Press Release
Contact: Dan Darling, European Defense Analyst
Phone: (203) 426-0800
Fax: (203) 426-4262
Web site: www.forecastinternational.com
E-mail: Daniel.darling@forecast1.com
Forecast International, Inc.
22 Commerce Rd. Newtown, CT
06470 USA
FOR IMMEDIATE RELEASE
Facing Tighter Budgets, Nordic Nations Consider
Greater Cooperation
NEWTOWN, Conn. [March 1, 2007] — Faced with tightening
defense budgets, the Scandinavian “Nordic” nations of Europe are examining
future collaborative options in order to maximize their resources and improve
efficiencies. While no immediate joint armed force branches – such as a combined
air and naval surveillance group – are expected to manifest themselves in the
near term, talks between neighboring Scandinavian governments have broached the
topic of examining possible areas of stronger cooperative defense.
The main engine driving various ideas behind greater Nordic
cooperation is tighter purse strings. According to Forecast International’s “Sweden
Market Overview” report for 2007, the defense budget approved in Stockholm
showed a slight increase from SEK43.4 billion in 2006 to SEK44.2 billion
(around $6 billion) for 2007. However, this slight increase is illusory, as
overall planned expenditure is divided into two segments. One segment covers contingency
measures against accidents and severe emergencies, while the other is purely devoted
to defense spending. Furthermore, a sharp decline in budgetary expenditure
allocations will begin in 2008, when some SEK1.82 to 2 billion will be trimmed
from defense spending.
In the meantime, the financial allotments for the Norwegian
Armed Forces (NAF) – in the midst of a defense transformation toward a more
compact, flexible, mobile and modern armed force – are caught in a vise. The
government of Norwegian Prime Minister Jens Stoltenberg has kept defense
spending at roughly the same as it inherited from the former government of
Kjell Bondevik in the fall of 2006.
Oslo will spend NOK31 billion ($4.64 billion) on defense in
2007 after providing the armed forces with NOK30.6 billion ($4.58 billion) in
2006. But the primary focus of the 2007 defense budget will be on NAF units
that are deployable for rapid reaction and overseas missions. At the same time,
the budget seeks to strengthen protection of the strategic “Northern Area” of
the country with its fisheries and oil capacity. The drain from these
priorities will leave the NAF charged with having to stretch every cent of its
finances as it undergoes its transformation.
The third Nordic nation considering its options via its
neighbors is Finland. Finnish defense spending in 2006 was around $2.8 billion.
Helsinki’s 2007 defense budget will not be set until after the national
elections, scheduled for the middle of March. Though the Finnish Ministry of
Defense will push for a budget increase, any boost is expected to be marginal
at best. Forecast International is predicting the Finnish budget will actually
decline in euro currency terms (from EUR2.25 billion in 2006 to EUR2.22 billion
for 2007), which – barring currency fluctuations – will keep it roughly at the 2006
level in U.S. dollar terms.
With the prospect of tight future budgets, mounting
international peacekeeping responsibilities, and force transformation, it is
logical that the Scandinavian governments would seek coordinated options to
better ensure territorial protection.
“One of the primary obstacles facing the Nordic countries in
terms of greater defense cooperation is that each country is part of a
different alliance,” says Forecast International European Defense Analyst Dan
Darling. “For instance, Norway is part of NATO, but not a member of the
European Union, while both Sweden and Finland are in the EU but not NATO.”
Being outside one of these two entities does not necessarily
prevent a certain country from participating within the other to some extent,
Darling notes. Both Finland and Sweden have been offered an opportunity to join
the NATO Response Force in a participatory role, though it is still up in the
air whether either will accept. As for Norway, despite being a non-EU member it
is part of the EU Nordic Battle Group along with Sweden, Finland and Estonia.
Still, the separate memberships may often result in different priorities and
outlook. Other – more obvious – obstacles, Darling adds, are simple
sovereignty concerns and the preference among each nation that its forces
remain separate.
“In terms of strategic needs and threats, it makes sense for
these countries to coordinate on a certain level, whether it be patrolling their
northern coastal waters, seaborne search-and-rescue, joint air transport for
deployment to international peacekeeping operations, or simply pooled defense
procurements resulting in common platforms,” says Darling. “Otherwise, each
nation’s armed force runs the risk of being overstretched financially and
operationally.”
Forecast International, Inc., is a leading provider of
Market Intelligence and Analysis in the areas of aerospace, defense, power
systems and military electronics. Based in Newtown, Conn., USA, Forecast
International specializes in long-range industry forecasts and market
assessments used by strategic planners, marketing professionals, military
organizations, and governments worldwide. To arrange an interview with
Forecast International’s editors, please contact Ray Peterson, Vice President,
Research & Editorial Services (203-426-0800, ray.peterson@forecast1.com).
