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Norway

Norway’s new center-right minority government is official

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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.

storting

Top photo credit to Vegard Grøtt / NTB scanpix.

Norway

Four reasons why cab-driving Stoltenberg has a chance at winning Norway’s election

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Though he’s making headlines this week for his stunt as a barely-disguised cab driver cruising the streets of Oslo to get a sense of the frustrations of Norwegian voters less than a month before Norway’s parliamentary elections, prime minister Jens Stoltenberg has long seemed destined to lose the September 9 vote. norway

Stoltenberg, who leads the Arbeiderpartiet (Labour Party) and has served as Norway’s prime minister since 2005, is running for a third consecutive term, and poll shave consistently shown his party running behind the Høyre (literally the ‘Right,’ or Conservative Party), and Norway has braced throughout the year for the likelihood that its voters will elect a center-right government.  It’s not unprecedented for Norway to have a right-leaning government — most recently, the Conservatives were part of a governing coalition led by Kjell Magne Bondevik and the Kristelig Folkeparti (Christian People’s Party) from 2001 to 2005.  But if polls today are correct, the Conservative Party will actually win more votes than the long-dominant Labour Party, and therefore hold more seats in the Storting, Norway’s parliament, and that hasn’t happened in a Norwegian election since 1924.

But the polls are narrowing — the Conservative Party still leads the Labor Party, and taken together, the broad center-right parties expected to form Norway’s next government hold a double-digit lead over the broad center-left parties that currently comprise Stoltenberg’s governing coalition.  One recent poll from TNS Gallup over the weekend showed the Conservatives with just 31.6% to 30.1% for Labour, much narrower than the five-point lead the Conservatives held only in July.  Here’s the latest August poll-of-polls data:

poll august norway

As I wrote earlier this summer, Erna Solberg, the leader of the Conservative Party since 2004, became the frontrunner in next month’s elections by rebranding the Conservatives as an acceptably moderate alternative to Labour.  In many ways, Solberg’s Conservatives today share more in common with Labour than with their largest presumptive coalition partner, the more populist, far-right Framskrittspartiet (Progress Party), a party.  But there’s still more or less a month to go before voting begins, and many Norwegians are still focused on their summer holidays than on the late-summer campaign.  That means there’s more than enough time for Labour to make up the difference before September 9.

While that doesn’t necessarily mean that Labour will return to government, it does mean that Labour has a shot at retaining its place as the largest parliamentary party in Norway and, in a best-case scenario, could potentially form a new, broader coalition, perhaps even with the Conservatives, to keep the Progress Party out of government.

Here are four reasons why that outcome isn’t as farfetched as it seems:

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