When NATO leaders meet this weekend in Lisbon, Portugal, they will certainly have an array of headaches to sort out: Afghanistan, a new strategic concept, nuclear deterrent, and so on.

But a bigger question is looming too: Where the 61-year-old bloc is heading in the next decade in a fast-changing environment?

Three challenges

A self-claimed "most successful military alliance in history," NATO now finds itself in a delicate and tricky situation.

The end of the Cold War left the bloc without a rival, and the rapid expansion from 12 to 28 members has made NATO much less cohesive than it was.

Moreover, the ongoing global financial crisis has prompted European members to cut defense spending, a trend that has made the Untied States, the bloc's major partner, anxious.

Even with unprecedented missions outside its traditional defense area over the past five years, NATO and national defense budgets have fallen consistently. Of the 28 members, only five have achieved the defense spending target of two percent of GDP set by the bloc.

Then there is the Afghan war -- NATO's biggest and longest-ever expeditionary ground military operation involving about 150,000 troops from 48 nations. The war is dragging on with no end in sight, sapping popular support in Washington as well as European capitals.

Justin Vaisse, a senior fellow with the Washington-based Brookings Institution, said that Afghanistan is just one of the three existential challenges facing NATO.

"It's evident that many NATO allies are in Afghanistan because the United States is in Afghanistan and out of loyalty for the United States, rather than out of conviction that they should be there like in the Balkans in the 1990s where they really had a conviction that they should be there," Vaisse told Xinhua in an interview. "Not all NATO allies are convinced that the operation should go on."

He named contracting defense budgets as a second challenge, noting that at a time when spending and technological gap already exists between the United States and its allies, European nations are cutting defense budgets to the range of 2-5 percent up to 10-15 percent, or even more for countries like Greece which was hit hardest by the financial crisis.

"The new cuts are gonna put in doubt the interoperability of the allies, meaning how they fight, how can we fight together, Americans and Europeans, if Europeans are not spending enough," Vaisse said.

Inside the alliance, there are conflicting visions on how NATO moves on. New members in Eastern Europe and the Baltic region prefer continued collective defense as an insurance policy against a resurgent Russia, based on Article 5 of the North Atlantic Treaty which states an armed attack on one is attack on all.