Norway and Germany – a close partnership in a time of European crisis

The Minister based his speech on some of the following points
(Check against delivery):

Introduction 

Honoured to speak here in the Hamburg Chamber of Commerce.

• Yesterday I participated at the meeting of the foreign ministers of the Council of the Baltic Sea States (where Iceland and Norway are included) at Plön Castle. Focus: Development of the region and exploring the potential for increased regional cooperation, with a focus on energy. We adopted a declaration on regional energy security.  Strong commitment from the northern German Bundesländer to develop economic cooperation within the framework of the Baltic Sea Cooperation. Important region.
• Norway and Germany: Close and mutually beneficial relationship on a wide range of issues. With regard to the EU, Germany backs us in matters even though we are not a member, and we are close partners in Afghanistan.  Broad cooperation in all fields: politically, economically and not least culturally. Norway’s most important economic partner in Europe. Trade: 10% of Norwegian exports are to Germany. Hamburg–Norway: Few places where Norwegian interests are as strong as in Hamburg. Around 50 Norwegian businesses have a presence here. Historic ties. Hanseatic League.

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• Backdrop: European sovereign debt crisis.
• My main message today:
• The importance of strengthening an effective internal market in Europe in response to the economic crisis and the needs of the European economy.
• In particular the importance of increasing economic interaction within the northern European region.
• You play an important role. No matter how many deals are sealed in Brussels, Berlin or Oslo, politicians do not do business. If they are not careful, they can undo business, but that is another matter.    
• Norway has restructured its foreign service in recent years. This summer, the Consulate General in Hamburg will be transformed into an Honorary Consulate General (in 2010 this happened in Minneapolis in the US.). Our main activities will continue unchanged under Innovation Norway and the Norwegian Seafood Export Council, and will even  continue to be run from the same building. The Embassy in Berlin will continue to deal with political and cultural aspects of our cooperation with Hamburg and northern Germany.
• This decision is due to the need to balance resources in the light of the overall demands on the Norwegian Foreign Service. Many countries are restructuring their foreign services in a similar manner.
• Obviously, this does not mean that our relationship with Germany or Hamburg is less valued in any way. It just reflects the fact that relatively small states like Norway are not able to maintain career diplomats at all their consulates anymore.

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I will briefly focus on three main topics:

1. The close relationship between Norway and northern Germany
2. Our bilateral relations in a time of economic crisis
3. The importance of regional cooperation, including on energy

Norway and northern Germany

• Starting point for our relations was fish: For 600 years, Hamburg has been the most important port of trade for Norwegian fish. Long before natural gas was sent to the continent in pipelines, Norwegian klippfisk, or salted and dried cod, was shipped from Bergen to Hamburg and then on to the rest of Europe. It all started in Bergen with the establishment of the Hanseatic League’s German Office in the 14th century. At that time the main trading language on the quayside Bryggen in Bergen was German. 
• Fish still important: Exports of Norwegian seafood to Germany peaked at 100 000 tonnes in 2011. Our 5th largest market. In recent years, the value of German imports has increased by about 10%. The Norwegian Seafood Export Council in Hamburg is an important instrument in this positive bilateral development.
• In 2006, Innovation Norway, which promotes Norwegian business development, was established in Hamburg.
• Hamburg was a natural choice: 2nd largest German city, close to Norway and Scandinavia, strong position in many sectors of business that are important to us. Hamburg is an important port for trade to Europe and the rest of the world.
•  Dynamic Norwegian business presence in this area. Concentration of companies in Hamburg developed. Well-established presence:  Hurtigruten, Ekornes, Bergans, DNV and DNB. Others recently opened offices. Just a few weeks ago Ulna opened its first private kindergarten right outside Hamburg and it is looking for locations for additional kindergartens.
• Tourism: Like most Norwegians, I feel coming to Hamburg is (almost) like coming home. Germans feel the same coming to Norway; over half a million Germans visit Norway every year (21% of all visitors) many from northern Germany, and many for the second and third time. Germany is increasingly popular for Norwegian tourists too: there has been an increase of 17 % in the number of Norwegians visiting Germany from 2009 to 2010.

Regional cooperation

• Still a visible Hanseatic influence in our cooperation and trade patterns today, not only in northern Europe, but also in formal cooperation arrangements like the Council of the Baltic Sea States. The CBSS is 20 years old this year, but the common economic area it is founded upon is just as old, if not older.
• Yesterday, as I already mentioned, I participated at the meeting of the CBSS foreign ministers at Plön Castle. Focus: Development of the region and exploring the potential for increased regional cooperation, with a focus on energy. We adopted a declaration on regional energy security. Strong commitment from the northern German Bundesländer to develop economic cooperation within the framework of the Baltic Sea Cooperation.
• Construction of the Fehmarn Belt Fixed Link between Rødby in Denmark and Puttgarten in Germany, is interesting. This will promote closer regional cooperation. And it will provide impetus for exploring the benefits of wider regional relations, including with Norway.
• The obvious point is: Geography matters, not least when it comes to who we do business with.

Europe’s economic crisis, consequences and challenges

• The ongoing financial and sovereign debt crisis is the most serious and immediate threat to Europe’s welfare. Compared with the pre-crisis situation, growth is flat-lining – making job creation even more difficult.
• Norway is the EU’s fifth most important trade partner (more important than India). 80% of Norway’s exports are to the EU. The EEA Agreement. [The Minister elaborated on the issue of the EEA’s role and importance in his speech].
• Short-term outlook for Europe in general is bleak, clearly better in the northern than in the southern parts. Competitiveness is vital for Europe’s ability to ensure a high quality of life. The global economy – increasingly influenced by new economic powers like China, India and Brazil – is imposing new demands on Europe. In simple terms: global competition is tougher than before. Europe has an aging population, chronic unemployment and a falling share of the world’s production.
• For many countries, the opposite is true. While European and North American economies are struggling, quite a few others are enjoying economic progress. That is good news and important for continued global growth. However, the global picture is changing – to a multi-polar world in which the balance of power is shifting from West to East/South. The financial crisis has helped to accelerate this shift.
• The current situation in Europe is unpredictable and is fuelling political tension and discontent.

The role of Germany and Norway in the economic crisis

• Pleased to see Germany and Chancellor Merkel taking leading role in resolving the crisis at the political level. Germany’s own experience over the last decade, with painful reforms, budgetary discipline and major restructuring of the economy, gives credibility to Germany’s prominent role today. Germany is leading by example.
  The short-term effect of fiscal consolidation on economic growth is negative. And the necessary tightening will be a burden on the European economy for some years to come. It is therefore crucial that measures are also taken to safeguard European competitiveness and stimulate private sector growth.
• Until a foundation for a common currency is fully built – there will be no stable currency.
• Also necessary to find a balance between expenditure cuts and protection of social rights in order to secure social stability and public confidence.
• This is our crisis too: Norway has performed well during the global financial crisis. However, signs of the crisis are starting to appear in our export-driven sectors. Adverse effects may also spread through the financial sector and affect private sector confidence. Hence we are preparing ourselves for what might come.

Norway’s main contributions so far

1. Norway helps to finance IMF loans to Greece, Ireland, Portugal, and other crisis-hit countries through our funding to the IMF. Our total IMF commitment is around EUR 7.1 billion at today’s exchange rate.
2. Follow-up of euro zone decision to increase the IMF’s resources: Norway has offered up to 6 billion SDRs (approximately EUR 7 billion) as a bilateral loan to the IMF conditional on a broad international effort and parliamentary consent.
3. The Government Pension Fund Global has invested around EUR 220 billion in European markets on purely market principles. These are long-term investments.
4. The EEA and Norway Grants help to address social and economic challenges in the EU and enhance the general investment climate in the beneficiary countries (2009-2014 – EUR 1.8 billion; 2004-2009 – EUR 1.3 billion).
5. Norway is a long-term stable supplier of energy to European markets, helping to secure a stable framework for growth. 

• Our participation in the EEA has had a positive effect on cross-border economic activity (trade, investments, and migrant workers) as well as on national economic regulation and growth policies.
• In our experience, the answer to the European economic crisis lies in close cooperation, close economic integration and a well-functioning, competitive and socially responsible market economy in Europe.
• Businesses in northern Europe have a particular part to play, with interesting opportunities in terms of new markets, innovation and economic cooperation.

Energy and the High North

• “The story of modern Norway”: Natural resources, fish, petroleum, gas, minerals. The sea, coastline, continental shelf. Sustainable use of resources. Knowledge and innovation. Marine bioprospecting (enzymes). Lots of new opportunities. First priority: Protect and safeguard the environment.
• Energy is important for safeguarding Europe’s growth in the future, and one region of cooperation is the north. Europe is facing profound challenges when it comes to energy security.
• Norway has been exporting natural gas to Germany and Europe for more than 30 years. Stable and predictable supplier.  
• The Arctic/Barents Sea will become an important European energy province. Norwegian oil and gas industry is moving northwards. New discoveries in the Barents Sea (in Skrugard, Norvarg, Havis). Considerable potential in the Barents Sea.
• Important to take into consideration other industries and interests within the framework of integrated, ecosystem-based management.
• Potential for renewable energy developments, hydropower, wind and wave power. Long distances, market-related issues, need for new infrastructure and environmental and safety factors pose challenges.
• Need to keep sharp focus on environmental requirements – and to continue technological innovation to limit/eliminate emissions – CCS.
• Of course German businesses are more than welcome to participate on an equal footing in these developments.  

Conclusion

• Although Europe is facing economic difficulties, both Norway and Germany are doing relatively well. The economies in our countries are stable – and even growing. Crisis is deep elsewhere. The average Europe-wide youth unemployment rate now exceeds 20% (in Spain and Greece the figure is 50 %). Key social challenge: large groups in society being left out.
• Without social cohesion and trust our societies will not thrive and grow, money will not be spent, initiatives will be forgotten and business will falter. The goal of all of us around this table is to have healthy and stable societies. We must share in order to be able to create, but we must also create in order to be able to share.
• I would therefore like to conclude by reiterating my main message here today: that economic cooperation, in an efficient internal market in Europe, must be a part of any solution to the crisis.
• In particular, I believe we should continue to do business and to strengthen economic interaction within the northern European region. Want to see increased cooperation – we will do what we can – including with our staff here. (Thank you).