Norway Daily No. 196/99

The Royal Ministry of Foreign Affairs,
Oslo Press Division

Norway Daily No. 196/99

DATE: 12 October 1999

BUDGET COMPROMISE ON THE HORIZON

(Aftenposten)

The other coalition parties gave Prime Minister Kjell Magne Bondevik the green light yesterday to start negotiating with Labour. Labour Party chairman Thorbjørn Jagland, too, has received full support from his own ranks. Mr. Jagland wants to take an additional NOK 2 billion in taxes from the rich and redistribute one billion to the lowest income groups. Mr. Bondevik had no major objections to this yesterday. "In reality, both sides know that the negotiations they have now initiated are fated to succeed," writes Aftenposten's commentator.

A HISTORIC COMPROMISE FOR PENNIES TO THE POUND

(Dagsavisen)

All the signs point to a budget compromise between Labour and the coalition Government. In a fiscal budget of nearly NOK 500 billion, the NOK 3 - 4 billion Labour wants to rearrange is just a drop in the bucket. "This may herald a new political situation pointing towards the next general election. The fact that Labour has now accepted the cash benefits scheme is also a feather in Mr. Bondevik's hat," writes Dagsavisen in its leader.

GOVERNMENT EXPECTED TOUGHER DEMANDS

(Verdens Gang)

Among themselves, many of Mr. Bondevik's ministers are surprised that Thorbjørn Jagland did not make tougher demands in his bid for a budget deal. A number of Labour MPs are equally surprised. "Things are tough enough as they are, but I was expecting harder demands from Labour. There is no dramatic reshuffling of budget items," says a centrally-placed Christian Democrat to Verdens Gang. Even if Mr. Jagland's list of demands does not seem insurmountable on paper, Government spokesmen do not rule out the possibility that the negotiations will not succeed.

CONSERVATIVES DISCUSSING IMPEACHMENT PROCEEDINGS

(Aftenposten)

The Conservatives may demand impeachment proceedings against former Minister of Transport and Communications Kjell Opseth if it is shown that he did not fulfill his information obligations to the Storting. The report detailing difficult climatic conditions at Gardermoen was never sent to the Storting when the decision on Norway's new international airport was made in 1992. Conservative Party chairman Jan Petersen and Progress Party chairman Carl I. Hagen both take an extremely grave view on the matter. The Progress Party will most likely ask the Odelsting to take the initial steps to determine whether impeachment proceedings should commence. The Ministry of Transport and Communications is now searching its archives to find out exactly what climatic information was given to the Storting.

NHO: GOVERNMENT AMBIGUOUS ON TURKEY

(Dagens Næringsliv)

Jon Vea, director of international affairs at the Confederation of Norwegian Business and Industry (NHO), feels the Bondevik Government is sending ambiguous signals when it refuses to let the Petroleum Fund invest in Turkey on the one hand, while encouraging the business sector to invest there on the other. "The Government is not being clear at all. When it lets the business community know that it takes a positive view of commercial investments in Turkey, I find it difficult to understand why it cites civil rights violations in barring Petroleum Fund investments there," says Mr. Vea.

IMPORT PROTECTION LESSENED FOR NORWEGIAN FOOD

(Nationen)

Norway and the EU Commission reached agreement on Friday on the substance of a new agreement which will reduce duties on a number of food products by three per cent. The so-called "Protocol 3" under the EEA Agreement imposes a handicap on the Norwegian food products industry. Multinational food products corporation Kraft Freia Marabou and two sector organizations within the Confederation of Norwegian Business and Industry (NHO) have cautioned against any relaxation of import barriers. The Bondevik Government, however, has gone along with a reduction in duties on bread, pizza, conserves and other processed farm products.

PETROLEUM DIRECTORATE DOUBTS RØKKE'S ABILITIES

(Dagens Næringsliv)

The Petroleum Directorate is in some doubt as to whether Aker Maritime has the necessary competence to extract oil from Norway's offshore oil fields. This is the essence of a memo sent by the Petroleum Directorate to the Ministry of Petroleum and Energy on 30 September. Aker RGI and Aker Maritime indicated their interest several times this summer in getting into the oil industry, exploiting smaller fields which are not profitable for the major oil companies.

SPAIN EMERGING AS WINNER OF FRIGATE CONTEST

(Aftenposten)

It now seems likely that the Norwegian frigate contract will go to the Spanish Bazan shipyard. Large direct offset contracts granted to Umoe and Kongsberg are what decided the issue. Blohm + Voss, Bazan's main competitors, are considering a move to mount political pressure through German Minister of Defence Rudolf Scharping, among others. Not surprisingly, the Royal Navy Logistics Command released a report yesterday that negotiations with Bazan and US armaments manufacturer Lockheed Martin will continue. The goal now is to complete contract negotiations with Bazan within the NOK 12 billion framework by the end of the year.

WORTH NOTING

• The Conservatives and the Progress Party still hope to meet the Government coalition at the negotiating table. "I do not believe Labour and the centrist Government will be able to come to terms," says Progress Party chairman Carl I. Hagen. Neither does Conservative Party chairman Jan Petersen believe the Bondevik Government will find it easy to make a budget deal with Labour. (Dagsavisen)
• The stock exchange board surprised everyone by choosing low-profile Pronova president Sven Arild Andersen as the new president of the Oslo Stock Exchange. With 25 years of service in Norsk Hydro behind him, Mr. Andersen knows little of stock markets but much about negotiations and restructuring processes. Mr. Andersen will assume his new duties on 1 January 2000. (Dagens Næringsliv)
• Uncertainties as to whether chaos will usher in the new millennium are driving market rates up sharply. Money market rates in Norway have recently risen nearly one half percentage point, and one prominent reason is the Y2K spectre. "Mortgage rates may take a bit longer to subside," says senior analyst Eirik Larsen of DnB Markets. (Verdens Gang)
• The Norwegian Pollution Control Authority (SFT) has indicated such strict environmental requirements to apply to the Skogn gas power plant that the entire project may be shelved. (Addresseavisen/NTB)
• One out of every six Bosnian refugees have given up trying to make a new start in their homeland and have returned to Norway. 325 refugees have given up so far. An offer was extended in 1997 to let them return to Norway within two years if they found it impossible to build a new life in their old homes. (Aftenposten)
• Board chairman Jan Åke Kark of the merged Telenor/Telia corporation has asked for a salary starting at SEK 5.4 million. Mr. Kark is presently director of the board and a working director. He says he will be putting in 12-hour working days in his new position and expects to be paid accordingly. (Dagens Næringsliv)
• Over 700 robberies have been committed in Oslo so far this year. This is a new record, but police are achieving higher rates of success in solving these crimes. Two persons were apprehended yesterday in the wake of two robberies committed yesterday morning. (Dagsavisen)

TODAY'S COMMENT

Now that Labour and the coalition parties have agreed to commence negotiations on next year's fiscal budget, it is all but politically impossible for them not to reach agreement. Labour has accepted the cash benefits scheme, and the changes it has already demanded in the draft budget should be palatable for the Government. Yet one should not disregard the fact that a budget deal with Labour will launch the Bondevik Government on a path fraught with political pitfalls. It will no longer be able to count on support from Progress and the Conservatives, and the chances of being opposed by a Storting majority will increase substantially. The Government's view in the matter is that a compromise with Labour will require fewer alterations in the budget than a compromise with Progress and the Conservatives. Still, there are many who will justifiably wonder where the Government is really headed when it trades its alliance with the political right with one for the left in the middle of its term. And what of Thorbjørn Jagland and the Labour Party? Mr. Jagland denied yesterday that a budget compromise with the Bondevik Government would signify that Labour views itself as a Bondevik supporter. Mr. Jagland has put himself and his party into a situation in which whatever step they take will be wrong. They may win influence this autumn, but their goal of returning to government will be no easier. (Verdens Gang)