NATO member Norway and unaligned Sweden are planning sharp increases in their defense spending in 2016-2020. Both countries are engaged in sizable capacity-building programs that will include acquisition of new front-line fighters and modernization of their surface and submarine fleets.
By contrast, additional spending by NATO member Denmark and unaligned Finland are expected to remain at modest levels – largely due to the tight fiscal constraints imposed on public spending in the wake of the 2008 financial crisis. The 2008 crisis caused the economies of Denmark and Finland to spiral into a lingering recession. Full recovery, and a return to national growth, has been a slow and difficult process for both countries.
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Norway has surpassed Sweden as the biggest Nordic defense spender, with a military budget set at $6 billion in 2016. The Norwegian Armed Forces (NAF) continue to reorganize into leaner, better-equipped combat units with improved readiness and strike capability.
The NAF’s capacity will strengthen further under a long-term investment plan announced by the defense ministry in June. Under the plan, the government will make an additional $20.2 billion in funding available over the next 20 years. The NAF’s annual defense budget is set to increase from its present level of $6 billion to around $7 billion.
"Our objective is to use increased spending to deliver improved defense capabilities and capacities," said Norwegian defense minister Ine Eriksen Søreide in June.
The strengthening of the NAF’s capability will feature big-ticket procurement programs. These include the purchase of 52 F-35 joint strike fighters, the replacement of the Navy’s Ula-class submarine fleet, the purchase of surveillance aircraft, upgrades to Leopard tank units and acquisition of new anti-aircraft systems for its Brigade North forces.
An additional $2 billion in spending will be released to the Swedish Armed Forces (SAF) in 2016-2020. The SAF’s budget sits at $5.1 billion in 2016.
Under the raised level of funding, the defense budget for 2017 is set to increase to $5.35 billion in 2017, $5.48 billion in 2018, $5.78 billion in 2019, and $5.96 billion in 2020. Total spending on defense will amount to over $26.6 billion over the next five years.
"Increasing the defense budget is fundamental, particularly in light of the deteriorating security situation, but also to address the need to increase the warfare capabilities of Sweden’s armed forces," said Peter Hultqvist, Sweden’s defense minister, following a meeting of the country’s Defence Council in July.
The SAF plans to procure armored personnel carriers, artillery, self-propelled mortars, anti-tank weapons, and new ground-based, short-range air-defense systems. Upgrades are planned for the Army’s Combat Vehicle 90 and Stridsvagn 122 main battle tanks. The Army will also purchase a new ground-based, medium-range air-defense system.
Sweden’s Defense Commission has proposed that the number of JAS 39E fighters bought should increase from the 60 ordered to 70. The final delivery of the 60 JAS 39Es is due to take place in the mid-2020s.
The Finnish government is expected to set its 2017 defense-budget allocation at around $3.3 billion. This is marginally higher than the $3.27 billion allocation for 2016, which was increased from $3.1 billion in 2015.
Spending on defense in Finland remains weak and constrained by a series of austerity budgets since the economy hit the 2008 crisis. The ratio of defense spending to GDP is currently running at around 1.37 percent.
The drive to achieve further efficiency-based cost savings will continue in 2017-2018. The Ministry of Defense (MoD) expects to bolster the Finnish Armed Force’s (FAF) procurement budget in 2017.
"The armed forces will have a larger procurement budget in 2017. More cutbacks are inevitable, also in the administrative side, as we reform the military organization and face a number of costly acquisition programs," Finish Defense Minister Jussi Niinistö has said.
But it remains to be seen how the FAF will cope with modest increases in funding in the face of several major procurement programs. These include the replacement of its Boeing F/A-18 fighter fleet, and the Navy’s surface ship modernization requirements.
The FAF’s logistics department sent out a request for information (RFI) for the acquisition of aircraft to replace its F/A-18 fighters in April. RFIs were dispatched to defense officials in the United States, France, Sweden and Britain for forwarding to manufacturers.
The Danish government’s decision to finance its fighter procurement program (FPP) within the annual defense budget framework could have serious consequences for the Danish Defense Forces’ (DDF) future capacity to both purchase essential weapon systems and modernize its land and naval wings.
The FPP’s cost has been conservatively estimated at $8.6 billion.
Under its five-year budget plan, the DDF’s budget amounts to $3.18 billion in 2016. The DDF will receive $3.23 billion in 2017, $3.14 billion in 2018 and $3 billion in 2019. Around $410 million has been shaved off the annual Danish defense budget since 2001.
Since 1988, Denmark’s defense budgets and security policy have been defined by multiyear agreements backed by a broad parliamentary majority.
"There is a real fear that the financing needs of new aircraft will consume much of the annual budget and leave little to cover other important military strengthening projects and equipment purchases," said Marie Krarup, the Danish People Party's (Dansk Folkeparti) spokesperson on defense.
Denmark’s military focus is expected to concentrate on its strategic interests in areas such as the policing of its large Arctic territories; raising operational capability in the Baltic Sea, and expanding the DDF’s capacity to participate in international missions.