Transformation appears to be the buzzword at NATO headquarters these days. The defensive alliance looks at the 21st Century stretching before it and sees many new challenges and threats ahead. Its original mandate and structure seems cumbersome when faced with diverse areas of deployment ranging from peace-keeping to disaster relief, international security to war fighting.

In a bid to meet the challenges head on, NATO leaders are urging the alliance to adapt and expand. And with the introduction of the new NATO Response Force (NRF) this year, the alliance looked set to modernize and become an armed organization ready to deploy in peaceful and conflict situations in a fraction of the time.

The plan was vital to US-backed efforts to transform the 57-year-old alliance from its former role as Cold War protector of Europe into an organization able to launch missions ranging from aid delivery to hard combat at a few days' notice.

Financing problems put NRF on hold after talks in Italy

However, despite NATO defence ministers reiterating on Friday their intention to get the rapid reaction force fully up and running by October, they did not agree on how to pay for it.

"Everyone is agreed we have to roll up our sleeves so as to set up this rapid reaction force on time," a diplomat said on the sidelines of a meeting of alliance defense ministers in southern Italy.

But there are still gaps to be filled and all of the alliance's

26 member countries have yet to say whether they will contribute.

However, diplomats said NATO defence ministers on Friday had put off until a leaders' meeting in Riga in November a decision on how to reform the alliance's funding to pay for the mission.

The force would be made up of soldiers from NATO members changing on a six-month rotating basis. The countries providing troops at that time would be required to also pay for any missions the force would undertake.

Bill for earthquake mission lands on Spain's doormat

In the trial run during the Pakistan earthquake disaster in January, the bill landed on Spain's doormat -- one of the countries providing troops during that window -- and the Spanish government was required to stump up the 16 million euros ($19 million) to cover the costs of the operation.

Unsurprisingly, Spain has led the calls for the NRF's costs to be financed out of shared NATO funds, a notion rejected by Britain and France who are wary of the principle of more common funding within NATO, arguing it could deter nations from investing in their own national forces.

Financing is just one of the problems facing the NRF.

The task force is also currently short of troops, with only 17,000 of the requested 25,000 soldiers put forward by NATO members.

Rumsfeld angry at lack of cooperation

US Defense Secretary Donald Rumsfeld -- who first proposed the NRF in 2002 -- is known to be frustrated by the lack of commitment and is expected to push NATO allies to contribute more in the near future.

NATO's commander in Europe, US General James Jones admitted himself that the October launch of the NRF was in doubt.

"The reason I'm not confident is it isn't resourced now," Jones said, when asked this week if he was confident that the NRF would be fully operational by October. "As things stand now, I can't say that, missing 25 percent of a force, that I have a great deal of confidence that we're going to generate 25 percent as if by magic. I'm hoping to get there."

The lack of enthusiasm for the project, especially in some European quarters, can be traced back to the European Union's proposed military force.

Europe's defense plans clash with those of NATO

Europe's ideas of forging a security and defense policy that could supplement some of NATO's tasks has been a sticking point between some EU members and the United States for some time. France, for example, favors making the European Union ever stronger in defense matters, part of a grander strategy of providing a counterweight to the United States in the world.

Supporters of the idea are stalling on committing to the NRF as the force may weaken attempts to set-up an EU equivalent in the future.

German Secretary of Defense Franz-Josef Jung is one of those who remain undecided.

"We must consider in future the European Union and the European Battle Groups," he said. "The application (for the NRF) must be discussed over and over again."

The soldiers of the NRF, when and if it is launched, are likely to be NATO's core task force. The force will be ready for deployment anywhere in the world within five days of receiving their mission and will be self-supporting for up to 30 days once on the ground, according to General Jones.

"This is will be a highly technological army and also a very adaptable one," according to Belgian Lieutenant Colonel Ludwig Decamps at NATO headquarters in Brussels. "The tools at its disposal will allow NATO to take charge of a whole range of operations, from humanitarian operations, such as the earthquake in Pakistan, to conflict situations."

Expensive logistical problems to be eased

One of the problems that NATO troops have experienced in the past, which became painfully obvious once more during the relief efforts in the earthquake zone, was the lack of its own aircraft. NATO has few planes, meaning troops and equipment are usually airlifted into situations by rented aircraft, an expensive and sometimes complicated state of affairs. Meager European defense budgets have often been cited as the reason behind NATO's dearth of aircraft.

Six month rotation of military responsibility

Alliance officials, however, hope the rotational nature of the NRF will help to put this problem right and allow the task force to live up to its billing as a rapid deployment army.

The NRF will not be a standing army but one made up of troops from national forces. Each NATO member will make soldiers available for call-up on a six-month rotating schedule backed by their own equipment and logistical apparatus. They will be stationed and will train together at their home barracks for that six-month period awaiting orders for deployment.

The NRF's first major maneuvers in the Atlantic island group of Cape Verde this June will go ahead, NATO officials announced this week, but the scale of the exercise would be reduced.

"We've down-scaled the operation in terms of some of the manpower, which is really what costs a lot of money," Jones said. He added that some 6,000 troops would take part instead of a planned 8,000, insisting it would still be a valid test.