The Defence Budget 2002
(Source : Norway Ministry of Defence ; issued Oct. 11, 2001)


The Defence Budget for 2002 amounts to NOK 27.7 billion of which NOK 725 million represents internally generated income. If the funding allocation for Norwegian forces abroad is excluded from the calculations, this represents a budget increase of 2.5 percent. When including this allocation, the sum budgeted represents a reduction of NOK 90 million, or 0.3 percent, compared with the budget for 2001.

2002 is the first budget year reflecting the restructuring of the Norwegian Armed Forces that is to take place over the period 2002-2005 as endorsed by the Storting on 14 June 2001. The principal aim is to establish a new defence structure that will enhance the operational capability of the Armed Forces.

Much importance is attached to the tempo and efficiency of this restructuring and a wide range of restructuring measures will be implemented during 2002 so that the potential for savings can be realised as rapidly as possible. This will have a positive effect on the overall budget allocations required in subsequent years of the restructuring period.


RESTRUCTURING 2002-2005
The principal aim of the restructuring of the Armed Forces is to establish a structure that will result in a substantially enhanced operational capability. The measures to be implemented in 2002 are both wide-ranging and demanding but they are essential if the overall aim is to be achieved. This will entail reducing current operating costs by a minimum of NOK 2 billion. The freeing of these resources is absolutely vital to the realisation of the new structure. The measures of greatest importance in cutting operating costs are the reduction and disposal of Defence real estate and reducing the number of defence personnel by about 5,000 compared with the September 2000 figure.

A range of restructuring measures have been implemented during the current year. The 2002 budget year will, however, be the first year in which the collective resources of the Defence establishment will be devoted in earnest to the actual process of restructuring. The Government has assigned top priority to the restructuring process over this period. Major measures of central importance will be implemented during 2002. In particular, priority will be given to investment in property, buildings and other defence installations.


INVESTMENTS
The budget for investment has been increased by 10.6 percent to a total of NOK 8.729 billion. Investment in nationally financed construction projects is increased in 2002 by NOK 800 million or by something in excess of 75 percent. Investment in jointly funded NATO construction projects is also increased markedly, by almost NOK 37 million or 6.5 percent. Investment of this magnitude in restructuring will necessitate some compensating reduction in investment in materiel, especially in 2002.

Important milestones for materiel investment in 2002 relate to progressing the frigate project, start-up of the standard helicopter programme and completion of CGV Svalbard, a new Coast Guard vessel specially strengthened for operations in ice.


OPERATING COSTS
The budget for operating costs is cut back by NOK 727 million (3.8 percent) to NOK 18.928 billion. The largest single cut is in the funding for multinational operations. This item has been reduced by NOK 707 million. One of the reasons for this cutback is that Norway's task as Lead Nation for KFOR is now over, thus freeing the funds allocated for this purpose. A further reason is the reduction in costs associated with the Norwegian battalion that has been achieved through greater efficiency and the lower cost of force production.

Rationalisation of administration and other support functions has led to a further saving of NOK 185 million. If the costs of peace operations are excluded, the remainder of the budget for operating costs is reduced by 0.1 percent. In the case of the Home Guard the reduction is approximately NOK 80 million. This will affect mainly the level of exercise activity. This is a temporary reduction made to make room for measures which are vital to the restructuring process. The Coast Guard budget is increased by approximately NOK 60 million in order to allow the level of activity to be maintained and to cover the operation of the new vessel CGV Svalbard.


THE TOP ECHELONS OF NORWEGIAN DEFENCE
During 2002 a start will be made on the rundown of the present Headquarters Defence Command Norway at Huseby and the establishment of the new Defence Staff which, in the next round, will be co-located with the Ministry of Defence. This new structure for the strategic leadership of Norwegian Defence will yield an overall reduction in staff numbers of approximately 50%, representing an annual saving of some 800 man-years.


THE COMMAND STRUCTURE
The new command structure for the Armed Forces will be implemented during the course of 2002. As from 1 January 2003, the Joint Operations Headquarters at Jåttå, Stavanger, will become operational. The same applies to the two Regional Command Headquarters for South Norway in Trondheim and for North Norway in Bodø. These measures taken together will result in personnel savings of about 40 percent.


MORE EXTENSIVE STRUCTURE THAN THAT PROPOSED BY THE GOVERNMENT
When considering the Long-Term Plan for the Armed Forces (Long-Term Plan), the Storting endorsed a broader force structure and a more extensive organisation than had originally been proposed by the Government.

Over the period 2002-2005, the overall expenditure required for the structure endorsed is estimated to be NOK 121.6 billion. This estimate does not include funding for the renewal of transport aircraft capacity and it assumes very limited investment in 5 Brigade and 12 Brigade. This sum corresponds to an average annual defence budget of NOK 30.4 billion.

In order to meet the targets for the reductions in operating costs and personnel numbers endorsed by the Storting, the successful restructuring of the Armed Forces will require still further measures. The Government takes a very serious view of the unresolved imbalances between the tasks of the Armed Forces, their structure and the resources available. To ensure that the restructuring can be carried through, the Government will be putting additional measures before the Storting for consideration during the Spring session in 2002.


LOCAL AND REGIONAL SUPPORT
The restructuring of Norwegian defence over the period 2002-2005 will inevitably affect some regions and individual municipalities. To assist in meeting the challenges facing the localities most affected, NOK 40 million has been set aside to provide assistance in developing the local economies in the areas concerned.


THE TERRORIST ATTACKS ON THE UNITED STATES
The terrorist attacks in Washington D.C. and New York on 11 September have brought into focus the possibility of the terror weapon being used also in Norway. The Government is currently considering a range of possible measures in concert with our allies. If Norway is to contribute to international measures in this context, to participate in further peace operations abroad or to implement national measures to counter the terrorist threat, the Armed Forces will inevitably incur. This will in turn mean a submission to the Storting for the approval of supplementary funding.


KFOR
Norway's ability and willingness to contribute to NATO's largest current peace operation on a multilateral basis is important to Norway's position in the Alliance. Such a capability also serves to provide Norwegian military personnel with invaluable experience. Our participation also represents a contribution to the strengthening of NATO as an organisation. A strong NATO is now, more than ever, a vital precondition underpinning the effectiveness of Norway's defence and security policy. Such participation also strengthens our own capability to undertake operations in Norway.


THE ARMED FORCES AND THE ENVIRONMENT
The sum of NOK 540 million has been budgeted for a range of environmental measures in 2002. The purpose of planning and implementing environmental measures is to forestall possible environmental problems, carry out clean-up operations where necessary, ensure compliance with environmental regulations and to engage in collaborative environmental programmes. Participation in the AMEC programme, concerned with environmental measures in the Kola area and elsewhere in Russia's northern region, will be continued.

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