The Defence Budget 2001

MAIN FIGURES:

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1) Funding for Program Argus is included under this heading.
2) The figure for 2000 relates to the revised national budget.

Restructuring is essential

One of the main tasks facing the Defence Establishment in the coming years will be to achieve a balance both between the tasks assigned to the Armed Forces and the available resources and between the investment in new materiel and the cost of running the organisation. To achieve this, the Armed Forces are having to undergo a continuing process of wide-ranging restructuring. If the operating budget were allowed to follow the current trend, a situation would arise in a few years time in which defence funding would cover only the Armed Forces running costs with nothing remaining for the renewal of materiel.

The need for traditional invasion defence is much reduced following the end of the Cold War. Other tasks, such as international crisis management, have on the other hand assumed much greater importance. The security situation in Europe suggests that the countries in the region should cooperate more closely in defence matters. Such cooperation will also serve to strengthen the future security and sovereignty of individual nations. The experiences of the last decade indicate that we, in concert with other countries, should have contingency plans ready in case the need arises to intervene in minor regional armed conflicts either in or outside Europe.

Even if the type of conflict I have alluded to does not break out in our immediate neighbourhood, experience has shown that such conflicts can also have direct consequences for Norway. The security situation that exists today suggests that we need to place greater emphasis on the management of international crises. Norway has, in common with other allied countries, an independent responsibility to contribute towards peaceful development in the Euro-Atlantic area. At the same time it is important to the Government that Norwegian security and defence policy should measure up to the challenges that face Norway as a nation both at home and in our neighbouring areas. Both Norwegian territory and the bordering areas are still of great strategic, political and economic importance. This means that Norway must have the capability and the competence required to safeguard our vital interests, both nationally and internationally.

In relation to other sectors of society, however, we cannot expect to see any noteworthy increase in the funding allocated to defence in the coming years. It will therefor be necessary for the Defence establishment to lower its sights somewhat in respect of certain tasks in order that we may achieve a balance in the budget.

The Government wishes to prepare the way for the efficient utilisation of resources in the defence sector.

The Government will present its views regarding the future structure of Norwegian Defence in a new Long-Term Report early in 2001. This will build on the recommendations of the cross-party Defence Policy Commission and those of the Defence Study 2000 report produced by the Chief of Defence, both submitted in June 2000. The priorities for the 2001 budget are essentially in line with the aims and guidelines endorsed by the Government in the last Long-Term Report, White Paper No. 22 (1997-98).

The defence budget for 2001 will give priority mainly to those areas and activities which will continue to form part of the Defence Establishment subsequent to the coming restructuring.

In the course of my visits to Armed Forces units and defence establishments, I have been heartened to meet with such a broad understanding of the need to restructure our activities.

We have a great many clever and highly skilled men and women in the Defence organisation and this will enable us to ensure that the restructuring is carried out in line with our aims. But our success in this respect is wholly dependent on keeping the common goal in sight. The one thing that is certain is that we must restructure. We simply have no choice.

Bjørn Tore Godal

Main aims and priorities

One of the main aims of the Government’s economic policy is to bring down the rate of growth of prices and costs to a level which will obviate the need for high Norwegian interest rates in the longer term, rates which weaken our competitiveness and lead to tighter economic policies with restructuring problems and rising unemployment as a result.

The Defence Budget proposes no major changes in the Norwegian Defence structure in 2001. The Government will, however, be presenting early in 2001 a White Paper with its long-term proposals which are intended to ensure a comprehensive and rapid restructuring of the Armed Forces over the period 2002-2005. As consequences of this restructuring, there will be a reduction in the overall extent and cost of the present defence structure, and the content of its tasks will be adapted to match the needs of the security policy situation..

The Government proposes to allocate NOK 27.23 billion for Defence in the year 2001. Of this total, NOK 1.92 billion is earmarked for international operations. This sum includes supplementary allocations amounting to NOK 1.85 billion. The ordinary defence budget, excluding international operations, thus amounts to NOK 25.37 billion of which NOK 17.39 billion is allocated for operating costs and NOK 7.91 billion for investment. This represents an increase in real terms of NOK 279 million (1.2%) compared with the budget for the year 2000, mainly attributable to additional funding earmarked for the procurement of new frigates. As from 1 January 2000, a scheme has been introduced for the refunding of the sick pay outgoings of government organisations. This is not reflected in the final budget for 2000 and the year on year change in the budget for 2001 thus needs revision. Accordingly the Ministry of Defence has adjusted the figure for the year on year increase in real terms for 2001 to NOK 279 million rather than the figure of NOK 176 million given in the original White Paper.

Restructuring
The Defence Budget for 2001 is based on the main priority guidelines for the activities and development of Norway’s Defence for the period 1999-2002 set out in the Long-Term Report as endorsed by the Storting. But since that time, many of the circumstances affecting the activities of the Armed Forces have changed. The limited resources available for defence have made it imperative to review Norway’s defence aims and resources and to bring about a substantial reduction in the present organisational structures for both peace and war. This requires a comprehensive restructuring that the Storting will need to endorse against the background of the Long-Term Report that the Government will be presenting early in 2001. The planned activities of the Armed Forces, as presented in the defence budget for 2001, will be in accord with guidelines set out in the last Long-Term Report.

Greater integration will be vital to the future thinking of the Defence Establishment. Emphasis will be placed on the tempo and efficiency of the work of restructuring so that the desired savings can be achieved as rapidly as possible. Savings must, however, be seen in an overall perspective. In other words, the cheapest alternative is not necessarily the one which pays in the longer term. The day-to-day running and upkeep of materiel, properties, buildings and installations make up, together with personnel costs, the greater part of the Armed Forces’ operating costs. Cutbacks in operating costs will have to be made primarily in these areas. The budget for 2001 does not envisage priority being given to units or departments that will probably have no place in the future structure. As far as Norway’s overall defence and security policy aims allow, the Government will endeavour to keep the adverse effects of restructuring on the activities of the Armed Forces to a minimum.

Priority units and tasks
The Defence Budget for 2001 gives highest priority, where equipment and training are concerned, to units designated to take part in international operations, Border Guard units and H M the King’s Guard. Next in order of priority are the Navy’s warships, combat aircraft and 6 Division. The maritime tasks of the Coast Guard will also be given priority. The activities of the Search and Rescue (SAR) helicopter service will be carried forward at the same level as in the year 2000.

Photo: The Armed Forces Recruiting and Media Center (FRM)

Unified management
The Defence Establishment will in future make more use of unified management to enhance the efficiency of the peacetime organisation. This will involve a number of common IT systems and management functions. The various logistics departments will also be merged to form the Defence Logistics Organisation (FLO).

Investments and materiel
The most important investments in 2001 will be new frigates and associated projects, IT infrastructure and projects considered essential to Norwegian participation in international operations. It is also planned that the choice of contractor and the conclusion of a contract for the supply of ship’s helicopters will take place in 2001. There are also plans to acquire refurbished Leopard 2A4 main battle tanks which will give the Army the equipment it needs for its participation in international operations. The termination of the planned procurement of new combat aircraft to replace the F-5 fighter aircraft and the lost F-16s has given the defence procurement authorities somewhat greater freedom of action for the time being. The updated F-16 currently in service will, however, require replacement in the longer term. There is also a need for a reassessment of the function of the Missile Torpedo Boat (MTB) forces and their place in the new defence organisation.

Operational capability
The Armed Forces must have sufficient reaction capability, combat capacity and endurance to enable them to react flexibly and efficiently. The operational capability of the Armed Forces depends on factors which include the level of training and exercising, materiel quality, logistic support and effective command.

Exercises
Exercise activity in 2001 will give priority to those elements that are most likely to remain as parts of the future defence structure. Norway will be taking part in NATO’s crisis management exercise CMX in 2001 between NATO as an organisation and the individual countries. Among the highest priority exercises in 2001 will be the computer-based Article 5 exercise Certain Benefit which gives special emphasis to the training of the command functions. Nordic Peace will be the most important of the "In the spirit of PfP" exercises for 2001. The exercise will be conducted in the Troms area. Norway will probably be acting as host nation for fewer major NATO exercises in future. The next major Allied exercise in Norway will take place in 2002 in connection with Battle Griffin and Strong Resolve.

Main facets of security policy and participation in international operations

NATO remains the most central pillar on which Norwegian security and defence policy rests. Norway must therefore contribute, both politically and militarily, to a NATO that remains strong. Norway supports the continuing further development of NATO.

High priority will be given to Norway’s contribution to KFOR during 2001. The NATO headquarters in Norway and Denmark will jointly be taking over the lead role at the KFOR headquarters in Kosovo for the period April to October 2001. The headquarters will be under the command of the Commander Armed Forces South Norway. This task will pose significant military challenges for our personnel as well as providing valuable experience in front-line international operations and making an important contribution to European crisis management. Norway’s contribution to KFOR will, however, limit the possibility of undertaking new UN assignments unless participation in other current operations can be cut back.

SECURITY POLICY MAIN FACETS

Photo:FRM

Cooperation within NATO
Adaptation to new military assignments is one of the most important tasks facing NATO in the years to come. But the situation with regard to security and defence policy within the EU, and the revision of the Alliance’s force structure, are matters attracting much attention. These developments are of the greatest relevance to the restructuring of Norway’s armed forces. Norway’s future defence structure must be adapted to interface with the Alliance structure. The process of adaptation will, in the first instance, be in line with the requirements embodied in the Defence Capabilities Initiative (DCI). Emerging from the 1999 NATO summit meeting in Washington, DCI was an important pointer for the way ahead in modernising the Alliance, the development of platforms for the joint procurement of defence materiel and the further development of cooperation in defence matters within NATO. DCI would also have a role to play in the establishment of a common European Security and Defence Policy (ESDP).

The EU decided in 1999 to develop a common security and defence policy within the Union. In 2000, collaboration was initiated between NATO and the EU whereby the Alliance would provide the EU with a substantial degree of support. Norway actively supports the EU being able to draw on NATO’s military resources and planning capability for crisis management tasks under EU auspices.

The Euro-Atlantic Partnership Council (EAPC) and the Partnership for Peace (PfP) provide the framework for NATO’s cooperation with other European countries. The main aim is to strengthen cooperation in the field of security and defence policy in Europe and to integrate the East European countries with the process of Euro-Atlantic cooperation. Experience gained in Bosnia and Kosovo, where a number of partner countries are participating, have shown that such cooperation does bear fruit. This applies not least to operational aspects. The main thrust of Norwegian participation in PfP activities takes the form of cooperation with high priority partner countries, particularly in the Baltic region. Special emphasis is placed on linking this bilateral cooperation with EAPC/PfP.

With Norway’s position outside the EU, the development of a European Security and Defence gives added importance to cooperation with our Nordic neighbours. Cooperation within the framework of the Nordic Coordinated Arrangement for Military Peace Support (NORDCAPS) represents the core function of Nordic defence cooperation. As from autumn 2000, this cooperation will be further strengthened by the establishment of a permanent planning office in Stockholm.

For a coastal State administering a sea area seven times the area of the country, the safeguarding of national sovereignty and the exercise of authority, particularly at sea, presents a major challenge. It is therefore essential that the Armed Forces should have the capacity to maintain surveillance of these areas and to deal with any incidents and crises that might arise. This applies especially to the resource-rich sea areas. As a result of the Schengen Treaty, which comes into effect from March 2001, the additional border control responsibilities will involve the Navy and the Army in extended duties regarding both maritime surveillance and the monitoring of the border with Russia.

Instability remains a feature of the economic, social and regional situation in Russia. Stemming from the defence-related collaborative agreements concluded with Russia during the mid-90s, the dialogue with Russia has been given a new impetus during the year 2000. Since March 2000 Norway has also been providing support for a collaborative programme involving the retraining of Russian officers made redundant from the Northern Fleet.

International operations

Photo: FRM

The Government is allocating NOK 1,922 million to fund participation by the Armed Forces in international operations in 2001. Of this, NOK 1,850 is supplementary to the ordinary budget framework.

During 2001 Norway will make an active contribution to international peace operations. Of these, the NATO-led international peace force in Kosovo, KFOR, with approx. 45,000 soldiers from some 40 different countries, is the most important. The Norwegian contribution to KFOR at present consists of one mechanised infantry battalion. The NATO headquarters in Stavanger and Karup (Denmark) will be assuming the lead role at KFOR headquarters for a period of six months during 2001. During that time the KFOR commander will be a Norwegian. This will entail costs in connection with the command function, administration and a range of support functions at KFOR headquarters in addition to the battalion running costs. The Government regards this command responsibility as a significant investment in the enhancement of our national security and competence. The principle of supplementary funding for the deployment of the Armed Forces abroad continues to apply.

The budget proposals for 2001 in the main continue to provide for the cost of Norway’s KFOR force, even though the support functions for the combat group are reduced. The intelligence unit in the Balkans will continue to be funded as at present. Seen in isolation, we would not wish to withdraw our remaining contribution of 40 members of the NATO-led peace force in Bosnia-Herzegovina (SFOR), but the Government has concluded, after careful consideration, that Norway will have to phase out its contribution during the course of the current year so that no further costs will be incurred in 2001. Norway’s commitment to the UN in 2001 will be maintained at the same level as at present. Against the background of the current uncertainty regarding the extent of our involvement in KFOR, and in order to prepare the way for the appropriate collaboration with our allies, it is proposed that the Government should be free to determine the military and budgetary measures that may be necessary to ensure compliance with the constraints of the budget framework.

In order to enhance the Armed Forces’ ability to react rapidly and satisfactorily to a crisis situation, an "Armed Forces Task Force" is being set up. This force will provide greater freedom of choice when a crisis situation arises and will also ensure greater predictability in the planning of our participation in international operations.

Armed Services force structure

A principal aim for 2001 with regard to force structure is the development of an integrated defence capability in which the various Services and their constituent units are mutually in balance. The force structure must fulfil the requirement for sufficient freedom of action to allow the Defence Establishment to adapt to changing circumstances while still enabling the Armed Forces to carry out all their tasks. Both the peacetime organisation and the war structure will be reviewed in their entirety in connection with the restructuring measures in the forthcoming Long-Term Report on the Armed Forces.

Photo: FRM

Army
The Army structure, established as part of the overall war structure in 1999, will remain essentially unchanged in 2001. The Army’s principal contribution to invasion defence consists of 6 Division with three brigades and divisional support units. Three independent brigades are also being set up, together with some 20 independent battalion units, both to strengthen the invasion defence capability and as a contribution towards territorial defence, crisis management and the exercise of national sovereignty. The Division has not been equipped as quickly or as comprehensively as had been planned. According to the Chief of Defence’s recent Defence Study 2000 (FS 2000), there is insufficient funding available to permit investment in materiel for more than two brigades in total. The structure of 6 Division and the level of ambition for its capability must therefore be reassessed. This also applies to the other brigades and the battalion units. The combat capability of the lowest priority units may be so low that consideration should be given to a reduction in numbers, the redistribution of equipment and the restructuring of parts of these forces.

The Home Guard structure will be carried forward unchanged. The level of defence funding, however, suggests that the Home Guard manpower target of 83,000 is unrealistic if the necessary annual training is to be provided. Work to identify possible cut-backs in the peacetime organisation for land defence will continue.

Navy
The Navy’s principal contribution to invasion and territorial defence is to safeguard supplies and reinforcements being transported by sea from one part of the country to another and to protect Norwegian territory against the seaborne landing of hostile forces. In this context the new frigates will have a key role to play and will represent a substantial strengthening of the Navy’s seagoing capability. The procurement contract was signed in June 2000. The Coastal Artillery will undergo further development to give increased mobility and flexibility, not least through the phasing in of light missile batteries. Consideration is also being given to the procurement of maritime helicopters and the preparation of their future base structure.

Priority will be given to the Coast Guard’s maritime operations but the resource situation dictates that other Norwegian naval presence at sea will have to be reduced. The Coast Guard has been assigned new tasks as a result of Norway joining the North East Atlantic Fisheries Commission (NEAFC). The provisions of the Schengen Treaty entail new border control inspection tasks for the Coast Guard. The new Coast Guard Vessel SVALBARD is expected to be handed over in 2002 and will give the Coast Guard a capability that it does not at present possess. Consideration is also being given to the replacement the Coast Guard’s helicopters as well as a new base structure for them.

The organisation of the Navy will be adapted to the needs of reduced regional activity. The new district structure will take effect from 1 January 2001.

Air Force
The Air Force’s principal contribution to invasion and territorial defence is its ability to achieve control of the air space over a limited geographical area for a limited period of time. Combat aircraft are essential to the establishment of air superiority in a country’s own air space. The combat aircraft, together with the air command and control system, the main air stations, deployment bases and air defence systems, are the most important elements of our area air defence capability. Efforts to improve the mobility and flexibility of all operational units are continuing. It is proposed to phase out three DHC-6/Twin Otter light transport aircraft and to disband 719 Squadron stationed at Bodø main air station. Further changes will be implemented in the peacetime organisation of the Air Force. Activities will be concentrated at the fewest possible air stations.

The Search and Rescue helicopter service
The Defence Search and Rescue (SAR) helicopter service is provided by 330 Squadron with helicopters based at the Banak, Bodø, Ørlandet and Sola. The squadron also has one helicopter temporarily based at the main air station at Rygge. The activities of the SAR helicopter service will be carried forward into the year 2001 with the existing readiness requirements (1 hour). The helicopter at Rygge will be kept at readiness for a minimum of 85% of the time. The Search and Rescue helicopter service will form part of the overall Defence war structure and the organisation of the SAR service in Norway is currently under consideration by the Ministry of Justice.

The Defence Logistics Organisation
The Government has proposed the establishment of the Defence Logistics Organisation (FLO) which will embrace most of the Armed Forces’ logistics activities in a single organisation. The savings achieved will amount to between NOK 3.8 billion and 4.5 billion (at current prices) over a 10 year period.

Investments
Implementation of proposed investment plans has been difficult due to constant pressure on the operating budget. This is due to a variety of reasons including the introduction of advanced weapon systems and the fact that restructuring measures have not had the desired effect. The aim is still to protect the planned materiel investments to the greatest extent possible although this may prove difficult. For a time it may be necessary to increase operating costs and cut back on investment funding in order to free resources for restructuring.

The Government has informed the Storting of the situation regarding investment in defence equipment in a White Paper (Stortingsproposisjon nr. 58 (1999-00)) on the Armed Forces investment profile.

Materiel
The procurement of new frigates, together with the associated projects, is proceeding to plan. With regard to the purchase of unit helicopters, the choice of supplier and conclusion of a contract are planned to take place during 2001. It is also planned that the choice of contractor and conclusion of a contract for the supply of ship’s helicopters will take place in 2001. Also planned for 2001 is the start of a new project (Leopard 2A4) which will give the Army the equipment it needs for its participation in international operations. The termination of the planned procurement of new combat aircraft to replace the F-5 fighter aircraft and the lost F-16s has given the defence procurement authorities a little more room for manoeuvre for the time being. The updated F-16 currently in service will, however, require replacement in the longer term. There is also a need for a reassessment of the function of the Missile Torpedo Boat (MTB) forces and their place in the new defence organisation. Major procurement projects are contributing to the continuing strong demand for new building works.

Photo: FRM

Three major new procurement projects are planned:

1) Unit helicopters, covering the purchase of helicopters for the new frigates and replacement of the Coast Guard’s Lynx helicopters.

2) Purchase of up to 56 used Leopard 2 A4 main battle tanks.

3) FISBasis, covering common information systems (FIS) for use by all Service branches.

Property, buildings and works projects
Three projects costing over NOK 25 million are due to start in 2001. It is important that investment should be restricted to sites where there is a high probability of continuing future use by the Armed Forces. The future Defence organisation will have fewer sites to administer while those sites which are retained will have additional functions. The closing down and disposal of real estate that is no longer required continues to represent an important means of achieving reductions in operating costs.

Personnel and military service

People are, and will continue to be, the Armed Forces’ most important resource. The principle of universal military service remains as one of the most vital cornerstones of our Defence.

In the coming process of restructuring it will be essential to focus on the retention of personnel with especially important and relevant skills. We must also take good care of those who continue to serve in the Armed Forces. The overarching aim of the Armed Forces personnel policy is to have a highly motivated body of men and women at all levels with the skills and ability to carry out successfully the full range of defence tasks. Such an aim is not incompatible with the personnel reductions foreshadowed in connection with the restructuring of the Armed Forces. On the contrary, an organisation in which the aims and resources are rooted in reality should actually stimulate and motivate those who work in Defence. For personnel who leave the Services there are some very good discharge schemes.

The Government will continue its efforts to increase the proportion of women in the Services. A plan of action directed towards this aim has been developed and this will be followed up during 2001. Similar efforts are being made to encourage more people from immigrant backgrounds to work in Defence. The Armed Forces’ apprentice schemes have yielded positive results and the aim is to bring the number of apprentices in the Armed Forces up to 1000 in the course of 2001.

The recruiting of personnel to serve in international operations will be given high priority.

Military service
The principle of universal military service remains, as already mentioned, one of the most vital cornerstones of our Defence. Existing patterns of service with 12 months and 6 months periods of initial service will continue. The main emphasis will be on a 12 months period of service. It is proposed that the system of 9 months service for the Coastal Artillery should be changed to a system of 12 months and 6 months service in the "mobile" and "stationary" structures respectively. Most of the personnel will follow the pattern of 12 months training since it is the "mobile" structure that is recommended for retention. One conscript contingent will be demobilised two to five weeks earlier than originally planned.

It is estimated that the number of military service conscripts in contingents with their first day of service in 2001 will be approx. 15,100, i.e. some 3,000 fewer than in the year 2000.

Education and training
Education and training will again be given high priority in 2001 and will be directed principally towards the knowledge and skill requirements of the war organisation. At the same time, however, the corresponding knowledge and skills needed in the peacetime organisation must be addressed both to enable the Armed Forces’ peacetime tasks to be carried out satisfactorily and to ensure that a credible war organisation can be produced. The overarching aim of the Armed Forces personnel policy is, as already mentioned, to have a highly motivated body of men and women at all levels with the skills and ability to carry out successfully the full range of defence tasks.

Training in aspects of the new technology needs to be more closely coordinated and greater used must be made of IT systems. Consideration must be given to a reduction in the overall intake quotas for military schools in the light of the coming restructuring of the Armed Forces.

Photo: FRM

Published October 2000 by
The Royal Norwegian Ministry of Defence

Myntgt 1
P.O. Box 8126 Dep
N - 0032 Oslo, Norway

Tel: + 47 23 09 80 00
Fax: + 47 23 09 23 23

Internet: forsvarsdepartementet.no