Tag Archives: jensen

Could Norway benefit from the oil price decline?


When she was elected in September 2013 as Norway’s new conservative prime minister, one of Erna Solberg’s top priorities was to bring down the value of the Norwegian currency, the krone.norway

Boosted by its spectacular oil wealth, Norway is today one of the world’s wealthiest countries, so strong that it’s shunned not only eurozone membership but accession to the European Union altogether. Like many other oil-producing countries, however, the sudden drop of oil prices since July from over $100 per barrel to nearly $60 today has adversely affected Norway’s economy. If prices drop even lower, or the $60 level sustains itself through 2015 or beyond, it could endanger Solberg politically, who leads a minority government consisting of her own center-right Høyre (the ‘Right,’ or the Conservative Party) and the more controversial Framskrittspartiet (Progress Party), a more populist, anti-immigrant party that has its roots in the anti-tax movement. The Progress Party’s leader, Siv Jensen, now holds the unenviable task of serving as Norway’s finance minister as oil prices tumble. Solberg ousted the popular two-term prime minister Jens Stoltenberg, who is now NATO secretary-general.

But for a country that was facing inflationary pressure when the rest of Europe continues to battle deflation, the fall in oil prices may bring additional benefits to a country long topping the list of the world’s most expensive places. As of July 2014, Norway still led The Economist‘s ‘Big Mac Index‘ — the price of the iconic McDonald’s sandwich was a whopping 61% higher in Norway than in the United States.

There’s no doubt that a sustained fall in oil prices will harm Norway’s bottom line. It will reduce the revenues available for public spending (already estimated to fall by over $9 billion because of the price drop), and it could easily cause Norwegian GDP growth to fall in 2015 from estimates of 2% or so (still robust compared to the eurozone), thereby causing the country’s relatively low 3.4% jobless rate to climb.

But it’s also caused the krone to fall to a 13-year low, declining to  parity with neighboring Sweden’s currency, the krona, for the first time since 2000. As recently as May, one US dollar was worth 5.8 Norwegian kroner. Today, that’s skyrocketed to 7.5 kroner and, as Russia and other oil-exporting countries see their own currencies tanking, investors could push the krone even lower.

NOKUSDPhoto credit to Bloomberg.

Aside from reducing concerns about inflation, the krone‘s fall could provide all kinds of benefits to Norway. For now, Solberg remains incredibly popular with Norwegians. Also for now, Jensen and the government doesn’t seem panicked, though the central bank cut interest rates from 1.5% to 1.25% last week. The current 2015 budget cuts taxes, while holding social welfare spending steady and increasingly spending on the country’s infrastructure.  Continue reading Could Norway benefit from the oil price decline?

Swedish far-right could inadvertently deliver 3rd term to Reinfeldt


When Swedes finish voting on Sunday in general election, they might find that, to their astonishment, the only party with the seats to deliver a majority coalition is the one that both the right and left have treated as politically radioactive for years.Sweden

In the final days of the campaign, the race has tightened between the four-party center-right alliance headed by two-term prime minister Frederik Reinfeldt (pictured above) and the loose confederation of social democrats, greens and socialists that would rally behind Stefan Löfven, the former labor union leader who now heads Sweden’s center-left Sveriges socialdemokratiska arbetareparti (Swedish Social Democratic Party), which essentially created the Swedish social welfare state in the 20th century.

If the results are close, it could leave the balance of power in the hands of the far-right, anti-immigrant Sverigedemokraterna (SD, Sweden Democrats), even though the party entered the final week of the campaign crippled after news reports revealed racist online commentary of several of the party’s candidates.

Though Löfven’s Social Democrats (and the left, generally) have held a polling lead for much of the the past year, a September 1-4 Sifo poll from showed the left’s generic lead falling to less than 4.9%. A more recent September 8-9 Sifo survey showed the left recovering a greater margin of 7.8%. But up to one-third of the Swedish electorate may still be undecided going into the election on Sunday, making predictions difficult.

Despite Löfven’s lead, many voters approve of Reinfeldt’s performance over the past eight years, most especially as his record relates to the Swedish economy. Sweden has emerged from both the 2008-09 global financial crisis and the 2010-12 eurozone crisis with stronger economic growth than much of the rest of the European Union. While unemployment is still probably too high at around 8%, the rate is slowly declining. But Swedes don’t dislike Reinfeldt. It’s that that Swedes are ready for a change, and Löfven’s moderate social democratic approach would bring more continuity than rupture.

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RELATED: One month out, Löfven and Social Democrats lead in Sweden

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Though the two Sifo polls this month showed support for the Sweden Democrats dropping from 10.4% to 8.9%, even a ‘poor’ showing would eclipse their previous high point in the 2010 election, when they won 5.7% of the vote. The 2010 breakthrough was a watershed moment for Sweden’s far right — much to the dismay of the rest of the political spectrum. Suddenly, a far-right party that had never held any seats in the Riksdag, Sweden’s parliament, now held 20.

So even if the Sweden Democrats under-perform in the 2014 election (they won around 9.7% in the May European elections), they could still hold a large enough bloc of seats to deny either the Reinfeldt-led right or the Löfven-led left a majority.

Though the current center-right government has only a minority in the Riksdag, it has often unofficially leaned on the Sweden Democrats for support, though it’s also turned to the Miljöpartiet (Green Party) as necessary on issues like refugees and asylum.

Continue reading Swedish far-right could inadvertently deliver 3rd term to Reinfeldt

Norway’s new center-right minority government is official


Having narrowed coalition talks from four to two parties last week, it didn’t take long for Norway’s new government to emerge formally on Monday.norway

As I wrote late last week, Norway is set to have a minority government that will likely be its most right-wing government in postwar history:

As widely anticipated, the leader of the center-right Høyre (literally the ‘Right,’ or more commonly, the Conservative Party), Erna Solberg, will become Norway’s next prime minister, but she’ll lead a minority government in coalition with just one of Norway’s three other political parties, the controversial anti-immigrant Framskrittspartiet (Progress Party) after two smaller center-right parties pulled out of coalition talks earlier this week.

I wrote before the election that pulling together all four parties on the Norwegian right might prove problematic.  Sure enough, both the Kristelig Folkeparti (Christian Democratic Party) and Venstre (literally, ‘the Left,’ but commonly known as the Liberal Party), which will hold 10 and nine seats, respectively, in the next parliament, will not join the government.  Though both parties have agreed to provide support to Solberg from outside the government, it’s not an auspicious start for the broad four-party coalition that Solberg hoped to build after last month’s victory.

It was no surprise on Monday to see Erna Solberg, the leader of the Conservatives and Norway’s likely next prime minister (pictured above, right) and Siv Jensen, the leader of the Progress Party (pictured above, left) announce their governing agenda.

That agenda came with few surprises from the general framework largely set forth last week — a push to tightening Norway’s immigration laws (for non-Europeans), lowering Norway’s tax burden and, importantly, an agreement not to deviate from the ‘4% rule’ that prohibits more than 4% of the country’s massive $790 billion oil fund to be used in the annual Norwegian budget, and a commitment to avoid exploration for resources in protected Arctic areas.

Both parties generally hope to unlock economic growth and modernization through tax cuts and decentralization of power from Norway’s central government.

But perhaps the most ambitious item is a plan to develop a new infrastructure fund of up to 100 billion kroner ($16.75 billion) for what Solberg and Jensen hope will a five-year mission to improve Norway’s roads and railroads — as well as its educational system:

Kristin Skogen Lund, director-general of the Confederation of Norwegian Enterprise, welcomed the “shift in direction for Norwegian politics”….

Ms Skogen Lund also welcomed the shift in focus of the oil fund from consumption to investment. The outgoing government had spent only about 14 per cent of annual proceeds from the fund, she said, when all of it was supposed to be directed into infrastructure, education and tax reduction.

That’s important in light of Solberg’s goal to reduce the value of the krone, Norway’s currency — inflation, along with high labor costs that have made Norway’s exports relatively uncompetitive, are the largest challenges to an economy that’s at risk of overheating (to the contrary of much of the rest of Europe).  Though the ‘investment’ will surely stimulate Norway’s economy, it will do so for long-term benefits.  That makes the Solberg ‘investment fund’ plan unlike, say, the 2009 US stimulus package enacted into law by US president Barack Obama designed to do the opposite — boost short-term aggregate demand.

Solberg’s government will also explore the possibility of splitting the country’s oil fund, the world’s largest sovereign wealth fund, into two smaller entities to encourage competition and maximize Norway’s investment returns.

The two parties remain at odds over cabinet posts, though it’s widely expected than Jensen will hold the finance portfolio.

By way of background, the Conservative/Progress coalition will hold 77 seats — and all four center-right parties will hold 96 seats — in the 169-member Storting, Norway’s parliament.  Though the center-left Arbeiderpartiet (Labour Party) of outgoing prime minister Jens Stoltenberg won more seats than any other party in the September 9 election, its coalition allies suffered huge losses — the Conservatives placed a close second and the Progress Party finished third, and a broad center-right government had been widely expected even before the election.


Top photo credit to Vegard Grøtt / NTB scanpix.

Norway’s new government will be more right-wing and more fragile than expected


Just less than a month after Norwegians went to the polls, the contours of Norway’s new government are taking shape — and it’s not exactly what everyone expected.norway

As widely anticipated, the leader of the center-right Høyre (literally the ‘Right,’ or more commonly, the Conservative Party), Erna Solberg, will become Norway’s next prime minister, but she’ll lead a minority government in coalition with just one of Norway’s three other political parties, the controversial anti-immigrant Framskrittspartiet (Progress Party) after two smaller center-right parties pulled out of coalition talks earlier this week.

The difference is that instead of a 96-seat majority in the 169-member Storting, Norway’s parliament, Solberg’s government will hold just 77 seats, eight short of an absolute majority:


I wrote before the election that pulling together all four parties on the Norwegian right might prove problematic.  Sure enough, both the Kristelig Folkeparti (Christian Democratic Party) and Venstre (literally, ‘the Left,’ but commonly known as the Liberal Party), which will hold 10 and nine seats, respectively, in the next parliament, will not join the government.  Though both parties have agreed to provide support to Solberg (pictured above) from outside the government, it’s not an auspicious start for the broad four-party coalition that Solberg hoped to build after last month’s victory.  The absence of the Christian Democrats is particularly difficult, given that they led the last center-right Norwegian government — that of prime minister Kjell Magne Bondevik between 1997 and 2000 and 2001 to 2005.

The Progress Party, meanwhile, will enter government for the first time since its foundation in the 1970s.  Founded as an anti-tax movement determined to roll back the Norwegian social welfare state, the Progress Party has also become increasingly anti-immigrant.  While it’s certainly tame compared to many of Europe’s more xenophobic anti-immigrant parties, it’s easily the most controversial party in Norway (not least because mass killer Anders Behring Breivik was once among its members).  Anxiety about the Progress Party’s new, unprecedented role in government is one of the reasons that the Christian Democrats and Liberals may have been wary of formally joining Solberg’s coalition, which will now become Norway’s most right-wing government in a century.

Solberg, on the other hand, slowly gained the trust of Norwegians after rebranding the Conservatives into a more welcoming, more national party that’s transcended its base catering to business interests in Oslo.  Although the Conservatives and the Progress Party agree on economic policies like tax cuts, the Conservatives have positioned themselves as an ever-so-slightly right-of-center party who would leave in place much of the mainstream policy preferences of the outgoing center-left Arbeiderpartiet (Labour Party) — you can characterize ‘mainstream’ in Norway as full commitment to a  generous social welfare state, mixed with strict fiscal discipline that diverts much of Norway’s oil largesse into its $780 billion investment fund, the world’s largest sovereign wealth fund.

Given that the Labour Party, led by the popular outgoing prime minister Jens Stoltenberg, still managed to win more votes than any other party — and seven more parliamentary seats than the Conservatives — last month (a feat Labour has repeated in every national election since 1918), that’s a wise move on Solberg’s part.  But balancing the moderation that Norwegians expect from her with the Progress Party’s expectations was always going to be difficult, and Solberg’s dream of a broad four-party coalition will be the first casualty of those competing expectations.

That balancing act informs much of the resulting agreement between the Conservatives and Progress and, more generally, among the four right-wing parties that Solberg will need to satisfy to keep her minority coalition in government — it’s more notable for what the government won’t do than what it will.  The government faces a much different challenge than the rest of Europe — with GDP growth holding steady at around 2%, it’s overheating, not recession, that threatens the economy.  Solberg’s challenge is how to keep the Norwegian krone from further appreciating, given that the country’s high wages are already making exports less competitive.

Notwithstanding the election campaign, lowering the value of the krone might ultimately be the Solberg’s most pressing policy imperative.

Here are the highlights of how Norway’s next government will unfold under Solberg’s leadership:  Continue reading Norway’s new government will be more right-wing and more fragile than expected

Solberg set to lead broad center-right coalition in Norway after today’s election


Erna Solberg, the longtime leader of Norway’s Conservative Party, will become Norway’s next prime minister after results from today’s Norwegian parliamentary election showed all four of Norway’s center-right parties winning enough seats to form an absolute majority in Norway’s Storting (parliament).norway

Prime minister Jen Stoltenberg has conceded defeat, and will resign shortly after presenting Norway’s next budget in mid-October.

The result’s a lot more complicated than that — for starters, Stoltenberg’s party, the center-left Arbeiderpartiet (Labour Party) actually won more votes than Solberg’s party, the center-right Høyre (literally the ‘Right’) — so much so that Labour will have around 55 seats to just 48 for the Conservatives.  It’s not an unexpected result because while polls earlier this summer showed the Conservatives leading Labour, support for Labour has increased as Norwegians focused on the campaign.  Moreover, Labour has emerged in every election since 1924 with more support and seats than Norway’s various opposition parties, and its long pedigree as the natural party of government means that it has a deeper wellspring of support among the Norwegian electorate.

Here’s the breakdown of voter support with nearly all the votes counted:

norway results

Here’s the projected allocation of seat in Norway’s new parliament:


But that wasn’t enough to pull off a victory for two reasons.  First, Labour’s support — around 30.9% — is smaller than the 35.4% it won in the September 2009 election, natural enough for a party that’s been in power for eight years and is seeking a third consecutive term.  Secondly, the two small parties that comprise the ‘red-green’ coalition that Stoltenberg heads, Sosialistisk Venstreparti (Socialist Left Party) and the Senterpartiet (Centre Party), did incredibly poorly, so the ‘red-green’ coalition is projected to win just a cumulative 72 seats in the 169-member Storting.

Meanwhile, Solberg’s Conservatives cannot govern by themselves, but must form an alliance among the four major center-right parties that will join parliament.  That includes the Kristelig Folkeparti (Christian Democratic Party), a moderately conservative party that led Norway’s last center-right government under prime minister Kjell Magne Bondevik between 1997 and 2000 and again from 2001 to 2005, and it includes Venstre (literally, ‘the Left,’ but commonly known as the Liberal Party).  All three parties worked together in government between 2001 and 2005 and all three parties generally accept the fait accompli of the Norwegian social welfare state and Labour’s rules to stash much of Norway’s annual budget surplus in the country’s massive oil wealth fund.  The Conservatives, in particular, have spent the election arguing for slight changes to the status quo, such as lower business taxes and tweaks to Norway’s health care system, after a major rebranding exercise to grow beyond their base of Oslo business interests.

But the coalition must also include the more controversial Framskrittspartiet (Progress Party).  Most reports highlight that the party is relatively populist and anti-immigrant, and that it was the party of Norway’s Anders Behring Breivik, who was responsible for the deadliest killings in Norway’s history in twin attacks in 2011.  That’s all true, but the party’s roots are in the anti-tax movement of the 1970s, and its goal is a massive rupture from the status quo — it would claw back many of Norway’s social benefits, drastically reduce the role of government in Norwegian life, but it would also push to spend more of the Norwegian oil surplus (or return it in the form of lower taxes).   Continue reading Solberg set to lead broad center-right coalition in Norway after today’s election

Solberg favored to become prime minister as Norway votes today


In Norway, voters will decide today whether to deliver prime minister Jens Stoltenberg a third term in government.norway

Stoltenberg, in his eighth year of office, leads the center-left Arbeiderpartiet (Labour Party) that dominates Norway’s governing ‘red-green’ coalition.  But while the center-right Høyre (literally the ‘Right,’ or more commonly, the Conservative Party) consistently led polls as the most popular party throughout the summer, Labour has caught back up in the polls, and the two are neck-in-neck to determine which will win the most votes today.

But even if Labour wins the largest share of the vote (as it’s done in every election since 1927), the Conservatives remain heavily favored to form Norway’s next government because the center-right parties, taken together, far outpoll the center-left parties.  Labour’s two smaller allies, in particular, are faring poorly in polls.

That means that Conservative leader Erna Solberg (pictured above, left, with Stoltenberg, right) is predicted to become Norway’s next prime minister with the support of the Folkeparti (Christian Democratic Party) and the Venstre (the Liberal Party), but also the Framskrittspartiet (Progress Party), a far-right, populist anti-immigration, anti-tax, anti-social welfare party formed in the 1970s.  Solberg leads a party that’s undergone a major rebranding in recent years — Solberg, from western Norway, leads a relatively moderate center-right party that hopes to lower taxes but otherwise promises quite a bit of continuity with Stoltenberg’s policies.  With a base in Oslo, the Conservatives are very business-friendly, and are likely to continue both the fiscal prudence of the Stoltenberg government (which diverts much of Norway’s annual budget surplus into its oil fund) as well as the social welfare state that’s come to define Norwegian government.

Although the Progress Party is currently the second-largest party in Norway’s Storting (Parliament), it’s never been part of a government in Norwegian history.  So even though it’s likely to lose seats today, its leader Siv Jensen will have the votes to bring Solberg a broader right-wing majority — and to demand the finance portfolio, despite the fact that Progress has radically different views about Norway’s finances than Labour and the Conservatives.

If Labour holds on, it will be due to Labour’s historically strong political base in the Norwegian heartland and its get-out-the-vote efforts, but also due to hesitation over putting the Progress Party in power, not any hesitation about Solberg.

Norway, a country of just five million in Scandinavia, is one of the wealthiest countries in the world, with a GDP per capita of about $50,000 to $60,000, due in large part to Norway’s oil wealth.  Voters will elect all 169 members of the unicameral Storting on the basis of proportional representation by choosing candidates from among 19 multi-member districts.  The electoral threshold for entering parliament is 4% of the vote.  Although Norway has twice rejected joining the European Union (most recently in a 1994 referendum), it is a member of the European Economic Area, so like Iceland and Liechtenstein, it is a member of the European single market, even though it doesn’t have any input on policymaking as a European Union non-member.

For more of Suffragio‘s coverage on Norway’s parliamentary elections:

  • here’s a look at how Solberg and the Conservatives ended up such strong frontrunners in 2013;
  • here’s a look at why no one should count out Stoltenberg and Labour today; and
  • here’s a look at tensions among Norway’s center-right parties and why a broad center-right government is still more likely than a ‘grand coalition.’

Despite doubts about far-right Progress Party, no talk of Norwegian ‘grand coalition’

siv jensen

Though the Høyre (‘Right,’ or Conservative Party) consistently leads polls as the party mostly likely to emerge with the most support in Norway’s September 9 elections, there’s still uncertainty about the future of Norway’s government.norway

That’s because while Conservative leader Erna Solberg is very likely to become Norway’s next prime minister and the Conservatives are widely tipped to win on September 9, the policies that her government will pursue will depend on the relative strength of the other center-right parties — notably the populist, anti-government, anti-immigration Framskrittspartiet (Progress Party), which remains the most controversial of Norway’s major parties.  If it joins the Conservatives in government as predicted, it will be the first time that the Progress Party has joined any government since it was founded in the 1970s.

If the election unfolds as polls predict, the Conservatives would win the largest share of the vote, around 32% and around 56 seats, which would be a historical victory against the Arbeiderpartiet (Labour Party), which is polling around 29% and around 51 seats.  The Progress Party currently polls as the third-most popular party with around 14.5% support and around 27 seats.  That means that the next government will require some kind of coalition between two of those three parties.

So while it’s not surprising that tensions are emerging during the campaign between Solberg and Progress Party leader Siv Jensen (pictured above) and that it’s clear coalition negotiations among the Conservatives, the Progress Party and other center-right allies are likely to be incredibly difficult, it is perhaps surprising that no one has really suggested a ‘grand coalition’ between Labour and the Conservatives as an alternative.  While there’s no real precedent of ‘grand coalitions’ in recent Norwegian history, neither is there precedent for a Conservative-Progress government — both options would mark new ground for Norway.

Solberg is riding high in polls today after a long stint in the wilderness for the Conservatives and a rebranding exercise designed to pull the Conservatives more fully to the center and expand the party’s relevance beyond its traditional image as a party solely for Norway’s business elite.  That means that it has moved more closely to Labour’s position on many issues and it’s much closer to Labour than to the Progress Party on both economic and social issues alike.  Nonetheless, there’s curiously little discussion about a ‘grand coalition,’ even as Norwegians assume that the Conservative-Progress coalition is virtually a done deal.  That means that the Conservatives, a party that favors continuity over rupture, will govern with the Progress Party, which has historically favored rupture over continuity.  It will also likely mean that Jensen will become Norway’s next finance minister, an outcome that could scare moderate voters otherwise disposed to a Solberg-led government into supporting Labour instead.

If, for some reason, the Conservatives win the election and don’t form a coalition with Progress, because negotiations stall or because Progress’s vote collapses, the Conservatives would more likely form a coalition with two smaller center-right parties or even try a minority government before pairing up with Labour, not least of which because Labour prime minister Jens Stoltenberg has spent much of his campaign warning about all the damage that a right-wing government would cause to Norwegian society.

But on policy terms, there’s a lot to recommend a Norwegian ‘grand coalition.’  And if it can happen in Germany, Austria and Italy, why not in Norway too?  Continue reading Despite doubts about far-right Progress Party, no talk of Norwegian ‘grand coalition’