By Andrius Sytas and Adrian Croft
GAIZIUNAI, Lithuania/BRUSSELS (Reuters) - Artillery and tank fire reverberate around a Baltic airstrip where U.S. paratroopers are fighting alongside Lithuanian soldiers. The battle is just an exercise and it only involves 150 U.S. soldiers - but the symbolism is clear.
With eastern European states nervous about Russia after it annexed Ukraine's Crimea region and massed 40,000 troops on Ukraine's borders, the United States and NATO allies want to show Moscow that former Soviet republics on the Baltic are under the alliance's security umbrella.
"We're ready if something were to happen, but we're not looking to start any problems," said Sergeant James Day, from the U.S. 173rd Airborne Brigade, during war games on the vast Gaiziunai training ground in western Lithuania.
That chimes with NATO's current posture. In an initial response to Russia's intervention in Ukraine, The United States has sent 600 soldiers to the three Baltic countries - Estonia, Latvia and Lithuania - and Poland to take part in exercises to bolster NATO's presence in eastern Europe. But the alliance has no inclination to intervene militarily in Ukraine.
Longer term, the crisis will have a profound impact on NATO's relations with Russia, its strategy and how it deploys, trains and equips its forces, although Europe has no wish to return to a Cold War-style confrontation between huge armies.
The crisis will compel the alliance to refocus on its core mission of defending its members after years in which its main effort has been far away in Afghanistan.
The 28-nation military alliance accuses Russia of tearing up the diplomatic rule book with its annexation of Crimea.
"For 20 years, the security of the Euro-Atlantic region has been based on the premise that we do not face an adversary to our east. This premise is now in doubt," NATO Deputy Secretary General Alexander Vershbow said last month.
The crisis, called a "game changer" by Secretary General Anders Fogh Rasmussen, will dominate the alliance's agenda as it prepares for a summit in Wales in September, which will mark the imminent end of the NATO-led combat mission in Afghanistan.
The United States, Britain, Denmark, France, Canada and Germany have sent or promised extra fighter aircraft to increase patrols and training over the Baltics, Poland or Romania.
A fleet of nine minehunters from NATO countries has been dispatched to the Baltic and another task force of five ships to the eastern Mediterranean.
In the longer term, NATO will consider permanently stationing forces in eastern Europe, something it has refrained from doing in the 15 years since the Czech Republic, Hungary and Poland joined the alliance after the fall of the Berlin wall.
NATO will also have to think about how it deals with the unorthodox tactics used by Russia in Crimea, including exploiting political divisions, using large-scale military exercises as cover for intervention, and denying Russian troops were operating in the peninsula.
The crisis has already affected relations between NATO and Russia, which have cooperated uneasily in recent years in areas such as combating terrorism, piracy and Afghan drug-trafficking. NATO suspended cooperation with Russia last month over Crimea.
The damage is not likely to be repaired as quickly as after Russia's 2008 war with Georgia, when a freeze in top-level contacts between NATO and Russia lasted barely six months.
"As compared, say, with the reset after the Georgia war, this is going to be a much more prolonged and difficult period," said a senior NATO official, speaking on condition of anonymity.
Russian President Vladimir Putin declared in March he had the right to invade Ukraine to protect Russian speakers there, causing alarm in NATO members Estonia and Latvia, which have large ethnic Russian minorities of their own.
Officials at NATO are asking themselves if Putin would seriously consider challenging a NATO member, although if it tangled with a NATO member state, Russia would also be risking a confrontation with the United States.
"Just as NATO doesn't want a war with Russia, so too Russia doesn't want a war with NATO, because the risks on both sides are global and catastrophic," said Samuel Charap of the International Institute for Strategic Studies think-tank.
So far, NATO has reinforced eastern allies with short-term deployments that will continue until at least the end of the year. If tensions with Russia persist, NATO may look at longer term ways to beef up its presence.
NATO's top military commander, U.S. Air Force General Philip Breedlove, said last week that NATO would have to consider permanently stationing troops in parts of eastern Europe.
With many NATO allies, including the United States, cutting defense budgets, there is a question mark over where the troops or the money for permanent bases would come from.
U.S. forces in Europe have shrunk dramatically since the Cold War. Their numbers are about 80,000, including 14,000 civilian staff, according to the U.S. military's European Command, down from more than 300,000 during the Cold War.
Diplomats and analysts do not expect any major shift of U.S. troops back to Europe and say the United States will not reverse its policy of "rebalancing" towards Asia.
That means that the United States, which accounts for around three-quarters of all NATO defense spending, will want European allies to do more to defend themselves.
Central and West European countries cut defense spending by 6.5 percent between 2004 and 2013 while Russian military spending doubled over that period, the Stockholm International Peace Research Institute, a defense think-tank, said last month.
While Latvia and Lithuania have just pledged to more than double their military spending, other allies, such as Slovakia, say they cannot afford any increase.
But despite budget cuts, NATO remains far more capable than Russia. Although Russia's military spending has risen, its armed forces have shrunk under reforms aimed at turning them into a better equipped, more professional military.
Rather than keeping large numbers of forces in eastern Europe, NATO could rotate forces from other NATO allies to the region while preparing to reinforce quickly if needed.
"There may be a need to increase forward presence, including a more institutionalized rotational scheme, maybe combined with pre-positioned equipment in ... the front-line states," the senior NATO official said.
Another change will be more regular exercises, simulating the perceived threat from Russia. The alliance will also look at speeding up the response time of its rapid reaction force.
Military training, dominated in recent years by counter-insurgency techniques useful in Iraq and Afghanistan, is likely to change back to training for conventional warfare.
NATO allies could also change the kind of equipment they buy. In Afghanistan, the pressing need was for mine-proof vehicles but in future the emphasis is likely to be on "high-end" military equipment such as advanced jets.
(Editing by Giles Elgood)
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