Address at International Bertelsmann Forum

 

Hotel Schloss Bellevue, Berlin, 3 July 1998

Mr. Chairman;

I have been asked to present a perspective on the European economic and monetary union (EMU) as seen from the viewpoint of a non-member of the European Union. I shall be happy to do so and will come to that in a minute. I feel, though, that it may be useful first to set out some general considerations regarding the Norwegian Government´s policy towards Europe.

Twice in the course of the last three decades, Norway has had the possibility of joining the European Community. On both occasions – in 1972 and 1994 – the majority of the Norwegian people in national referenda decided against membership. For all those who are either members of the Union, or aspire to become so, it may seem like a paradox that a modern European nation freely elects to remain outside the Union.

At this important conference on the future of Europe and the European Union I would like to emphasise that just as co-operation and integration are the “Leitmotifs” of our debate here today, my Government sees Norway´s future in close co-operation and interaction between European nations. In our case that means making full use of the agreement on the European Economic Area (EEA) which remains the cornerstone for Norway´s co-operation with the European Union. The agreement continues to serve us well and for all practical purposes makes us an integral part of the Single market. It opens up for political contacts and regular dialogue on a wide range of issues. It offers, in short, access for our products and involvement in the larger European political processes. As a non-member of the EU, but as a full and equal member of the EEA, Norway has a solid basis for playing an active role in the shaping of Europe´s future. We will continue to make maximum use of it.

As the European Union proceeds with its eastward enlargement, the EEA agreement will equally continue to serve as our main gateway to co-operation with the Union. The inclusion of new members, as we see it, also means extending the scope of the EEA agreement. Thus, Norway also has a strong interest in the expansion process now underway. Just as we take it for granted that we are respected for our choices, we respect the will of any European nation to choose democratically its own course based on national interests and traditions. Bringing new nations into Western structures such as the European Union, NATO and the Council of Europe means strengthening peace, stability and prosperity in Europe.

When my Government and a clear majority of the Norwegian population believes that the EEA agreement retains its relevance and significance under the reforms and changes which the Union is undergoing, it follows i.a. from what we see as an important trend to day – that of a differentiated integration. Indeed, the concept of different speeds is a recurrent theme in the stimulating and important paper prepared for this conference – “Europe on the Eve of Completion”. In my view the notion of a Europe which develops according to a pattern which is suited both to the needs of individual nations and the collective needs of the community of European nations, is the one that best serves the dynamic diversity of Europe and - in the final instance - the stability of the continent. Thus the image of concentric circles which gravitate towards a cluster of basic principles and shared values, but yet independently of each other and at different speeds, is one that rightly has been used to describe a possible model for European integration. It is my feeling that the enlargement process will further underpin this process of what one might call diversification in unity of purpose. The latest developments in the debate within the Union, including the recent meeting of the European Council in Cardiff, where I seemed to detect greater emphasis on overall leadership, and less on detailed regulation, point to the same direction.

Could it be that these tendencies may take us towards a Europe where the definition of who is in and who is out of the Union, becomes not irrelevant, but less significant ?

I believe that a future vision for “a Europe whole and free” definitely should include a scenario such as this. European integration only becomes real when it means all European co-operation and integration. This is also why Norway places great emphasis on our participation in OSCE where we shall assume the chairmanship from 1 January next year. And that is why regional and subregional co-operation is so important. Let me in this connection express my Government´s support for the Northern Dimension policy of the European Union and our appreciation of the strong German backing for this important initiative.

The enlargement of the European Union, the strengthening of the role of the OSCE, the external and internal adaption of the NATO alliance, are all decisive elements in building a new European architecture where unity of purpose goes hand in hand with the principle of diversity. In my opinion an open and flexible approach holds the greatest promise for addressing what is arguably the most important challenge we face – that of bringing the Eastern and Western parts of the continent together. The unfolding situation on the Balkans and in Kosovo is a sobering reminder of the complexities before us. How we succeed will also largely depend on genuinely integrating Russia and avoiding a new divide along the borders of the former Soviet Union.

Our focus is Europe. It goes without saying, however, that as globalisation intensifies, Europe’s role must always be seen against the backdrop of the larger international perspective, and what Europe can do to meet the common challenges which the world community faces.

The impact of the European Economic and Monetary Union will - notwithstanding its name – probably be just as important in political terms as in economic ones. I shall, therefore, try to look at it from both angles.

First and foremost – in every respect the introduction of EMU is an event of far-reaching importance for insiders as much as for outsiders, like my country. There is no doubt that we are talking about a historical decision. EMU – if it succeeds or falters – will exert decisive influence on Europe´s development. There are obvious arguments in favour of EMU. At the same time it gives rise to questions and uncertainty.

The point of departure for Norway is our economy. It is strong. It does not mean that we do not have our problems. But the main indicators send a positive message. Unemployment is less than 3 % and among the lowest in Europe, inflation insignificant, production and exports are up and the state´s finances solid with a considerable budget surplus. Our human and natural resources, including those of energy, will continue to generate a growth orientated economy.

Norway´s economy is intrinsically linked to the single market and our relationship with the European Union. Roughly two thirds (2/3) of our external trade is conducted within the European Economic Area. Half of our trade with the European Union, though, falls on Sweden, Denmark and UK which will not take part in the Economic and Monetary Union, at least not from the beginning.

This is why the immediate effect on Norway of EMU will, after all, be limited. Neither will the overall thrust and balance of Norwegian economic policy be significantly affected by the introduction of the Euro. It is the Government’s view that the introduction of the Euro has no direct implications in itself for the choice of our monetary policy regime. Norwegian monetary policy will continue to be aimed at maintaining a stable exchange rate vis à vis European currencies after the Euro is introduced on 1 January 1999. The Euro will be included as an important European currency in the implementation of Norway´s monetary policy, in the same way as ECU is a key policy parameter for the Norwegian exchange rate policy today.

The effect of EMU on international financial markets is of particular importance, not only in small European outside countries as Norway, but also globally. We seem to have entered a period with more volatile financial markets, where domestic imbalances become more expressed through the international financial system. There is a risk that financial market volatility may increase during the introductory phase of EMU, as markets adjust to the new currency and closely follow the market operations of the European Central Bank. Over time, however, a stable euro and closer co-operation between the three large currency areas in the world should lead to enhanced financial stability, not only in Europe, but also globally.

On the other hand, if EMU were not to succeed in fostering growth, employment and financial stability, the costs would be felt, not only by the member countries themselves, but also by outside countries, specifically through increased financial instability.

Consequently, both the insiders and the outside countries have one interest in common - that EMU should prove successful internally and create a framework for policies supportive of growth and employment in the EMU-area and externally by inserting more stability into the international financial system.

As for the political impact of EMU, it will undoubtedly be a prime integrating force. It will affect the daily lives of people in the member states more directly than any other EU decision. Yet - with a number of countries opting to remain outside EMU - the pattern which we see today is less than one-dimensional. Again – without wishing to overstate the case for diversity and differentiated integration which I have made “the Leitmotif” of my intervention – diversity may well be what the future of Europe holds for us in the field of economic and monetary policies too. A flexible and open model of integration could, therefore, be the one that corresponds best to the realities of Europe and is best suited to ensure the sustained and dynamic development of European co-operation.

Thank you.