Gjedrem is putting on the brakes (Dagsavisen)

Svein Gjedrem, Governor of Norges Bank, has raised interest rates. This will eat into the wage increase we won in this year’s wage settlement. And he is not stopping there. The expensive wage settlement itself is the main reason for yesterday’s 0.5 percentage point hike in interest rates, bringing the rate up to seven per cent. Mr. Gjedrem and the other top bank executives are going to punish the greedy working man and woman. "What we are facing looks like an interest rate shock that has been determined by negotiations," said Jarle Bergo, Deputy Governor of Norges Bank, at a press conference yesterday, according to dn.no.

Putting the blame on Foss (Dagens Næringsliv)

The Socialist Left Party and Progress Party are placing the blame for yesterday’s interest rate hike squarely on the shoulders of Minister of Finance Per-Kristian Foss. They regard it as ridiculous that Mr. Foss points his finger at the expensive wage settlement. "Per-Kristian Foss is personally responsible for this rise in interest rates," thundered Øystein Djupedal, Socialist Left deputy chairman. In his view, the main explanation for the interest rate hike is that the Government has not tightened up the budget. Mr. Djupedal believes that raising interest rates was an unwise decision, and that there is something wrong with Norges Bank’s mandate. "Now we are seeing the result of Mr. Gjedrem’s independence. He wants to be a self-appointed supervisor who can ignore the Storting and everyone else with impunity. This is entirely undemocratic," said Mr. Djupedal. He does not agree that the interest hike is due to the wage settlement.

Six-week wait before banks can raise mortgages (Dagbladet)

Consumers have the law behind them if they insist that the banks must wait until the end of August before raising their mortgage rates. According to new legislation on financial agreements, consumers must be notified of an increase in interest rates at least six weeks before it takes effect. Recently BNbank had to shell out over NOK five million to its customers because it raised its interest rates too soon in the autumn of 2000. When it comes to new loans, however, the new rates can take effect immediately. The only major bank to announce an increase in interest rates yesterday was Nordea.

Government spent NOK 39 million on asylum lawyers (Aftenposten)

The principle that everyone who comes to Norway to seek asylum has a right to free legal aid cost taxpayers a total of NOK 38.9 million last year. This was an increase of 60 per cent over the previous year. "This is a job that anyone could do. You don’t need to be a trained lawyer to do this," said asylum lawyer Jacob Aars-Rynning. The job involves simple information activities that could be carried out by anybody. First the asylum-seeker is informed about the application process. Then he or she is told that it pays to tell the truth, he says. Mr. Aars-Rynning believes that this job could easily be taken over by an organization. In his view legal aid is not necessary unless a case is appealed to the Immigration Appeals Board.

470 boards without women (Dagens Næringsliv)

470 of Norway’s 611 public corporations have no women on their boards. The percentage of women has increased by 0.6 percentage points, to 6.3 per cent, since last year. "At this rate it will only take 200 years to reach the goal of 40 per cent women on the boards," said Minister of Trade and Industry Ansgar Gabrielsen. The day before International Women’s Day on 8 March, Mr. Gabrielsen and Minister of Children and Family Affairs Laila Dåvøy, who is responsible for gender equality issues, managed to pull off a "women’s coup": a draft bill on gender quotas in the private sector was railroaded through the Government. If the private sector takes no steps to halt this legislation, public corporations in Norway will be required by law to ensure that their boards consist of 40 per cent women by 2005. The 611 companies in Norway that are registered as public corporations in the Brønnøysund Register Centre are the largest companies in Norway.

LO wants to cut off support to Labour (Aftenposten)

The Norwegian Confederation of Trade Unions (LO) may stop making financial contributions to the Labour Party, said Gerd-Liv Valla, head of the LO, to NTB. Labour Party secretary Marin Kolberg admits that the party would really feel a cutback of this scope. Ms. Valla believes that there are several good reasons for cutting off financial support to political parties. She says that it is time to assess this kind of support, and that it is not at all certain that it will be continued after the next national convention. "Of all the elements in the political cooperation between the LO and the Labour Party, financial support has been the biggest source of conflict," she said. She points out that she herself has not yet reached a definite conclusion. The left-leaning wing in the LO is pleased with Ms. Valla’s suggestions. "This is a positive signal, which should result in the LO no longer granting funds to the election campaigns of political parties," said trade union leaders Oddrun Remvik and Per Østvold, both of whom are members of the Socialist Left Party. At last year’s national convention, the LO granted funds to the Socialist Left election campaign for the first time, contrary to the recommendation of the Confederation’s leaders.

NRK boss shrugs off criticism (Vårt Land)

Every day over 1.3 million listeners tune in to the regional radio programmes broadcast by the Norwegian Broadcasting Corporation (NRK). Regional television shows draw an audience of 900 000. NRK’s regional programmes are a success. All the same, top management at NRK wants to get rid of employees, reorganize and combine several district offices. There have been strong reactions to this proposal. "It is surprising that the leaders of NRK are suggesting reductions in their most popular shows," said Magnhild Meltveit Kleppa (Centre Party). Director General John G. Bernander at NRK rejects the criticism. "We’re talking about expanding our regional journalistic staff. These offices will be given 23 new journalists," said Mr. Bernander. But 36 full-time jobs will disappear at the administrative level, which means that the regional offices will actually lose 15 positions.

Eleven exporters cheated on salmon prices (Dagens Næringsliv)

The EU Commission has revealed that 11 Norwegian exporters have sold salmon for prices that are below the agreed minimum price last autumn and winter. These exporters will pay a penalty of 12 to 15 per cent, and in practice they will be expelled from the EU market. The exporters were exposed after a thorough investigation. The EU Commission has examined a number of Norwegian exporters closely. These exporters have violated their agreement with the EU Commission, and will soon be informed that they can no longer sell salmon in accordance with the salmon agreement. This means that they will be shut out of a market that imports around 75 per cent of all Norwegian salmon. According to Dagens Næringsliv’s sources, this applies to several companies that are owned by corporations from EU states that have subsidiaries in Norway. These groups have established these kinds of companies precisely in order to avoid having to conform to a minimum price.

Worth noting

Norges Bank’s raising of interest rates had an immediate impact on the foreign exchange market, where the strong krone grew even stronger. The Norwegian krone was listed at 7.32 against the Euro yesterday, which is a new record. (Dagsavisen)

Deputy General of Norges Bank Jarle Bergo has told Verdens Gang that the bank’s executive board considered increasing the interest rate earlier this year. One of the reasons that Governor of Norges Bank Svein Gjedrem decided not to do so was because he was afraid of being blamed of meddling in the wage settlement last spring. (Verdens Gang)

Jens Ulltveit-Moe, president of the Confederation of Norwegian Business and Industry (NHO), is worried that even more jobs will disappear after yesterday’s interest rate shock. "This means that the krone will remain strong, which will make it even more difficult for Norwegian industry to be competitive. The situation was really difficult enough already," said Mr. Ulltveit-Moe, who is also president of Umoe, in response to yesterday’s 0.5 per cent interest rate hike. (Dagens Næringsliv)

Expert analysts believe that Storebrand will have to enter a loss of over one billion kroner into its books for the second quarter of this year as a result of the failed merger with DnB. Yesterday Storebrand shares plunged to their lowest level since February 1997, ending at 39.80. (Dagens Næringsliv)

Half of all asylum-seekers changed lawyers during the application process, and interpreters often acted as intermediaries, according to Secretary General Morten Tjessem at NOAS (the Norwegian Organization for Asylum-Seekers). "The interpreters go to the asylum reception centres and establish personal contact with asylum-seekers," he said. It is a well-known fact that lawyers ally themselves with interpreters in competing for clients. (Klassekampen)

Today’s comment from Verdens Gang, Dagsavisen, Dagbladet and Aftenposten:

It is expensive to live. It is expensive to have a financially generous Storting, and it is expensive to have as costly a wage settlement as the one we had this year. Yesterday the Governor of Norges Bank, Svein Gjedrem, sent us the bill: an interest rate hike of half a percentage point and a warning that further increases could be right around the corner. (Verdens Gang) There is more where that came from. Norges Bank is not stopping here. This bodes no good. The main objective of financial policy should be to be to keep price increases at bay. For the moment price increases are well under the goal of 2.5 per cent. This means that Norges Bank has no good reason to raise interest rates. A subsidiary goal for keying financial policy to inflation is that it should contribute to maintaining a stable and moderate exchange rate. But the reverse is happening. The high-interest-rate policy pursued by Norges Bank is forcing the exchange rate for kroner even higher. The interest rate hike and the resulting high exchange rate are causing tremendous problems for the export industry. A large number of industrial sector jobs are now in the danger zone. (Dagsavisen) Yesterday Minister of Finance Per-Kristian Foss was quick to assign responsibility for Norges Bank’s interest rate hike to what he called "an expensive wage settlement". On the other hand, Jens Stoltenberg was just as quick to blame the Government’s substantial tax cuts, which he feels were irresponsible. Since one of the results of higher interest rates will be a drop in spending power, both are partially correct. But of course it is wrong to place the blame exclusively on the income increases that one disapproves of personally. In the days when the Minister of Finance played a part, no matter how secretive, in determining interest rates, politicians had to refrain from drawing such simplistic politically-defined conclusions. (Dagbladet) The picture that is now emerging makes it easy to raise the question of whether financial policy is too unilaterally occupied with keeping inflation at bay. Wage and price inflation are definitely among the biggest problems in the Norwegian economy. At the same time, however, the strong krone resulting from this policy is just as big a problem for the competitive capabilities of the industrial sector as are interest rates. In any case, we must acknowledge that the Government’s hope that low inflation will mean a stable exchange rate has been thwarted. We have not yet reached a final conclusion, but it is necessary to spark a debate on guidelines for Norwegian financial policy. (Aftenposten)