It is the same situation that affected many units in the Civil War in the US and German and Soviet units during WWII.
In the Civil War there plenty of Regiments that had been so badly depleted they were just a shell of what they started out with. The answer was to add more Regiments to Brigade when the overall strength of a Regiment fell to low. That not to say that a Regiment would fall so low that they wouldn't be combined, which seemed to happen on the Confederate side more than Union side. It did happen, but at this time Regiments in the US and Confederate Armies were largely raised at State level and then sent to where ever the respective War Department told them to be deployed.
Where in WWII the German Army started the war where a Regiment would have HQ, Support elements, and up to 4 combat battalions. As the war progress many of the Regiments/Brigades would slowly be reorganized and reduced until in the late stages of the war there were some Regiments that little more battalion strength....
On the Soviet side it is tradition of take broken and spent units and using them to bring up one unit to strength as the flag(s) of the other units would be sent to where ever and used for the next version of the unit. Why GDW didn't use this system to bring Soviet and Pact Divisions back up to strength I am not sure. I think it was either an oversights, or ignored because it was too hard to explain, and wanted to keep both sides on the same footing.
Before 1998 the 40th Mechanized had been badly damaged and the remain force was consolidated into a Brigade. Excess personnel was sent back to California to raise the rest of the Division which got caught up in the Mexican invasion. Same thing happen to the 2nd Armored with the exception here the excess personnel were disperse through out the unit in Europe. There were ACR where this had happen where they consolidated into Squadron where the excess personnel was transferred to other units. I personally don't believe that the excess personnel of the 40th would of been returned to the US, but since it was NG Division and made good excuse to have new heavy unit still in California not caught up in Pacific Northwest.
With that said, I think there were two reasons why consolidation of units didn't take place in NATO. Some Corps and Division were multi-national. Next by 1999 no matter if it was Army Commander, Corps Commander, Division Commander or Brigade Commander. You knew what you had and what worked, any unit that you are order to trade or would like trade with, their equipment was a wild card. Next none of these people and their staff would like to be out of job. It is kinda of the reverse logic why when the US Army went from 33 combat brigade to todays 48 - 52 Brigade why at least 2 new Divisional HQs weren't stood up. It was cheaper to add Brigades to existing Division HQ which in most cases was only one Brigade and 10th Mountain and 25th Infantry gained two brigades, then build new Division HQ, Division support units and what not.
So at the time, while 'Division HQ', 'Corps HQ', and 'Army HQ' were still operating and claiming they were still functional but the units were known to be understrength. It was economical and cheaper to keep them where they were at. The reality that there would no longer be any reinforcement/replacement was starting to set in. Then like others have pointed out such in the British/Canadian units to large extent and to German and US unit to lesser degree would hate to lose their identity. Even though realistically the German units should be able to raise new troops locally, even the other NATO units would start to raise fresh troops local on small scale too, going to the point where they allow Pact troops that haven't active taken action with them to attached themselves to the unit without much fuss and/or recruiting POWs.
One the Pact side you can almost tell with some of the Divisions were 5000-8000 men strong that they were consolidating where the local Army and Front Commanders still had some control. Look at the overall strength of these Fronts and Armies show they were minus at least a Division or two. The 3rd Shock Army which should of had 4 - 5 Division was down to 3 Division and I believe they had one decent size Division and the other two were still really weak. Even the 4th Tank Army and 22nd Cavalry Army their Division after their movement had seemed to be still quite small, but this could be explained by almost constant fighting with marauders and partisans on their way to hit the XI US Corps and 5th US Mechanized Division.
The next thing with the Pact Forces you run into similar problems where units histories and what not where their Commanders may be unwilling to consolidate units. Yet again many of these units were in their home country by the end of 1999. One thing I don't remember seeing in Germany is any mention of Hungarian Army units. Don't know if these units had been sent elsewhere in Europe, or if any Soviet Group of Force in Hungary were used in Germany/Austria area. Then again it seems like much the German units of NATO it was dependent on the Commander if they did active local recruitment or not.
By 2000 it would probably be standard practice that whatever Divisional and higher HQ would try to recruit locally.
Just some thoughts.
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