The Royal Ministry of Foreign Affairs, Oslo
Press Division – Editor: Benedicte Tresselt Koren

Norway Daily No. 103/03

Date: 3 June 2003

Government tries for budget deal with Labour (Aftenposten)

Yesterday afternoon, the ruling coalition parties contacted representatives of the Labour Party in an attempt to reach agreement on the revised national budget. It had become clear earlier in the day that a deal between the Government and the Progress Party would not be possible. The gulf between them was just too great. The Progress Party wanted to spend NOK 3-4 billion more than the Government, mostly on measures to combat rising unemployment. For their part, The coalition parties say the Progress Party’s demands would have cost NOK 5-6 billion in the first six months alone. They also reacted to the fact that additional demands for next year were included in the Progress Party’s proposal. Bringing down unemployment will be the key issue for the Labour Party if there is to be a budget deal with the Government. Labour leader Jens Stoltenberg is not particularly optimistic. "Our starting point is a Conservative budget which has already led to higher unemployment," he said. The two sides have agreed to meet shortly, perhaps even today. Labour will waste no time in presenting its list of demands. It will want to see if there is any basis for further negations and find out what the Government is prepared to offer.

Government forced to raise pensions (Verdens Gang)

This is the best news of the year for a million Norwegian pensioners and incapacity benefit claimants: Jens Stoltenberg and the Labour Party has said it will force the Government to raise pensions and benefits. "Kjell Magne Bondevik must now keep his promise. If not, the Labour Party will ensure that he is forced to in the Storting," thundered Mr Stoltenberg. Using VG as a vehicle, the Labour leader is now dictating what the PM must do to prevent the Storting from staging a major revolt before the summer recess. Pensioners and those on incapacity benefit must receive a 4.5 per cent increase if wage earners get 4.5 per cent. And that is final! "The Bondevik government itself says in its revised national budget that pay rises for wage earners will average 4.5 per cent. If Mr Bondevik believes that the general level of pay rises will actually be less than that, he should document the fact. So far he has not done so," said Mr Stoltenberg.

Conservatives forced to back down (Dagbladet)

The Conservatives want to join forces with the Labour Party to push through a major expansion of hydro-electric power production on the Sauda river system, but are being stymied by their coalition partners in the Liberal and Christian Democratic parties. "I am surprised that the Christian Democrats and the Liberals are so strongly opposed to a slightly larger HEP development project on this river system," said Leif Frode Onarheim, the Conservative Party’s spokesman on energy and the environment. This afternoon he is due to meet Labour energy representatives to discuss the Sauda development project. Labour is backing a more wide-ranging expansion of HEP production than the Government. The Conservatives agree with Labour, but the Christian Democrats and Liberals are refusing to let the Government do a deal with Labour. "Our parliamentary group has voted unanimously in favour of a resolution, which is crystal clear," said Christian Democrat MP Bror Yngve Rahm, chairman of the Storting’s Energy and Environmental Committee. Leader of the Conservative Party’s parliamentary group, Oddvar Nilsen, attempted to calm the situation by underlining that the Conservatives have not yet made a formal decision on the issue.

Abolition of electricity tax could lead to waste (Dagens Næringsliv)

The Government’s plan to abolish the electricity tax for commercial consumers could lead to a 3 TWh increase in consumption. This is the equivalent to six times the proposed expansion of hydro-electric power production on the Sauda river system. Following this winter’s power crisis, the Government has tabled a proposal that could make the situation in the electricity market even more difficult in the years ahead. The Government wants to exempt businesses from the electricity tax. Behind the proposal is a demand from the EFTA Surveillance Authority (ESA) for all businesses to be treated equally. Either heavy industry, which is currently exempt from the tax, has to start paying it in line with everyone else, or all businesses must be exempted. Businesses would save a total of NOK 1.8-1.9 billion next year if they no longer had to pay the electricity tax. But by making electricity cheaper for business consumers, the Government expects consumption to rise. "This would lead to a considerable increase in electricity consumption, and a complete halt to energy conservation measures and efforts to develop alternative energy sources. It would mean additional pressure to build more hydro-electric and gas-fired power stations," said Øystein Djupedal, economic policy spokesman for the Socialist Left Party.

SAS slash fares (Aftenposten)

SAS had almost priced itself out of the market. SAS’s new chief operating officer Sören Belin has now been forced to reduce ticket prices by 15-30 per cent in the next few years in order to meet the competition from low-cost airlines. "We know that in highly competitive markets, prices tend to lie 30 per cent below today’s level. That is where we also need to be," said Mr Belin, who is therefore planning to meet low-cost competitors like Ryanair, Norwegian and EasyJet on their own home ground by competing on price. "We would like to be a low-cost airline, but not a low-service airline," said Mr Belin yesterday. Everything that is not profitable will be cut out. Among other things, that means the axing of the non-stop route between Oslo and New York, which was only reopened on 1 April.

SAS says save or face the sack (Dagsavisen)

Sören Belin, newly appointed chief operating officer at SAS, has given the airline’s Norwegian employees an ultimatum – support the package of measures to save cash, or face the sack. At the same time, he is threatening to axe international and domestic routes from Oslo if Norwegian cabin crews do not accept management’s terms and conditions. SAS’s new chief operating officer has run out of patience. He is tired of arguing the toss with the company’s Norwegian cabin crews and is now demanding loyalty. An agreement with the cabin crews is all that remains for the entire company to fall into line behind the latest package of cuts, totalling NOK 8 billion. The negotiations are already one month behind schedule, and Mr Belin has now made it plain that he has had enough and is ready to issue redundancy notices.

Working group proposes three-month military service (nrk.no)

Compulsory military service could be cut to three months for half of those eligible from 2006. This is one of the proposals being made by an internal working group set up by the Norwegian Armed Forces and led by Colonel Ove Weisæth, General Staff, Norwegian Army. In an interview published in the armed forces monthly magazine, Forsvarets Forum, Col. Weisæth said that compulsory military service for those destined for international operations, border patrols, His Majesty the King’s Guard, the special services and other specialist units will continue to be as long as today. But around half of those eligible for military service could perhaps make do with three months of basic training before they are transferred to the army reserve as part of the Heimevernet. The working group’s recommendations are now being considered by the Armed Forces leadership, who will make a formal recommendation to the Defence Minister in November.

1. Worth Noting

• There is an optimistic tone between the opposition parties and the Government over proposals for reforms in the pre-school day-care sector. The opposition could accept a new compromise settlement today.
  (Dagsavisen)
• Although the aim is to get Norwegians to leave their cars at home and switch to public transport, the National Transport Plan, published yesterday, contains proposals for a substantial increase in investments to improve the most heavily used roads. The plan recommends spending almost three times as much money on roads as on the railways.
  (Dagsavisen)
• "Norway must make a contribution in those areas where the need is greatest, and must help to strengthen the UN’s role in the international community," said Raymond Johansen of the Norwegian Refugee Council. "We must say yes to Kofi Annan’s plea to send soldiers to the UN force in the Congo, and show that we think a human life in the Congo is worth as much as other human lives," he continued. Mr Johansen is upset by the fact that Norway is good at making fine speeches, but does not follow up its words with actions.
  (Aftenposten)
• The property market has all but ground to a halt. While record numbers of properties are up for sale, both prices and the number of potential buyers have fallen. Many property owners are facing a considerable drop in the value of their homes, according to Rune Garborg, marketing manager of real estate agents DnB Eiendom.
  (Dagens Næringsliv)
• Finally some good news for unit trust investors. For the first time in years, the major Norwegian unit trust funds can point to a solid rise in share prices. VG has tracked share price developments so far this year for the ten unit trusts in which Norwegian private investors have placed most money. All ten can show a positive return on investment so far this year. Three of them have even risen more than the Oslo Stock Exchange’s main index.
  (Verdens Gang)
• Biotech and internet shares received a pounding when the stock market bubble burst three years ago. Now they are moving ahead at full steam. The technology-focused Nasdaq exchange has risen around 21 per cent so far this year, and a number of IT companies have experienced a renaissance on the stock market after three years of wandering in the wilderness.
  (Dagens Næringsliv)

2. Today’s comment from Dagbladet

The Ministry of Finance wants to keep even closer tabs on our credit card use. A proposed new surveillance body would keep a day-by-day watch on Norwegians’ use of credit cards abroad. The move is prompted by the best intentions. The new body would be a weapon in the battle against money laundering. But it would also be a step in the direction of the complete surveillance of everything we do in our day-to-day lives. The scary part is that people think that more and more surveillance is alright if it means that we ourselves can feel even safer. After all, we are living in an age when some of us are even willing to allow ourselves to be watched 24 hours a day by television cameras that broadcast our most intimate actions to a huge audience. In other words – the authorities can give themselves the right to force their way into any aspect of our lives without meeting any resistance. But when the ‘big brother’ society reveals itself in all its horror one day, it will, unfortunately, be too late to protest.