UPDATE 2-U.S. presses allies to raise defence spending after Ukraine
* Hagel says slide in military spending poses threat
* NATO to draw up longer-term measures for September summit
* NATO promises support for defence reforms in Ukraine (Updates with Rasmussen, Ukraine, Polish ministers)
By Adrian Croft and David Brunnstrom
BRUSSELS, June 3 (Reuters) - U.S. Defense Secretary Chuck Hagel urged NATO allies on Tuesday to raise their defence budgets due to the Ukraine crisis, saying a spending slide could pose as big a threat to the alliance's future as any enemy.
He also called on allies to review how their militaries were trained and equipped to meet new security challenges, arguing NATO should expect Russia to continue to test its resolve, even though it was withdrawing its troops from the Ukraine border.
"We cannot shrink from this challenge ... We must reaffirm the security guarantees that lie at the heart of this alliance. And we must hold fast to those guarantees by summoning the will to invest in a revitalised NATO," Hagel said, according to the text of a speech to NATO defence ministers meeting in Brussels.
The 28-member alliance is studying what longer-term steps it needs to take to bolster its eastern defences and improve its ability to respond to the unorthodox tactics used by Russia during its annexation of Ukraine's Crimea region.
As the NATO meeting began, the White House unveiled plans for a $1 billion initiative to send more of its military to Europe on a temporary basis but stopped short of promising to beef up its permanent presence as some of Washington's allies are seeking.
Hagel urged NATO to "come to grips with the potentially dire consequences of current trends in reduced defence investment - consequences that, in the long term, pose as much of a threat to the alliance as any potential adversary.
"Allies must ... reverse these trends," he said.
Many NATO allies have slashed defence spending in response to the financial crisis. Only a handful meet NATO's target of spending two percent of their economic output on defence.
Latvia, Lithuania and Romania have announced plans to increase defence spending in response to the Ukraine crisis and Poland also proposed on Tuesday to slightly boost its military budget.
NATO Secretary-General Anders Fogh Rasmussen, who also rammed home the message about the need to halt the slide in defence spending, said he expected allies to make commitments on military spending at their summit in Wales in September.
After the ministers held talks with acting Ukraine Defence Minister Mykhailo Koval, Rasmussen said NATO would produce a support package by the end of June to help Ukraine with defence reforms and modernisation of its armed forces.
Individual allies had also come forward with offers of help for Ukraine, including advice, technical assistance and material support, but this did not include weapons, NATO and Ukrainian officials said.
"We received assistance from France, Poland, the United States, the United Kingdom - also assistance is coming from other allies. There is a very long list of items. At the moment we are talking only about non-lethal (equipment)," Koval told reporters.
Ukraine's ambassador to NATO told Reuters in April that Kiev had asked NATO allies for supplies for its army, which is battling pro-Russian separatists in the east of the country, ranging from uniforms to spare parts and aircraft fuel.
In the three months since the Ukraine crisis erupted, the U.S.-dominated alliance has sent fighter planes and ships to the region and stepped up military exercises to reassure eastern European allies alarmed by Russia's actions, while making clear it has no intention of intervening militarily in Ukraine.
The defence ministers agreed to develop a "readiness action plan" for the NATO summit with longer term measures for beefing up eastern European security.
These could include pre-positioning equipment in eastern Europe and preparing infrastructure to enable rapid reinforcement, more military exercises and shortening the response time of NATO's rapid reaction force.
Special operations forces are one of the priority areas the United States believes NATO should focus on developing, Hagel told the meeting. "Russia's asymmetric tactics in Ukraine underscore the need to enhance allies' unconventional capabilities," he said.
Ministers from Germany, Denmark and Poland, which work together in NATO's Multinational Corps Northeast, told NATO counterparts they had agreed to upgrade the readiness of the corps' headquarters in Szczecin, Poland, a NATO official said.
The headquarters is likely to get more staff and equipment so it could take command of exercises and potentially any reinforcement effort needed in eastern Europe.
However, Poland, which wants large numbers of NATO troops stationed permanently on its soil, said beefing up the headquarters was not enough.
"We don't want the strengthening of the command centre to be seen as the only aspect of bolstering NATO presence in the east. We expect much more and we are talking about this," Polish Defence Minister Tomasz Siemoniak told reporters in Brussels.
Many allies are hesitant about permanently basing large numbers of troops in eastern Europe, a move Russia says would violate its 1997 agreement with NATO. NATO officials insist that the reinforcements and exercises under discussion are within the terms of the agreement.
Ministers also agreed on a new cyber defence policy, calling for improved information sharing and mutual assistance between allies. It also calls for better cyber defence training and exercises and closer cooperation with industry. (Additional reporting by Justyna Pawlak; Editing by Tom Heneghan)
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