Making a Difference – The Importance of Business, Industry, Creating Value and Innovation in Norway’s Foreign Policy

Check against delivery (see the video recording)

Ladies and gentlemen, good morning to you all,

• I am honoured to be here – at this meeting of the Norwegian–American business community.
• This is the first time I am here in Houston (and Texas), and Houston is my first destination abroad in 2012 – which I find appropriate! My job as foreign minister – since 2005 – has been to promote Norwegian interests. Few places are Norwegian interests as strong, vital, current and important as here. Thanks to you.
• Norwegian business makes its presence felt here in Houston and indeed all over Texas. For generations Bay Ridge in Brooklyn was the entry point for Norwegians coming to the United States. Today, Houston is the foothold for Norwegian entrepreneurship in America.
• As you know better than I, Houston is home to the largest population of Norwegian expats outside Scandinavia, close to 7 000 Norwegians (the size of a typical Norwegian town) are currently living here, and a large number of them work in the shipping, finance and energy sectors.
• This is due to the fact that Norway is today a significant player in the field of energy – as the second largest exporter of natural gas in the world and the sixth largest exporter of oil.
• In a sense you could say that we have come full circle: the United States was instrumental in developing the North Sea as an energy province in the late 1960s. Today Norway is playing a key role in developing the Gulf of Mexico.
• In contrast to the overall financial downturn in the US, here in Texas, I’ve been told, there are clear signs of recovery in the energy sector, both offshore and onshore, and in particular with regard to the extraction of shale gas.
• So, there is a certain sense of optimism, and the Norwegian energy sector is part of this.
• The fact that Norwegians travel and settle abroad – to find work for a short or long period –  is not new; what changes over time is the kind of workplaces or schools that encourage Norwegians to travel abroad.  
• As in London, Edinburgh, Stavanger, Singapore, Dubai or Abu Dhabi, we find here in the Houston area a highly qualified, international community of Norwegians working in the energy, technology and shipping sectors.
• Houston is home to almost 150 companies that are either Norwegian or that have links to Norway.
• Let me give a few examples that illustrate the modern Norwegian–American relationship and Norwegians interests in the 21st century:

Energy: Statoil – a major licence holder – has a large presence in the region; indeed it is one of the largest licence holders in the Gulf of Mexico for deepwater drilling.

The Norwegian renewable energy company Havgul is developing wind energy projects here in Texas and in the Lake Michigan area.

Houston has also become a financial hub of growing importance for Norway, as reflected by Den Norske Bank’s presence here.

There are also Norwegian niche companies in the medical and IT sectors, representing creativity and innovation.

From the life science sector: LoneStar Heart, a company founded by the President of (the world renowned) Texas Heart Institute Dr Jim Willerson, and the Norwegian entrepreneur (and founder of Fjord Ventures in California), Olav Bergheim, have co-developed a unique alginate product from Norwegian sourced seaweed to treat congestive heart failure. A product that may save lives throughout the world. The Norwegian Institute of Public Health is involved in the project.

Another example from the health sector is the collaboration established between the M D Anderson Cancer Center in Houston and three hospitals in Norway (the Norwegian Radium Hospital, Stavanger University Hospital and Oslo University Hospital).

About 30 Norwegian companies were involved in the response to the Deepwater Horizon accident. Aker Solutions played an important role in dealing with the blowout. And the global offshore classification expert DNV assisted our American colleagues.

Recently, Cambi – a Norwegian waste water (sewage) cleaning technology company – landed a USD 50 million contract for cleaning waste water in Washington D.C. A broad environmental technology project.

*****

Now, why these examples? They illustrate the story of modern Norway:

a country of five million people>

a bit more than half the size of Texas

a small, modern, open, and sound economy

rich in natural resources.

• And the contrasts: Norway 1912 – 2012. A young nation (1905), one of the poorest in Europe, almost a million people had emigrated to the United States and Canada during the 19th century.
• Another contrast: Today, one of our biggest assets is the Government Pension Fund Global, one of the largest sovereign wealth funds in the world.

All government petroleum revenue is transferred to the Fund.

The Fund is now larger than Norway’s GNP.

Approximately 100 billion dollars have been invested in the US, in 2.200 different companies.

The Fund provides a good buffer to economic shocks.

• Today, our oil and gas resources, key figures: Preliminary production figures for November 2011 indicate average daily production of about 2 057 000 barrels of oil, LNG and condensate. (An increase of 18 000 barrels compared to October).
• Aldous Major and Avaldsnes fields in the North Sea were the largest finds offshore globally last year. Recent finds in the Barents Sea indicate that there is great potential in this region too. Technology development.
• Approximately 210 000 people are directly or indirectly employed in various Norwegian petroleum industries. 45 % of the value of Norwegian exports in 2010 came from oil and gas (NOK 469 billion).
• According to fresh prognoses from the Norwegian Central Bank, we can expect record high investments in the oil business every year in the period 2011 – 2014. The Central Bank estimates an investment level of NOK 120 – 150 billion annually.
• And then there are policies, politics and government – “the Nordic model” – I’ll return to this later.

Dear friends,

• Let me remind you of the story of modern Norway. I often raise the following question when visiting universities and high schools in Norway: Why did tens of thousands of Norwegians leave their country 100–150 years ago?  Despite the:

oil and gas under the seabed,

opportunities for fish farming in the fjords,

thousands of species in the ocean that could be used for marine  bioprospecting?

• Today, the answer is obvious: They did not know. They lacked the necessary knowledge.
• How could they know? And what do we know about the developments in technology in – say – 20–30 years’ time? Who could foresee in 1990 that fish farming along our long coastline would become one of the most important export industries for Norway twenty years later? In 1960 the experts were certain: There was no petroleum to be found at the bottom of the Norwegian Sea. Less than ten years later we saw the first “bottle” brought to the surface.

***

• One area where knowledge, expertise, is key: the energy sector.
• I just said that Norway is the second largest exporter of natural gas and the sixth largest exporter of oil in the world [the Minister added some figures here].
• Furthermore, in a long-term perspective, a significant part of our oil and gas future will be in the High North – in the Arctic. Norway’s oil and gas future is dependent on the development of infrastructure in the High North – the development of knowledge, resources, the ocean, and open markets. This is why Norway’s High North policy is our top strategic priority. And this is one of my messages to you.

Our focus on High North issues has three main drivers:

Climate change: challenges and solutions.

Developments in Russia. (International cooperation in the High North).

And the potential for resources and economic activity.

These issues are linked: The High North can play a role in enhancing our understanding of global climate change and improving energy security, and help us develop solutions in these areas. 

Another point I would like to highlight is that in Norway there is what I would call a kind of “social contract” between citizens, industry and the Government – or a common understanding – that in the High North we must use and further develop new, cutting-edge technology in order to protect the fragile environment and to meet the global climate challenges. The role of industry in this process is extremely important. It is a matter of responsibility.

• Now, what characterises the Arctic today?

As I already said: Climate change.

Greater access to natural resources.

Opening of sea routes.

Growing economic activity.

Growing geopolitical interest, new players entering the stage.

There is a legal framework in place. There is no legal vacuum.The Law of the Sea provides the legal framework for all activities in the Arctic Ocean, an ocean surrounded by land under national jurisdiction. No race for resources in the Arctic.

• Norway has gradually built capacity and developed expertise on High North issues – such as climate change, polar science, geopolitical changes, as well as new business opportunities – within sectors such as aquaculture, petroleum, shipping and mining.
• And there is still plenty of room for more Norwegian–American cooperation in these sectors.
• Knowledge is at the heart of our policy. Which means that close cooperation and interaction with the scientific community and the business community are essential if we are to achieve our goals for the High North:

Ensure sustainable management and use of resources.

Strengthen international cooperation and the international legal order.

Strengthen value creation and employment.

• The key visions I believe will determine the future of the High North over the next 20–30 years:
• First: a new industrial age. Increased interest (in Norway, Sweden and Finland) in strategically important minerals. (Minerals worth more than USD 250 billion could be found in the Norwegian High North alone).
• Second: Pioneering work on integrated marine management. The Northeast Arctic Cod stock is the best managed fish stock in the world (due to joint Norwegian–Russian ecosystem-based fishery management in the Barents Sea).
• Third: Growing interest in the Arctic Ocean. The Northeast Passage may potentially reduce sailing time from Yokohama to Rotterdam by 40% compared to the Suez route, reducing fuel costs by 20%. We see an increased number of sailings: 34 ships through the Northeast Passage in 2011 compared to 6 in 2010. Trend: Larger and faster ships. Key: Energy security, increased efficiency, for commerce and shipping. (And fewer pirates).
• Fourth: Close and innovative cooperation in the High North. For example: the Arctic Council sets the agenda: knowledge about climate change. Search and rescue agreement. Now: ongoing negotiations on an instrument on oil spill prevention (co-chaired by the US, Russia and Norway). 
• Fifth: The High North as a new geopolitical centre of gravity. We have advanced from Cold War logic and inaccessibility to extensive international cooperation and access to resources and shipping routes. No military threat (but still military strategic interests). Increased economic activity. High North – Low tension.
• Sixth: The High North as a source of knowledge about the environment and climate change – with implications far beyond the region itself. (The US State Department has shown interest in having a research platform presence on Svalbard/Ny Ålesund).
• Seventh: A new energy province in Europe. The US Geographical Society estimates that as much as 22% of the world’s undiscovered petroleum resources could be found in the Arctic. Depends on: market conditions, technological developments, the size of any commercially viable discoveries of oil and gas, and how fast renewable energy sources are developed.
• Thus: The Norwegian oil and gas industry is moving northwards. There is vast acreage waiting to be explored. And potential for renewable energy developments: hydropower, wind power and wave power.
• In sum: The energy (and technology) dimension – and climate change – will be the most important drivers of increased interest in the High North in both political and business circles globally.

[Here, the Minister added more comments on the High North in general, the maritime delimitation treaty between Norway and Russia, the Northeast Passage, icebreakers, the Law of the Sea (UNCLOS), as well as a few more comments on the global climate change challenges.].

***

• Now, let me move from our future industry and business possibilities – to the area of politics, the state, and good governance. The energy resources are there, but so is the political framework (and remember: political initiatives, courage and will are renewable!). A few comments on this:
• What are “the characteristics” of Norway – of the whole Scandinavia – that have made growth, prosperity, stability and development possible? – The Nordic Model.
• I remember discussions at international conferences in the 1990s (e.g. Davos/WEF) – where there was a negative focus on the Nordic welfare state model: too big, inefficient, not able to adapt, high levels of unemployment. Today, there is a much more positive focus: the dynamic Nordic Model, modern and effective. Why?
• The Nordic countries are characterised by high levels of income and employment, and low levels of inequality. They have time and again shown a remarkable capacity to adapt to external “shocks”. In my mind four characteristics stand out in explaining the relative success of the Nordic countries:

Firstly, we have a long and successful tradition of cooperation between the unions, employers and the Government. Wide-ranging contacts in these areas. This has a lot to do with the Nordic countries being small, open and homogenous countries: these characteristics are conducive to social cohesion and trust. And they facilitate an emphasis on common interests and a fairly equal distribution of wealth.

Secondly, all Nordic countries have been successful in mobilising their labour forces. In particular, the story of how Nordic women have moved into the labour market over the last 30 years is a truly Scandinavian success story. In Norway, female labour force participation increased from 55% in 1980 to 70% in 2009. Ambitious welfare and family policies, developed in close cooperation between government, employers and employees, have been instrumental in bringing about this change.

Thirdly, expansion of the welfare state has gone hand in hand with prudent fiscal policies. While large parts of Europe experienced a marked deterioration in public finances from the 1970s onwards, the Nordic countries have been able to consolidate public finances. Pension reform. Flexicurity.

Fourth: openness and flexibility, hallmarks of the Nordic economies. All Nordic countries are small, open economies. Small economies have much to gain from foreign trade, and openness brings foreign competition and puts a premium on the ability to adapt and to learn from others. As much out of necessity as choice, we have had to work hard to make our markets work well.

• Generally speaking, there are three lessons (at least) to be learned:

Bring all key stakeholders to the table: establish “a shared world view” (and coordinate actions).

The importance of prudent fiscal policies, transparent budgetary systems, long-term fiscal planning.

The need to move beyond perceived conflicts between welfare and flexibility. Well-designed welfare policies and relatively flexible labour market regulations can reinforce each other.

• This is the Norwegian model – the Nordic model – in overall, general terms. It makes a difference; it creates a good climate for innovation and growth. It has also become an export product (“adapted versions” of the Nordic model, of course).

***

• Now, before I conclude, let me make a few comments on globalisation and the bigger picture in terms of the economic situation in 2011/2012, which forms the international backdrop to the developments in today’s markets. Four overarching points:
• First: The obvious: we are living in times of global change, times of major economic upheaval and transition.
• These global changes are fundamental. They leave us with formidable challenges – but also with opportunities. My experience is that the business communities are among the first to notice change – and the first to adapt. (The public sector could learn from this!)
• On opportunities: Several hundred million people are being lifted out of poverty as a result of economic growth in China, India, Brazil and other countries. A global middle class is emerging. New markets are opening up.
• The financial crisis is occurring at the same time as a fundamental global power shift – partly driven by economic forces, partly self-reinforcing.
• The “old” West is on the defensive and the emerging states in the East and the South are on the offensive. A formidable power shift.
• Due to the overall global changes we are increasing the number of staff at the Norwegian missions in the East Asian countries. We have established embassies in petroleum regions, such as Angola. And I can add that we have engaged in dialogue on energy issues with many countries, both close neighbours such as France and Germany, but also with countries like Brazil.
• Second: Today’s world order/organization: to a large extent a result of the end-game of the Second World War. Never before or since has a similar will and ability to organise the world been mobilised.
• Today, these global institutions are facing severe challenges in terms of governance, partly due to the shift in global power. I have seen this in my years as foreign minister. To illustrate: The WTO ministerial meeting in Geneva last month.
• Nothing in global trade negotiations today can be agreed unless China, India and the other BRICS countries are on board. The days when the West dictated the outcome are gone.
• To many outside the West, the “anomaly” of the 20th century is gradually being replaced with a level playing field.
• To us westerners of the post-war period this may seem like the advent of a new era. But we should bear in mind that it is not totally new. For instance, China is not so much emerging, as re-emerging.
• Third: When will China overtake the US as the world’s leading economy?
• The really interesting question is what kind of global leadership we will we see in the coming decades.
• Never in history has a country – or a civilisation – failed to translate economic and technological power into political power.
• Fourth: The US for its part: relative decline? In the 1990s the US was the only remaining superpower. Since the Bush years we have witnessed US “overstretch”, and the emergence of multipolarity.
• Has the US economy turned the corner since 2008/2009? Too early to tell, but indicators provide some comfort.
• We can see how a modern economy and political institutions are interlinked, and all the more in an election year.
• There have been many previous predictions of “the fall of the United States” – which have not come to fruition.
• I believe the US will continue to be the strongest single nation for a long time ahead. In military terms, the US will continue to be the only superpower capable of operating on a global scale.
• The US regularly demonstrates its ability to achieve technological breakthroughs and revitalise its economy. And the US still possesses some of the world’s most innovative industrial clusters. This is why it is such an attractive partner for Norway.

***

• Now, let me conclude:
• It is a fact that the United States remains Norway’s most important ally and our second largest export market after the EU, and that we enjoy excellent bilateral relations – not least here in Houston, thanks to you – and many other partners.
• We will continue to deepen our relations and our cooperation. Developing technology, building business and creating value are key aspects of our relations.
• How can we develop our bilateral ties further? Let me give a few illustrations – or ideas:
• First: The existing organisations. Priority number one for the Consulate General here in Houston (Jostein and his staff) is to help Norwegian businesses to succeed in the United States. They work closely with Innovation Norway, INTSOK and the Norwegian American Chamber of Commerce (NACC). Now, my message to you is: use all these organisations and their knowledge and networks well. I would like to thank the NACC and the Norwegian Consulate General in organising this breakfast session.
• Second: Broaden the view/the sectors. While energy, shipping and finance have been our strong suits in Houston, I am pleased to note that this year’s Transatlantic Science Week – to be held here in Houston in November – will focus on energy as well as medicine/health and innovation. The purpose is to build new networks between American and Norwegian research and higher education institutions and knowledge-based businesses.
• For example: Texas is a global leader in medical technology. The Houston Medical Centre is the largest – and the best? – of its kind in the world. Health care seems to be the fastest growing sector in most developed countries. Dependence on new advanced medical technology is critical – to fight disease and improve quality of life but also to improve efficiency and limit expenditure.
• My point is this: It is my hope that the successful collaboration developed between our two nations in the field of energy can be extended to the field of healthcare and medical technologies.
• Third: We should look at the interrelated areas of business, industry, innovation and culture.
• One example: I am impressed by the initiative taken by the City of Clifton (often referred to as the “official Norwegian capital of Texas”) in its recent launch of the Cleng Peerson Institute. The Institute will build on the heritage of early Norwegian immigrants to Texas in the 1850s, spearheaded by the “father of Norwegian emigration to the US” – Cleng Peerson from Rogaland and founder of Clifton. What makes this new initiative so interesting and innovative is the forward-looking promotion of Norwegian–American collaboration in business, education and culture.
• Fourth: We also need new initiatives, new ideas, and we need more public–private partnerships.
• One idea – among many others – could be to establish a kind of a Transatlantic “committee” or “forum” with a view – particularly – to studying or evaluating strategic, long-term proposals for creating new knowledge-driven, innovative business initiatives in the fields of, for example, medical technology, information technology and energy. These would be collaborative initiatives between the United States and Norway. We could look at what kind of initiatives would need initial public–private seed funding. Well, I leave this up to you – for further discussions – and I suggest that the organisers of the forthcoming Transatlantic Science Week in Houston in November consider whether this issue should be put on their agenda in some way or another.
• My point is this: thriving industry is based on the effective application of science and innovation – it all starts with ideas.
  

***

Ladies and gentlemen,

• There is a striking similarity between Norway and Texas: We may differ on many issues, such as taxation and redistribution of wealth, but we both enjoy relative prosperity and economic progress although we are surrounded by states in the midst of a severe economic crisis.
• In oil and gas, shipping and some other sectors that contribute substantially to our GDPs, we are still seeing growth.
• But we must also be aware that we are not immune to the turmoil in our neighbourhoods. 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 ensure its long-term competitiveness. And we must respond to our neighbours who are facing far greater challenges than we are.
• Responsibility is key –the Norwegian Government conveys high expectations to the business community with regard to corporate social responsibility (CSR) – an agenda that is based on four pillars: human rights, the environment, decent working conditions and anti-corruption. We expect the business community to set high standards in all these areas.
   
• Thank you. I welcome any questions or comments.