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HELSINKI — The Swedish government's approval of $700 million in new funding to bolster naval capacity forms part of a wide-ranging capital investment plan to significantly advance the military's surface warship presence in the Baltic Sea and submarine hunting capabilities.

The special funding is intended to be used by the Navy for core investment programs in 2016-2020.

In its funding proposal, the Armed Forces Command (AFC), envisaged a more expansive naval-strengthening plan costing up to $2 billion. The government's response has been to announce the purchase of two new A26-class submarines. The capital budget earmarked for the A26-class submarine acquisition amounts to $950 million.

Saab-Kockums, which signed in June 2014 a letter of intent covering the A26's design and development, is expected to secure the contract and deliver the two submarines by 2022.

The Saab letter of intent reached with FMV, Sweden's defense material administration, is focused on developing Sweden's underwater capability through 2024. The letter includes support, development, design and production of submarines and other underwater systems, corresponding to potential orders of up to $1.3 billion.

"In terms of capital funding and specific investments in defense, this is the biggest single decision that we will make during the lifetime of this government. This is a critical decision that will ensure Swedish submarine capability beyond 2030. The next-generation submarine will comprise the very best in advanced technologies," said defense minister Peter Hultqvist.

In terms of the $700 million in new non-submarine funding, the focus will be on conducting upgrades to the Navy's existing fleet of submarine hunter warships, with major modernization refits and technology improvements scheduled for the Gävle and Sundsvall Göteborg-class corvettes.

The strategic mission direction of the capital investment programs is intended to support measures to reinforce Sweden's presence in the Baltic Sea. It will result in a permanent return by the Swedish Navy to Gotland Island, Sweden's most southern military outpost in the Baltic Sea.

The AFC has advanced plans to locate a fast response Gripen jet squadron on Gotland, along with a support helicopter unit and a modular-structured rapid response Army battalion.

The increased funding is directly related to increased Russian activity and growing security tensions in the Baltic Sea region, said Hultqvist.

"Our military reinforcement of Gotland should demonstrate to the world that Sweden recognizes the very strategic importance that the island has," Hultqvist said.

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