Norway, home to roughly 5 million people, is often thought to be isolated from the European Union. As a colleague said to me as I sat reading about the recent Norwegian elections, “Why bother? Norway will never join the EU, with their oil they don’t need to bother with the rest of us.” This casual remark, while bearing no ill will, is disappointing. For, in truth, the Kingdom of Norway is quite involved. The regional cooperation stemming from the EU has affected every corner of the world, and most assuredly Norway, a country with long-standing historic and economic ties to member states, is no exception.
What is all this talk of oil, and Norwegian self-reliance?
In 1969, the future of the Norwegian economy changed with the discovery of oil in the North Sea. As the sixth largest exporter of oil in the world, Norwegians continue to benefit economically, with an average disposable income increase of 3.8% per year from 2008-2012 compared with the OECD average at .8% a year.
There are regional jokes that the Norwegians, as former Vikings, are hiding their good fortunes under heavy guard to avoid being plundered. In true Viking spirit, this inspires an image of casks of gold being lowered into peat bogs, yet in the modern age this is being done through funds and investing. The Government Pension Fund Global, known as simply the Oil Fund is most likely, at a current value of 760 billion US dollars, the largest sovereign wealth fund in existence. Estimated to grow to over 1.1 trillion US dollars by 2020, the fund owns approximately 1% of world’s stocks, and 2.5 % of European publicly listed companies. The Norwegian Finance Ministry are the owners, while it is run by the Central Bank.
How is Norway engaged as a partner of Europe?
Ironically, the common misperception is that Norway is economically independent due to their oil fund, yet, despite their great coffers, Norway is highly engaged with Europe regarding monetary regulation, trade, and economics. The cooperation doesn’t stop there, touching upon foreign policy, climate change, energy, innovation, as well as justice and home affairs.
Norway is not a member state of the EU, having rejected membership with public referendums in 1972 and 1994. However, it has been a member of the European Free Trade Association (EFTA) since 1960, when EFTA was established together with Austria, Denmark, Portugal, Sweden, Switzerland, and the United Kingdom. Norway is a part of the European Economic Area (EEA) agreement and is also a part of the Schengen Agreement. The Schengen, EEA, and EFTA are the chief grounds upon which Norway has built not only an economic, but a political and social relationship with the European Union.
The EEA is the most extensive economic agreement that Norway has ever entered into, with the ultimate purpose of expanding the EU internal market to EEA EFTA states, those being Norway, Iceland and Liechtenstein. The EEA extends the four freedoms of the EU internal market – free movement of goods, persons, services, and capital, non-discrimination, and equal competition.
From 2009- 2014 Norway will have given 1.79 billion Euros to reduce disparities in the EEA, as well as contributing to EU programme budgets (in 2010 Norway contributed 230 million Euros). Norway’s involvement does not stop at merely writing a check. In 2010, Norway was a participant in 26 EU agencies, and was actively engaged in 19 EU programmes. Norway is, undeniably, involved in the European Union.
Norway in the future
Notorious for being concerned with economic stability in the long term, the government is having a problem quite different from other nations around Europe and the world. While elsewhere unemployment is high, and citizens are feeling the pinch of less ‘disposable income’, statistically unemployment is low and amount of disposable income is rising for Norwegians. While Norway may be open to recruiting talent from elsewhere, with roughly 10% of their population not born in Norway, talent in the technical field is dominated by the oil industry, while the public sector including education and innovation is also large. It is important to think of Norway as more than just oil. 95% of Norwegian electricity comes from the renewable resources of hydro and wind power, making them an example for other nations around the world regarding green energy.
Norway is looking into the crystal ball and preparing itself for a day when its precious oil resource does not see the profit turnovers of today. In 1990, when the Oil Fund was created the purpose was to promote non-oil industries, such as shipping. The fund in essence, is using the oil profits of today, to secure Norway’s future for years to come. Considering the current levels of regional involvement, it is predictable that Norway will continue to be a strong partner for the EU.
The September 2013 election saw the fall of the incumbent’s popularity and a switch from the liberal government to a coalition government led by Conservative Erna Solberg (switch will take place in October). While neither of the two leading candidates was anti- EU, the issue of the EU is always a hot topic leading up to elections. To be, or not to be, a member state will, for the foreseeable future, be a chief concern.
And yet, while some view this question as a clear-cut issue, rendering politicians without a middle ground – it does, when examined, appear that politicians, unbeknownst to most, have found a middle ground regarding regional cooperation. In essence, the answer for ‘to be or not to be’ is – to be in part but not in all.
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