Translation from the Norwegian

Foreign Minister Knut Vollebæk's statement to the Storting

Statement on the Government's European policy, with emphasis on relations with the EU

19 January 1999

Mr. President,

Europe is in a state of transition. A tide of change is sweeping across our continent.

In the south, we are facing an extremely critical situation in Kosovo, which I have just visited in my capacity as Chairman-in-Office of the OSCE. There are powerful forces working against peace in our part of the world as well. I have already presented a statement to the Storting on our contribution to peace and stability through the OSCE. However, I will return to the Storting with an up-to-date account of the situation in Kosovo.

In the north, serious environmental problems are still unresolved. Nobody knows what the outcome will be of the political, economic and social developments in Russia. But they will affect us, especially because of our close ties with northwestern Russia.

In the east, NATO and the EU are about to embark on historic processes of enlargement. The countries applying to these organizations view them as their main anchor of security and stability.

But stability in Europe is dependent on Russia's participation and on economic and social progress in the poorest countries. This also includes the former Soviet republics in the Caucasus and central Asia. Pan-European cooperation in the OSCE and the Council of Europe has an important role to play in this regard.

The many and varied challenges we are facing can only be met through broad-based cooperation between nations and international organizations.

And at the same time, the euro is being launched and the crucial third phase of Economic and Monetary Union (EMU) has begun. This is one of the EU's most radical political projects, and nobody can predict the consequences with any certainty.

This is Europe today. How should we respond to these developments?

A colleague of mine once said that if you want to build an edifice, it is no good just giving the builder a hammer. A complete set of tools is going to be needed. Our foreign policy tools consist of the UN, NATO, the EEA, EFTA, the OSCE, the Council of Europe, the Western European Union and a whole series of regional cooperation arrangements, such as Nordic and Nordic-Baltic cooperation, the Barents Council, the Council of the Baltic Sea States and our close neighbourly relations with Russia.

It is by using and developing all these tools that we can best create the mutual dependence which is decisive for peace, stability, growth and welfare.

The 1994 referendum decided Norway's relationship to the EU. The people's vote against membership is binding and must be respected.

The EEA Agreement is Norway's platform for cooperation with the EU, and enjoys wide support in the Storting. The Government will use the agreement as a tool for safeguarding and promoting Norwegian interests.

The vote against membership has not isolated Norway from the international community, as some claimed it would prior to the 1994 referendum . Norway continues to play a significant role and participates actively in international cooperation, despite the fact that we are not a member of the EU.

The Government attaches great importance to the freedom of action Norway has in political and economic terms. Norway must make its voice heard in the international fora where it takes part. For we have an important contribution to make. We have strong traditions as regards efforts to improve welfare and ensure equitable distribution, and to promote human rights, gender equality, cooperation with the social partners, transparency and democracy. We also have strong traditions of cooperation based on common interests and a common set of values in the Nordic region, of cooperation with Russia, and of participation in peacekeeping efforts, humanitarian relief operations and conflict prevention. Norway is also an important energy producer, with abundant natural resources and a sound economy.

In my statements last year on Norway's neighbouring areas and the OSCE, I discussed important aspects of the Government's European policy. Today, I shall focus on our relations with the EU.

What are the main challenges facing Norway as a result of developments in Europe, particularly in the EU? And how is the Government responding to them?

I would like to concentrate on four areas: EU enlargement, Economic and Monetary Union, security and defence policy cooperation, and cooperation in the field of justice and home affairs. I will start by turning to Norway's platform for cooperation with the EU, the EEA Agreement.

The EEA Agreement

This month, it is five years since the EEA Agreement entered into force. It provides a stable framework for cooperation with our most important trading partners and close neighbours. It is also an important means of safeguarding Norwegian commercial interests. Trade with the EU now accounts for over 70 per cent of Norway's total foreign trade.

New legislation drawn up by the EU is continually incorporated into Norwegian law through the EEA Agreement. This process makes great demands on our ability to evaluate the consequences of new legislation for Norway at the earliest possible stage and to influence its final form.

We must review each individual act of Community law thoroughly, particularly any effect it may have on health, safety and the environment.

The Government will make full use of all the opportunities provided by the EEA Agreement to safeguard Norwegian interests. If we encounter difficulties, we will strive to reach agreement on a solution.

Our right to refuse to implement EU directives was negotiated in order to be used. However, its use is not something that can easily be discussed in theoretical terms. It must be considered in the context of specific cases, and weighed against our overall national interests.

The Government has started a review of activities at national level related to the EEA, and intends to call on external expertise. The goal is to make improvements in four areas:

• Firstly, the Government is reviewing the administration of EEA-related activities. Generally speaking, the agreement affects all the ministries. The various levels in the government administration must cooperate with the relevant organizations and interest groups. We must also ensure that Norway pursues a coordinated EEA policy vis-à-vis the EU and its member states.
• Secondly, we wish to ensure the greatest possible involvement and participation in EEA-related activities. The EEA Agreement affects not only the central government administration, but also the municipalities, the social partners and NGOs. All of these have valuable expertise to offer.
• Thirdly, the Government will continue its efforts to provide more information and encourage openness and public debate on ongoing EEA processes. Openness and transparency are of crucial importance for public debate and the exchange of views. We have already made a considerable effort to ensure greater transparency and better communication on EEA matters with business and industry, other users and the general public. These efforts will be continued. Information has now been made available on the Internet, and contact persons have been designated in ministries and agencies. Enquiries from the public are to be answered as quickly as possible.
• Fourthly, we must ensure that we have the best possible access to legislative work in the EU at the earliest possible stage of the process. To achieve this, we are making use of our participation in expert groups and working groups under the European Commission. At the same time, we take part in discussions on future EEA decisions in the various EEA bodies.

We must also ensure that we become involved before the EU has determined its common position. This means that we must all work together - the political authorities, the social partners, the public administration and the various experts, interest groups and NGOs. We must act as sounding boards for each other and for Norwegian interests. This will enable us to identify matters that will result in decisions by the EU at the earliest possible stage.

There is probably a great deal of potential here. The Government is in the process of defining and systematizing this potential. We are particularly interested in how all those affected by the EEA process, from major industrial organizations and trade unions to local administration and NGOs, can work in relation to the authorities. They must make use of their own networks in their work vis-à-vis EU institutions and member countries in order to win support for Norwegian interests.

Bilateral relations with EU member states are a particularly important channel for promoting Norwegian interests. As a non-member, Norway must work harder than countries that attend all the meetings in a number of areas. On the other hand, EU cooperation does not carry the same obligations for us as it does for the member states. However, unless we form alliances we cannot expect other countries to speak on our behalf when decisions are being made in Brussels.

The positions taken by the member states are decided in the capitals. The sooner we can start a dialogue with them on a particular matter, the greater will be our opportunity to find allies when the matter is deliberated in the EU.

Such contacts cannot and should not be restricted to the official Norway. Political parties, labour and business organizations, NGOs and other important groups should intensify their efforts in this field. The Government will encourage networking, particularly by the political parties and their youth organizations and by NGOs. Support for activities of this kind will be given priority within the budgets at our disposal.

The EFTA countries in the EEA make systematic use of the information and consultation procedures set out in the EEA Agreement. The EFTA Joint Parliamentary Committee is, for instance, considering how contact with the European Parliament can be expanded, given the increasingly important role of the Parliament in decision-making processes in the EU. The Government supports these efforts.

Several of the EEA matters dealt with last year were difficult. It would take too long to discuss all of them here, but one example was the revision of Protocol 1 on veterinary issues. As you know, the Government parties did not want an extension of the EEA Agreement in this field.

In this matter, the Government attached decisive importance to ensuring that considerations of public and animal health were safeguarded. When the Government asked the Storting for consent to ratify the agreement that had been reached, it was therefore on the understanding that the necessary national control measures would be implemented and adequate resources allocated for this purpose. The Government is also prepared to make active use of the safeguard clause in the EEA Agreement if there is a threat to public or animal health. The national control measures will be assessed on a regular basis. By the end of 2001, the Government will submit an overall evaluation of the new legislation to the Storting. It is also very important for Norway to give priority to the opportunities provided by this extension of the EEA Agreement to influence the development of new legislation in this field.

We have safeguarded the interests of the Norwegian fisheries industry as regards exports to the EU. One of the results of the extension of the EEA Agreement will be a reduction in veterinary frontier controls.

Other important matters are patents on biotechnological inventions, food and baby food additives, labelling and approval of genetically modified products, differentiation of employers' social security contributions and the gas market directive. Some of the directives include provisions that in the Government's opinion are unacceptable to Norway. The Government is therefore of the view that Norwegian legislation in these areas should not be amended.

The Netherlands has brought the case of patents on biotechnological inventions before the EC Court of Justice, and is asking for the directive to be repealed. Since this directive is relevant to the EEA Agreement, we are now considering whether Norway should also use its right to make its views known to the Court.

The Government has indicated that it will enter reservations against legislation that it finds unacceptable, particularly in areas relating to health, safety and the environment. If we are convinced that our solutions are the best, we will make every effort to gain support for our views, both in the Nordic countries and in other EU countries. Experience has shown that the EU often follows our lead and develops legislation more in keeping with our standards, even though this may take a long time. This has for example been true of legislation on chemicals. In the case of genetically modified organisms, we have seen progress both in labelling and in the importance attached to ethical considerations. We will stress the importance of transparency and information in these matters.

With few exceptions, Norwegian companies have access to the entire EU market on an equal footing with EU companies. This helps make it possible for Norwegian companies to remain in Norway. Cooperation on the regulation of competition, state aid and state monopolies are subject to the same legislation in the entire EEA. The legislation on public procurement enables Norwegian companies to compete for commissions on the same terms as companies within the EU. Every year, purchases worth about NOK 5 500 billion are made by the public sector in the EEA.

However, market access for fish and fish products is restricted in the EEA Agreement. It is also unclear how certain provisions are to be interpreted. Here, I am thinking particularly of Protocol 9, which governs trade in fish. The salmon agreement between the EU and Norway illustrates these points. The Government considers it important to clarify such outstanding matters, and thus improve the conditions for Norwegian fish exports to the EU.

Negotiations are under way with the EU on mutual expansion of trade in agricultural products. Negotiations on trade in processed agricultural products will probably start in the course of the year.

The EEA Agreement entitles us to take part in many EU programmes in fields such as environmental and consumer protection, energy conservation, research and development and cultural affairs. Participation in EU research programmes is a central element of the overall Norwegian research effort, and enables Norwegian business and industry to develop important networks. The EEA Agreement also provides for mutual recognition of academic and vocational qualifications and equal access to educational and research programmes.

The EEA Agreement is all these things. It provides a platform for broad-based cooperation with the EU. Nevertheless, Norway is vulnerable, as illustrated by the discussions on financial mechanisms. More than ever, we must be alert and maintain a high level of expertise.

The EEA Agreement is the basis for our cooperation with the EU, our closest partner and a very important market for Norwegian business and industry. The Government will make use of the EEA Agreement and develop it to serve Norwegian interests.

EU enlargement

The processes of change in Europe do not follow a straight course with well-defined time limits. The trends point in different directions, and there is considerable uncertainty attached to some of them.

We do not know how the negotiations on EU enlargement will proceed, nor whether the individual applicants will be able to take part in EU cooperation as full members from the first day of membership. The unresolved Cyprus issue is also an uncertain factor.

Will the current member states be able to agree on the necessary changes in agricultural policy and regional policy, on the means of financing the enlargement process and on institutional solutions for the future?

There are many questions, but as yet few answers. But one thing is clear: Norway has important interests and ideals to safeguard, regardless of the outcome. And we have a responsibility to do our share in the transition taking place in Europe at the threshold of a new millennium.

However, we must make sure to retain a realistic perspective on what is happening in the world around us.

Enlargement of the EU means that the internal market and the EEA will also be enlarged. The new member states will become parties to the EEA Agreement, and thus close partners of Norway. This opens up possibilities for wider market access, but also poses new challenges.

In consultation with business and industry, the Government will make a thorough review of the effect it will have on Norway and Norwegian interests when new countries join the EU and the EEA. We must also ensure that new EU members are informed about cooperation within the EEA and the rights and obligations this entails. This is an important task for the social partners as well, both nationally and through the EFTA Consultative Committee.

In the last few years, EFTA has entered into free trade agreements with 14 countries in Central and Eastern Europe and in the Mediterranean region. When EU enlargement takes place, it will be particularly important to retain the current conditions for the export of fish and fish products to Central and Eastern Europe. Today's free trade agreements between EFTA and the applicant countries give full tariff exemption for a number of fish products, whereas the EU still levies duties on imports from Norway. When these agreements are adjusted to the EEA Agreement, we will make every effort to ensure that conditions for Norwegian fish exports are as favourable as possible.

The Government is keeping abreast of developments in the enlargement process. Regular contact has been established with the Commission and the member countries. Consultations are held both in the EEA Council and in the EEA Joint Committee. We have also intensified our dialogue with the applicant countries.

The applications of the Central and Eastern European countries for EU membership involve new challenges for EU cooperation. There is great pressure to make changes in procedures and ensure a more equitable distribution of the burdens in an enlarged EU.

How enlargement is to be financed is one of a number of unanswered questions. In its proposal for a new financial package for the EU for the period up to 2006, the Commission has proposed that the budget should correspond to the same proportion of GDP as it does today. It has proposed that about NOK 650 billion should be allocated to support the applicant countries over the next seven years. Viewed in isolation, this is a lot of money. However, the Commission recognizes that the financial framework may seem modest when viewed in relation to the challenges posed by enlargement. Nonetheless, the Commission considers the proposed amount to be adequate.

The distribution of burdens between the member countries is closely related to the work on amendments to the common agricultural policy and regional policy, especially the structural funds. The overall effect of enlargement will be an increase in the number of net beneficiaries in the EU.

Member countries in southern Europe fear that enlargement may be funded at their expense. The current net contributors, on the other hand, do not feel obliged to contribute new funds to the Community budget. On the contrary, several of them, headed by Germany, are demanding a reduction in their contributions.

This will be a test of solidarity within the EU. The solutions arrived at may have major consequences for agricultural and regional policy. This means that the member states are engaged in a tug of war. They will attempt to reach an agreement at the summit in Brussels on 24-25 March.

If agreement is reached in Brussels, the debate on institutional reforms, such as the composition and size of the Commission and the weighting of member states' votes when the Council takes a decision by qualified majority voting, could begin later this year. These are sensitive issues that were not resolved at the conference leading up to the Treaty of Amsterdam. They illustrate the complexity of the items on the agenda that must be resolved by the EU member states before enlargement can be brought to fruition.

We do not know when enlargement will be completed. However, the process will in itself change the EU. Enlargement of the EU has always been preceded or followed by a deepening of the existing cooperation. The membership threshold for new applicants is getting higher all the time. At the same time, countries that are already members are becoming more closely integrated.

Changes in regional policy and certain aspects of the common agricultural policy may have consequences for Norway. For farmers, the Commission's proposal will mean a reduction in EU market prices. At the same time, it is proposed that more emphasis should be placed on the environmental aspects of agricultural policy and an increase in aid according to the size of holdings and the number and type of livestock.

The outcome of the EU's internal reforms will have a direct effect on EU positions in the WTO. Here, the EU is one of several major players, and common EU positions will therefore be part of the negotiating situation Norway will be facing. The Government is following these processes closely, both by means of talks with representatives of EU institutions in Brussels and through bilateral contacts in member states.

EMU

The implementation of Economic and Monetary Union and the introduction of the euro on 1 January this year is one of the most far-reaching cooperation projects in the history of the EU. It is too early to say what the final outcome of EMU will be, and how the process will continue. There can be little doubt, however, that this will eventually involve changes in a number of important aspects of EU cooperation.

The introduction of a common currency is primarily a further development of the single market. Competition between enterprises from different member states will be tougher, and it will be simpler for enterprises and the public to trade across national borders. When the price of goods and services in several different countries in Europe can be compared directly, competition will increase. Consumers are unlikely to put up with paying considerably more for a product in one country than the same product costs in another.

Thus, the introduction of the euro will have a number of favourable effects. At the same time it poses a considerable challenge to the participating countries as regards economic policy. EMU will be put to the test particularly if there is a significant disparity in economic trends within the monetary union. This could, for example, occur if a particular country should be affected by heavy, unexpected turbulence or an economic shock.

With the introduction of a common currency, the participating states lose the opportunity of using interest and exchange rates as instruments of national economic policy. This will impose more stringent requirements on financial policy and on the ability of the labour market to redistribute the labour force between companies, branches of industry and regions.

Economic fluctuations in the participating states may also create tension between the independent central bank and the political authorities in the individual countries. The central bank's goal is to achieve price stability in the euro area. Only the future will show whether the new currency cooperation will be able to accommodate these challenges and withstand this kind of pressure in the long term.

The implementation of monetary union will probably result in greater harmonization of taxes and closer coordination of important aspects of economic policy. We have already seen the contours of this kind of closer integration, for example when the Stability Pact was established in December 1996. We can see it in the provisions of the Amsterdam Treaty concerning closer cooperation on employment policy, in the appointment of the Euro XI Group for the finance ministers of the 11 participating countries and in the closer supervision of the work being carried out on structural reform in the member states. In global and international fora of economic cooperation, such as the G-7 Summits, the IMF and the World Bank, the euro countries will be able to act as a single player.

The need for a greater degree of coordination in economic policy was stressed at the EU summit in Vienna in December last year. Attention was drawn to the need for closer coordination between the member states and the Community as regards both fiscal policy and in matters to do with structural policy and wage determination. The importance of taking steps to prevent negative competition on tax levels, and consequently an imbalance in the internal market, was also emphasized.

Carrying out a general programme of tax harmonization in member states is not one of the EU's goals. However, there may be greater pressure to coordinate corporate taxation, and possibly various forms of energy taxation, in order to ensure equal conditions of competition for the business sectors of participating countries. Efforts to promote more balanced and sustainable economic development, in keeping with the principles laid down at the Kyoto conference, may also result in increasing pressure to achieve greater harmonization in the pricing and taxation of energy and environmental measures.

EMU and the introduction of the euro also means that the EU will become more of a supranational institution. Monetary policy is now the province of the European Central Bank, which is to act independently of political authorities. At the same time, EMU is an example of increasing differences in the degree of participation by member states in important areas. As you know, 11 out of 15 countries are participating.

For applicant countries, participation in EMU will be a commitment. It is quite a different story for new members, who will not be eligible for participation in EMU until they meet the economic criteria that have been set. For some of today's applicant countries, this will not be possible for quite some time.

To sum up, implementation of EMU will reinforce features of the EU that are already familiar: the EU will become more supranational in character, the tendencies towards further integration between member states in important areas of economic policy will be strengthened, and the EU will enjoy greater influence in the international arena. In the years ahead, however, we will also see greater flexibility within the EU as regards the number of countries that participate fully in the principal areas of EU cooperation.

The factors we have to take into consideration in the choice between a stable and a floating exchange rate are not much influenced by the establishment of EMU. This issue was discussed in the revised national budget for 1998. Here the Government has proceeded on the assumption that the guidelines for the exchange rate policy in relation to the stability of the krone against other European currencies will continue to be applied after the establishment of EMU. This received broad support in the Storting during the debate on the revised national budget.

The Storting has decided that a strategic dialogue with the EU should be initiated to strengthen our cooperation within the EEA and our participation in the various EU cooperation projects. In the decision it is also stated that such a dialogue may be used to explore the possibility of linking the Norwegian krone more closely to the euro.

The various possibilities for monetary cooperation will be one of the topics the Prime Minister will be taking up during his talks with President of the European Commission Jacques Santer and German Chancellor Gerhard Schröder this week.

In the Government's opinion the starting point for this dialogue should be the continuation of current Norwegian monetary policy. Intervention agreements to support the currency only have economic significance in a fixed-exchange-rate regime, and the Norwegian fixed-exchange-rate regime was discontinued in 1992.

The current Norwegian system, based as it is on a stable krone, must be seen in the context of Norway's experience in 1992 and the problems experienced by many other countries in maintaining a fixed-exchange-rate regime over time. The increase in capital flows across borders has meant that fixed-exchange-rate regimes are less stable than they used to be. There is therefore broad agreement not to return to the regime we had before 1992.

So far the signals we have received have not indicated that cooperation with the EU on the exchange rate would result in a sufficiently stable and robust new fixed-exchange-rate regime. Nor has the EU considered in detail what kind of exchange-rate cooperation with third countries it will be establishing in the future. The EU's attention has naturally been directed towards its own preparations for the implementation of EMU.

Stable exchange rates in Europe are in Norway's interest. In the course of our dialogue with the EU, the Prime Minister and the Minister of Finance will discuss how Norway and the EU can best contribute to this, for instance through the way economic policy is determined. The Government will examine whether and on what conditions Norway and the EU can cooperate to ensure that stable currency conditions continue.

Routines have been established for regular consultation with the EU bodies responsible for monetary policy, at both political and senior administrative level. In the Government's view, it is important to retain close contact with the EU on monetary issues, and the Prime Minister and the Minister of Finance will be taking up these questions during their visit.

The Government also attaches importance to the political effects of the implementation of EMU, including the effects on Norway as part of the internal market. This applies to important areas like energy and the environment, employment, wage determination, and other issues of significance to the social partners. In the long term, it will be very important for Norway to establish a regular dialogue with the EU countries on these issues, especially at political level.

The Government will therefore take advantage of the opportunities provided by the EEA Agreement and the cooperation between EFTA and the EU for discussions on these issues at political level, in the EEA Council and at the annual meetings of finance ministers. Article 46 of the EEA Agreement also allows for regular discussions on economic and monetary issues.

In 1993 Norway proposed that the finance ministers of the EFTA and EU countries should have annual meetings. The aim was to cooperate more closely on employment policy. Unemployment had for a long time been a serious economic and social problem in the EU and was also on the rise in Norway. Today, while unemployment has been cut by about half in Norway, to 3 per cent, it is on average over 10 per cent in the EU.

As a result of the Treaty of Amsterdam, the EU countries have intensified their cooperation on employment policy. For example, the individual member countries submit annual reports on the national employment situation and measures for strengthening employment. The reports form the basis for discussions in the Council and for recommended measures for the individual countries to implement.

Nordic cooperation provides Norway with a good means of access to this work. The Government will also propose that Norway should systematically report on Norwegian employment policy and strategy at the annual meetings of the EU and EFTA finance ministers, in the same way as the EU countries. Norway has much to contribute in this area, especially because cooperation between the authorities and the social partners is very close.

The Government wishes to strengthen the role of the EEA Council in political management and as a source of new ideas in cooperation with the EU in these areas. All in all, EEA cooperation provides us with a broad platform. Through the EEA Council, the EEA Committee, the EEA Consultative Committee and the cooperation between parliamentarians, we have an opportunity for systematic cooperation with the EU in key areas such as economics, energy and the environment, welfare, social and economic cohesion and employment and other issues of importance to labour and management.

Foreign and security policy

Since 1980 Norway has maintained contact and pursued a dialogue at various levels with the EU about foreign and security policy. Our current arrangement also allows for consultations in the capitals of third countries and in international organizations. Experience has shown that it is mainly up to us to contribute to this cooperation in such a way that it is meaningful for all parties.

Norway and the other EFTA/EEA countries are regularly invited to become a party to EU declarations, common positions and statements. This gives us a better opportunity to make ourselves felt. If Norway's views differ from those of the EU countries, or if we wish to take a stand alone, we can do so. In a forum like the UN we can play on different strings - working together with the Nordic countries where possible, with the EU where appropriate, and with other groups of countries where this seems called for. This gives us the opportunity for flexibility and freedom of action from case to case.

At the same time it is clear that when the EU countries take up a common position in an international organization, the EU exercises considerable influence. We see this for example in the OSCE. As chairman-in-office of this organization we maintain close contact with the EU presidency and influential EU countries.

Outside the sphere of the EU Norway has freedom of action with regard to foreign policy. And we make use of this freedom. The EU countries often spend a long time coordinating their common positions. In such situations we have greater freedom than they do to act quickly and play a catalytic role. In a number of situations this has been in the interests of other countries, including EU countries. In the UN this has helped to ensure that Nordic cooperation has continued to be close, even though the Nordic profile is not as pronounced as it used to be.

Cooperation with the Nordic countries in the field of foreign and security policy has not lost any of its importance since Sweden and Finland joined the EU. For Norway, cooperation with the other Nordic countries constitutes an important platform in relation to the EU. All the Nordic governments attach great importance to continuing Nordic cooperation, particularly in international organizations.

The Government will systematize and strengthen Norway's bilateral contacts with influential EU countries, as well as with the Nordic EU countries. Finland is part of the EU troika for the current six-month period, and the other Nordic countries will follow. This will give us an opportunity to promote Nordic interests and priorities in the field of foreign policy.

Relations with Russia are one of the main challenges in Norwegian foreign policy. In northwestern Russia the Government has given special priority to cleaning up nuclear waste and to preventive action in the environmental field. This region has unusually serious problems in many sectors of society, as I described in my statement to the Storting last May on Norway's neighbouring areas. The tasks facing us are so large and complex that broad-based international efforts are necessary to solve them.

During its chairmanship of the Barents Council, where the European Commission also participates, the Government has taken a number of initiatives to assist the region. We have also made systematic efforts to obtain more extensive international assistance with the difficult situation in this region, especially in northwestern Russia.

Today the EU is one of the main agents in the efforts to involve Russia in broader international cooperation. This is a welcome development. Norwegian and EU policies tend to overlap to an increasing extent and are being linked more closely than ever. In the main we have the same goals and interests. In recent years the EU has developed a specific strategy for its cooperation with Russia and also with the Baltic countries.

Finland's and Sweden's membership of the EU has helped to increase the EU's general awareness of and involvement in the challenges in the north of Europe. We have supported the Finnish initiative for the development of a northern dimension in the EU, particularly as an instrument for integrating Russia into this cooperation. We will continue to work together with Russia, the EU and other interested parties in the region, in accordance with the decision taken at the EU summit in Vienna last December.

The economic instruments employed by the EU include the TACIS and PHARE programmes, which are programmes of assistance for the former Soviet republics and applicant countries. We have found it expedient to link Norwegian funding to EU funding for projects of common interest. We welcome the opportunities for parallel financing of cooperation with the EU that are now opening up, primarily in connection with TACIS projects.

There are five particular areas that are suitable for such cooperation: cleaning up nuclear waste, energy efficiency, preventive medicine, cleaner production and cross-border projects. Most of the larger projects are to do with nuclear safety. This is an area where we have long desired international participation in both the economic and the technical spheres.

Outside the framework of the EEA Agreement Norway also takes part in INTERREG programmes together with the EU countries. These are cross-border programmes in which all Norwegian counties and municipalities are able to participate in cooperation programmes.

There is still a considerable gap between the goals and ambitions set out in the EU treaties and the practical cooperation that takes place between the EU countries in the field of foreign and security policy. The EU's political importance is not always commensurate with its economic role.

The experience gained from the peace process in the Middle East, the implementation and follow-up of the Dayton Agreement in Bosnia and the efforts to reach a ceasefire and a peaceful solution in Kosovo have strengthened the position of those who feel that the EU should not only make an economic contribution but also play a more prominent political role.

For this reason a number of EU countries have wished to give the EU a role in the field of foreign and security policy. This is part of the broad-based efforts to develop the European Security and Defence Identity (ESDI) that are being carried out in the EU, the WEU and NATO. The aim is to strengthen Europe's capacity to implement crisis management operations when NATO is not an appropriate choice.

The development of the ESDI is also a response to the desire of the USA for more equal burden-sharing between Europe and North America. There is broad consensus that the ESDI must develop in a way that strengthens NATO and the transatlantic ties.

NATO's decision in 1996 to develop the ESDI within the framework of the Alliance has provided an opportunity for the WEU to make use of NATO resources in crisis management operations. Norway's interests were safeguarded when the WEU decided in April 1997 that associate members are to be treated in the same way as full members in situations where the WEU makes use of NATO resources. This has given us an opportunity to participate in the European share of the work on security policy in Europe.

Prime Minister Tony Blair initiated a debate last autumn on enhanced European defence cooperation. The reason for this was a desire for a more effective and credible foreign and security policy in the EU and a stronger total European defence capability. The initiative was followed up in close cooperation with France and resulted in a British-French declaration after the summit between the two countries in St. Malo at the beginning of December.

The aim of the declaration was to encourage debate on how the EU's common foreign and security policy could result in joint action when the EU wishes to act independently of NATO.

The declaration defines the minimum level of practical defence cooperation that the EU needs in order to play such a role. The two countries consider that the EU must have the ability to obtain information, analyse specific situations and make strategic plans, all of these with the aim of making independent decisions in European fora.

The declaration outlines principles but has left a number of difficult questions unanswered. Relations with Allied non-EU members like Norway are touched on but without any clear indication of how they are to be dealt with.

Both the UK and France emphasize the importance of avoiding unnecessary duplication of effort within the various institutions. The EU must be gradually given more automatic access to resources that are ordinarily under Allied command. If such a scenario were to become a reality, it could mean that strategic political decisions would to a greater extent be made within the framework of the EU, while the resources were made available by NATO.

The declaration signifies a change in the British view of the EU's role in this area. Previously the UK considered it essential that the WEU should continue to be an independent institution. Prime Minister Blair, however, has emphasized that the UK has an open attitude to the consequences this development may have for the WEU. We must assume that agreement on needs will be followed by a debate on means: in other words, a debate on the WEU and its future relations with the EU.

There seem to be three options. First, the WEU could become part of the EU. Secondly, the various elements of WEU cooperation could be split between the EU and NATO. This solution would avoid the problems that full integration with the EU would create for non-Allied EU members. Thirdly, the WEU could be further developed as an independent organization.

The emphasis in European security policy cooperation has to some extent already been shifted from the WEU to the EU. In accordance with the Maastricht Treaty, the EU made certain decisions last autumn that were then submitted to the WEU for further evaluation and implementation. In November the EU countries' defence ministers had an informal meeting in Vienna. This was the first time a meeting of defence ministers had been held within the EU, and it may signal a new departure in EU cooperation. The defence ministers' meeting was also referred to in the St. Malo declaration.

The dissolution of the WEU would create totally new challenges for Norway as regards participation in crisis management and European security in general. It could also mean closer coordination between the EU countries on issues discussed in NATO. I would also imagine that, in this case, there would be a desire to establish closer and more direct relations between the EU and NATO.

The debate on these issues will take place in all the organizations affected - the EU, the WEU and NATO - and in bilateral contexts. The WEU has initiated an analysis of these issues. Even though we are not involved in the EU debate on the subject, we will make our views known in the WEU and NATO.

The question of the integration of the WEU into the EU was discussed in detail in 1995. It was agreed in the WEU that in the event of such integration, the WEU associate members should be given the option of some form of association with the EU's foreign and security policy. So far, this issue has not arisen. But if the EU should become the framework for political decisions on European security and crisis management to a greater extent than at present, the natural result would be for Norway and the EU to deepen their existing cooperation within the framework of the current arrangement for political dialogue.

Norway makes a substantial contribution to international crisis management. It is therefore essential for us to continue to participate fully in the efforts to further develop the European nations' capacity for crisis management. The continuation of full Norwegian participation in European security policy cooperation is also important, especially for our position in NATO cooperation.

Norway has been an active participant in a number of crisis management operations, and we wish to continue cooperation in this field. It is important for the European capacity for crisis management that the main military operational capacity continues to rest with NATO. The Government's point of departure is therefore that Norway's rights as an Ally, and as an associate member of the WEU, must be maintained in any future solutions that may change the cooperation between the EU, the WEU and NATO.

In practice this will have to be ensured by involving Norway in discussions on defence and security policy issues within the EU. This can be done within the framework of the current foreign policy dialogue arrangement with the EU. We have placed great emphasis on this point in the talks at senior official level that have been held in the last few weeks in London, Paris and Bonn and with other Allies. We will also take this up in fora where the British-French initiative is to be discussed at political level, in NATO and the WEU. We are maintaining close contact with the German EU presidency on these issues, both when the Prime Minister visits Bonn tomorrow and when I myself and later the Minister of Defence have meetings with our German colleagues.

It is the Government's impression that the key Allies fully acknowledge Norwegian needs and that they welcome Norway's initiatives. They are prepared to consider solutions that also safeguard Norwegian interests.

Justice and home affairs

Security and stability also involve taking steps to protect individuals from crime and violence. All over Europe, the crime scene is becoming increasingly dominated by international organized crime. This is something that affects all countries, and the prevention of cross-border crime requires international collaboration.

We are involved in this work through the Nordic cooperation on justice and home affairs, the Baltic cooperation and the Council of Europe.

In a few years' time, the EU may comprise over twenty European countries. Because of this, but also as a result of the general rise in international crime, the EU countries have over the last few years expressed their desire to strengthen their cooperation on justice and home affairs. For today's applicant countries, full participation in this area will be required from the very first day of membership.

In future, cooperation within the EU on justice and home affairs will cover a broad range of areas, including judicial cooperation in criminal and civil matters, police cooperation, cooperation on asylum and immigration policy, cooperation on controls at the EU's external frontiers, and combating racism. The aim is to lay the basis for what the EU refers to as an area of greater freedom, safety and security for all. The purpose is to ensure the free movement of persons while at the same time taking action to strengthen controls at the external frontiers.

As part of these efforts, the EU member states decided in Amsterdam to integrate the Schengen cooperation into the EU's institutional framework. For Norway, this has meant that the present cooperation agreement with the Schengen states can no longer continue. In the Storting on 18 December last year, I gave an account of the institutional solutions necessary for the continued participation of Norway and Iceland in the Schengen cooperation when this has been integrated into the EU. This institutional agreement was negotiated on the basis of a majority vote in the Storting in favour of continued Norwegian participation in the Schengen cooperation. I also referred to the Government's fundamental opposition to the Schengen cooperation, an opposition which is based on considerations of privacy, refugee and asylum policy, the need for border controls and the integration of the Schengen cooperation into the EU.

Under the institutional agreement negotiated by the Government, the EU has undertaken to keep Norway and Iceland informed at all times about measures and legislation within the field of justice which are being drawn up by EU agencies. This applies to matters that are not part of the Schengen cooperation. The plan of action recently adopted by the Council of Ministers of Justice and Home Affairs serves as a good example.

Combating and preventing crime are key areas, and this includes the issue of strengthening EUROPOL's mandate. Immigration and asylum issues will be an important topic at the EU Summit in Finland this autumn. The agenda will include a review of the Dublin Asylum Convention, which gives rules on which member state should examine an application for asylum.

The Government will keep abreast of developments in EU cooperation within the field of justice and home affairs. We receive regular information about the issues being dealt with in this field through our six-monthly consultations with the EU presidency, including information on areas in pillar III that are not included in Schengen. Norway also participates in an expert group under the European Conference for combating drug-related crimes.

The Schengen negotiations have shown that EU member states set limits as to how far other countries can be included in the further development of the Schengen cooperation and other relevant and associated areas of cooperation. However, the cooperation will act as a channel by which information can reach us at an early stage and which affords us the opportunity to convey Norwegian positions and views to EU member states.

Concluding remarks

The foundations for Europe's development in the next century are being laid now, and Norway will make its contribution. This is one of the best ways of safeguarding our own security and interests. We will make use of the frameworks of cooperation that are at our disposal and we will contribute towards their development. We will accomplish this by building alliances and strengthening ties with our European partners and allies. And we will continuously analyse the processes of change as they take place, and assess their effect on Norway.

I have presented and discussed some of the most central current trends in Europe, as seen from the Government's point of view. These trends must of course be viewed in a wider international context as well. Developments in Europe and in the EU are also affected by global developments.

The 1994 referendum clarified Norway's relations with the EU. Norway cooperates closely with the EU and its member countries, and the development of the EU is therefore of great importance for Norway. The Government will therefore submit a report to the Storting on Norway's European policy in the course of the year 2000. This report will provide the Storting with a sound basis for discussing trends and challenges that are central to European cooperation as we embark on a new century. The Government will also be taking steps to encourage a dialogue with key organizations, the social partners, the political community, non-governmental organizations and others.