Afghanistan's neighbors in its evolving strategy. U.S. and NATO officials outline the following three Afghanistan-related priorities for Chicago: Identifying milestones in 2013 for NATO's transition from a primary emphasis on combat to a primary emphasis on support—in particular, training, advising, and assisting Afghan forces and authorities; Defining the appropriate size of the Afghan National Security Forces (ANSF) after 2014 and securing commitments from NATO member states to help fund and sustain the ANSF after the withdrawal of allied combat forces; and Refining the terms of a NATO-Afghanistan relationship after 2014. Statements by several alliance leaders earlier this year, including newly elected French President François Hollande and U.S. Secretary of Defense Leon Panetta, had led some observers to speculate that some allies could call for an accelerated withdrawal out of Afghanistan at the Chicago Summit. NATO officials say that a further withdrawal of forces in 2013 is in line with existing transition plans. At the same time, they highlight the importance of maintaining some level of combat forces in Afghanistan throughout 2014, even after Afghan forces have taken lead responsibility for security across the country. On May 13, 2012, Afghan President Hamid Karzai announced the beginning of the third "Tranche" of the formal transition process in Afghanistan. According to U.S. officials, Afghan forces now have lead security responsibility over half of the Afghan population. Upon completion of "Tranche 3" of the transition—which reportedly could come within six months—Afghan authorities will have lead security responsibility for 75% of the population. Between now and the end of 2014, NATO forces increasingly are to increasingly take a supporting role, focusing on training and assisting Afghan forces. The Obama Administration reportedly has been leading efforts to raise funds to sustain the ANSF beyond 2014. According to press reports, NATO and the United States estimate that maintaining the ANSF at adequate levels beyond 2014 would cost approximately $4.1 billion annually. In testimony to the Senate Foreign Relations Committee on May 10, 2012, Assistant Secretary of State Philip Gordon said that the United States is seeking a collective annual commitment of about $1.3 billion from its allies and expects the Afghan government to contribute about $500 million annually. U.S. officials reportedly have said the United States could cover the additional cost. Other allies reportedly have been reluctant thus far to make specific commitments ahead of the Summit. Observers expect such support would be necessary for at least 10 years after 2014, reflecting President Karzai's request for international support during a 10-year "transformation" period. Plans for NATO's involvement in Afghanistan after 2014 remain unclear, though some NATO member states—including the United States, United Kingdom (UK), France, and Italy—have signed bilateral agreements with the Afghan government that outline broad commitments after the NATO draw-down. Most member state governments face considerable public opposition to a significant continued combat role in Afghanistan. As of April 18, 2012 there were 128,961 troops from 50 countries serving in NATO's International Security Assistance Force (ISAF) in Afghanistan, with the 28 NATO members providing the core of the force. The largest ISAF troop deployments come from the United States (90,000), the UK (9,500), Germany (4,900), Italy (3,816), France (3,308), and Poland (2,457). Europe's current financial problems have led to heightened concern about European allies' willingness and ability to project power as a global security actor in the years ahead. The European debt crisis comes amid already long-standing U.S. concerns about a downward trend in European defense spending and shortfalls in European defense capabilities. Not counting the United States, NATO militaries have about two million personnel in uniform, but some 70% of European military forces reportedly cannot be deployed abroad, and throughout the Afghanistan mission the European members of the alliance have struggled to maintain 25,000 to 40,000 troops in the field. In 2011, only three NATO allies exceeded NATO's informal goal of 2% of GDP for defense spending (Greece, the United Kingdom, and the United States). European militaries continue to be limited by shortfalls in key capabilities such as strategic air- and sealift, aerial refueling, and Intelligence, Surveillance, and Reconnaissance (ISR). Some analysts have long asserted that defense spending in many European countries is inefficient, with disproportionately high personnel costs coming at the expense of much-needed research, development, and procurement.