Speech/statement | Date: 20/11/2014
'The EU is effectively Norway’s domestic market. This is why it is crucial for us that Europe can compete successfully on the global stage', Minister of EEA and EU Affairs, Vidar Helgesen said in his address to Storting om 20 November 2014.
Twenty five years ago the Berlin Wall was brought down by people’s desire for freedom. This changed Europe – and Norway. In November 1989, we didn’t know how events would unfold. Changes of this magnitude are always easier to understand in hindsight.
Today we are once again at a watershed moment in European history. But now one people’s desire for freedom is being met with military force, and other countries are being subjected to provocation and are seeing their borders violated. Europe is surrounded by instability and conflict, both to the east and to the south, and is also facing major problems internally. We don’t know what Europe will look like in 25 years’ time. But we know that key Norwegian interests are at stake. And we know that no other form of cooperation will be more important for Norway’s future than our cooperation with the EU. That is why Norway’s foreign policy begins in Europe.
The Government’s strategy for cooperation with the EU in the period 2014–17 shows that there is a strong correlation between what is important to Norway and what is important to the EU. EU and EEA issues affect large parts of Norwegian society and all policy areas. The Government has set up a European policy coordination committee to enhance coordination of EU and EEA matters and ensure that there is strong backing for Norway’s positions on the most important European policy issues among the relevant ministers and ministries.
How can we create jobs and stimulate growth? What can we do to promote the development of a digital internal market and a modern digital economy that protects the interests of both industry and consumers? How can we ensure that Norwegian companies and research groups are at the forefront when it comes to innovation and securing competitiveness for the future? What should Europe do to meet the challenges posed by migration? What should we do to ensure Europe’s collective security at this dangerous time in history?
These are important questions both for Norway and for Europe as a whole, and in the coming months, the EU will seek to provide the answers. The new EU leadership has started drawing up its work programme. It is important for Norwegian interests that we provide input to this process.
Four new changes to the structure of the Commission are worth noting.
Firstly, a separate post of First Vice-President has been established, with responsibility, among other things, for ensuring better regulation and reducing bureaucracy. From a Norwegian perspective this is important; a couple of months ago the ten thousandth piece of EU legislation was incorporated into the EEA Agreement. It is therefore in our interests that the EU adopts smart rules. We agree with the view put forward by President of the European Commission Jean-Claude Juncker in his political guidelines that the European Union should be ‘bigger and more ambitious on big things, and smaller and more modest on small things’.
Secondly, the seven Vice-Presidents have been given responsibility for coordinating major areas of policy. With leading European politicians heading the various project teams, we can expect to see a more dynamic approach in areas that are also important for Norway.
Thirdly, the portfolios and responsibilities of the commissioners in areas of particular importance to Norway have been reorganised. A single commissioner will be responsible for both climate action and energy policy, and will work with one vice-president on developing an energy union, and with another on sustainable development. The areas of environment and maritime affairs and fisheries have been combined under a single portfolio.
Fourthly, Commissioner Johannes Hahn, who has been given responsibility for the European Neighbour Policy and enlargement negotiations, will also be involved in managing relations with the EFTA/EEA countries. Mr Hahn will therefore be an important contact for Norway.
It remains to be seen what the impact of these organisational changes will be in practice. It is important and right to view different policy areas in connection with each other. But the new structure of the Commission moves the EU further away from the structure of the EEA Agreement, which is based on the EU’s old pillar structure.
The EEA Agreement is the cornerstone of Norway’s European policy. But it is a cornerstone in an edifice that is constantly being rebuilt. If we are to keep the EEA Agreement alive and secure understanding for Norway’s positions in the EU cooperation, we need to establish close contact with the new commissioners and the new European Parliament, and we also need to maintain close bilateral ties with key EU countries.
Our extensive cooperation with Germany is important. We are also expanding our cooperation with Poland. The Government intends to make more active use of Nordic cooperation and Nordic–Baltic cooperation in its European policy. The Baltic dimension will be particularly important during Latvia’s upcoming EU Presidency.
At a time when Europe is surrounded by insecurity and itself has serious internal problems, the Nordic–Baltic region is a success story. We have shown an ability to implement reforms even when times are good, and to build up stable, sustainable economies. We have a shared set of economic and political values that provides a foundation for a practical partnership. The new security situation in Europe has reinforced the importance of Nordic–Baltic cooperation in the areas of foreign and defence policy.
The prime ministers of the Nordic countries have stated their desire for closer coordination of European policy issues. The Ministers for Nordic Cooperation have agreed that the Nordic Council of Ministers should be reformed in order to strengthen cooperation on international issues, including those relating to the EU/EEA. And, at Norway’s initiative, the first meeting of Nordic ministers responsible for European issues was held during the Nordic Council session in October. We agreed that the Nordic countries have an important contribution to make to the European cooperation.
This is particularly true with regard to efforts to promote growth, employment and innovation. A proposal for a substantial investment package is expected to be presented to the heads of state or government at the meeting of the European Council on 18 December. We will work to ensure that these investments are as far as possible in line with our interests, not least because energy infrastructure and renewable energy are expected to be key elements of the package.
In addition, President Juncker has announced the Commission’s plans to present an extensive package of measures in April 2015 that will lead to the development of a digital single market. This will also be an important priority area for Norway in the future, as we will be a part of this market under the EEA Agreement.
Europe needs to stimulate growth not least because of the high levels of social and economic inequality within the EU. The EEA and Norway Grants contribute to reducing disparities in Europe. Many of the beneficiary countries are struggling with high youth unemployment and weak economic development. The Government therefore wants the next funding period for the EEA and Norway Grants to give particular priority to the areas of education and research, innovation, entrepreneurial activity, climate change, energy and the environment.
Following a long break in the negotiations on the new funding period, contact between the parties has recently been resumed. However, the distance between the parties remains great.
The negotiations on the new funding period for the EEA and Norway Grants are taking place in parallel with the negotiations on market access for fish. In the past, negotiations with the EU have tended to lead only to small improvements in market access for Norway. The Government considers it very important to improve market access for the Norwegian seafood industry. We have therefore made it clear to the EU that Norway’s contributions to the Grants depend on a satisfactory solution being found on the issue of market access for Norwegian seafood in the EU.
We are now about to embark on another negotiation process with the EU. According to Article 19 of the EEA Agreement, the contracting parties have an obligation to work towards the progressive liberalisation of agricultural trade, within the framework of their respective agricultural policies. The EU has now adopted its mandate for the negotiations and we expect negotiations to begin early in the new year.
The new round of negotiations has its origins in an agreement reached in 2012, under which Norway agreed to a demand from the EU to enter into a new round of Article 19 negotiations. The EU’s demand was a direct result of the changes made to the Norwegian customs regime shortly after the previous round of Article 19 negotiations.
In the light of this, we are expecting the EU to put forward far-reaching and comprehensive demands, which will probably affect products that are sensitive for Norway. The Government will start working on Norway’s proposal as soon as we have received the EU’s demands.
The Government will seek to safeguard both consumer interests and factors that can enhance diversity in the Norwegian food market.
One of Norway’s top priorities in the time ahead will be its participation in Horizon 2020, the biggest research and innovation programme ever launched. In the period up to 2020, Norway intends to invest close to NOK 26 billion in the programme. This will give us access to extensive resources and world-leading networks. It will enhance our own efforts in the areas of research and education and innovation. This year, two Norwegians were awarded the Nobel Prize for medicine. Their success – and the sense of national pride this has given us – was the result of the work of two keen minds combined with EU networks and EU funding.
Norway needs to take a proactive approach if more people are to benefit from the opportunities on offer. We need to make contact and get involved with the research groups in Europe we want to work with. In the Government’s budget proposal for 2015, we have proposed an increase of NOK 115 million for efforts to secure Norway’s participation in Horizon 2020. Our long-term plan for research and higher education sets out our intention to intensify these efforts in the period up to 2018.
The purpose of the EEA Agreement is to ensure predictability, common rules and, as far as possible, equal conditions of competition throughout the EEA. This is important for the Norwegian business sector. The Government therefore gives high priority to the work of incorporating EU legislation for the internal market into the EEA Agreement. Intensive efforts to this end are already underway and are producing results. This autumn we have managed to significantly reduce the backlog of legal acts adopted by the EU but not yet incorporated into the EEA Agreement, and we aim to reduce this further in the time ahead.
Reducing our backlog is only part of the job. We are dependent on our EFTA partners and the EU taking similar steps. We are therefore working actively to ensure that they also make progress in this area.
The EU’s Third Postal Directive is a key example in this context. Norway is prepared to incorporate the directive into the EEA Agreement and the Ministry of Transport and Communications has circulated a draft new postal services act and accompanying regulations for comment. But we have not yet been able to incorporate the directive into the EEA Agreement because of delays in Iceland’s process.
The same applies to the Paediatric Regulation, a key objective of which is to promote the development and authorisation of medicines for use in children. We have reached agreement with the EU on this issue too, but Iceland has yet to resolve the matter.
Ensuring that the EEA Agreement is continuously updated is important, but the Government intends to do even more to reduce trade barriers between countries. Sweden, Denmark, the Netherlands and the UK are taking the lead in a ‘Frontrunners’ initiative aimed at improving the EU internal market. The aim is to reduce specific barriers to trade within the existing legislative framework. Norway intends to join this initiative. We want to be at the forefront of efforts to further develop the internal market.
The free movement of people is essential for the functioning of the internal market. If Europe is to regain its competitiveness, greater mobility is needed in the labour market. In this respect Norway is among the best in Europe. Some 7 % of all employees in Norway are labour immigrants from EU/EEA countries.
Whereas free movement is an overarching principle across the EU, welfare systems are determined at the national level. Questions can thus arise relating to welfare benefits that can be taken out of the country, and to benefits for family members. This is a subject of political debate in several European countries, and some cases have also been considered by the European Court of Justice. The recent judgment of the Court in the Dano case from Germany clarified an important principle, namely that immigrants who move to another country in order to obtain social benefits may not be entitled to certain benefits in the country in question. This is consistent with Norway’s view.
EU agencies and supervisory bodies play an increasingly important role in policy development and the implementation of legislation in the EU. Following the financial crisis, the EU established three new financial supervisory authorities. These bodies have been given powers to make decisions, in exceptional cases, that are binding on member states’ national supervisory authorities or market actors. This type of supranational authority is a deterrent to prevent individual countries or market actors from taking actions that jeopardise financial stability.
In cases where the incorporation of a legal act into the EEA Agreement involves a transfer of powers, the rules set out in the Norwegian Constitution concerning the transfer of powers to international organisations must be considered carefully. In certain cases, the Storting has given its consent for powers to be transferred to EU agencies and supervisory bodies in accordance with Article 26 of the Constitution, that is, when the transfer of powers is considered not to encroach too far on constitutional powers. In some cases where there is talk of a more significant transfer of powers to an international organisation to which Norway belongs, powers may be transferred with the consent, by a three-fourths majority, of the Storting, under Article 115 of the Constitution. This has only been necessary once: in connection with the conclusion of the EEA Agreement.
The Legislation Department of the Ministry of Justice and Public Security has reached the conclusion that the powers that the EU’s new financial supervisory authorities have been given to make decisions that have a direct effect on market actors in Norway encroach too far on constitutional powers. We have therefore had to find a solution that enables the EEA EFTA states to participate in the European system of financial supervision, without transferring powers from Norway to the EU’s financial supervisory authorities.
In October this year, following intense efforts over several years, the finance ministers of Norway, Iceland and Liechtenstein reached agreement on how the legislation establishing the EU’s financial supervisory authorities can be adapted to and incorporated into the EEA Agreement.
Under the agreed model, decisions that are binding on Norway or Norwegian companies will be taken by the EFTA Surveillance Authority. We are pleased that this solution means that supranational decisions will be made by a body in the EFTA pillar. The intention is that the EU and EFTA supervisory bodies will cooperate, and that they will be able to participate in each other’s preparatory work and decision-making processes. Decisions that are to be taken by the EFTA Surveillance Authority will be based on draft decisions proposed by the EU financial supervisory authorities. It has been important to find a good solution, one that takes account of important interests for the Norwegian financial and business sectors, and at the same time ensures continued close cooperation on the supervision of the financial markets in Europe. The Government will submit the matter to the Storting for its thorough consideration.
The EEA EFTA countries have now also begun negotiations with the EU on the question of their participation in the EU Agency for the Cooperation of Energy Regulators (ACER) and the Body of European Regulators for Electronic Communications (BEREC). These are also areas of vital importance to Norway and Norwegian companies. We are working hard to achieve the best solutions in these areas too.
The participation of the EEA EFTA states in ACER is being negotiated as part of the third energy package. ACER complements and coordinates the work of national energy regulators at EU level and plays a key role in developing rules for the internal energy market. ACER has been also been given decision-making authority in certain areas.
ACER’s decision-making powers are, however, more limited than those of the EU’s financial supervisory authorities. ACER can make decisions on issues relating to cross-border infrastructure and on certain technical issues if the national regulators have failed to reach agreement, or if they want ACER to make a decision. The Government is working to find a solution that takes into account the two-pillar structure of the EEA Agreement, that is, a solution whereby decisions that affect the Norwegian energy regulator, in this case the Norwegian Water Resources and Energy Directorate, are taken by an EFTA body.
BEREC is an independent advisory EU body made up of representatives of the national regulatory authorities for electronic communications in the EU member states. We disagree with the EU on the issue of participation rights for the EEA EFTA states in BEREC. The EU is of the view that this issue has been resolved in the regulation establishing BEREC (Regulation (EC) No 1211/2009), which sets out that third countries are to have observer status. The regulation is currently being revised. The Government wants the regulation to be changed to enable the EEA EFTA states to have full participation rights, though without voting rights.
These three examples illustrate the fact that EU agencies and supervisory bodies differ considerably as regards their roles, functions and authority. Norway’s basic approach is to negotiate the question of Norway’s participation separately in each case, irrespective of the role and tasks of the agency in question.
It is in Norway’s interest that there is not only political stability and security, but also economic development and growth in Europe. Unfortunately, today, developments are negative on both fronts. Europe is being challenged from both outside and from within, and by both short-term crises and long-term trends.
Climate change and energy issues are a key challenge for Europe. This area is closely linked to the issue of European competitiveness – and thus Norwegian competitiveness. We note that many countries are taking drastic steps to adapt their economies. Germany’s energy transition policy is a major about-turn that has significance far beyond the country’s borders. In just ten years’ time, it is expected that 50 % of Germany’s electricity supply will be from renewable sources.
The EU’s climate and energy policy sets out the course and pace for the transition to a low-carbon economy in Europe. That is why the Government has given priority to – and has put a great deal of work into – contributing to the EU’s efforts to develop its 2030 policy framework for climate and energy.
The 2030 framework, adopted by the European Council in October, is good for Europe and largely in line with Norway’s positions. The fact that the EU has agreed on a target to reduce greenhouse gas emissions by at least 40 % by 2030 compared to 1990 levels sends an important message to the rest of the world in the run-up to next year’s climate summit in Paris. Norway had strongly advocated the adoption of an ambitious target for reducing greenhouse gas emissions.
The EU has also agreed on a number of other targets, but the emissions reduction target is unique, because it is the only target that will be binding for the individual member states. This means that the individual countries will retain the flexibility to develop cost-effective energy and climate policies.
We also wanted the emissions trading system to be strengthened and are pleased that this is included in the 2030 framework. However, we will work to promote further reforms that can lead to a significantly higher carbon price. This would provide incentives to develop and make use of new, more climate-friendly technology.
We agree with the EU’s view that a well-functioning internal energy market also requires greater infrastructure development, not least development of cross-border infrastructure, as well as further liberalisation of the markets for both electricity and gas. This will help to ensure better use of energy resources, as well as enhancing energy security in Europe.
Carbon capture and storage (CCS) is essential if the two-degree target is to be achieved and we have argued strongly for a greater focus on CCS in Europe. We are therefore very pleased that support may now be provided for the further development and demonstration of technology. We had hoped for a decision that no new coal-fired power plants should be built without CCS. Norway is willing to consider how the EEA and Norway Grants could be used to speed up the pace of CCS technology development in Europe.
Norway has a key role to play in improving the EU’s energy security. We are a major supplier of oil and gas, but we are also a major renewable energy nation. Connecting the European electricity markets is important, and this autumn we have given the green light for two subsea electricity cables, between Norway and the UK and between Norway and Germany. Norwegian companies also deliver gas on Norwegian vessels to the new LNG terminal in Lithuania and thus contribute to infrastructure development and energy security.
Norway is considered an important and constructive partner in European climate and energy policy and has been invited to participate in the Green Growth Group, which brings together the European countries that are taking the lead in climate issues. This will be a new forum for promoting Norwegian interests and views.
Over the last year, energy security has also become a more important concern as a result of the new security situation in Europe. Russia is pursuing a more assertive foreign policy and this, combined with the considerable increase in its military capacity, has led to greater unpredictability.
The most dramatic manifestation of this is Russia’s use of military means to achieve its political goals. Russia has annexed another country’s territory, and is using unmarked military forces to destabilise its neighbour. This is a form of power politics that belongs in the past and must not be allowed to succeed in Europe.
The Ukrainian authorities, the EU, NATO, the US and Norway have responded to Russia’s behaviour with firmness and a common commitment to fundamental principles of international relations. It has been made clear to Russia, through political, economic and military means, that its actions will not be accepted. They are a clear violation of international law.
Russia’s increasingly unpredictable behaviour is also evident in its provocations towards other countries in our neighbouring areas, including violations of sovereignty. In the Baltic states in particular, there is serious concern about Russia’s actions, and these countries are calling for a stronger response from the EU. The Government considers it important to maintain close political contact with the Baltic countries, and Norway is also taking part in measures to reassure NATO’s eastern members.
Our message to Russia is that we want to engage in cooperation in accordance with international rules and principles. As a neighbouring country, we will continue our practical cooperation with Russia in areas such as joint fisheries management, search and rescue, and nuclear security. We will also seek to continue cooperation at local and regional level in the north, including environmental cooperation and people-to-people cooperation.
The restrictive measures imposed on Russia by the EU, Norway and other countries give a clear signal that Russia’s actions are unacceptable. However, if Russia changes its course, it is possible that the measures could be downscaled in the future. The King in Council decided to tighten Norway’s restrictive measures on 10 October. The Storting was informed in advance. The tightened measures are in line with the EU’s. The EU is now considering extending the measures to cover more people.
We can see that both the restrictive measures and the retaliatory import restrictions introduced by Russia pose challenges, and are at times painful for Norway’s and the EU’s business sectors. However, we have no alternative; doing nothing would lead to far more dismal prospects for Europe and European security.
For the EU, and for Norway, the situation in Ukraine is a test of European integration and cooperation. The EU must acknowledge its responsibility. The entry into force of the Deep and Comprehensive Free Trade Agreement signed by Ukraine and the EU will be crucial for the country’s integration into Europe. It is also crucial for the credibility of the European cooperation and for reinforcing the principle that all countries should be able to choose their international ties and alliances.
Norway will support Ukraine’s closer integration into Europe. Two days ago, I was present during the Prime Minister’s visit to Ukraine – the first visit to Ukraine by a Norwegian prime minister ever. Prime Minister Solberg presented a package outlining increased Norwegian support in several important fields. Energy efficiency and energy sector reform. The rule of law and good governance. Adaptation to EU legislation. Nuclear security.
In addition, we intend to increase humanitarian assistance to relieve the difficult situation facing hundreds of thousands of displaced people now that the winter is approaching.
In all these areas, Norway will help to promote vital reforms in Ukraine, not least by promoting Europeanisation, in line with the wishes of the Ukrainian people.
We are embarking on a dialogue and a joint project with the Ukrainian authorities aimed at promoting the Europeanisation of the Ukrainian public administration. We will share our experience of the EEA cooperation and the other agreements we have with the EU. In this way, we will be supporting the choice made by the Ukrainian people to seek closer integration with Europe. We are engaging in this way because it is in our interest that Ukraine succeeds. And because we know that if Russia’s current course is allowed to continue, Europe will become a far more dangerous place.
The crisis in Ukraine has dominated the media over the last year. However, we must not forget other countries such as Moldova and Georgia, which are also included in the European Neighbourhood Policy. They too have ‘frozen conflicts’ within their borders as a result of Russia’s conduct. These conflicts are threatening stability in the region. And these countries, and the conflicts they are experiencing, are also testing the EU’s integration policy. The EU’s association agreements with Moldova and Georgia are important. We hope that both countries will continue on the path of European integration, and we will do what we can to help them succeed. We are increasing our support to Moldova significantly, and are continuing our already extensive engagement with Georgia.
Security policy has returned to the top of the agenda in our part of the world and has gained a new dimension. Working together with the US and NATO, the EU has taken on a more distinct role in the area of security policy. This is partly because Western military intervention in the Ukraine conflict has not been a viable policy option, and the EU has had other important tools and means at its disposal. And it is partly due to a deliberate policy on the part of the EU, despite underlying internal tensions and differences in approach.
It is interesting and positive that Germany has assumed a clear leadership role in the response to the Ukraine crisis. Poland has also played an important role, particularly through its cooperation with Germany and France in the ‘Weimar Triangle’. In the past, the EU’s effectiveness in foreign and security policy has been reduced by a lack of policy coordination between the major EU countries. The EU’s response to the crisis in Ukraine shows a stronger will and ability to improve policy coordination between key EU countries within the framework of EU cooperation.
The fact that the EU is now taking on a more forceful role in the area of foreign and security policy is both positive and challenging for Norway. Foreign and security policy are not formally included in the EEA cooperation. However, we are in an excellent position to take part in and contribute to the development of the EU’s security policy identity and role, given that Norway is a member of NATO, enjoys good bilateral relations with countries in Europe and is closely integrated with the EU.
The EU’s Common Security and Defence Policy is constantly being further developed. It is in Norway’s interest to further enhance our cooperation with the EU in this area, and to promote close cooperation between the EU and NATO. We will contribute to the EU Battlegroups by participating in the Swedish-led Nordic Battle Group in 2015.
Our cooperation agreement with the European Defence Agency gives Norway the opportunity to take part in the Agency’s programmes, projects and other initiatives to boost defence capabilities. Norway makes good use of this opportunity and makes an important contribution to the Agency’s work in a number of areas. Norway has advocated more frequent and more effective collaboration with third countries. The EU has followed this up, and we are seeing a positive development in terms of invitations to meetings. The meetings held between EU countries and NATO countries that are not EU members, and candidate countries, are an important part of our dialogue. A security policy dialogue at state secretary and senior official level between Norway and the European External Action Service (EEAS) has also been established.
Our closer cooperation with the EU in the area of security and defence policy is important, not just because of the security situation to the east. To the south of Europe, a belt of weak states now extends from West Africa via the Middle East to Central Asia. As a result, instability and armed conflicts are rapidly spreading across national borders, and whole regions are at risk of destabilisation. The most acute example is the advance of ISIL in Syria and Iraq.
Several EU countries are, like Norway, taking part in the coalition against ISIL. There seems to be a trend of more active foreign and security policy engagement in the region on the part of the EU and individual EU countries. Norway should welcome this development. Time will tell whether the EU is able to coordinate its policy and measures and speak with a single voice.
Violent extremism is also putting Europe to the test. Far too many young people are being radicalised, and then travelling abroad as foreign fighters, claiming – incorrectly – to find justification for violence and bestiality in the teachings of Islam. The threat of terrorism is real, and it is essential that we maintain public security. We must be aware of the links between what we do abroad and what we do at home. We must bring our common European values into play, and we must address the challenges we are facing in a balanced and sensible way. Norway can contribute to efforts to tackle these issues in Europe, not least by harnessing the engagement shown by the active, moderate, open Muslim communities that represent the clear majority of Norwegian Muslims.
The increased migration to Europe from countries to the south of Europe is in part due to the prevalence of war, conflict and instability. There is an ongoing crisis in the Mediterranean. The Italian EU Presidency has played an important part in the efforts to deal with the huge flows of migrants.
Broad agreement was reached at the Justice and Home Affairs Council meeting in October on the need to concentrate this work on three pillars: cooperation with third countries, reinforced management of external borders, and action at member-state level.
Norway supports this approach, and will provide assistance in all three areas. In the long term, the challenges posed by migration can only be resolved in close cooperation with the countries of origin and transit.
Norway has a long and strong tradition of providing assistance to many of these countries. We consider it important that we continue to do so, in close cooperation with the EU and its member states.
European cooperation and solidarity is being challenged by the issue of migration, in part because southern and northern Europe are affected so differently. Countries in southern Europe feel an acute need to strengthen reception capacity, while countries to the north feel that a disproportionate number of immigrants end up seeking asylum in northern Europe
Norway considers it important that the migrants who come to Europe are treated in accordance with EU legislation. Unless everyone entering Europe is registered, it will be impossible to ensure that their applications are correctly processed. When there are large numbers of unregistered migrants, it is also difficult to ensure flexibility and solidarity within Europe.
It is not only external pressures that are shaping the EU. There are also internal challenges that need to be tackled. And the way the EU addresses these challenges will have consequences for Norway.
The elections to the European Parliament in May showed worrying trends in several member states. Extremist, xenophobic parties with varying degrees of euroscepticism gained ground in many countries. Several have a fundamental attitude that is diametrically opposed to common European values. These parties will not be able to form a united force in the European Parliament, but they will colour the European debate in the years to come. It is telling that it was EMPs from these groups who voted against the EU association agreement with Ukraine, and many of them have expressed strong sympathy with President Putin’s policies.
Hungary should be mentioned in this connection. In recent years, we have witnessed a concentration of power in Hungary that is undermining democratic values and the principles of the rule of law. Funding for Hungary under the EEA and Norway Grants has been suspended since May. Hungary has shown little willingness to find solutions that would make it possible to lift the suspension. In August, Norway requested the EU member states to respond to developments in Hungary. Some countries have done so, but we would have liked to see a stronger reaction on the part of the EU.
In some cases, the advance of extremist forces in Europe is related to the economic crisis. The EU economy still does not have a clean bill of health, and its competitiveness in the global economy is still too weak.
This has a bearing on security policy, as the weak economy is affecting investments in security and defence in European countries. Europe is being challenged by the gradual shift in the world’s economic centre of gravity towards Asia. Several of the emerging regional major powers are gaining political influence and at the same time are increasing their defence spending. This is challenging the position of the US and Europe in international politics.
This development highlights the urgent need for structural reform both within individual countries and at EU level. Unless progress is made in the reform process underway in the countries in the eurozone, Europe’s economic development as a whole will be at risk.
The weak and uneven growth that was seen in the eurozone in the spring of 2013 has now levelled out, and negative trends and uncertainty can be seen in several countries. One particular cause for concern is the continued decline in the proportion of GDP accounted for by investment. Growth in industrial production has been slow in 2014.
Access to credit from the banks is still limited, and loans to households and companies are falling. Many countries are struggling with a heavy debt burden that is limiting their economic room for manoeuvre.
Inflation is still low in the eurozone. In some EU countries, prices are now falling. This is worrying. Since the key interest rate cannot be set lower than zero, a continued period of very low inflation will restrict the possibility of stimulating the economy through monetary policy.
But there are also positive developments. Budget consolidation in the member states and extensive measures implemented by the European Central Bank have helped to make the financial markets in the eurozone more stable. Countries that received assistance from the EU and the IMF during the crisis are now able to take up loans in the market again.
The overall picture is that unemployment is still high. Greece, Spain, Portugal and Ireland have the highest levels of unemployment, including youth unemployment. However, the rate of unemployment is also falling fastest in these countries, and they are expected to experience economic growth that is well over average for the eurozone.
Although the picture is mixed, the main impression is that the EU, and the eurozone in particular, is still in a difficult economic situation. This is not good for the EU, obviously. Nor is it good for Norway. If Europe is to hold its own as an economic and political actor on the global stage, more effective measures and a more future-oriented economic policy are needed.
In the global perspective, it is not difficult to see the strategic importance of the Transatlantic Trade and Investment Partnership (TTIP), which the EU and the US are currently negotiating. Today, the EU and the US account for half the world’s GDP and 30 % of world trade, and they are by far Norway’s most important trading partners.
Freer transatlantic trade could breathe new life not only into the transatlantic area but also into the world economy. TTIP could also raise global standards and foster progress in the important ongoing multilateral trade negotiations. Greater growth and purchasing power as a result of TTIP will also benefit the Norwegian economy. At the same time it is likely that the competitiveness of Norwegian fish exports will be undermined, as Norway does not have tariff-free access for its fish exports to either the EU or the US. TTIP could also have implications for Norwegian agriculture.
It is too early to decide how Norway should proceed if TTIP is entered into. We have started work on identifying and formulating Norwegian positions in areas that are important for us. The Government will present these positions to both the US and the EU.
The EU has determined that health, environment and food security standards are not to be lowered as a result of TTIP. This is an area where Norway and the EU have common interests.
Norway is engaged in a trade policy dialogue with the US, together with the other EFTA countries, and TTIP is among the topics being discussed. The European Commission has also agreed to enter into a dialogue with Norway and the other EEA countries on the parts of the TTIP negotiations that affect the EEA Agreement. Just yesterday, I discussed TTIP with the European Commissioner for Trade, Cecilia Malmström. She clearly attaches importance to openness and a good dialogue with Norway. We are also raising Norwegian interests and views in our bilateral talks with the US and individual EU countries.
TTIP is one of several examples of the need for both Europe and Norway to adapt in a in a world where Europe is under pressure. We are competing with Turkey, which has a 51-hour working week, China, where companies are constantly challenging established business models, India, which is at the forefront of technological development, a number of African countries that are increasingly focusing on education, and the US, which is highly adept at brand building.
Unless Norway and the other European countries take action, they will end up as losers in the global competition. We must intensify our research and development efforts. We must increase investments. We must pursue a healthy macroeconomic policy. And we must carry out extensive structural changes.
Our willingness and ability to take effective action will be decisive. New ideas must be conceived, and new measures must be taken, even though this may be difficult. This is what politics is all about. Whether the EU takes the right steps remains to be seen. In any case, we must make sure that we adapt in time. We need to take difficult decisions today in order to prepare Norway for the future.
The EU is effectively Norway’s domestic market. This is why it is crucial for us that Europe can compete successfully on the global stage.
Developments in Europe also affect our security. Our cooperation with our European allies is becoming increasingly important. NATO and the US expect more of Europe. The fact that Europe is now experiencing greater uncertainty does not diminish these expectations.
Europe is the cradle of our cultural heritage and our values. A stronger European economy and a more robust European security and defence policy are important for safeguarding these values. But these values are also crucial for our own economy and security. Democracy and the rule of law provide the foundation for economic freedom. For diversity and the division of power. For welfare. For resilient societies that citizens are willing to defend. As we saw in 1989. This is something we should remember today – 25 years on.