Hotspot – Norway

The fate of the Lofoten islands, Norway, has been described as a battle for the ‘soul of the country’ The fate of the Lofoten islands, Norway, has been described as a battle for the ‘soul of the country’ Andrey Armyagov
30 Oct
2017
Klaus Dodds turns his gaze north, to examine the debates raging across Norway regarding oil and gas exploration

In September, two notable stories emerged about Norway. The first involved the reported value of the much-heralded sovereign wealth fund, known more colloquially as the ‘oil fund’. The net-value of the fund is estimated to be more than $1trillion, which is a staggering achievement for a country that was once largely dependent on fishing as opposed to oil and gas exploration.

Remarkably, the oil fund was only established 25 years ago with the express purpose of investing hydrocarbon revenues for the long-term benefit of the five million-strong Norwegian population. While there are strict rules governing the use and management of the fund, it’s a reminder of how small states can control investment portfolios that are global in scope.

The second story involved the recent Norwegian national election. Held on 11 September, the result saw the country’s prime minister, Erna Solberg, and her Conservative coalition government retain office for another four years. Although the margin of victory was modest, what was notable was that this Conservative-leaning government secured a second term. This last occurred in the 1980s, and Solberg and her government’s coalition partner, the Progress Party, appeared to have benefited from concerns over rising immigration coupled with improvement in the state of Norway’s economy, which had been affected by fluctuating oil prices.

Notably, the 2017 election campaign underscored the divisive role of oil in Norwegian society. While Norwegians have grown accustomed to their accumulated oil wealth, there has been a reluctance to confront the contradictory nature of an industry that is complicit with environmental degradation and global climate change. When discussing further oil and gas exploration in the Norwegian Arctic, it is not uncommon to hear political and industry spokespersons highlighting the safety record of the national operator, Statoil (in which the Norwegian government is a majority stakeholder).

Oil – and the wealth it has brought – has allowed the country to develop a generous welfare system, extensive infrastructure and a commitment to supporting overseas aid and progressive development. The election revealed, however, that a growing number of Norwegians are prepared to challenge what we might think of as the orthodox view of oil and its place in Norway’s present and future and it is not uncommon to hear that Norway needs to think about a post-oil future. The Green and Socialist Parties are leading these calls for change.

Oil exploration has arguably been most controversial in the north of the country, especially around the Lofoten archipelago. It is a stunningly beautiful part of Norway and home not only to impressive mountain peaks and picturesque villages but also a long-established fishing industry. Cod fisheries were once the backbone of the Norwegian economy and have been the major source of export income for the past 1,000 years.

A rapid growth in tourists, meanwhile, has sparked local debates on whether there is a governance structure in place that can keep pace with visitor numbers. Complicating matters further is the estimate that there may be over one billion barrels of oil with a value of at least $60billion in the surrounding waters.

Public opinion is divided across the country about future oil and gas exploitation. The fate of Lofoten and the neighbouring areas of Vesterålen and Senja has been described as a battle for the ‘soul of the country’. For critics in Norway and beyond, oil drilling is unthinkable in the midst of the Paris Agreement.

For now, it is thought that the returning coalition government will continue a moratorium on oil exploration in the area, but allow other activities to continue further north in the Barents Sea. In 2016, 54 exploration licences were granted and there is talk of offering up even more in the next licensing round starting in January 2018. What opinion polls suggest is that Norway’s political parties may not be reflecting changing public attitudes towards oil and gas, which appear to be far more sympathetic to the idea that oil be ‘left in the ground/seabed’.

The durability of the Lofoten moratorium is largely dependent on political negotiations. Norwegian elections are based on proportional representation so the results are far more likely to generate the necessity for coalition-based governments.

Election observers have to consider how a suite of parties might perform either on the centre-left or centre-right of the political spectrum in any given situation. The Conservative government has often had to find support from up to three other centre-right parties at critical moments such as budget setting. At the time of the 2017 elections, the Labour Party was polling well, but its potential coalition partners were not.

What all the political parties have to confront are some home truths. Norway’s impact on the world has been significant in the post-oil era; ranging from being an essential supplier of natural gas to countries such as the UK, to generously funding overseas aid and development programmes. It is arguably one of the most corrupt-free countries in the world and currently sits at the top of the UN’s World Happiness Report. But all of this sits awkwardly with both global climate change progress and a recognition that Norwegian oil and gas production is in decline.

The challenge for Norway is whether the country can develop a new consensus on what a post-oil future might look and feel like. In other words, can Norway break its addiction to oil?

Klaus Dodds is Professor of Geopolitics at Royal Holloway, University of London and author of Geopolitics: A Very Short Introduction

This was published in the November 2017 edition of Geographical magazine.

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