Behind the scenes, however, the picture is less rosy. The alliance continues to confront fundamental questions about how it should define its role and mission in the twenty-first century, and whether its member nations have the political will and capacity to fulfill its mission. In particular, countries are ambivalent about whether the alliance should continue to conduct operations outside the North Atlantic, or limit missions to member nations’ borders. The collection of twenty-eight sovereign democracies is sometimes fractious, each with its own national interests, threat perceptions, and domestic constraints. None of these issues is officially on the Chicago agenda, but they will form part of the background for discussions and will surely influence the commitments NATO nations are prepared to make when it comes to conducting out-of-area operations, developing new collective capabilities, and forging partnerships with non-member states.

Three items will dominate the official agenda in Chicago: navigating a tricky endgame in Afghanistan, implementing NATO’s new «smart defense» doctrine, and bolstering the alliance’s global partnerships.

Ensuring a smooth–and sustainable–transition in Afghanistan. NATO’s ongoing campaign in Afghanistan is by far the most ambitious military intervention in the alliance’s seventy-year history. In Chicago, leaders will reaffirm their plans to shift military leadership to Afghan national security forces during 2013–and to remove remaining NATO combat troops by the end of 2014.

NATO members have committed to the principle of «in together, out together.» But will they follow through? On this score, the allies will be looking for reassurance from France, whose new president-elect, François Hollande, pledged during his recent campaign to withdraw France’s 3,400 troops this year.

The NATO allies must also pledge to manage the enormous risks of a transition to a fully Afghan-led counterinsurgency campaign. As widely reported, the Afghan National Army (ANA) and National Police (ANP) remain severely limited. The financially strapped Western allies will also need to discuss how long they are prepared to cover the costs of the Afghan security forces, whose budget represents eight times the annual revenue of the government. In Chicago, NATO leaders must send a clear signal –to the Afghan government and their own publics–that the removal of NATO combat troops does not mean an end to support for Afghan security.

Delivering on «smart defense.» The Chicago summit must also seek to shrink the yawning gap between U.S. and European military capabilities. Libya placed these disparities into sharp relief (as NATO itself conceded in a leaked after-action review). While Europeans flew most aerial sorties, they ran out of munitions only weeks into the campaign. They also depended overwhelmingly on U.S. intelligence, surveillance, and reconnaissance capabilities required for precision targeting, and they relied on U.S. planes for in-air refueling.

These disparities reflect chronic underinvestment in defense. Since 1991, the European share of total NATO defense expenditures has dwindled from one-third to one-fifth. Today, the United States spends more than 4 percent of its GDP on defense spending. Europeans, on average, devote only 1.6 percent–a figure not likely to rise in an age of austerity. Without greater European efforts, as former Secretary of Defense Robert Gates warned in his June 2011 valedictory speech in Brussels, the alliance faces «the very real possibility of collective military irrelevance.»

NATO began to address these shortcomings at its November 2010 summit in Lisbon, where it adopted a new Strategic Concept, Active Engagement, Common Defense. That document committed allies to develop new tools, ranging from improved defense against chemical or nuclear weapons to enhanced expeditionary capabilities. The dilemma, as U.S. ambassador to NATO Ivo H. Daalder and Supreme Allied Commander James G. Stavrides rightly note, is that Europeans are being asked «to summon the political will to implement these standards in a period of fiscal austerity.»

The only way to square this circle is for European nations to adopt a «smart defense» approach, whereby they pool investments in weapons and other defense programs in a multinational effort to close the capabilities gap. As NATO Secretary-General Anders Fogh Rasmussen explains, «Smart defense is about building security for less money by working together and being more flexible.» But this collides with the instinct of national governments to maintain an independent defense industry. As Europeans face the challenge of a single currency and nationalist sentiment grows, supporting any type of «pooling forces» might be politically risky. Still, in one positive summit development, thirteen NATO members plan to announce that they will jointly procure a new ground surveillance system, to be owned and operated by NATO.

Building global partnerships. Third, Chicago offers an opportunity to extend NATO’s relationships with critical international partners and to reinforce the alliance’s emerging role as a hub for global crisis management. As the Strategic Concept outlines, «the evolving international security environment» is far more complex and diffuse than during the Cold War, when NATO’s sole focus was deterring Soviet aggression.

While eastern Europeans still value the alliance as a hedge against Russian revanchism, NATO increasingly focuses on unconventional threats beyond its borders, such as failed states, terrorism, WMD proliferation, ballistic missiles, transnational crime, cyberattacks, maritime piracy, energy insecurity, and resource scarcity. Besides taking NATO far afield from its historical competencies, such challenges require new, reliable partnerships. These include new cooperative arrangements between NATO militaries and civilian agencies (often better placed to respond to unconventional threats). But they also include external partnerships with non-member countries–as well as with international and regional organizations–that possess complementary capabilities and interests.

Of critical importance is the effort to build a more constructive relationship between NATO and the European Union, whose memberships overlap significantly. NATO and the EU have taken steps to enhance pragmatic cooperation, eased by a belated U.S. acknowledgment that deepening EU military capabilities need not pose a threat to NATO. And yet, cooperation between the two bodies continues to be hobbled by outdated, at times ridiculous, political and operational restrictions. Summit observers will be on the lookout for evidence of progress in developing NATO-EU partnership in crisis management, as envisioned at Lisbon.

NATO will need to tread a delicate line on its relationship with Russia, holding firm on plans for missile defense and alliance enlargement while extending an olive branch. NATO should ignore Moscow’s recent bluster on missile defense, reiterating that it poses no threat to strategic stability or Russia’s nuclear deterrent, while repeating its outstanding offer to collaborate with Russia on a system that will advance mutual security needs. Likewise, the alliance should reaffirm that NATO membership remains open under Article 10 of the Washington Treaty to any European democracy, including eventually the four current aspirants: Bosnia-Herzegovina, Montenegro, Macedonia, and Georgia.

If leaders demonstrate progress in Chicago on their three big agenda items, it will signal their determination to keep NATO an anchor of global security in a changing world. To be sure, divergent national interests and threat perceptions suggest that NATO itself is headed for an era of increasing «a-la-carte-ism,» with more flexibility to allow individual countries to opt out of missions that they deem irrelevant, too risky, or too costly. But if leaders manage the transition well, NATO can remain an indispensable useful hub for global cooperative security, one that allows allies to donate different capabilities (including a strategic location in some cases) and to partner with non-member states, as in the Libyan intervention.