The Royal Ministry of Foreign Affairs,
Oslo Press Division

Norway Daily No. 111/00

Date: 15 June 2000

INTEREST HIKE EATS UP WAGE INCREASE (Aftenposten)

Banks’ deposit rates at Norges Bank are being raised by 0.5 percentage points, effective from Thursday 15 July. This interest rise will most likely not be the last one. The entire wage increase is now being eaten up by higher interest rates, but Central Bank Governor Svein Gjedrem is still on the warpath. This interest hike makes it even more advantageous to work at Norges Bank. Employees there receive cheaper mortgages, and their interest rates are not raised. The rest of us can expect a letter from our banks in the near future.

CONFEDERATION IS PROVOKED BY GJEDREM (Dagens Næringsliv)

Central Bank Governor Svein Gjedrem is provoking the Norwegian Confederation of Trade Unions with yesterday’s interest hike. In the view of the Confederation’s senior economist, Stein Reegård, Norges Bank has to stop acting on its own initiative while at the same time demanding that others adapt themselves to its decisions. He regards the rise in interest as an overreaction, and is critical of it. He would like the Government to respond more clearly than it has so far.

PATENT PROMISE FROM BJERKE (Nationen)

Minister of the Environment Siri Bjerke will not agree to introduce the EU directive on patents if it is in violation of Norway’s commitments under the UN Convention on Biological Diversity. Minister of Foreign Affairs Thorbjørn Jagland denies that he will violate the provisions of the Convention. He hopes, all the same, that the EU’s patent legislation does not conflict with the UN Convention. Mr. Jagland now says, "I have not said that I want to introduce the directive on patents immediately. It is not clear whether it is covered under the EEA Agreement."

LABOUR OPPOSITION TO PATENT ON LIFE (Klassekampen)

High-level Labour politicians are again in trouble after having avoided dealing with a difficult issue according to normal party routines. Party chairman Thorbjørn Jagland has supported the EU’s directive on patents entirely on his own. He is meeting a storm of protest from former Minister of the Environment Torbjørn Berntsen and designated chairman of the Norwegian Labour Youth League Eva Kristin Hansen, among others. Many protesters are demanding that the issue be raised at the national party congress in November.

REDUCED PENALTY FOR CONFESSION OF GUILT (Verdens Gang)

The Minister of Justice wants the legal system to work more quickly. If you regret your crime and confess in order to pay your debt to society and to ease your conscience, Minister of Justice Hanne Harlem will consider reducing your sentence. Today she will be meeting with experts in Norwegian criminal law in order to find ways of streamlining legal procedures.

HARLEM NOT NECESSARILY SUPPORTIVE OF NEW COMMISSION (Aftenposten)

While former Minister of Justice Odd Einar Dørum was eager to establish an independent commission to deal with all petitions for reopening cases, current Minister of Justice Hanne Harlem is not sure that a commission based on a British model would be the best solution for deciding whether convicted criminals should be given a second chance in the legal system. The Ministry of Justice is currently working to capacity to revise Mr. Dørum’s draft document so it can be circulated for comments.

REACTING TO PRESSURE FROM VALUES COMMISSION (Aftenposten)

An "initiative group" has been set up to choose which issues the Values Commission should get involved in. Now it appears that this group wants to place itself above everybody else, in the view of State Secretary øystein Mælend at the Ministry of Justice. Mr. Mæland is surprised by the fact that the Values Commission has contacted the Ministry on a number of occasions in connection with an immigration case in Rogaland County. "The case was decided by the Ministry, and the political leadership was informed of the decision. The members of the initiative group seem to be taking advantage of their roles as members of a Government-appointed commission to act as though they were above absolutely everybody else," says State Secretary Mæland.

WANTS GODAL TO ENSURE REPURCHASING AGREEMENT IN ADVANCE (Aftenposten)

"The Minister of Defence must ensure that the conditions for repurchasing are met before the new frigate agreement between Bazan and Mjellem & Karlsen is signed," says Knut Aga, managing director of Umoe Sterkoder. However, Minister of Defence Bjørn Tore Godal emphasizes that the Ministry of Defence will not get involved in negotiations between Bazan and Norwegian shipyards. The Ministry will not give its final opinion on the agreement until the entire repurchasing package is finished. The condition of 100 per cent repurchasing right for Norwegian enterprises is absolute.

WORTH NOTING

• Norges Bank’s increase in the interest rate should be a warning for everyone who is giving the impression that we can increase government spending because we have such a large surplus in the fiscal budget, according to Minister of Finance Karl Eirik Schjøtt-Pedersen. ( NTB)
• Norges Bank’s goal should be to stabilize inflation at one to three per cent. This is the view of a group of economists who are afraid that current policies are too austere and could inhibit economic growth. They presented their views yesterday in a report on Norwegian monetary policy. ( Dagens Næringsliv)

• A group called "Norges Bank Watch" has been set up by the Centre for Monetary Policy at the Norwegian School of Economics and Business Administration. This group believes that an interest increase of 0.5 per cent is more than expected, and that Central Bank Governor Svein Gjedrem has gone overboard in order to scare us into spending less. ( Dagsavisen)
• The corporate assembly at Orkla defied the wishes of a number of major shareholders when they rejected financial expert Christen Sveaas as a member of the Orkla board. ( Aftenposten)
• A survey carried out by Din Mening/Norsk Statistikk indicates that if there were a referendum today, 48 per cent of voters would vote in favour of Norwegian membership of the EU, and 41 per cent against. In western and southeastern Norway a majority is in favour of membership, while in central and northern Norway the opposition is still strong. ( Nationen)
• After Norway’s football victory over Spain, Norway has suddenly become one of the favourites to win the European championship. A victory would give Norway a bonus of NOK 79 million and a profit of around NOK 40 million. ( Dagens Næringsliv)
• In the course of ten years the number of Norwegian missionaries abroad has been reduced by a fourth. Norway is still the Western country that sends the greatest number of missionaries abroad. ( Vårt Land)

TODAY'S COMMENT from Aftenposten:

Yesterday Central Bank Governor Svein Gjedrem said that Norges Bank will continue to raise interest rates until the Central Bank believes that inflation in Norway is on its way down to 1.5 per cent. Actually he did not say this in so many words. He continues his policy of combining clarity with vagueness. Mr. Gjedrem speaks clearly enough to ensure that the players in the financial markets are in no doubt as to his intentions. But he still surrounds his message with a thick cloud of fuzzy arguments. So anyone who does not want to listen to what he has to say has a good excuse not to do so. There are many people who take advantage of this opportunity, among others members of the Standing Committee on Finance and Economic Affairs, perhaps the members of the executive board of Norges Bank, and maybe even the Minister of Finance himself. The reason for this is simple: Svein Gjedrem has reorganized monetary policy, but our politicians and the parties to the wage settlement are still not keen to listen clearly what has actually happened.