Nobel Peace Prize 2001

The Nobel Peace Prize for 2001 has been awarded jointly to the UN and UN Secretary General Kofi Annan.

Labour leaves behind NOK 10 billion in unpaid bills (Aftenposten)

The forthcoming coalition government had set its sights on doing some significant things in the budget. That dream was more or less shattered yesterday by a sitting Finance Minister with a few crafty tricks up his sleeve. Before the coalition can afford to implement their key policies, billions and billions in extra cash needs to be found. "I have to admit it will not be easy to rework this budget," said in-coming Finance Minister Per-Kristian Foss. He could be tempted to spend more of Norway’s oil revenues, but that may prove difficult. This spring the Storting adopted a new policy to enable an increasingly large slice of our oil wealth to be used for welfare schemes to benefit the population. A key point in the new policy is that there should be a definite limit for how much money can be withdrawn from the Government Petroleum Fund each year.

Oiling the wheels (Dagsavisen)

There is a great deal of uncertainty in the international economy, says Finance Minister Karl Eirik Schjøtt-Pedersen, which is why the Norwegian economy is to be given a shot in the arm with a historically large dose of oil money. The Labour government is planning to spend NOK 26 billion of the country’s oil revenues, while the rest - NOK 169.4 billion – is deposited in the already bulging Government Petroleum Fund.

NOK 4 billion shortfall for Armed Forces (Aftenposten)

Chief of Defence Staff, General Sigurd Frisvold, is NOK 4 billion short of being able to implement the Storting’s resolution of 13 June this year. The Storting’s decision requires annual budget allocations of around NOK 31 billion. However, the Government is only willing to spend NOK 27.6 billion. In addition to this shortfall, comes the purchase of new transport aircraft. "The Storting’s defence policy decision of 13 June has been effectively killed off by the Government’s proposed national budget," said General Frisvold.

Hits the poorest (Vårt Land)

The Labour Party has admitted that it lost the general election because it did too little for the poorest sections of the population. The Finance Ministry acknowledges that all those earning less than NOK 126,000 will see a tax increase. This is because the proposed tax relief measures do not affect this group of people in any significant way, combined with the fact that both the basic child benefit and the additional cash benefit will be worth less because they are not being raised in line with inflation.

Bondevik capitulates to Progress Party (Dagsavisen)

The Progress Party will smooth the path for the new coalition government’s takeover of power, but at a price. Yesterday Carl I. Hagen forced Mr Bondevik to give the Progress Party prestigious positions in the Storting. Siv Jensen, one of the Progress Party’s deputy chairmen, will take the chair of the Finance Committee, while the party’s other deputy chairman, John Alvheim, will chair the Social Affairs Committee. On Monday the Progress Party will gain acceptance for its other demand – a written commitment of cooperation between the party and the new government. Mr Hagen has sent Mr Bondevik a list of 54 questions which he must answer by Monday afternoon. The coalition partners have refused to negotiate with the Progress Party over the in-coming government’s policy platform. But the Progress Party’s 54 questions are in reality political demands. The party has no illusions about winning acceptance for all of them, but Progress Party officials believe that the questions and their answers will together form a de facto agreement.

Russians and Røkke could carve up Kværner (Aftenposten)

This week Aker Maritime has held a secret meeting with Kværner’s major new Russian shareholder, Yukos Oil, the result of which could be that Kjell Inge Røkke and the Russian company split Kværner between them. Kværner is of great importance for the development of other companies owned by Mr Røkke and Yukos’s major shareholder, the super-rich financier, Mikhail Khordorkovski. If such a solution does come about, it is most likely that Yukos will take over Kværner’s Engineering & Construction division, which the company has previously expressed an interest in. On the other hand, Aker has had its eye on Kværner’s Oil & Gas division for some considerable time.

Worth Noting

• "I note that the budget is in many ways a bid to curry favour with the Christian Democrats, and does not represent an easy starting point for the new government. The Government has proposed many expenditure increases in our key areas – some of them considerable – but has postponed measures which will secure the revenue side," said Kjell Magne Bondevik. (Aftenposten)
• "We are glad that, for the first time, the Labour Party is concerned about cutting taxes," said Progress Party deputy chairman Siv Jensen. However, she was quick to underline that the proposed national budget has not filled her with any great enthusiasm. (Aftenposten)
• "A scorched earth policy. This is obviously a budget designed to make life difficult for the people who will take over. A great many items are locked in, and with regard to the investment tax the Government is just putting off the problem," said Liberal leader Lars Sponheim. (Aftenposten)
• "The budget is wholly inadequate when it comes to education. On the other hand, the Stoltenberg government’s focus on nursery care is good," said Kristin Halvorsen, leader of the Socialist Left Party. (Aftenposten)
• The first thing Per-Kristian Foss will do as Finance Minister is to consider spending more of the Government Petroleum Fund. "The uncertainty created by the terrorist attacks in the USA makes this necessary," said Mr Foss. (Dagbladet)
• Education Minister Trond Giske is giving a handsome present to the country’s 130,000 teachers before he leaves office. In the last few days he has been working flat out to give them a NOK 12,000-15,000 salary boost – over and above next spring’s annual pay rise. (Dagbladet)
• Finance Minister Karl Eirik Schjøtt-Pedersen’s last budget before leaving office has been greeted with disappointment in Norway’s regional areas. Both local authorities and local businesses will be worse off. (Nationen)
• A review of the budget shows that the environment is one of the biggest losers. The Government is proposing the allocation of NOK 25 billion to environmentally damaging measures, twice as much as to environment protection. Environmental groups have strongly criticized the budget. (Klassekampen)
• Kværner could be the door to international expansion for the Russian oil company, Yukos. Yesterday Yukos acquired a 10 per cent stake in Kværner. (Dagens Næringsliv)

Today’s comment from Dagbladet

The Stoltenberg government has fulfilled all Labour’s election promises in its proposed national budget, announced yesterday. But it is Kjell Magne Bondevik who must pay the bill, both economically and politically. The proposed budget is expansive and allows for greater public expenditure than we have seen in the economic boom years of the 1990s. Nevertheless, there is very little room for major transformations, be they tax cuts or wide-ranging reforms. Mr Stoltenberg has been forced to postpone a number of major cost items. The Government has, for example, proposed that the abolition of investment tax be postponed by six months. Nor does the Government want to remove the dividend tax. We already know that local authority finances will be severely hit by rising pension costs, so the proposed tax cuts will have to be paid for by cuts in welfare benefits or by spending more of the country’s oil wealth. If the Stoltenberg government were to have continued in office, the budget would have been considered a sensible compromise between many competing considerations. Not least Mr Bondevik would have found much to commend it. But as it is, Mr Bondevik will see the Labour government’s financial overtures to the Christian Democrats as a poisonous farewell gesture. If the in-coming government is to make any changes big enough to make a difference, it will have to make some hard choices about what measures to keep and what to drop. If the tripartite government spends more of Norway’s oil revenues, the danger of higher wages, inflation and interest rates will also increase. If it cuts public services to finance bigger tax cuts, Mr Bondevik will face a storm of reproach. The new government can take comfort in the fact that there is too little time to make any major changes to the budget in the course of a few short weeks. This was also the situation when Mr Bondevik took office in 1997. Only when Per-Kristian Foss has held the reins at the Finance Ministry for a full year will the new government be able to present a budget which fulfils its own promises.