Ladies and gentlemen, honourable guests

I am very pleased to meet with such a distinguished audience to talk about my government’s policy on restructuring our defence in light of the new challenges. Most of you are already very well informed about our defence policy. I hope that my brief this morning will provide some added value. May I also inspire for some questions.

Firstly, for your recollection . Last summer The Parliament decided a comprehensive restructuring of the defence for the period 2002-2005 proposed by the previous government.

Already before the change of government last October there was a broad agreement to prepare some new proposals and policies. This was mainly due to two considerations.

Firstly, Stortinget had left some questions unsettled by their reading. The most important of these is, there was no decision on funding of the approved defence structure.

Secondly, what happened on the 11 ^th> of September has been crucial in many ways. We also have to adjust our defence to cope with the growing threat of terrorism. This is an essential issue in the new proposition – the so-called Implementation proposition –which was submitted to the Parliament on the 5 ^th> of April.

The Defence reform has two main features. Firstly, a rather substantial, however an inevitable downscaling of our traditional mobilisation forces. The Implementation proposition also recommends some adjustments in structure and organisation with the aim to reduce expenditures. Secondly, the restructuring will give birth to a modern and flexible defence, which is adapted to the tasks and relevant to the "new" NATO". This is my main concern, this is the most important feature of the future defence.

Based on decisions already made by the Parliament, and our new proposals, I have the responsibility to ensure that the most comprehensive defence reform in Norway after the Second World War is carried through.

You may ask – how shall we get there? The downscaling makes a foundation for a reduction in the peacetime establishment of minimum 5 000 personnel. The defence properties, buildings and facilities will be reduced by net 2 million square metres. This is about a third of the present level.

Compared to an alternative without restructuring, the annual operation and maintenance costs will be reduced by 2 billion Norwegian kroner .

In short, there has for several years been a recurrent imbalance between defence structure and the defence funding. During the 1990s the gap between the assumed funding level, the real costs and the real allocations has be steadily growing. In the long run, to avoid disintegration of the Defence, this development must be stopped.

In fact, we will not allow this development to continue. We will restore the balance between defence structure and funding by proposing a historical growth in allocation to the Armed Forces. We must also be relevant to the "new" NATO.

Already this year we will reach a level of defence spending which will exceed the highest level in the period 1989-2001.

By 2005 we will reach a level of about 31 billion Norwegian kroner which represents an increase of almost 12 percent compared to today’s level.

These proposals are not only historic compared to our national record. In addition, by this funding level we will preserve the Defence budget share of the Gross Domestic Product safely "on the bright side of life", which in NATO is indicated by 2 percent.

Just as important as a signal to our Allies, is our effort to strengthen the operational capabilities. As a share of the total budget, the investments in material will rise from 23 percent today to about 29 percent in 2005. We should also take into consideration that the larger share adds on to a considerably higher total budget.

During the period 2002-2005 we plan to use about 31 billion Norwegian kroner, to material investments, rising from 6.3 billion Norwegian kroner this year to 9.1 billion Norwegian kroner in 2005. Lord Robertson personally has given credit for these priorities.

Which investments and capabilities are hidden behind these figures? The Army will, over the next few years procure new tanks and anti-tank missiles and we will build a new training and life fire area in Eastern Norway.

The Navy will procure new frigates, maritime helicopters and a new generation of fast patrol boats.

The Air Force will procure air-to-ground missiles for the F-16s. We will start the preparation of the new combat aircraft acquisition, which will take place after 2010. We are also preparing for a renewal of our ageing transport aircraft squadron. For the time being we are considering several options. Our ambition is that by 2010 Norway will have strategic transport aircraft capacity and if possible tanker-aircraft capacity as a part of its inventory. When deciding on this subject, NATOS’s request for making forces more deployable certainly will be emphasised.

The government also gives priority to the Home Guard. Compared to the previous four-year period we propose a substantial increase in allocations to the Home Guard. The Home Guard will be upgraded to take an increasing role in territorial defence. On the other hand, we are planning not to train the oldest age group of the Home Guard. However, if necessary, this group can be called upon if a situation, which requires numerous Home Guard forces happens. In my view, this priority is in line with the security policy development, which primarily requires high readiness and high quality.

There is undoubtedly a dynamic development concerning new security challenges. This has been confirmed during the recent month’s political developments. Firstly, by the fight against terrorism after the 11 ^th> of September attacks, secondly, by the positive development in relations with Russia, and finally by the growing instability in the Middle East.

These international trends and events already have had, and will continue to have a clear impact on our defence policy and deliberations. My preoccupation since I came into office, has been connected to the fight against terrorism and in particular Norway’s participation in the operations taking place in Afghanistan.

As you know, Norwegian Armed Forces takes part in Afghanistan with force elements both in "Operation Enduring Freedom" and in "International Security Assistance Force". The government is this year prepared to spend about 1 billion Norwegian kroner extraordinarily to fund our participation. This represents almost 4 percent of today’s total defence budget. The present activity of the Norwegian Armed Forces against terrorism constitutes a substantial part of their total activity.

Taking into consideration that the operations in Afghanistan were unforeseen by the Parliament when the decisions were made last summer, this shows that our Armed Forces already have considerable flexibility and potential for adaptation to meet new challenges. Simultaneously, the fight against terrorism shows that new challenges and the security policy framework demand modern and more flexible forces than ever. This is what the Norwegian defence reform is all about.

To satisfy the requirements of high readiness and high quality, we will further develop the Armed Forces Task Force – Army by including this force in one of our present brigades.

The Task Force consists of elements which are tailored to respond quickly on inquires from NATO to deploy Norwegian forces abroad. As I have mentioned, to have such a capacity on high readiness is one of the main elements in the defence reform. At present, Norway is more involved in crisis response operations than ever before. Besides our involvement in Afghanistan, we are, as you know, heavily involved in Kosovo.

I believe that the Norwegian defence also in the future will contribute to regional security while maintaining the capability to solve our national tasks. We have similar demands on competence and ability of forces, which are fit for operations outside Norway as we have of the forces, which are primarily fit for operations in Norway.

The requirements are interoperability, high readiness, mobility and modern equipment. For Norway it is not only a question about how we co-operate with allied and partners abroad, but equally that we have the competence and ability to co-operate with allied forces in Norway.

We emphasise the need to keep up a high speed on modernisation and restructuring. This year and the next couple of years are decisive for the re-structuring of the peacetime establishment. We are on schedule, we have not lost one minute.

A success in restructuring is a precondition for realising a modern force structure. There is no doubt that a lack of modernisation of our forces itself could represent an increased insecurity in light of new challenges.

The Implementation proposition ensures the necessary balance between restructuring of the peacetime establishment and the modernisation of military capabilities.

• Undoubtedly the security policy environment is demanding when it comes to our ability to maintain collective security. What is new, both for the international security and for Norway, is that distant actors strike in the most unexpected ways. NATO’s revised strategic concept and the Defence Capabilities Initiative of April 1999 identified a considerable need for modernising our military capabilities to address new challenges. The attacks of 11th of September last year have accentuated the existing and forced us to identify new requirements.

In NATO the process has started by the formulation of new Force Goals. I expect this process will have further consequences for the precise structure of our Armed Forces.

I feel confident that Norway is on track to meet new security challenges. This is illustrated by the ambitions of the Norwegian government set out in the Implementation proposition and our participation in Afghanistan. I am proud of this government’s achievements in the defence policy. When we came into office last October the world was shaken by the attacks of the 11 ^th> of September. But we have not been paralysed. We have stood firm by supporting our most important ally, not only by words, but also by doing some important work.

However, we cannot, and will not rest on our laurels. We have addressed a policy for the future. At the same time we are fundamentally restless. We must have an open mind. Therefore, when preparing the next Defence White paper, we cannot, on a broad base, rule out further significant adjustments of the defence structure.

Thank you for your attention!