"The positive security political development in our surrounding areas allows us to modernize our defense and adjust it to a changed reality and gives us the possibility to save," Swedish Defense Minister Leni Bjoerklund said.

The Swedish military has until now been focused on an invasion from the old Soviet block, which is no longer a real threat, she said in a statement.

"What we're building now is a high-tech, flexible, deployable defense that can be deployed where and when it is needed," she added, pointing out that Sweden going forward would focus much more on international crisis and security missions.

To tackle a new reality of international terrorist threats, Bjoerklund insisted that competency levels among soldiers needed to be raised, adding there would be a shift of focus away from conscripts to professional recruits.

"But we keep conscription as a base," she told reporters on Friday.

The defense department has proposed cutting the total number of military personnel by 25 percent, letting about 5,000 employees go, and closing 15 regiments across the country between 2005 and 2007. In addition, a number of military units would be moved and a few new ones would be created.

The cuts, which still need to be approved by parliament, are expected to help save the military about three billion kronor by 2007, Bjoerklund said.

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