NATO Secretary-General Anders Fogh Rasmussen on Friday called for European countries to adopt a " Smart Defense" strategy in time of financial crisis.

Speaking in an opening statement at the 47th Munich Security Conference (MSC), Rasmussen noted that several European countries has cut down their defense budgets because of financial difficulties.

"If the cuts are too deep we won't be able to defend the security on which our democratic societies and prosperous economies depend," he said.

Rasmussen highlighted the importance of "Smart Defense," through which "NATO can help nations to build greater security with fewer resources but more coordination and coherence."

He listed three ways that NATO can help its partners and member countries realize "smart defense," from pooling and sharing capabilities, to setting the right priorities and better coordinating efforts.

"Pooling and sharing are vital if we want to develop our military know-how and capabilities," he said, adding "NATO is best placed to identify and connect nations that have similar needs but not enough money to build a capability on their own."

"But pooling is not enough, if we don't put our money where the real priorities are," Rasmussen said. "At the NATO Summit in Lisbon last November, we identified several of these priorities, including cyber defense, and the fight against terrorism and piracy. We also agreed on ten critical capabilities for our forces- - such as helicopter transport, medical support, and countering road-side bombs."

He said NATO can provide the bigger picture of what Allies need and want, which can help some nations to focus on certain capabilities ,either alone or working together with a few other Allies.

"This is the time to make better use of NATO as an adviser and an honest broker," he said.

Rasmussen rebuffed the suggestion of a labor division within NATO, which means that the United States provides hard power, while its European Allies increasingly turn to soft power assignments like training and institution-building.

"I find this suggestion at best naive, and, at worst, dangerous. It is completely out of touch with today's increasingly complex security environment."

The American share of NATO total defense spending has increased to 75 percent from less than half ten years ago, said Rasmussen, and the percentage keeps rising.

"Europe simply cannot afford to get out of the security business. It has to revitalize its role as the United States' prime security partner and adjust to the new global security environment," he said.

Rasmussen praised the cooperation between France and Britain to develop and share critical defense capabilities. "This new agreement is a real turning point. And I believe it could show the way forward for other Allies too."

During the three-day conference, 350 world leaders and diplomats will discuss major global security issues, including financial crisis, cyber war, transatlantic security, NATO-Russia relationship, non-proliferation of mass destruction arms, Afghanistan and Middle East.