The Royal Ministry of Foreign Affairs,
Oslo Press Division

Norway Daily No. 108/00

Date: 9 June 2000

LABOUR IN FREE FALL (Aftenposten)

Labour plunged eight percentage points in Opinion’s June political barometer for Aftenposten for a reversal without parallel in the history of party ratings in Norway. This poll indicates that Labour lost 200,000 voters from May to June. Labour is now down to 28.2 per cent, the same as its performance in the county elections last year. Progress and the Conservatives are the only parties to gain from Labour’s reversal.

NOK 1.6 BILLION ON CHRISTMAS DEFENCE SHOPPING (Aftenposten)

In the face of severe underfunding, the defence forces spent 20 per cent of their budget on an intense round of Christmas shopping. A study of patterns in defence spending revealed that a surprisingly large percentage of last year’s defence spending took place in the closing weeks of the year.

NO SUPPORT FOR "SUPER-REGIONS" (Dagsavisen)

Kjell Magne Bondevik is open to the idea of eliminating the counties as a level of government administration, but he will do his best to prevent the creation of Prime Minister Jens Stoltenberg’s "super-regions". Mr. Stoltenberg and Minister of Local Government and Regional Development Sylvia Brustad’s proposal to replace today’s 19 counties with five to seven regions thus has little chance of success in the Storting. It seems there is sufficient parliamentary support for doing away with the counties altogether, however.

BONDEVIK WARNS STOLTENBERG TO CHANGE HIS WAYS (Nationen)

Kjell Magne Bondevik warns the PM that Labour can forget any sort of collaboration with the centrist alliance if Labour does not amend its rural policies. Mr. Bondevik launched a direct attack on the PM at a meeting of Christian Democrats in Nome, Telemark, last night. "We now have a new Government without a new policy but with many broken promises," said Mr. Bondevik.

GJEDREM WILL KEEP MONETARY POLICY OUT OF POLITICS (Aftenposten)

Central bank Governor Svein Gjedrem will not get involved in the competition between wage settlements and fiscal budgets. In an unusual article in this morning’s Aftenposten, Mr. Gjedrem stated that interest rates would be even higher if he were to pay any heed to the shifting interest rate standpoints of the Storting and the business community. He has no taste for putting on a show to influence wage settlements or budget deliberations. "When Norges Bank commits to a definite strategy, there is no room for adjusting interest rates in tactical manoeuvres to influence other important decision-making processes," writes Mr. Gjedrem.

INTEREST RATES PREDICTED TO RISE (Verdens Gang)

All analysts believe the central bank will raise key rates next Wednesday. The good news is that they believe rates will go up only 0.25 points. The bad news is that they expect a one-point rise by the end of the year. For whatever comfort it is worth, experts have been wrong before. The European Central Bank (ECB) surprised the market yesterday by raising its rates 0.5 per cent, which is more than the market anticipated. Norwegian analysts say this could affect Norwegian interest rates, but probably not as much as it would have done in the past.

STATISTICS DIRECTOR VOICES SUPPORT FOR GJEDREM’S POLICY REVISION (Aftenposten)

Economists in government agencies have heretofore been extremely reticent about what has been viewed as central bank Governor Svein Gjedrem’s interest rate coup d’etat, but they are now beginning to support Mr. Gjedrem’s new monetary policy in earnest. Svein Longva, director of Statistics Norway, feels last year’s monetary policy revision was justified. He sees it as a recognition of the futility of trying to use interest rates to achieve short-term exchange rate control.

WORTH NOTING

• First-time military training could be reduced to as little as four months for some groups, though it could be increased to as long as 16-18 months for personnel training for overseas service in NATO or UN operations, according to Chief of Defence Staff Sigurd Frisvold. (Verdens Gang)
• Former Statoil chief and Labour veteran Harald Norvik was highly critical of his former employer, the Norwegian state, at yesterday’s Johan Throne Holst conference. Mr. Norvik advocated letting government corporations go public. (Dagens Næringsliv)
• After a round in the Storting’s Finance Committee, it is likely that the National Insurance Fund will be allowed to trade on other Nordic stock exchanges, but it not to invest in unlisted stock. (Dagens Næringsliv)
• Stein Reegård, senior economist for the Norwegian Confederation of Trade Unions (LO), stands by the hard criticism he voiced in April. "I consider it likely that the effects of the interest rate hike in April on the wage settlement will result in higher inflation," he says.
• A recent study performed by Statistics Norway has found that non-Western immigrants are three times as likely as the rest of the population of Norway to fall victim to violence. The police’s rate of success in solving violent crimes is 32 per cent when victims are Norwegian but only 18 per cent when they are immigrants.
• The unique coral reef off Tautra in the Trondheim Fjord, discovered only a couple of years ago, has now been classified as a protected area under the Nature Conservation Act. (Aftenposten)

TODAY’S COMMENT from Aftenposten

Let it first be said that Norwegian voters have now become so mobile that one opinion poll provides no basis at all for predicting the outcome of the next. Having said this, the poll presented today, reporting an 8-point drop for Labour from last month, does indicate that Labour is ailing. At 28.2 per cent, the party has hit the low mark noted right before Mr. Stoltenberg took over as Labour’s prime minister candidate. Labour made noticeable gains after forming a new Government, only to plunge once more. It is interesting to note that the Progress and Conservative parties are the only ones that seem to be profiting from Labour’s dramatic drop in popularity. Equally interesting is the fact that the centrist alliance is at a standstill. Though alarming, the figures are no indication of what next month’s poll will show, let alone the outcome of the general election in 2001. A huge volume of water will flow under the bridge before then, and plenty can happen. One thing that should be crystal-clear, however, is that it is imperative for the Labour Government to demonstrate its ability to achieve its political goals. If it does not, it may be in big trouble.