Press Release

No. 071/1999
Date: 4 October 1999

Defence budget – 2000

The Government proposes to allocate NOK 25.5 billion for Defence in the year 2000. Of this total, NOK 860 million is earmarked for international operations, essentially for the funding of KFOR, the peace force in Kosovo. The overall defence budget, excluding international operations, thus amounts to NOK 24.7 billion. Of this, NOK 17 billion is earmarked for operating costs and NOK 7.7 billion for investment. When adjusted for changes in pay and prices, this represents a reduction in real terms of approximately NOK 130.5 million compared with 1999. The Defence Budget proposal for the year 2000 means that the overall amount allocated for defence for the two budget years 1999 and 2000 taken together is approximately NOK 180 million below the level envisaged in the White Paper No. 22 (1997-98); The Long-Term Report on the Armed Forces.

Operating costs

Reducing the current level of operating costs is one of the greatest challenges that the Defence Establishment will be facing in the years to come. The Government is therefore placing considerable emphasis on first stabilising and then reducing the current level of defence operating costs. For 1999-2000 these operating costs have increased by NOK 474 million relative to the Long-Term Report assumptions while the sum allocated to investment has decreased by NOK 654 million. The Government proposes a series of essential cost-saving measures for the year 2000, for example taking advantage of current opportunities for reduced initial military service/early demobilisation, increased utilisation of the 6 months period of service and delaying by up to 5 weeks the call-up of an Army contingent.

In the year 2000 the number of military service conscripts is, because of lower birth rates, expected to show a fall of about 2,400 compared with 1999.

Investment

For the year 2000 the amount allocated for investment is NOK 7.7 billion. Of this, NOK 5.7 billion is earmarked for investment in materiel, which is a reduction in real terms of NOK 75 million compared with 1999. The budget allocation for buildings and constructions is NOK 1.9 billion, an increase in real terms of NOK 230 million compared with 1999.

The rescheduling of large and important projects dominates the Armed Forces’ priorities for bringing the investment budget back into balance. Work on the start of the procurement programme for new frigates and the associated equipment is proceeding as planned. The intention is that a contract for new combat aircraft should also be placed in the course of the year 2000 and, during the same year, initiation of the procurement project for a new ice-reinforced patrol vessel for the Coast Guard is also planned.

Earlier in the year the investment profile for the Armed Forces was set out in White Paper No. 23 (1998-99) to the Storting. A number of factors, however, now make it necessary for the Ministry of Defence to review this investment profile. These factors include: 1) the Storting’s decision to request the Government to make room for an earlier start to the MTB procurement programme, 2) increased emphasis on tasks associated with international peace operations and 3) the continuing pressure on the operating budget which is making it increasingly difficult to realise the investment plans. This review will form the basis for a report back to the Storting in spring 2000.

International operations

The Government has allocated NOK 860 million to fund our participation in international peace support operations. Apart from a relatively minor involvement in Bosnia (SFOR) and observers currently acting for the UN, the main contribution by the Norwegian Armed Forces will be in connection with the NATO-led peace force in Kosovo (KFOR). There is some uncertainty regarding the eventual costs due to the nature and future extent of this task. The Government will give further consideration to the question of possible additional funding in the context of the revised national budget for the year 2000. The Norwegian Armed Forces’ contribution to KFOR during the initial phase will consist of a strengthened mechanised infantry battalion consisting of a little over 1200 men.

The Army and the Home Guard

The new Army structure, which was integrated into the war structure as from the mobilisation term 1999, will remain essentially the same in the year 2000. The resource situation, however, means that 6 Division is unlikely to receive all the materiel that had been envisaged. A slightly less ambitious programme is called for and some delay in implementation will be necessary. The Home Guard war structure will be carried on. Åsegarden, Steinkjersannan and Voss garrisons will be given the status of allied training centres.

The Navy

Particular attention has been focused on the procurement of new frigates. The procurement costs amounting to NOK 12.2 billion will be spread over several years. The sum of NOK 670 million is expected to be paid out during the year 2000 towards the cost of the new frigates. The prototype of the new type of MTB (Missile Torpedo Boat), KNM Skjold, will be undergoing trials and evaluation until summer 2000. The Coastal Artillery will undergo further development to provide enhanced mobility and flexibility through the acquisition of mobile missile batteries. Cost-saving measures, such as reducing the number of maritime defence districts and the centralisation of stores functions, will receive continuing attention.

The Air Force

A contract for the supply of new combat aircraft is expected to be placed during this budget year. The updating and life extension programmes for existing F-16 fighter aircraft will continue throughout the year 2000. It is proposed to phase out the remaining F-5 fighter aircraft and disband 336 Squadron at Rygge. The possible phasing out of two maritime patrol aircraft (Orion) and four light transport aircraft in the course of the year is also being considered. Air Force activity will be concentrated at the few possible air stations.

The Coast Guard and the Search and Rescue Service

As in 1999, the maritime tasks of the Coast Guard will be given priority. In the case of the Inner Coast Guard, the Government proposes to maintain the current level of funding but a small reduction in activities will be necessary. The activities of the Search and Rescue helicopter service will be carried forward into the year 2000 within the existing organisation.

Management and organisation

NOU 1999:8 (STYFOR Project) puts forward various alternative proposals for the future management and organisation of the departments and agencies involved in the administration of defence materiel. These proposals will be put before the Storting around the turn of the year.

Exercises and training

Exercise and training activities in Norway will continue in the year 2000 at essentially the same level as in previous years.

Schengen

The provisions of the Schengen Treaty entail additional tasks for the Armed Forces in connection with patrolling territorial boundaries at sea and the border with Russia in the North. Inspection tasks between the permanent border control points along the coast will be carried out by the Coast Guard. The garrison in Sør-Varanger has responsibility for patrolling the 196 km border with Russia. The Government has proposed the earmarking of an allocation to fund the Armed Forces’ contribution to collaboration under the Schengen Treaty and, within the overall sum, priority will be given mainly to investment in new equipment and infrastructure. This funding will be in addition to that approved for immediate measures in 1999.

Personnel

The Armed Forces are finding that the labour market in Norway is still tight and the numbers of personnel leaving the Services remain relatively high. This has led to a significant imbalance in the officer corps in terms of both age and professional skills. Measures that should help to put a brake on this outflow will be put in hand. Further work will also be done to bring the proportion of women, both officers and conscripts, closer to the target of 7 percent in all the service branches by 2005. Increased funding will be provided in the year 2000 to strengthen officer training.