The reduction in the Swedish Armed Forces’ research funding will be felt almost entirely by FOI whose allocation for 2008 is expected to be cut by SEK 480 million compared with 2004. The remaining SEK 20 million reduction will be born by the Swedish National Defence  College.

In his report on the future organisation and funding of the Swedish Armed Forces, Peter Lagerblad suggested that FOI’s financial allocation should be reduced by SEK 425 million.

As FOI’s Director General, Madelene Sandström, puts it:

-We either see ourselves as a sacrificial lamb or we seek to redefine our identity in the new situation.

By this she means that if FOI regards itself solely as a defence research organisation, the consequences will be far-reaching. Defence research contracts and the associated financial allocation are to be reduced from a figure in excess of SEK 1 billion to barely SEK 600 million. If, on the other hand, FOI sees itself as a research institute focusing on safety and security on a commercial basis, then it becomes a question of filling the gap left by the reduction in defence work.

Madelene Sandström also believes that the reductions now being imposed on the Swedish Armed Forces can hasten FOI’s transformation process.

- We must now abandon industrial age thinking. Our future does not depend on the fact that we own extensive installations and facilities. Our future lies in the heads of our scientists and researchers. It is their knowledge that counts. And not least their ability to persuade others to pay to share in this knowledge. This could apply to civil customers or equally to the defence organisations of other countries.

The prioritisation of Sweden’s future defence has been undertaken in cooperation with FOI and the National Defence College. The underlying principle has been to become even better in those areas in which our strength already lies. There is no need for FOI’s scientists and researchers to take on defence tasks that could be done just as well by other universities, research institutes and commercial companies.

The Armed Forces are talking about areas such as network based defence (NBD), human aspects such as recruiting and selection, aircraft technology and the like. Each of these areas require specialist competence and expertise. And it is in these areas that the Armed Forces are making reductions to a greater or a lesser extent. The high priority areas suffer the less severe cuts but in no area is there an increase in the funding allocation.

Major reductions are to be made in areas of competence such as weapons and protection, sensors, aeronautics and underwater technology. Some areas are given priority, for example electronic warfare. Command and control technology is closely coupled to the development of network based defence and is also given priority. That area also covers electric warfare, a field of research in which, for security reasons, work can only be carried out in Sweden.

The big questions now are how quickly these cutbacks are to be made at FOI, which locations will be affected and how many will lose their jobs. FOI has a turnover of SEK 1,200 million and a total of 1,250 employees. It is not a difficult sum to do. If the gap left by the cutback in defence work is not filled, then at least 400 jobs will be lost.

Director General Madelene Sandström says that no dramatic decisions are expected in the immediate future. There will probably be no decision about the future of the various locations before the end of this year. Nor will there be any major redundancy for the time being. FOI’s order book for 2006 is full. The problem now is a shortage of the right people, not any lack of work. For 2007 the situation is still good even though the reductions in defence work will already be starting to bite.

-We have a time limit of 12-18 months. Then we, and the market, will have to decide what is going to happen to FOI. We shall either become a much smaller organisation than we are now, focusing solely on defence research, or we shall succeeed in our ambition to stand on two legs rather than one. In that respect we have become like a normal commercial company. We cannot rely on an assured funding allocation, or the certainty of obtaining a long-term series of contracts, with the whole year nicely planned out in January. We have to keep on selling our research, our expertise and our services. The advantage we have over others, however, is that we start with a nest egg of SEK 600 million. And despite everything, that is no bad start.

Not all the research programme areas are equally well placed to make an impact in a new market. Some research is, by its very nature, so military that market possibilities are virtually limited to other countries’ defence organisations. On the other hand, today’s threat picture is very different to that existing during the cold war. Then it was soldiers who needed protection against splinters. Today it is perhaps airports and public buildings that need protecting instead.

Madelene Sandström regards Sweden’s special expertise in underwater technology in shallow water as the jewel in FOI’s crown. The Swedish Armed Forces may well reduce their research allocation by half but, even so, Madelene Sandström believes that FOI’s research groups in this field could still constitute an international research hub. It is surely no coincidence that the United States Navy insisted on conducting trials with the Swedish submarine Gotland. Knowledge and technical expertise in shallow water operations is in demand internationally and in the past this has been a Swedish niche.

-There should be several areas which we have previously regarded as exclusively Swedish specialities but which now offer international opportunities. Now we just have to prove it. It is not merely a question of one race that we have to win, but more a battle that we have to keep on fighting. FOI’s new existence will depend on it.