Biannual address to the Storting on important EU and EEA matters

Translation from the Norwegian

Check against delivery

 

Mr President,

The major challenges facing Europe today are a reminder that the economy, politics and society are inextricably linked, at both international and national level.

In my addresses on foreign policy and on EU-EEA matters to the Storting since the financial crisis in 2008, I have discussed how the global crisis and the ensuing economic downturn has turned into a sovereign debt crisis in a number of countries and, in some cases, a social and political crisis. Action is being taken to resolve the crisis, but the political situation in Europe will be defined for a long time to come by the way the major imbalances in many countries and the challenges facing the euro cooperation are dealt with.

When the financial crisis erupted in 2008, the European governments were prepared to rescue the banks. That time around, the banks were salvaged, but in many countries they remain in a vulnerable position.

Now it is the countries themselves that are in focus. Weakened government finances have become a source of instability in the financial markets and are the crux of the problem. The affected countries have their hands full rescuing their own economies. The most severely affected need external help, and this is putting the sense of political fellowship in the EU to a severe test. This applies to the climate of cooperation between the countries themselves and between the countries and the EU institutions, to relations between countries inside the euro area and those outside, and to relations between the EU and other countries and financial actors outside the EU.

There is no easy way out of the dilemma experienced by many European countries that are trapped by heavy debts and large budget deficits. When I spoke to European Council President van Rompuy last Tuesday, he said that what Europe really needs now is economic stimulus, while what Europe is getting is austerity measures. But there is no alternative given the situation in the countries that are at risk. The imbalances must be put right, and it is a matter of restoring basic confidence in the workings of the economy.

It is quite telling that, even after the rescue packages and debt reductions agreed on in October, Greece’s ambition is to reduce its sovereign debt to 120% of GDP by 2020. This in itself is twice as high as the maximum limit set out in the Maastricht Treaty. This says something not only about a national economic policy that is out of control but also about an absence of mechanisms to ensure compliance with agreed economic policy rules.

Mr President,   

The situation in Europe is complex. Not all countries are experiencing an equally difficult situation. The fact is, however, that Norway is the odd man out in Europe, with our low unemployment rate, our high levels of employment, our budget surplus and our freedom from debt. Norway is a prosperous nation in both political and economic terms. But as we all know, you have to be strong to weather good times as well. Our situation makes it imperative for us to keep our economy in order and enable the private sector to play its role as an engine of value creation and employment – and to take our share of the responsibility for safeguarding the European economy.

At the same time we know from experience that economic turmoil in the rest of Europe affects Norway in many different ways. Europe is our most important market. We are already seeing some effects of the crisis, such as a somewhat higher exchange rate for the Norwegian krone and higher financing costs for the banks.

If the crisis continues to worsen, this will have an effect on the world economy and the price of oil and other raw materials we export, which will in turn have an impact on the Norwegian economy. An economic downturn in Europe could, of course, also lead to a decline in demand for Norwegian commodities. And of course in addition to this there are the political consequences, which would also affect Norway.

Mr President,

As the German Chancellor put it last Monday, the current economic crisis is the continent’s “toughest hour since World War II”. Completely new initiatives are needed to address it.

Big decisions are being made. The cooperation between the EU, the IMF and the European Central Bank has been further intensified to follow up countries that are receiving emergency loans. The parliaments of the euro area member states have backed new rescue packages and a broader macroeconomic toolkit for the European Financial Stability Fund (EFSF).

At the same time, the crisis has shown that even though the causes of the problems can be traced back to the respective countries’ policies, there are also structural flaws in the single currency system.

The coordination mechanisms have proven to be weak, not least because the member states of the euro area have failed to comply with their own rules. These challenges will be the focus of European policy in the time ahead. While there is a recognition of the need for closer central coordination, in a number of member states there is growing opposition to relinquishing more sovereignty. European politics will be clearly marked by the tension between these two standpoints in the time ahead.

Having said this, there are clear signs that decisions are being taken, both as regards policies and governance structures. The European Council meetings in October introduced a comprehensive set of additional measures that are important for stability. These include a new emergency package for Greece that is conditional on a 50% reduction in Greek government debt to private creditors, a plan for recapitalising European banks so that they are better equipped to sustain losses, and measures to make the EFSF more effective. A good deal of work remains to be done, however, before everything is in place.

Separate bodies may be established for the euro area, together with strengthened surveillance of the economic situation and policies in the member states. This in itself is politically controversial and could widen the gap between the 17 member states that have adopted the euro and the ten that have not. With a view to long-term stability, programmes are also being established to ensure compliance with the conditions of monetary union. These have been put together as a package of six legislative acts – known as the six-pack – that were adopted by the European Parliament in September.

What is known as the European semester has been introduced with a view to ensuring that the member states’ budget processes are carried out in close cooperation with the European Commission and the Council before their budgets are approved by their national parliaments. This will better enable the Commission and the Council to monitor the situation and follow reform efforts in the member states more closely.  

The European Council meeting in October also announced that additional measures would be introduced to improve policy coordination in the euro area. European Council President Herman van Rompuy has been given a mandate to identify possible steps to deepen economic union, including the possibility of limited Treaty changes. An interim report will be presented in December, and a final report in March next year.

Mr President,

I believe I am right in saying that the measures taken by the EU in response to the financial crisis are aimed at achieving stability and burden-sharing. Stability in that they seek to ensure that the rescue mechanisms are sufficiently broad to restore and sustain market confidence. Solidarity in that they call on the member states to support the most severely affected member states in the euro area and require the private sector and the banks to contribute to stabilisation.

Perhaps the most important issue is confidence. President van Rompuy has underscored how important it is to restore confidence, and that this requires a willingness and ability to take a long-term approach. Confidence can be quickly lost, but it takes a long time to restore it – often a painfully long time.

It is too early to say with any certainty whether the measures now being planned will be sufficient to stabilise the situation and cooperation in the euro area and quell the turmoil in the financial and stock markets. There is growing concern about the situation in Italy, as well as the problems in Greece.

In both countries, governments that originally had a majority of the seats in their parliaments have been replaced by technocratic caretaker governments, i.e. governments made up mainly of experts. This gives pause for thought. Nevertheless, it is worth noting that these solutions were advocated by democratically elected parties precisely as a means of restoring confidence. And most important of all, the policies to be implemented by these new governments must be approved by national parliaments, which are democratically elected. After all, this is the essence of European democracy.

Mr President,

What is certain is that the EU’s future direction will also be decisive for the Norwegian economy – for the Norwegian banking sector, Norwegian exports and Norwegian politics and society.

Norway has invested in European government securities through the Government Pension Fund Global. Norges Bank has considerable freedom to put together its investment portfolio on the basis of commercial considerations provided that certain criteria are met. In the Government’s view, this is as it should be for a fund that manages our savings. 

Norway is helping to assist the euro countries experiencing the greatest difficulties through the IMF. Norway has made available some NOK 55 billion to the IMF for lending in the form of a credit facility the IMF can draw on. This is about 0.9% of the IMF’s total lending funds. This credit facility has not been used up. In the Government’s view, we must be willing to consider increasing the amount we make available to the IMF if necessary. However, this must be part of a concerted effort between several countries.

Norway is also prepared to provide technical expertise, and it is clear that our knowledge is sought after. In October the European Commission asked Norway to take part in a group of experts established to assist the Greek government administration in implementing reforms in accordance with the EU and IMF reform programme. Norway is the only country outside the EU that is taking part in this group. The assistance we have given Greece under the EEA and Norway Grants is undoubtedly part of the reason why the Commission has turned to Norway. This has given Norway unique experience of the Greek government administration.

Mr President,

Europe is still a rich continent. We are still seeing strong growth and significant value creation. It is still true that that democracy can bring about change, given the links between the economy, politics and society.

There is also a growing interest in how the strategy for jobs and growth, Europe 2020, can be used to trigger growth as quickly as possible. Although the most important elements here are the use of common resources to invest in transport, telecommunications, energy networks and efforts to promote research, innovation and business activity, it may now be much more difficult to mobilise the necessary additional resources.  

In the Government’s view, it is important that Norway is involved in these processes, not least in areas where we are directly affected through the EEA Agreement.

The EU has unquestionably contributed to stability and democratic development in new member states that previously had authoritarian forms of government. The progress made is now in danger of being reversed because of the current crisis. The sense of ownership of the European cooperation project is being put to the test.

However, it is still the case that financial institutions, budget discipline and labour market policy are for all intents and purposes a national responsibility.  The countries themselves must take most of the political responsibility for the imbalances that have arisen. It is a paradox that country after country – including the largest among them – has failed to comply with stability criteria adopted by the countries themselves.

Economists have pointed out that once a monetary and economic union has been established, closer cooperation should be developed to ensure the necessary stability and confidence. There is considerable debate on this in the EU today. At the same time, we know that it is difficult for the EU to acquire broader powers. Putting in place new structures is not just a matter of new common institutions, but possibly even constitutional amendments in some countries. This is a controversial issue at a time when the people of the EU member states are not exactly clamouring for “more integration”.

There are few people in Europe today who are taking to the streets to demand “more EU”. Those who are demonstrating fear for their jobs, for their future. They have no confidence in the political system, either at national or European level. This is worrying. It will be difficult to garner support for a closer economic and political union.

Mr President,

In Europe we are seeing that economic cutbacks, cuts in welfare schemes and rising unemployment are primarily affecting vulnerable groups such as young people, members of minorities and those who have the least to start with. We are seeing that cuts in public welfare services are creating greater disparities and increased social marginalisation.

This in itself is unfortunate – and it is bad economic policy. Greater disparities make the economy less robust, less able to adapt to change. They undermine confidence, which is a society’s social capital. Not least, they rob young people of any hope of a future. And that is extremely serious.

High debt levels and consistently large deficits are not sustainable over time. The political direction will determine how cuts are made and how budgets are consolidated, what should be a public responsibility and what should be left to the individual.

The crisis may thus, Mr President, lead to renewed debate on the role of the state in individual countries. A state must have the strength and the ability to ensure stability and, if necessary, launch rescue operations. Paring down the state can make a society more vulnerable in the face of the kinds of crises we are seeing today.

Several social scientists have identified the level of public confidence as a key factor for a society’s ability to function – economically, socially and politically. Confidence is also decisive for a society’s ability to adapt, which is crucial in a modern economy.

But what happens to confidence, the ability to adapt and the outlook of the younger generation when unemployment among young people rises above 40% as it has in Spain, or 20% as it has in countries even closer to us? We could end up with a generation of young people in Europe who are unable to get jobs, regardless of how good their exam results are or how hard they are willing to work. How would that affect public confidence in political institutions?

An even more worrying effect of the crisis is that populist, right-wing extremism is on the rise in Europe. However, it is reassuring to see that such currents have not gained prominence in crisis-affected Spain, Portugal, Ireland, Greece or Italy.

At times like these, there is a tendency to look for scapegoats – a role that is too often assigned to minorities. We must meet this challenge with political debate, openness and respect for other people’s points of view. But we must also have the courage to refute generalisations, stigmatisation and scaremongering based on disinformation and anything that may resemble xenophobia.

 By and large, Mr President, Norway’s views on the majority of foreign policy matters coincide with those of the EU member states. We need Europe’s clear voice and engagement in order to make progress on major issues. This is absolutely crucial for finding good solutions to global challenges in areas such as climate change, the environment, energy security, trade, development and the fight against poverty.

We have a close, constructive dialogue with the EU in these areas. In fact it has become even closer and more comprehensive since Catherine Ashton was appointed High Representative of the Union for Foreign Affairs and Security Policy following the entry into force of the Treaty of Lisbon. Norway has benefited from this, for example in connection with our Middle East policy and our chairmanship of the Ad Hoc Liaison Committee (AHLC) for assistance to the Palestinians. 

Nonetheless, there is reason to be concerned that the crisis in Europe is causing so much energy and decision-making to be focused on internal affairs that Europe will have less of a voice and less impact in the global arena. This is not in our interests.

Mr President,

As I noted in my previous address to the Storting in May, the political situation in Europe’s neighbouring countries to the south has led to an increased focus on control of the common external border. This is reflected in discussions between the Schengen countries on new legislative acts and measures.

Some of the themes from the debate on the euro crisis and the financial crisis recur in these discussions as well. Countries in the South point out the need for solidarity and burden-sharing, while actors in the northwest underscore that the individual country is responsible for putting its own house in order. It is against this backdrop that a decision will now be taken on Bulgaria’s and Romania’s accession to the full Schengen acquis. This would mean that the internal controls at the borders with the other Schengen countries would be lifted.

Norway has actively supported EU membership for the Central and Eastern European countries. This is one of the themes of the white paper on Norway’s engagement for stability and development in South East Europe (Meld. St. 17 (2010–2011)), which will be debated in the Storting in a few days’ time. Through the EEA and Norway Grants, Norway has also provided considerable support to these countries to enable them to fulfil the EU’s legal and technical requirements for full accession.  

At the same time, Norway is concerned that new countries that accede to the full Schengen acquis should be able to fulfil the obligations they undertake.

The Polish EU presidency has put forward a compromise proposing a step-by-step dismantling of internal border controls for Bulgaria and Romania. From our vantage point, this seems to be a solution that takes account of various different considerations, and it is a proposal we can live with. However, there are still divergent views on this issue in the EU, and some countries have questioned whether Bulgaria and Romania actually have the ability to fulfil their obligations.  

Other relevant problems are also being discussed in the bodies that deal with Schengen-related issues. In June, the ministers of justice and the interior of the member states asked the European Commission to come up with a proposal for amending the right to temporarily reintroduce border controls between the Schengen countries. However, the Commission’s proposal, which was put forward in September, goes quite far in shifting decision-making powers from the member states to the Commission.

Norway’s view, as then Minister of Justice Storberget said at the meeting of the Justice and Home Affairs Council in Brussels on 22 September this year, is that decisions concerning internal security must continue to be taken by the respective countries’ national authorities. The Government will continue promote this view, which is also shared by a large number of EU member states.

The Schengen Visa Information System (VIS) became operational on 11 October this year. It has taken time to complete the preparations, and the Government is pleased that this is now in place.

The first of Norway’s consular posts to be connected to the VIS are those in Rabat, Cairo and Algiers. The purpose of the system is to speed up the processing of visa applications, simplify efforts to combat falsification and forgery of travel documents and facilitate external border controls in the Schengen area. Police authorities of Schengen countries that are responsible for the prevention, investigation and prosecution of terrorist offences or other serious criminal offences may also be given access to the system under certain specified conditions.

The Government is pleased that we are now connected to the system and that the start-up has been successful. Norway has participated in all the relevant forums involved in the development of the VIS on an equal footing with the other Schengen countries.

Mr President,

In our European policy we are seeking to influence the EU bodies by participating in their activities. This involves meticulous work at an early stage – the stage at which EU legislation is developed.

For example, Norway participates when the Commission adopts supplementary legislation following discussions in committees made up of representatives of the member states, i.e. the procedure known as the comitology system. Under the EEA Agreement, Norway is entitled to participate as an observer in these committees, which provides an opportunity to discuss matters of substance and put forward our views at an early stage.

As you know, the EU has recently made amendments to this system. The European Parliament is now on an equal footing with the European Council in terms of delegating decision-making powers to the Commission. A distinction has been made between what are termed delegated acts and implementing acts, and the number of committee procedures has been reduced. These amendments do not affect our rights of participation within the framework of the EEA.

The new comitology system is in the introductory stage. We are now working to ensure that our rights are adequately safeguarded in practice as well. The EU has said that it is also in its interest that the EEA EFTA countries participate actively in order to ensure the best possible legislation throughout the EEA area for all parties.

Sound knowledge of the EU comitology system is required if Norwegian participation is to have a good effect. An effort is therefore being made to build competence in this field in the Norwegian public administration.  

Mr President,

EU legislation is constantly evolving. I will now turn to three areas the Government is focusing on at present, and where it is intensifying its efforts at an early stage of the process: the Posting of Workers Directive, amendments to the Data Retention Directive and the new EU framework programme for research and innovation.

I will begin with the question of supplementary rules under the Posting Directive. The Laval, Viking and Rüffert judgments have created uncertainty concerning questions related to what rules on pay and working conditions member states are entitled to impose when workers are posted from one EEA country to another – and concerning the enforcement of such rules. These matters are governed by the Posting Directive.

In connection with the Single Market Act, the Commission is looking at ways of improving the implementation of the Posting Directive.

This includes enhancing cooperation between the authorities of different member states, improving the flow of information to workers and businesses, ensuring effective enforcement of the directive and preventing circumvention and abuse of the rules. These matters will probably be regulated in an implementing directive under the Posting Directive.

In addition, it has been signalled that proposals will be put forward for legislation aimed at clarifying the exercise of freedom of establishment and the freedom to provide services, as well as fundamental social rights such as the right to engage in collective bargaining.

From a Norwegian perspective, it is important to safeguard pay and working conditions for workers when dealing with the establishment of businesses and the provision of services across national borders. It is also important to protect collective rights. Furthermore, we need to ensure that the Norwegian authorities can impose rules concerning pay levels and working conditions, and that this can also be done vis-à-vis foreign companies when projects are put out to tender. The Ministry of Labour is currently taking part in the development of supplementary rules under the Posting Directive in the expert group appointed by the Commission.

The second area on which the Government is focusing at present, Mr President, is that of amendments to the Data Retention Directive. Earlier this year, the Storting gave its consent to the incorporation of the directive into the EEA Agreement. At the same time, amendments to Norwegian legislation were adopted that implement the directive in Norwegian law.

These amendments will enter into force on 1 July 2012. The deadline for implementing the directive in the EU was 15 September 2007. The EU has thus had ample time to gain experience of its application, and published an evaluation report earlier this year.

This confirms that amendments to the directive will be proposed, but also that the principle of data retention will be upheld. The proposals may include principles for access to data and for sharing costs between the authorities and e-communication providers. Under the current directive, the mandatory data retention period can vary from six to 24 months, and this is also being assessed with a view to greater harmonisation. 

Norway is following this process closely. The purpose of data retention is to combat serious crime, and the Government is pleased to see that joint standards are being set. We also consider it important to find a reasonable way of sharing the costs between the authorities and the e-communication providers. A working group made up of representatives of the authorities and the industry is to submit a proposal for how costs should be shared to the Ministry of Justice and the Ministry of Transport and Communications at the beginning of next year.

Mr President,

The third area I wish to discuss is European research and innovation cooperation, which is in a crucial phase. A new framework programme is currently being developed, and efforts to develop the European Research Area are being intensified. We are therefore giving special priority to this area as well. Norway participates in the current Seventh Framework Programme (FP7) for research and technology, and the EU framework has become extremely important for Norwegian researchers, institutions and businesses, as well as a key part of Norwegian research policy.

The successor to FP7 has been named “Horizon 2020”, and will run from 2014 to 2020. It will have a broader scope than earlier framework programmes, and will include both research and innovation, in line with the Europe 2020 strategy.

Research and education are priority areas in the Commission’s proposal for the new long-term EU budget, in which a budget of EUR 80 billion is proposed for Horizon 2020. By way of comparison, the budget for FP7 is EUR 55 billion. In the area of education, a budget increase of some 70%, to EUR 15.2 billion, is proposed for the period 2014–20. One of the advances made will be closer cooperation on higher education with countries outside Europe. However, the outcome of the negotiations on the long-term budget is somewhat uncertain due to the financial crisis.

The Government considers it important to have an influence on the focus of the new research programme, so that it is as far as possible in line with Norwegian priorities. One of the suggestions we have put forward is a greater emphasis on global challenges facing society that cannot be dealt with by individual countries alone, such as climate change, an ageing population and public health, energy supplies and food security.

In parallel with Horizon 2020, the Commission is working on the further development of the European Research Area. The aim is to strengthen research in Europe by providing more attractive conditions for research and encouraging more open research cooperation, outside as well as within the framework programme.

Norway has for example taken the initiative for closer cooperation on ocean-related research.

The Commission will put forward a proposal for a new ERA framework next year. The Government will participate in the consultation on the new framework this autumn.

Mr President,

Finally, I would like to say a few words about EU legislation that has already been adopted and that is being considered for incorporation into the EEA Agreement. I also refer you to statements and discussions during the meetings of the European Consultative Committee of the Storting.

Firstly, there is the Postal Directive. In my previous address, I discussed this directive and the grounds for not incorporating it into the EEA Agreement. At the meeting of the EEA Council on 23 May this year, I presented Norway’s position. I expressed Norway’s intention to follow the procedures in the EEA Agreement for entering a reservation as we proceed with this matter.

Since then, we have had informal consultations with the EU. The purpose of these consultations has been to explain Norway’s position further and clarify the facts of the matter. They have been useful but they have not in any fundamental way changed our view that we are not prepared to incorporate the Third Postal Directive into Norwegian legislation. The EU was informed of this at the meeting of the EEA Council this week. We will continue to deal with this matter in accordance with the procedures set out in the EEA Agreement.

Secondly, like the earlier “TV without Frontiers” directive, the Audiovisual Media Services Directive is based on the principle that it must be possible to broadcast television programmes from other countries – unchanged. The same applies to advertisements for alcoholic products that are in accordance with the directive and the rules of the country of origin. In other words, it is not a matter of allowing alcohol advertising in Norway, but of not being able to prevent such advertising from being included in television programmes from other countries.

Norway has worked hard to gain acceptance for maintaining an exemption from this directive that makes it possible to stop advertising of alcoholic products in certain broadcasts from other EEA countries that are specifically targeted at us, i.e. programmes broadcast through Norwegian cable networks. We have not gained acceptance for this. 

There is no doubt that we can retain our national prohibition on advertising of alcoholic products. But according to this directive, we cannot stop advertisements from television channels that are under the jurisdiction of other countries, just as we cannot stop such advertising in magazines and periodicals. According to the directive, problems concerning programmes directed towards a specific country should be resolved bilaterally, through a formalised consultation procedure. The Government is expected to complete its consideration of the matter in the near future and will inform the Storting of its decision as soon as possible.

Thirdly, the revision of the Deposit Guarantee Schemes Directive is still continuing. In my address in May, I said that the Government would continue to work proactively on this important matter. We have followed it up since vis-à-vis the European Parliament, the Commission and individual member states. Within the EU trialogue negotiations that are now under way between the Commission, the Council and the European Parliament, Norway’s input is one of the matters being discussed. This is a controversial issue, but the Government is continuing its efforts to find a solution that will enable Norway to maintain its current level of coverage.

Fourthly, there is the Temporary Agency Work Directive, which the EU adopted in November 2008. This is designed both to protect temporary agency workers and to recognise the agencies as employers. The directive requires application of the principle of equal treatment for temporary agency workers. This will improve the pay and working conditions for temporary workers.

Norway has held a public consultation on this matter, and the Ministry of Labour is following it up. The Temporary Agency Work Directive involves a number of legal and more technical issues that must be carefully evaluated. As the Government has not yet reached a conclusion on this matter, it is not possible at present to say exactly when it will be put before the Storting. We will return to the matter as soon as the Government has arrived at its conclusion.

Fifthly, there is the energy sector. The Renewables Directive is considered to be EEA-relevant. After exploratory talks with the Commission, the EFTA countries have presented a formal proposal for an EEA decision. In this proposal, the Norwegian target is for 67.5% of energy to be sourced from renewable sources in 2020, the highest target in the entire EEA. We can expect a decision from the EEA Joint Committee on this matter in the near future.

I would also like to mention that the Commission is proposing further steps towards a more coordinated energy policy in the EU, which will among other things include information on external energy relations, regulations on infrastructure development and scenarios for how the EU’s long-term climate targets in the energy area can be achieved.

It should be noted that despite greater energy efficiency and lower total use of fossil energy in the EU, the Commission expects that the EU’s need for gas imports will continue to rise. The Commission refers to Norway as important for the EU’s energy security and as a partner with whom there is a potential for closer cooperation. This coincides with our views. As a major energy supplier, it is in Norway’s interests that the level of uncertainty in the European energy market is as low as possible. And in my view, Norway is a stable and predictable supplier of gas to Europe – a supplier that can promote energy security and stability.

Mr President,

Influence through participation is at the heart of Norway’s European policy. We need to be proactive, create room for manoeuvre and grasp opportunities as they arise.

In my experience, people listen to us when we have something to contribute. And Norway’s expertise is sought after in many areas, such as in the energy and maritime sectors, the High North, fisheries, and in relation to the situation in Sudan and the Middle East. In September, Norway was invited for the first time to participate in the part of the EU’s informal meeting of Foreign Affairs Ministers where the peace process in the Middle East was discussed. We were invited because of our engagement in the peace process and Norway’s role as chair of the Ad Hoc Liaison Committee (AHLC) for assistance to the Palestinians.

Before the end of 2011, we will receive the report from the EEA Review Committee, which is carrying out a review of our experience of the EEA Agreement and our other agreements with the EU. It will be a comprehensive and interesting report and will be followed up by a white paper during the course of 2012. The white paper will stake out the future course of Norway’s European policy, and will focus on how the EEA Agreement can meet our needs. It will address questions such as: how can we best safeguard Norwegian interests in the light of the major changes the EU has undergone in recent years? Could there be a need for new, more long-term measures to safeguard Norwegian interests in our cooperation with the EU?

We know that the EU considers the EEA Agreement to be a well-functioning arrangement and wants to continue it. This was confirmed at the meetings in Brussels this week.  The EU is also awaiting the Norwegian report with interest, as was confirmed at the meeting of the EEA Council this week.

Mr President,

In the 1990s, what was known as the “Washington Consensus” was the standard prescription, which in simple terms can be described as privatisation and a reduced public sector as the economic growth model. Today, the picture is quite different. Developing countries see that China is achieving economic growth of more than 8% year after year. India, Brazil, Indonesia and Turkey are also experiencing economic growth. Which models work? What fosters growth and leads countries out of poverty?

In this debate more countries are looking to the Nordic countries, which despite a number of differences are characterised by a model that 20 years ago many people thought would fail, because it was assumed that their public sectors were too large, their taxes too high and their trade unions too powerful. But in recent years, the Nordic welfare states have received greater recognition internationally – and with good reason. Their high levels of welfare and equality, combined with their strong competitiveness and not least their ability to adapt, have proven to be strengths in an increasingly globalised world.

I mention this because of the current  economic turmoil in Europe, and because the development of a sustainable welfare state in a Nordic perspective will be the main theme for the Norwegian Presidency of the Nordic Council of Ministers in 2012. During our Presidency, we will look at the various challenges currently facing the Nordic welfare states, and how the public sector can operate more efficiently. These questions are now being discussed in one way or another in the majority of European countries, and we will have the opportunity to discuss the topic with the Danish EU Presidency in the first half of 2012.

At a time when Europe is struggling with a debt crisis, political uncertainty and social instability – as well as a loss of public confidence – these discussions are necessary if we are to move the continent forward. Europe has the best possible basis for emerging strengthened from the crisis: democracy, the rule of law, a diverse civil society and, not least, societies that are willing to engage in debate and critical reflection on the current crisis.

But this will require courage and innovative thinking in many parts of Europe – and in European cooperation. Saying that the world economy is global is not just a figure of speech. Europe has benefited greatly from an open world economy. Now the countries of Europe are being challenged not only by cheaper labour from other regions, but also by new ideas, innovation and knowledge-intensive production of goods and services from other parts of the world. The countries of Europe can only meet this challenge by renewing their societies and mobilising their human resources to the full.

It is vital to prevent a situation where more and more people are being excluded and losing confidence in the political institutions – in democracy itself. If large groups of young people, minorities and others are left behind, it is the whole of Europe that will be the loser.

Norway is no exception. As other countries now strive to renew their societies in the face of severe fiscal pressure, we too must grasp the opportunity to renew and strengthen our society and our economy. And we must do so in a way that safeguards the principles of equal rights, equitable distribution and strong public confidence that are so crucial to success in the world today.