This agreement is based on a budgetary framework figure of NOK 118 billion for defence spending over the period 2002-2005. The defence budget for 2003 now brings into balance the defence structure that has been endorsed and the resources made available to finance it.
- This is absolutely essential if we are to realise our aim of achieving modern, flexible defence forces with improved operational capability, says Defence Minister Kristin Krohn Devold.

Main aims and priorities

The restructuring of the Armed Forces is going according to plan. With this year’s budget proposals, the pieces are in place to allow this process to continue towards the goal of achieving a more modern and effective Defence.

"Carrying forward this process of restructuring the Armed Forces is our most important task for 2003. We are now paving the way to enable the Armed Forces to carry out a broader spectrum of tasks more rapidly and more effectively than is possible today," emphasises Kristin Krohn Devold. There is no longer a clear distinction either between the security threats that we face, whether they be national or international, civil or military, or between the kinds of forces required to
counter them. Restructuring will thus also yield further benefits, for example strengthening the capability of the defence organisation in roles such as the fight against terrorism.

The Parliament’s endorsement of a budgetary framework of NOK 118 billion, to cover the restructuring period 2002-2005, provides stability and predictability for our defence planning as well as a balance between the new structure and the resources available. The Government’s proposed defence budget of NOK 29.6 billion for 2003 is thus in line with the Parliament’s intentions regarding the implementation and financing of the restructuring process. The budget proposed for 2003 is based on the assumption that continuing progress will be made towards the target of reducing operating costs to a level which is NOK 2 billion lower than it would have been in the absence of restructuring. This provides headroom for increased investment in new, modern systems and equipment. With regard to defence manpower reductions, almost 3,000 of the 5,000 man-years which are to be cut by the end of 2005, have so far been identified and the personnel concerned have in most cases been released.

Main points of the budget proposals

In line with the restructuring assumptions, funds are being made available through cuts in the operating budget amounting to a little under two percent compared with 2002. Priority can thus be given to the investment budget which is being increased by four percent in real terms compared with 2002.

Investments

The investment budget for 2003 amounts to NOK 9.8 billion, including NOK 6.8 billion to be invested in new materiel for the Armed Forces and NOK 2.5 billion for investment nationally in the property, buildings and construction sector.

Priority will be given to the following areas:

• Approximately one third of the investment in materiel planned for 2003 will be devoted to the Royal Norwegian Navy, the largest single project being the procurement of new frigates.

• Investment in land forces includes strengthening of the Norwegian Army High Readiness Force (NOA HRF/FIST-H) through the procurement and adaptation of used Leopard 2 A4 main battle tanks and the upgrading of M113 tracked armoured personnel carriers (APC). The acquisition of a new tactical training system will bring a decisive improvement in the quality of combat training at company level with benefits extending down to the individual soldier.
• The procurement of new helicopters for the Coast Guard and the Navy’s new frigates represents the largest single project for 2003. Other projects include the upgrading of the NASAMS air defence system and the upgrading of the electronic warfare equipment for the F-16 combat aircraft.

• Priority is being given to investment in properties, buildings and installations associated with the process of restructuring. Restructuring measures earmarked for implementation early in the planned programme are those linked to functions which have to be in place prior to the relocation of particular activities. Over the period 2003-2005, resources for investment in the relevant properties, buildings and installations will also be given priority over those required for force production for multinational operations. Extension of the Southern Norway exercise area and the construction of new accommodation for officers and NCOs at Rena are the works projects that will account for most of the expenditure in 2003.

Operations

The operating budget for 2003 amounts to NOK 19.9 billion. This represents a reduction of 1.8 percent compared with the budget for 2002. Priority will in 2003 be given to Norwegian participation in operations in and around Afghanistan and to Norway’s force contribution to KFOR. Funding in excess of NOK 1 billion has been allocated for these operations. Norway’s contribution in Afghanistan has been strengthened by the deployment of six F-16 combat aircraft to participate in the operation "Enduring Freedom". These aircraft will take part during the period 1 October 2002 – 1 April 2003. Their duties will include joint flight operations with aircraft from Denmark and the Netherlands. Norway will continue as an active contributor to the peace operations in the Balkans. Participation in KFOR will be maintained through the contribution of a mechanised infantry battalion operating jointly with forces from the United Kingdom, Finland and Sweden.

The budgetary framework for the Coast Guard will remain the same as for 2002.
CGV Svalbard will enter operational service in autumn 2002 and will represent a significant strengthening of the Coast Guard’s capacity to undertake operational tasks in both northern and southern waters. The ocean-going elements of the Coast Guard will be afforded special priority in 2003.

The budget for the Home Guard is being increased by NOK 320 million in relation to the budget approved for 2002 in order to allow new tasks to be taken over while maintaining the level of exercise activity endorsed by the Parliament.

The top echelons of Norwegian Defence

Headquarters Defence Command Norway is being closed down and the Chief of Defence, with his strategic functions, will be integrated with the Ministry of Defence. The new Defence Staff is being established to support the Chief of Defence in his role as head of the military organisation of the Armed Forces. These organisational changes will be implemented in the course of the summer 2003 or as soon as is practicable. The strategic leadership will initially be relocated in a number of buildings in or adjacent to Akershus Fortress pending completion of the purpose built facilities now under construction.

Support for municipalities

To assist in meeting the challenges facing some municipalities in the wake of the Armed Forces restructuring, NOK 40 million will continue to be made available to provide support for the local economy in the areas most affected.