Title: With the Armed Forces into year 2000 - Economic Consequences
![](/Images/blueh.jpg)
ECONOMIC CONSEQUENCES
The Government recommends to uphold the current budgetary level of the first two of the coming four years and with a net growth of 0.5% over the last two years. The Government plans that parts of the expenditures linked to the acquisition of new frigates are treated as being additional to, or an extention of, the defence budget.
During the current economic boom, the financial policy of the Government must seek to reduce the growth of the demand. The main lines of the defence policy must thus reflect a strict economic policy.
In order to maintain credible defence, the current security environment does not give room for reduced defence budgets. The Government thus recommends to uphold the current budgetary level in the first two of the coming four-year period and with a net growth of 0.5 % over the last two years. Jointly with reallocations on the operational side, it will be possible to implement the Government's priorities based on personnel, materiel, training, and exercises. The actual allocations, however, will be determined during the annual budgetary process.
Within our national defence, we build a capability for limited participation in international operations. Training and upholding of these capabilities are an integral part of the Armed Forces which can be covered within the ordinary defence budget. At the same time, the use of our capabilities for international operations is very difficult to predict. The Government expects that additional funding for participation in international operations must be added, or be allocated as an increase in the defence budget.
The Armed Forces are facing two major and absolutely necessary investments that will replace old frigates and old/lost fighter aircraft. Since these investments will have to be implemented at about the same time, the need for investments will be substantial for a period of time. These projects cannot be implemented by discontinuing all other investments of the Armed Forces. Even if the main bulk of the expenditures will come after this four year period, the final decisions will have to be made during the next few years. The Government plans that parts of the expenditures linked to the acquisition of new frigates are treated as being additional to, or an extention of, the defence budget.
Topic: Defence - What Does It Cost?
The 1998 Defence Budget amounts to NOK 23.8 billion. This budget represents a smaller proportion of society's resources than was the case in the early 1990s. Fluctuations in the defence budget and the percentage of the Gross National Product (GNP) that it represents are illustrated below.
![](/Images/for-econ-img1.jpg)
The defence budget as a percentage of GNP.
The procurement of new escort vessels and combat aircraft is likely to dominate the Armed Forces' investment programme over the coming decade. These projects cannot be implemented at the expense of all other defence investments. If all other projects were to be suspended, this would lead to critical shortfalls over large parts of our defence structure. During the period 1999-2002 the total investment required will amount to approximately NOK 25 billion if we are to continue to maintain a balanced defence.
The Government aims to finance the continuing development of the Armed Forces by maintaining budget allocations at current levels in the years 1999 and 2000 («zero real growth») and to increase the allocations by percent annually for the years 2001 and 2002 (real growth). The Government intends that the additional cost of military participation in international operations, and some elements of the procurement costs for the new frigates, should be financed in addition to, or as a further increase in, the defence budget.
The Coast Guard
The Coast Guard maintains a high level of presence and activity in Norway's Economic Zone and in the Protection Zone around Svalbard throughout the year. Because of the increase in herring fisheries, Coast Guard presence in the Jan Mayen Fishery Zone has also increased in recent years. Apart from the Coast Guard vessels themselves, helicopters, ORION maritime patrol aircraft and other leased fixed-wing aircraft are employed on surveillance duties covering sea areas under Norwegian jurisdiction.
In the international sea areas known as «Smutthullet» [the Loophole] in the Barents Sea and «Smutthavet» [the Loophole Sea] in the Norwegian Sea, the Coast Guard has no authority to carry out inspections of foreign vessels. In order to monitor catches as far as is practicable, however, the Coast Guard does maintain a presence in these areas whenever there is activity there.
Through the Inner Coast Guard, the establishment of which was approved in 1995, The Coast Guard also assists other national authorities with tasks in inshore sea areas. Examples of such assistance include preparedness for rescue or oil pollution incidents and assisting the Customs and Excise authorities.
The Coast Guard's tasks in times of tension or war include the protection of the coastal shipping routes, look-out and warning duties as well as maritime surveillance.
The Coast Guard has 18 vessels at its disposal of which 7 are allocated to the Inner Coast Guard. Eleven of the vessels are leased. The Coast Guard also has a further 7 leased vessels allocated to Inshore Patrol Service especially along the coast of North Norway.
Plans for increasing the strength of the Coast Guard include updating of the three NORKAPP Class vessels, replacement of the Coast Guard's helicopters and procurement of a new SVALBARD Class vessel with an increased capability to operate in waters with difficult ice conditions.
(See maps)