Prime Minister Kjell Magne Bondevik
Growth and Security in a Globalised World
Historisk arkiv
Publisert under: Regjeringen Bondevik II
Utgiver: Statsministerens kontor
Sanderstølen, Norway, 5 February 2003
Tale/innlegg | Dato: 05.02.2003
Prime Minister Kjell Magne Bondevik
Growth and Security in a Globalised World
Staying Competitive in a More Complex World
The Sanderstølen Conference, Norway, 5 February 2003:
Ladies and Gentlemen,
Good morning.
As we speak, two countries far apart and so different are on our minds.
With consequences for our safety and security, for ordinary people’s lives, for the supply of energy and the international rule of law Iraq and North Korea show us what globalisation is all about.
Without every nation adhering to the rule of law, and without popular support for our actions to uphold that rule of law, safety and security in the long run is an illusion.
And energy is part and parcel of the agenda of maintaining and advancing safety and security.
Let me raise with you the following:
- The effects of globalisation on government and business
- The need for economic growth and for safeguarding the environment
- The importance of security against terrorism
- How to ensure energy security and a stable oil market.
This is not the first time the world is going through a period of grand capital flows, mass movements of people and cross-border cultural currents. A quarter of my countrymen emigrated to America some one hundred years ago. Trade and capital flows have hardly been freer than in the period up until 1914.
Yet, the magnitude and the speed of change are now all so much greater.
Globalisation is interdependence. My colleague Tony Blair says: ”Your problem becomes my problem. One country’s war becomes another country’s asylum seekers. One country’s pollution becomes another country’s floods.”
These issues demand global solutions.
Global solutions can only be found in international cooperation. Only in this way can we reduce the probability of war by moving a conflict to the negotiating table.
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International terrorism has also gone global. There are long distances between New York, Yemen, Bali and Moscow. Yet, tragedy has struck them all.
In many ways, international terrorism feeds on the benefits and virtues of modern societies. Our economies are one in a global market. Our means of transport and communications erase barriers of the past in geography and distance. These are all great accomplishments.
Openness is the foundation of our wealth, but provides a new source of vulnerability. Terrorism strikes at the very nature of open and democratic societies. It strikes at some of our core values.
The petroleum sector is vulnerable, I would say particularly vulnerable. Oil and gas installations anywhere in the world could be targets. The attack on the oil tanker “Limburg” in the Bay of Aden showed that international shipping is yet another vulnerable link.
How, then, do we meet such a threat that is often not represented by a nation-state, by a government or a traditional set of decision-makers?
International cooperation on a broad set of measures is key. It might seem unspectacular. Yet, it is crucial, it is complex, and it is demanding.
The challenge of global terrorism requires strong political answers as well as diplomatic and economic action. We must pay serious attention to the less developed nations and groups within nations, respect for religion, cultural and ethnic diversity. We must struggle to promote democracy and open societies.
We must exchange intelligence, identify and close terrorist financial sources, freeze their financial assets.
My Government is seeking to do its share.
We are in for a long-term commitment. Perhaps fighting terrorism is an open-ended endeavour that will remain with humanity always.
To me it is clear that poverty, violation of human rights, lacking democratic freedoms provide a particularly dangerous mix that strengthens support for terrorist networks.
We must attack these root causes. My country is fully committed to the cause of international economic development. Norway as do many countries supports poverty alleviation, human rights, democracy and the peaceful resolution of conflict. These are key measures to limit the support for terrorist networks.
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Over the past more than fifty years, restrictions on international trade, capital movements and foreign exchange transactions have been reduced or eliminated.
A framework of global and regional structures that have replaced national rules with international ones has made this possible. The nation-state has shed some of its functions as a decision-maker, regulator and enforcer. Governments have instead opted for exercising powers in concert with others.
We in Norway know more than most about the advantages.
Few countries are as dependent on international trade as Norway. Since the Viking age and throughout the centuries, this small nation has thrived on trade, the fisheries, shipping and, more recently, on the global market for oil and gas.
Our level of providing public services is directly linked to open markets and a common playing ground enforced by international bodies.
Small countries stand to gain more under a multilateral regime than under webs of bilateral arrangements that tend to favour the stronger party. Yet, all benefit from an international community founded on the rule of law. We need further to strengthen a stable, predictable rule-based system for trade and international economic cooperation.
Yet, this does not answer all our calls.
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Throughout my political life the fight to promote the less developed nations of the world has been a personal commitment and driving force, as it is to my Government.
For the sake of the dignity of man, fairness and human rights, integrating all developing countries into the trading system is a crucial issue.
Norway’s commitment is manifesting itself in a large and expanding development aid budget. I am the first to recognise that aid itself is not a sufficient means to win the battle against poverty. Good governance is also a prerequisite, so are improvements in the global trading system. A key objective of the Doha trade negotiations is to strengthen the integration of all developing countries into the trading system.
It makes the issue no less urgent that it is also firmly linked to international terrorism.
Developing countries need technical assistance in order to help them benefit from the existing trade rules and strengthen their participation in the negotiations on future arrangements. But most important, they need access to foreign markets.
As of 1 July last year, Norway granted duty- and quota-free access to all products from less developed countries. In the international negotiations on agriculture further tariff reductions will be considered. We want special attention to be paid to products of particular interest to developing countries.
The World Trade Organisation has set the task of liberalising the trade in energy services. I support this work. If negotiations are successful oil and gas contractors and service providers will face reduced trade barriers and a more level playing field. This would bring important cost savings for the entire oil and gas industry, to the benefit of society at large.
Globalisation means that companies with ease establish branches or enter into partnerships all over the world. Manufacturing can easily be relocated to low-cost countries. Many of these countries offer not only low salaries. They offer less developed workers’ rights and low health, safety and environmental standards. Fortunately, many foreign companies show the way by adopting standards above the national legal minimum requirements. This, in my view, is a price that is not only worth paying. It is almost a prerequisite. The alternative is to undermine one`s own legitimacy both at the country level and globally.
The issue of promoting a level playing field also in the area of respect for workers’ safety and individual rights in the workplace is a daunting task, but no less important.
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Ladies and gentlemen,
You present here today, executives of the oil and gas industry, play a major economic role in your own countries as well as in many host countries rich and poor.
The energy industries have to act as responsible global citizens.
More than ever before, governments, consumers, stockholders and the general public are more alert to the role of private enterprise.
The Confederation of Norwegian Business and Industry has established a programme on corporate social responsibility. The aim is to raise awareness and inform members on ways of reconciling business and ethics in foreign operations.
I commend this work.
My Government has created a “Consultative body for human rights and Norwegian economic involvement abroad.” Under the auspices of the Ministry of Foreign Affairs, this consultative body consists of private companies, business and trade organisations, trade unions, non-governmental organisations, research institutions and government ministries.
The purpose is to strengthen ethical issues, human rights and the political aspects of business in geographical areas of conflict and war. The body acts as a forum for dialogue, mutual information and exchange of ideas and experience. Likewise, it provides policy-makers with valuable inputs from industry.
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Energy is a vital part of international politics. It is vital to economic development. It is crucial to the environment and our future.
How we deal with the global issues of energy will decide whether the world’s development will be sustainable.
For the next generation or more fossil fuels will constitute a main source of energy. Fossil fuels will continue to meet the energy needs of the world. For developing countries to depart from poverty, improved access to energy is vital.
Two thousand million people currently go without the energy necessary for development. This is a key element in causing the poverty trap. The poor need to be connected to electricity and gas grids. This is a necessary condition for their economic growth and for global production to increase.
But the poor have but little say in the access to modern energy supplies.
A main global challenge is therefore how poverty can be reduced by means of increased access to energy for the developing world. This is an enormous challenge. And on top of that, or simultaneously, we are faced with the equally important task of improving environmental protection. While global demand for energy continues to rise.
The business community and governments have a common responsibility to secure global energy distribution and even supplies. This will have to be combined with the protection of the environment.
To this end, the oil and gas industry can offer risk capital, competence and technology.
Governments must provide long-term stable frameworks for their operations.
Only in such collaboration and with a shared commitment can we secure energy supplies and promote environmental protection in the process.
Only in such collaboration can we promote renewable energy sources and natural gas and encourage technology for more efficient use of all fossil fuels. Adequate infrastructure is fundamental.
Access to energy is crucial in order to provide public services and improve living conditions.
This, in turn, contributes to political stability, secures the foundation for democratic institutions, lessens the risk of armed conflicts and, ultimately, limits the fertile ground for international terrorism.
These are tremendous challenges. Yet, progress is made.
I attended the World Summit on Sustainable Development in Johannesburg last autumn. Less was accomplished than we had hoped for, but more than we could have feared.
Now it is up to political decision-makers around the globe to follow up on the pledges made in Johannesburg. All countries that have endorsed the Plan of Implementation must act on their commitments. The necessary follow-up requires strong international institutions. Only such institutions can monitor implementation. Only they can ensure that the Plan of Implementation remains a viable document that will trigger action on the national level.
As I stated in Johannesburg, my Government is fully committed to the targets set at the WSSD. Norway intends to spend 54 million US dollars in new funds over three years. These funds will be channelled to developing countries in the water, health and agricultural sectors, in the field of biodiversity and, not least, in the energy sector.
Let med add that my country is supporting the initiative to curb the flaring of gas associated with the production of oil.
We launched this initiative with the World Bank, some key oil producing countries and a group of oil companies. I urge you all to join us in this partnership that combines addressing poverty, protecting the environment and securing sound economics.
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There is a need for adequate investments to ensure profitable production and long-term security of supply. This rings particularly true for gas. Gas resources are typically found in remote areas to the market. Basic infrastructure is often lacking.
Therefore, to ensure adequate investments and long-term security of supply, let us braise ourselves for the task of predictable conditions. This is a prerequisite for availability. This is a cornerstone for developed as for developing countries alike.
It is a major objective of my Government to contribute to such predictable framework conditions.
We have secured a sound business climate for oil and gas activities on the Norwegian Continental Shelf. In order to explore for and produce petroleum safely and effectively, we need the expertise of the international oil and gas community.
International companies contribute substantially to Norway's privileged standing as a reliable producer and supplier of oil and gas.
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Some of the world’s major oil producers work together within the Organisation of Petroleum Exporting Countries. OPEC controls two thirds of global oil reserves and 40 per cent of production capacity.
OPEC has for a long time proven to be a reliable supplier of oil and contributes to oil market stability.
By holding idle production capacity, OPEC is in the position rapidly to increase production if unexpected shortages occur in the oil market.
As a consequence of OPEC's stated goal of sustaining oil prices at a reasonably high level, oil exploration and development in high-cost regions outside the Middle East is made commercial and viable.
Without OPEC's efforts to support oil prices, non-OPEC oil production would have been much lower. In this way, the dependency on Middle East oil is reduced.
Oil prices at a reasonable level are vital for the economic and social stability of oil exporting countries. Many of these countries are totally dependent on oil revenues. Such stability is a precondition for undertaking investments to expand oil production capacity and to meet future demand for oil.
Oil prices at a reasonable price level are an insurance premium we all have to pay. Thus, we maintain secure and stable supplies of oil.
To contribute to such stable prices my Government is prepared to regulate production if we deem that necessary. We also cooperate with our partners in the International Energy Agency.
An achievement of the last decade has been the constructive dialog between governments of petroleum producers and consumers.
In this producer-consumer dialogue a key issue is energy security.
Energy security encompasses the need for security of demand for the producers, as well as security of supply for the consumers. The two parties realise that there is strong interdependence. They – that is we - are in the same boat. Stability and security are vital to both sides.
We have a common interest in alleviating market disturbances.
Procedures can cushion market shocks by regulating production and mobilising spare capacity. Consumers have a range of policy options to dampen the impact of supply disruptions.
Emergency oil stocks are a central element. Most industrialised countries hold oil stocks for at least 90 days consumption. Heightened focus on security concerns has led the United States to increase their strategic petroleum reserves. The European Commission has proposed to increase oil stocks in the European Union member states to 120 days of consumption.
Consumers have other means to influence their dependency on oil.
Energy diversification has successfully been pursued by many countries for decades. In a crisis, fuel switching in plants that have multi-fuel capacity can play a role.
Thus, producers and consumers should not create divisions that do not exist. There should be no conflict between the market measures producers and consumers have at their disposal. They all contribute to global energy security.
Let me add a note on an international initiative that warrants our full attention. The initiative deals with transparency in the energy sector, particularly on the role of oil and gas companies in countries plagued by armed conflicts and corruption. The objective is to create standards for disclosing payments made to governments. In this way, the citizens of the country concerned become aware of the actual revenues.
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Oil is the most important source of energy. Oil is subject to global market conditions.
Consequently, oil warrants particular political attention.
However, natural gas also deserves our watchful eye, even though most supplies of natural gas are confined to regional markets.
My country is a significant supplier of gas to Europe.
Europe's dependency on imported gas will increase. Norway will supply the European market with gas. We are party to the internal single market through the Agreement on the European Economic Area. In this way we adhere to the same rules that apply in the EU member states.
Our neighbour Russia will remain the largest single supplier to Europe.
We do not fear this competition. We welcome it. This competition will ensure a continuous focus on efficiency in the production of Norwegian gas. The energy dialogue between Norway and the Russian Federation is considerably strengthened. Elements in this dialogue are the European gas market and the role the two countries play in Europe's security of gas supply.
Let me remind you also of the huge potential of the Shtokman gas field in the Barents Sea of the High North. The exploitation of these tremendous resources will be the call of the near future, not only for the Russian side. Norwegian deep-water technology could be key in any exploitation.
In order to meet the European demand for gas large investments in infrastructure are necessary. On the Norwegian Continental Shelf, two challenging gas projects are underway, Ormen Lange and Snøhvit.
Snøhvit, or “Snow White,” in the Barents Sea is the first export facility for liquefied natural gas in Norway. The LNG will be exported to Spain and the United States. In this way, Norwegian gas is introduced to a new continent.
LNG is set to increase its market share significantly. LNG provides a global dimension in gas markets. LNG provides a link between regional markets.
We can see a global gas market emerging as LNG trade expands and involves more players. With improved technology, called gas-to-liquids, we can exploit gas reserves where traditional pipelines are not economical. These trends have indeed bearings on energy security as well as market developments.
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Ladies and gentlemen,
Globalisation brings challenges, yet globalisation is part of the solution.
These days, the world community discusses the approach to Iraq. Until we left the United Nations Security Council at the end of last year, my Government contributed - as we still do - to the strict view that the issue, with all its consequences, should be addressed within a UN framework.
An armed conflict in Iraq could have deep consequences for energy security.
Above and beyond that issue, crucial as it is, the interdependence of the globalised world should indeed make governments agree on common goals and on the steps to reach them.
A dynamic global economy constitutes the best basis for developing new technologies. We need these technologies to reach our targets.
Energy is essential for economic development, growth, welfare and security. Fossil fuels continue to play the most important role in supplying this energy. Increased use of energy does not come without costs. For all these reasons energy issues remain central to everyone, everywhere. Let us keep our highest aspirations alive: Making globalisation more inclusive to all of mankind and thereby lifting the hopes of men, women and children everywhere.
I welcome the responsibility of Norway and the opportunity we have to play our part.
Thank you for your attention.