Norway Daily No. 207/99

The Royal Ministry of Foreign Affairs,
Oslo Press Division

Norway Daily No. 207/99

DATE: 27 October 1999

TAXES STILL A BUDGET HEADACHE

(Aftenposten)

Senior Government ministers spent hours yesterday afternoon working out new tax measures to form a basis for a budget compromise with the Labour Party. A proposal to raise the capital tax from 28 to 29 per cent was promptly dismissed by Labour, making it necessary for the Government to come up with new proposals. The details are not known, only that they involve tax measures. They returned to the negotiating table later. "We are moving slowly," said Hill-Marta Solberg last night. The budget negotiations enter the concluding phase today.

PROGRESS IS SLOW

(Dagsavisen)

Labour flatly refused to go along an increase in the flat tax rate applying to ordinary income from 28 to 29 per cent. The coalition parties responded with a proposal to raise electricity taxes in order to offset tax relief measures for the lowest income groups. "The negotiations are going around in circles now," says Hill-Marta Solberg, head negotiator for Labour.

USA INTERCEPTED NORWEGIAN AID

(Aftenposten)

Norwegian Church Aid made an attempt to transfer NOK 1.5 million to Iraq, which is till under UN sanction, without obtaining clearance from the UN Security Council or from Norges Bank's sanction inspectors. The funds were promptly confiscated by the USA and placed in a frozen account. The funds were to finance a project to improve water and sewage facilities in a village in southern Iraq. "It was our understanding that this project was not subject to the restrictions of the UN sanctions," says Geir Valle of the Norwegian Church Aid, who finds the sanction procedures cumbersome and bureaucratic.

NGO CHARGES HUGE INTEREST RATES

(Dagens Næringsliv)

The Strømme Foundation, a humanitarian organization, loans millions of kroner to the poorest people in the world every year, charging interest rates of up to 72 per cent. Johannes Sannesmoen, who is in charge of the loan programme, says he would never borrow money at such a high rate of interest. "But I am not among the poorest who live on less than a dollar a day," he says.

NORSK HYDRO STRUGGLING

(Aftenposten)

Norsk Hydro's fertilizer, aluminium and oil divisions are facing major problems. I other words, Hydro is in trouble. President and CEO Egil Myklebust will tell the world tomorrow what the flagship of Norwegian industry intends to do to tackle its problems.

VOLLEBÆK: NO CHANGE IN POSITION

(Nationen)

In the commentary following an interview with Finnish Minister of Foreign Trade Kimmo Sasi on the TV2 news yesterday, it was claimed that the EU has set its sights on dismantling NOK 10 billion worth of Norwegian farm subsidies. Spokesmen for both the Norwegian Farmers' Union and the Ministry of Agriculture believe TV2 misinterpreted Mr. Sasi's statement. Norwegian Foreign Minister Knut Vollebæk is still convinced that Norway and the EU will be allies in the upcoming Third WTO Ministerial Conference. "I find that we still stand side by side with the EU in our views on agriculture," said Mr. Vollebæk in Lausanne yesterday.

WORTH NOTING

• Norwegian Minister of Transport and Communications Dag Jostein Fjærvoll and Swedish Minister of Industry Björn Rosengren have beat the broker's fees 1 billion kroner down in connection with the stock exchange listing of the merged "Telianor" corporation. (Dagens Næringsliv)
• The Government has asked Labour for its support in raising the overtime tax rate over the magical 50 per cent threshold, but Labour has refused. Labour still demands NOK 2 billion in tax hikes in exchange for a compromise. (Verdens Gang)
• Lord Chamberlain Lars Petter Forberg has confirmed that the Palace will be opened to the public for guided tours starting next June. Tours will be conducted on a trial basis to begin with, but the intention is to make them a permanent feature. (Dagbladet)
• The Norwegian government normally covers expenses for 15 persons in connection with state visits, but this does not go far when the US President comes calling. President Clinton will have a staff of 700 with him next week, but the USA will foot the bill. (Aftenposten)
• Despite a steady rise in minke whale quotas, the market has no problem absorbing the meat. (Nationen)
• The Handelsbanken does not have sufficient capital to buy the Kreditkassen or Den norske Bank. Pesident Arne Mårtinsson must obtain around 13 billion kroner in fresh capital in order to buy Kreditkassen. (Dagens Næringsliv)
• Norway will depict itself as an overall experience in the Expo 2000 world fair in Hannover next year. An artificial waterfall conceived by Bentein Baardsen will be a real eyecatcher. (Aftenposten)

TODAY'S COMMENT

Finnish Minister of Foreign Trade Kimmo Sasi has frightened Norwegian farmers out of their wits. His statement regarding the upcoming Third WTO Ministerial Conference must have made an impression in widespread political circles as well. If his predictions are borne out, we will be forced to revise our agricultural policy in a few years. The large subsidies enjoyed by the farmers and the high import barriers protecting farm products from competition from imports will have to come down. The result will be fewer farms and cheaper food. Mr. Sasi, speaking on behalf of the EU, made it clear that Norway cannot count on support from the EU in the Seattle round where trade in farm products will be discussed. The EU will no longer even protect its own agriculture. This may be due to the fact that it will have to revamp its own agricultural policy in order to accommodate new members in Eastern Europe. With a membership of 25-30 countries a distinct possibility within a few years, the EU hasn't much choice. The EU cannot demand free trade in industrial goods while protecting other sectors. Norway continues to practice this dual standard despite the fact that we are far more dependent on free trade than either the EU or the USA. Half of our gross national product is based on exports, compared with only ten per cent in the EU and the US. So the World Trade Organization is much more important for us than for many others. We cannot demand free trade in fish while closing our borders to meat imports. That's a lot to ask, even for Norwegians. Our chances of success in the WTO with a strategy like that are greatly reduced without an alliance with the EU. (Dagbladet)