"The blunt message from Colorado is going to be this: We need real deployable soldiers, not paper armies," Secretary General George Robertson told reporters.
NATO defense ministers and their top brass gathered at Schriever Air Force Base outside Colorado Springs where they were confronted with a fictional scenario in which the alliance new NATO Response Force is deployed.
Details of the scenario were kept secret, but officials here said it begins with a NATO intervention in a friendly fictional island nation in the Red Sea to rescue civilians trapped by a crisis.
But it quickly turns sour and the alliance soon finds itself facing a threat to Europe in the form of terrorists on freighters off the coast with missiles possibly armed with chemical or biological warheads, according to the officials.
"It was hypothetical, but it was designed to deal with real world threats and capabilities," US Defense Secretary Donald Rumsfeld said. "I think it was useful. I know I learned some things, and I hope others feel the same way."
He said the exercise -- dubbed "Dynamic Response 07" -- underscored the need for rapidly deployable forces but also for decision making structures that will allow the alliance to respond quickly in a crisis.
All but a fraction of NATO's 1.4 million non-US troops were still committed to a static defense of Europe against a non-existent enemy, Robertson told reporters.
The deployment of only 55,000 NATO troops from countries in the United States in other operations had left the alliance "overstretched," he said.
"So long as you have so many unusable soldiers, then taxpayers are being ripped off," he said.
All 19 NATO members and seven countries that have been invited to join the alliance next year took part in the exercise. They are gathered here for an informal two-day meeting at a resort in the shadow of the Rocky Mountains.
Ministers from some countries initially were uncomfortable about participating in something that could be construed as a war game devised by the United States, according to diplomatic sources.
US officials have studiously avoided the term "war game" to describe the event, calling it a "study seminar" in which the ministers were asked to explore the political and military implications for NATO of rapidly evolving crises.
They said it was the first time NATO defense ministers, chiefs of defense and alliance ambassadors have taken part in such an exercise.
More broadly, the ministers were discussing how to transform an alliance created to defend Europe into one better suited to meet threats that are less predictable and more likely to arise outside Europe in ungoverned parts of the world.
The leading edge of that transformation is the NATO Response Force, a force of some 15,000 to 20,000 ground troops as well as air and naval components that is being formed to move a combat brigade quickly to world hot spots.
A ceremony formally establishing a prototype the unit is to be held October 15 in Brunssum, Netherland, and it is to have an initial capability by next year.
France, which is not a member of NATO's military command structure, nonetheless will be one of the major contributors of ground troops to the force.
US Defense Secretary Donald Rumsfeld told reporters Tuesday the NATO Response Force will give the alliance greater agility, responsiveness and lethality.
"I suspect that what is learned from that activity will be backed into the militaries of the NATO nations," Rumsfeld said.
The ministers will take up the more divisive issue of Iraq at an informal dinner Wednesday.
Other operational issues, including NATO plans to expand the International Security Assistance Force in Afghanistan and the future of its peacekeeping operations Bosnia, will be discussed Thursday.