Why Should Norwegians Emigrate to the United States?

View of the village of Reine, Norway
View of the village of Reine, Norway (Sandra Mode)

American president Donald Trump reportedly disparaged immigrants from Africa, El Salvador and Haiti on Thursday, asking his advisors, “Why are we having all these people from shithole countries come here?”

Trump then suggested that the United States should bring more people from countries like Norway, whose prime minister he had met a day earlier.

Much of the outrage has focused on Trump’s racism. It’s clear he would rather have more white than brown people in the country.

But here’s another question: What possible reason do Norwegians have to emigrate to the United States? Read more

Norway’s Election Winners Propose Relaxing Wealth Fund’s Spending

Norwegian Conservative Party leader Erna Solberg meets with other Nordic countries' right-wing leaders, June 25
Norwegian Conservative Party leader Erna Solberg meets with other Nordic countries’ right-wing leaders, June 25 (Flickr/Erna Solberg)

In an election that was a foregone conclusion even before the first ballot was cast, Norway’s right-wing coalition led by the Conservative Party’s Erna Solberg swept to power on Monday. Perhaps the most controversial story from the election was the rise of the Progressive Party, the Conservatives’ key political ally. It is noted both for its anti-immigration positions and for its association with mass murderer Anders Breivik, a former party member.

While this aspect of the election has caught international attention, the bigger issue for voters in Norway was oil. Specifically, what to do with $760 billion worth of oil generated wealth in a sovereign wealth fund awkwardly and inaccurately named the Government Pension Fund-Global.

Much of the debate in the run-up to the election centered on questions of how the fund should be managed and spent. Current regulations limit the government’s ability to use the fund to 4 percent of its annual budget. The Labor Party, in power during the last eight years, often chose to use less. Outgoing prime minister Jens Stoltenberg advocated using only 3 percent of the money each year.

Many Norwegians were unhappy with this proposal, with criticism aimed at the government for failing to improve infrastructure and health care while sitting on top of a huge pile of money.

Certainly some criticism of the Labor Party’s management and use of the fund is legitimate. Compared to other sovereign wealth funds, such as the one run by Temasek Holdings in Singapore, Norway’s has underperformed. It has been invested very conservatively, with the majority of its investments in highly developed and slow growing economies like the United States and Switzerland. It has, until recently at least, tended toward investments with low volatility but low returns as well.

Investing the fund more aggressively is one thing. Spending the money is another altogether. Norway has been a paragon of macroprudential policy, often opting for conservative fiscal expenditure levels and running consistent budget surpluses.

Drilling down deeper, though, reveals a more complex story. Norwegian household debt is among the highest in the world, at nearly 200 percent of disposable income. Norway is also faced with a swelling property bubble and the housing market is overvalued by as much as 40 percent according to the International Monetary Fund. These are worse indicators than the United States had in the run-up to the subprime lending crisis that precipitated the global financial meltdown.

Norway is not the United States but what should be especially worrying for institutions and countries overexposed to Norwegian banks (which is the entire Nordic region) is that Solberg and the Conservative Party deny that a housing bubble is emerging at all and encourage deregulating lending rules so more first time homebuyers can get a mortgage. At the same time, their Progressive Party allies campaigned for removing the 4 percent spending limit from the sovereign wealth fund to increase budgetary allocations to infrastructure and education while providing cuts in taxes.

It is easy to see why this set of spending priorities would be popular in some quarters of the country. Likewise, it is probably difficult for average Norwegians to understand why they don’t spend their mountain of wealth when societal needs can clearly be recognized. But opening the fund’s floodgates is risky and shows a fundamental misunderstanding of Norway’s unique position in Europe.

First, as the euro crisis deepened , Norway — like Sweden and Switzerland, among others — came to be seen as a safe haven for parking wealth. Because the country did not aggressively work to counteract this, commodity and asset values shot up. In March of last year, the Norwegian central bank cut the benchmark rate to 1.5 percent, where it still stands, in a move to make the country less attractive to outside investment. This also put relatively cheap money in the hands of Norwegians looking to either buy homes or speculate on asset prices themselves.

Secondly, Norway’s economy exhibits classic Dutch disease symptoms. The nation’s production output and currency value have both been distorted as offshore oil emerged as the primary driver of growth. This has reduced its competitiveness in other sectors in proportion to the increasing value of the krone.

These two factors taken together mean that increases in domestic spending or decreases in taxation related to loosening restrictions on the use of the sovereign wealth fund will likely cause the Norwegian economy to overheat and costs to outstrip income — especially if interest rates are not raised. However, the sentiment in Norway currently is to reduce interest rates to stimulate lackluster economic expansion.

This cannot be done in tandem with increases in government spending. While it might satisfy short-term populist desires, it would have debilitating long-term effects for the country’s competitiveness, negative effects on prices for domestic goods and negative impacts on Norwegian homeowners.

Even in a worst case scenario, it is possible that there is enough money in the oil fund to bail out Norway’s banks and stimulate economic activity during a housing bubble collapse or a recession caused by overheating. Using it for such purposes would undermine the original idea behind creating the fund, however.

According to the Ministry of Finance, the fund exists to “finance rising public pension expenditures and support long-term considerations in the spending of government petroleum revenues.” It is possible that the incoming government will spend it carefully to achieve just those ends, while meeting voters’ desires and improving everyday quality of life. However, using it to gain political popularity vis-à-vis undermining the country’s competitiveness and, worse, to bail out a flatlining Norwegian economy would be to waste years of careful planning and unfair to Norway’s future generations.

America Wakes Up to the Arctic’s Potential

Secretary of State Hillary Clinton during a visit to Norway, June 2 (Utenriksdepartementet/Andrea Gjestvang)
Secretary of State Hillary Clinton during a visit to Norway, June 2 (Utenriksdepartementet/Andrea Gjestvang)

In the clearest sign yet that the United States are taking seriously the enormous economic potential and future geopolitical challenges of the Arctic region, Secretary of State Hillary clinton visited the city of Tromsø on Saturday in the north of Norway.

“From a strategic standpoint, the Arctic has an increasing geopolitical importance as countries vie to protect their rights and extend their influence,” Clinton told reporters in the capital of Oslo before heading for Tromsø where she was accompanied by Norway’s foreign minister, Jonas Gahr Støre.

The visit comes just two months after Norway and Cold War rival Russia agreed to improve military relations and expand cooperation in their Arctic lands. Russia has the largest Arctic territory by far, second to Canada. The United States, courtesy of Alaska, are considered an Arctic state as well but have done little to advance their interests there so far.

Norway aims to convert one of its High North battalions into a dedicated Arctic brigade comprising naval and special forces units. Russia last year announced plans to create an armored Arctic brigade of its own on the Kola Peninsula. The Canadians have similar plans for military deployment above the Arctic Circle but the United States Coast Guard fields just three icebreakers, two of which are antiquated and slated to be retired.

American soldiers have participated regularly in Norway’s Cold Response exercise which draws participation from many NATO member states.

This saber rattling has caused consternation in Moscow, Wikistrat’s Graham O’Brien told the Atlantic Sentinel last month. “Russian foreign minister Sergei Lavrov has said in several interviews that he believes NATO has no place in the Arctic, whether it be for political or security reasons.”

In good Cold War fashion, Russia has resumed patrolling the Arctic region with bomber planes and warships while the Kremlin invested more than a billion dollars in the expansion of the northern port of Murmansk which is supposed to double its capacity by 2015.

Even as tension is mounting, American supermajor ExxonMobil is working with Russia’s state-owned oil and gas company Rosneft to develop blocks in the Kara Sea, off Siberia, where sea is present up to three hundred days per year.

Russia’s Gazprom is also working with Total of France and Norway’s Statoil in the Shtokman gasfield, east of Novaya Zemlya.

Climate change is expected to improve access for oil and gas drilling. The Arctic could contain some 13 percent of the world’s undiscovered oil and so much as 30 percent of the world’s undiscovered natural gas. Combined, these figures amount to 22 percent of the planet’s untapped but technically recoverable hydrocarbons.

“N” for North: NATO’s Cold Future

British Hägglunds BV206 All Terrain Tracked Vehicles participate in a military exercise in Norway, February 28, 2010 (Defence Images/Mez Merrill)
British Hägglunds BV206 All Terrain Tracked Vehicles participate in a military exercise in Norway, February 28, 2010 (Defence Images/Mez Merrill)

NATO may take a different form as “the Great Melt” heats up. After the expected pullout from Afghanistan in 2014, pressure will mount on the alliance to turn northward. “The Arctic represents the emergence of a new geopolitical arena.”

As a result of climate change, many nations in the Northern Hemisphere could soon pivot to the pole, argues Lorenzo Nannetti, an analyst for the crowdsourced consultancy Wikistrat.

“As global demand for resources grows, the Arctic region becomes a new field for international competition as new sea lanes open due to ice melting,” he says. Read more

Norway, Russia Strengthen Arctic Relations

At a ministerial summit in Oslo last month, Norway and Russia agreed to improve military relations and expand cooperation in their Arctic territories.

Both northern states are reorganizing their armed forces in recognition of the changing strategic landscape. Norway aims to convert one of its High North battalions into a dedicated Arctic brigade comprising naval and special forces units. Russia last year announced plans to create an armored Arctic brigade of its own on the Kola Peninsula.

As a result of climate change, the Arctic region is set to assume newfound importance for the world economy. The melting ice could shorten global supply chains and free up vast oil and natural gas reserves to exploration.

The Arctic is estimated to contain some 13 percent of the world’s undiscovered oil and so much as 30 percent of the world’s undiscovered natural gas. Combined, these figures amount to 22 percent of the planet’s untapped but technically recoverable hydrocarbons. Over 80 percent of those Arctic resources lie offshore.

The rapprochement between Norway and Russia seems odd given that the former is a NATO member but it makes sense for both of them. The reason? A country that’s far removed from the Arctic but definitely interested in asserting a presence there — China.

Sino-Norwegian relations soured in 2010 when the Nobel Peace Prize committee decided to award Chinese dissident Liu Xiaobo. Beijing wouldn’t let the activist travel to Oslo to collect his prize and suspended free-trade talks with Norway. China even barred the import of Norwegian salmon.

Recently, those moves have come back to haunt China. Even though Norway hardly sold any salmon to China to begin with, it blocked Chinese entry as an observer state to the Arctic Council, a deliberative body of the eight countries that have territory within the Arctic Circle.

Russia probably doesn’t care for Chinese membership either. The Arctic is the one region where its sheer size and military prowess are yet unmatched. Canada is catching up and emerging as a northern superpower though. Why should Moscow invite another competitor?

Gunman Targets Norway’s Social Democrat Party

An explosion in the Norwegian capital on Friday left eight dead and many injured. A bomb went off near the prime minister’s office in the late afternoon. Soon after, the perpetrator killed dozens of youngsters gathered for a Labor Party summer camp on a small island west of Oslo where former prime minister Gro Harlem Brundtland had just spoken. The killer identified her as his primary target on Monday.

Prime Minister Jens Stoltenberg was scheduled to speak at the island on Saturday. He was not in office during the blast and remained unharmed as did Brundtland but at least 68, many of them teenagers, perished in a killing spree.

Police detained the gunman who was described as tall, blond and a right-wing extremist. The 32-year old criticized “cultural Marxists” in a lengthy essay that he had posted online and championed a “crusade” against Islam in the Scandinavian country. He blamed the Labor Party for letting Muslims “colonize” Norway and accused it of “treason.”

Police believe the gunman drove to the island after the explosion in the capital.

This post was updated with corrections and new information.

Cold Response

Between February 17 and March 4, Norway hosted the Cold Response 2010 military exercise in Troms county, above the Arctic Circle. More than 8,500 troops as well as 1,000 special forces from fourteen different nations participated, including soldiers from Germany, the Netherlands, Sweden, the United Kingdom and the United States.

The exercise, the first of its kind to take place exclusively in the minus thirty degree Celsius temperatures above the Arctic Circle, tested cold weather amphibious operations as well as interoperability between expeditionary forces. Ground operations ranged from company-sized maneuvering to a brigade-sized beach assault. Both American and Royal Marines hit the beaches in landing craft, with air and naval support, responding to the “invasion” of fictitious Northland by the enemy from Eastland.

The different contingents ranged in size from Britain’s 2000 sailors and Royal Marines and several hundreds of Sweden’s elite Jägar units to a handful of Polish officers who aided in tactical planning.

Naval forces included the Dutch amphibious transport dock Johan de Witt, a British task force as well as the helicopter carrier HMS Ocean, a French korvette and Norwegian mine sweepers and support ships.

Others segments of the exercise saw Finland’s brand new NH90 helicopters supplying tactical transport in the mountainous areas; Norwegian tanks rumbling across the border with Sweden and Austrian Kiowa OH-56B attack helicopters taking part with American, Dutch and Norwegian units in maritime interdiction operations. Dutch and Norwegian submarines also hunted each other in the icy waters of the country’s fjords while shadowing surface vessels.

Most of Cold Response 2010’s participators were NATO countries with the exception of Austria, Finland and Sweden. All three maintain individualized relations with the alliance and partake in its Partnership for Peace program.