BRUSSELS - THERE'S no austerity for Nato, at least where its headquarters are concerned. The military alliance says its new complex will cost 1 billion euros (S$1.7 billion), a sum critics are calling unnecessary in a time of international belt-tightening. "The total estimated cost of the new Nato headquarters is about â‚¬1 billion euros," the alliance's spokeswoman, Oana Lungescu, told journalists on the margins of a press briefing by Nato secretary general Anders Fogh Rasmussen. The massive construction will expand over 250,000 square metres In reply to a question on the cost, Mr Rasmussen said that "the final figure happens to be a bit lower than the original expectation," as a result of construction prices dropping amid the economic crisis. The initial price tag for the construction itself was at â‚¬650 million, but following the bidding procedure, the Belgian state who hosts the facility managed to lower it by 28 percent, to â‚¬460 million. On top of that come other expenses, such as demolition costs, site security, cabling, IT and audiovisual facilities, as well as personnel costs, leading to the total estimate of â‚¬1 billion. During a ground-breaking ceremony in December 2010, Mr Rasmussen had said the new mega-headquarters were needed to accommodate all the delegations and staff, currently hosted in a barrack-style compound that was provisionally offered to Nato by the Belgian state in 1967 when the alliance was kicked out of France. "Our current building simply cannot cope with the demands that we are placing on it. It is too small, it is too inflexible, and it is inefficient," Mr Rasmussen said at the inauguration ceremony in December. Expected to last five years, the construction works will stretch over 250,000 square metres across the street from the current location on the highway between Brussels and the international airport in Zaventem and house some 4,000 people, as well as conference rooms, sport facilities and shops. The construction was agreed upon in 2004, with progress moving slowly through project tenders, land appropriations and the demolition of a former Belgian military base. "In terms of location, Nato is somewhat on the outskirts of Brussels, but I think we are very much at the heart of the European debate when it comes to dealing with the effects of the economic crisis on our security," Mr Rasmussen said in the press conference on Monday. He again warned against "un-coordinated" budget cuts and urged the 26 members of the alliance to use the Nato forum when deciding which defence programmes to slash. "Over the past two years, European defence spending by Nato's European member nations has shrunk by some 45 billion dollars â€“ that is the equivalent of Germany's entire annual defence budget," Mr Rasmussen noted. Nato itself is due to decide in June which command bases and local headquarters scattered across Europe to cut in a bid to lower its overall costs.