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EUROPEAN UNION

Norway flirts with the idea of a ‘mini Brexit’ in election campaign

On paper, Norway's election on Monday looks like it could cool Oslo's relationship with the European Union but analysts say that appearances may be deceiving.

Norway flirts with the idea of a 'mini Brexit' in election campaign
The Centre Party's leader Slagsvold Vedum has called for Norway's relationship with the European Union to be renegotiated. Photo: Gorm Kallestad / NTB / AFP

After eight years of a pro-European centre-right government, polls suggest the Scandinavian country is headed for a change of administration.

A left-green coalition in some shape or form is expected to emerge victorious, with the main opposition Labour Party relying on the backing of several eurosceptic parties to obtain a majority in parliament.

In its remote corner of Europe, Norway is not a member of the EU but it is closely linked to the bloc through the European Economic Area (EEA) agreement.

The deal gives Norway access to the common market in exchange for the adoption of most European directives.

Both the Centre Party and the Socialist Left — the Labour Party’s closest allies, which together have around 20 percent of voter support — have called for the marriage of convenience to be dissolved.

“The problem with the agreement we have today is that we gradually transfer more and more power from the Storting (Norway’s parliament), from Norwegian lawmakers to the bureaucrats in Brussels who are not accountable,” Centre Party leader Trygve Slagsvold Vedum said in a recent televised debate.

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Defending the interests of its rural base, the Centre Party wants to replace the EEA with trade and cooperation agreements.

However, Labour leader Jonas Gahr Store, who is expected to become the next prime minister, does not want to jeopardise the country’s ties to the EU, by far Norway’s biggest trading partner.

“If I go to my wife and say ‘Look, we’ve been married for years and things are pretty good, but now I want to look around to see if there are any other options out there’… Nobody (in Brussels) is going to pick up the phone” and be willing to renegotiate the terms, Gahr Store said in the same debate.

Running with the same metaphor, Slagsvold Vedum snapped back: “If your wife were riding roughshod over you every day, maybe you would react.”

EU a ‘tough negotiating partner’

Initially, Brexit gave Norwegian eurosceptics a whiff of hope. But the difficulties in untangling British-EU ties put a damper on things.

“In Norway, we saw that the EU is a very tough negotiating partner and even a big country like Britain did not manage to win very much in its negotiations,” said Ulf Sverdrup, director of the Norwegian Institute of International Affairs.

While Norwegians have rejected EU membership twice, in referendums in 1972 and 1994, a majority are in favour of the current EEA agreement.

During the election campaign, the EU issue has gradually been pushed to the back burner as the Centre Party — which briefly led in the polls — has seen its support deflate.

The nature of Norway’s relationship to the bloc will depend on the distribution of seats in parliament, but experts generally agree that little is likely to change.

“The Labour Party will surely be firm about the need to maintain the EEA agreement,” said Johannes Bergh, political scientist at the Institute for Social Research, “even if that means making concessions to the other parties in other areas”.

Closer cooperation over climate?

It’s possible that common issues, like the fight against climate change, could in fact bring Norway and the EU even closer.

“Cooperation with the EU will very likely become stronger because of the climate issue” which “could become a source of friction” within the next coalition, Sverdrup suggested.

“Even though the past 25 years have been a period of increasingly close cooperation, and though we can therefore expect that it will probably continue, there are still question marks” surrounding Norway’s future ties to the EU, he said.

These likely include the inclusion and strength of eurosceptics within the future government as well as the ability of coalition partners to agree on all EU-related issues.

Meanwhile, Brussels is looking on cautiously. The EEA agreement is “fundamental” for relations between the EU and its
partners Norway, Iceland and Liechtenstein, according to EU spokesman Peter Stano.

But when it comes to the rest, “we do not speculate on possible election outcomes nor do we comment on different party positions.”

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EUROPEAN UNION

The Euro celebrates its 20th anniversary

The euro on Saturday marked 20 years since people began to use the single European currency, overcoming initial doubts, price concerns and a debt crisis to spread across the region.

The Euro celebrates its 20th anniversary
The Euro is projected onto the walls of the European Central Bank in Brussels. Photo: Daniel Rolund/AFP

European Commission chief Ursula von der Leyen called the euro “a true symbol for the strength of Europe” while European Central Bank President Christine Lagarde described it as “a beacon of stability and solidity around the world”.

Euro banknotes and coins came into circulation in 12 countries on January 1, 2002, greeted by a mix of enthusiasm and scepticism from citizens who had to trade in their Deutsche marks, French francs, pesetas and liras.

The euro is now used by 340 million people in 19 nations, from Ireland to Germany to Slovakia. Bulgaria, Croatia and Romania are next in line to join the eurozone — though people are divided over the benefits of abandoning their national currencies.

European Council President Charles Michel argued it was necessary to leverage the euro to back up the EU’s goals of fighting climate change and leading on digital innovation. He added that it was “vital” work on a banking union and a capital markets
union be completed.

The idea of creating the euro first emerged in the 1970s as a way to deepen European integration, make trade simpler between member nations and give the continent a currency to compete with the mighty US dollar.

Officials credit the euro with helping Europe avoid economic catastrophe during the coronavirus pandemic.

“Clearly, Europe and the euro have become inseparable,” Lagarde wrote in a blog post. “For young Europeans… it must be almost impossible to imagine Europe without it.”

In the euro’s initial days, consumers were concerned it caused prices to rise as countries converted to the new currency. Though some products — such as coffee at cafes — slightly increased as businesses rounded up their conversions, official statistics have shown that the euro has brought more stable inflation.

Dearer goods have not increased in price, and even dropped in some cases. Nevertheless, the belief that the euro has made everything more expensive persists.

New look

The red, blue and orange banknotes were designed to look the same everywhere, with illustrations of generic Gothic, Romanesque and Renaissance architecture to ensure no country was represented over the others.

In December, the ECB said the bills were ready for a makeover, announcing a design and consultation process with help from the public. A decision is expected in 2024.

“After 20 years, it’s time to review the look of our banknotes to make them more relatable to Europeans of all ages and backgrounds,” Lagarde said.

Euro banknotes are “here to stay”, she said, although the ECB is also considering creating a digital euro in step with other central banks around the globe.

While the dollar still reigns supreme across the globe, the euro is now the world’s second most-used currency, accounting for 20 percent of global foreign exchange reserves compared to 60 percent for the US greenback.

Von der Leyen, in a video statement, said: “We are the biggest player in the world trade and nearly half of this trade takes place in euros.”

‘Valuable lessons’

The eurozone faced an existential threat a decade ago when it was rocked by a debt crisis that began in Greece and spread to other countries. Greece, Ireland, Portugal, Spain and Cyprus were saved through bailouts in return for austerity measures, and the euro stepped back from the brink.

Members of the Eurogroup of finance ministers said in a joint article they learned “valuable lessons” from that experience that enabled their euro-using nations to swiftly respond to fall-out from the coronavirus pandemic.

As the Covid crisis savaged economies, EU countries rolled out huge stimulus programmes while the ECB deployed a huge bond-buying scheme to keep borrowing costs low.

Yanis Varoufakis, now leader of the DiEM 25 party who resigned as Greek finance minister during the debt crisis, remains a sharp critic of the euro. Varoufakis told the Democracy in Europe Movement 25 website that the euro may seem to make sense in calm periods because borrowing costs are lower and there are no exchange rates.

But retaining a nation’s currency is like “automobile assurance,” he said, as people do not know its value until there is a road accident. In fact, he charged, the euro increases the risk of having an accident.

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