Friday, September 30, 2005

Norwegian farmes: - We don't care about Africa

Not excactly what they said, but it sure is what they advocate. The Farmers Union stated today that they completely disagree with the African Union, that recently made a statement urging rich countries to stop subsidising the agricultural sector. It is commonly claimed that direct subsidies and export subsidies forces African farmers out of both their own and the European markets.

"This is about the poor farmer, not what government beureaucrats think. We have contact with agricultural organisations in Africa, and they are more concerned with export subsidies than direct subsidies", claimed Bjarne Undheim, leader of the Farmers Union.

The new government is likely to take the Farmers Union view, given the Farmers Party close relationship with the organisation and the socialists' fear of market mechanisms. They seem to prefer building a high wall, throwing some crumbles over whenever there is a famine on the telly.

Monday, September 26, 2005

Negotiations started today

The three parties Labour Party, Socialist Left and Farmers Party started negotiating for a joint platform today. They have booked the hotel for the next two weeks, and despite a daily press conference, no "real" news are likely to emerge until then. Given that they succeed, the new cabinet will take over two-three days after the current government has announced next year's budget.

Could have saved NOK20m

If the leaders of the new coalition had bothered checking before buying the private house for 30m last week, they would have found that the ongoing process to acquire it was already ongoing. Newspaper Aftenposten reports that the conservative Oslo city council was about to buy the seaside of the property for 10m, which would save the taxpayers 20m kroner. A representative for the city council stated today that the house cannot be used for anything else, due to its age and heritage.

Sunday, September 25, 2005

- Have to increase taxes

To finance increased government spending, the new socialist will have to increase taxes, according to professor at the Norwegian School of Economics, Guttorm Schelderup. He claims that "Taxing the rich", as Labour and Socialist Left has named their source of income, will not raise enough money.

The top tax bracket i Norway is 65% tax on all income above NOK800,000 (US$124k). Decreasing the limit and increasing the tax would bring in NOK0.5bn, compared to the NOK6bn the new government wants to increase the taxes by.

Most likely, the government will have to add more taxpayers to the top tax bracket, which is currently 49.5% on all income above NOK400,000 (US$62k). By decreasing the amount where the tax starts, the new government will add 70,000 new taxpayers to the tax bracket.

35% of all Norwegian taxpayers already hit the 49.5% tax level, intended to punish the richest.

Friday, September 23, 2005

NOK 30m for 100 meters

Although this sounds too crazy to be true, both NRK and Aftenposten report that the leaders of the three socialist parties have negotiated directly with one of Norway's richest individuals, and agreed that the government buys his house for his asking price, NOK 30m. The house in central Oslo has a 100 meters long beach that shall be open to the public.

They didn't exactly go through normal channels but negotiated directly with the buyer. It is outside all normal practises for government acquisitions, and a very bad presedence if you want to eliminate all possibilities for corruption. And at NOK 300,000 per meter it's just an incredibly populist move from the new government. The opposition is going to feast on this, I'm quite sure. If this is a signal of what will come with the new government, it is scary.

More to follow later...

Update: The whole area is 54*54 meters, and includes a large classical house. The house needs a full refurbishment. Seller Sven Erik Bakke has been trying to seel this house for at least 6 months, which may indicate that the price is too high.

Update: - This is not an expense, just an investment, said Socialist Left leader Kristin Halvorsen during the press conference.

Tuesday, September 20, 2005

- Labour unions the jewel of a democracy

Labour Party's powerful General Secretary, Martin Kolberg, stated on a labour union meeting that "We stand at the era of a new and very important social democratic era of Norwegian politics, where the labour unions will play an important role. Labour unions are the jewel of a democracy."

Socalist Left's Oystein Djupedal, who also attended the meeting, added that "it used to be Labour Party and Labour Union that acted as the Siamese twins. Now the twins are all labour unions and the broad political left. Many people will feel this confortable". Mr. Djupedal probably didn't include the tax payers in his concern.

King names USA as friend and closest ally

Norway's King Harald voiced support to the United States during a ceremony in the US yesterday. "USA is Norway's closest ally. Our armed forces participate in international operations side by side with the American and other allied forced. We share a common goal to help other nations to achieve piece, prosperity and security", he said. Socialist Left, which is against the monarchy and has named "US the largest threat against world peace", chose to ignore the King's comments. "He speaks for the current government", was all Oystein Djupedal would say.

The membership in NATO and relationship with USA is one of the most controversial diversions between Labour Party and Farmers Party on one side, and Socialist Left on the other.

Monday, September 19, 2005

No news from the Socialists

Although few doubt the socialists have started preparing negotiations, no news have been reported this weekend or Monday. Social Democrats gloat over the Conservatives, while Socialist Left has taken a humble stance prior to the three-party negotiations.

The Social Democrats have given leader and coming Prime Minister Jens Stoltenberg a free mandate in the negotiations, while Socialist Left has tied leader Kristin Halvorsen to a comittee with members from the far-left of the party. This move has been been seen as distrust from the more left wing parts of Socialist Left.

Friday, September 16, 2005

Election promises will cost NOK20bn

The organisation for munincipalities, Kommunenes Sentralforbund (KS), has estimated the price for the government's most central promises to NOK20bn. At the same time the government has promised only to raise taxes by 4bn, and not decrease the budget surplus. So Mr. Stoltenberg, how will you finance your promises? By breaking your promises, or printing money?

Thursday, September 15, 2005

Business leaders fear new government

A survey among 530 directors, and sales and marketing executives shows widespread fear of the new socialist government. Over 75% expect businesses in Norway to face tougher regulation. And there is more:
  • 58% think it will be harder to do business
  • 70% think competitiveness will worsen
  • 45% expect profits to detoriate
Labour Party's Olav Akselsen, who was Minister of Trade and Industry in the previous Labour government, said businesses leaders "can sleep safely at night", and should have nothing to fear. We'll see about that.

Who won the election?

When Labour Union leader Ms Valla was asked who "really won the election", she replied:
"We started the long election campaign in February 2003. We set our targets then, and met them. We shall have a government that is with usu, not against us. Our issues shall be on the agenda, so our members can see that it was important to change government."

And she wants a position in cabinet:
"It would be strange if a government from the labour movement didn't include a minister that really knows workers' issues."

It seems Ms Valla has forgotten that she didn't stand in any election, that she didn't get any votes. Time will tell how much influence her money can buy with the new government, though.

Wednesday, September 14, 2005

Promise not to affect interest rate

Economics spokesperson for the Socialist Left, Oystein Djupedal, is commonly mentioned in the media as a hot candidate for the Finance Minister position. In an interview today he promised that "our politics won't affect the interest rate".

Earlier, Mr Djupedal's party has stated that it wants to control the interest rate politically, and this might one reason why he sounds so confident two days after the election. After all, the socialist coalition has promised to raise taxes by only NOK4bn in four years, and at the same time increase public spending massively.

Oystein Djupedal is probably one of the most colourful politicians in Norway. Being extreme left he usually struggles to explain how the market works, and sometimes offers his own theories on what's going on. Two weeks ago, when a Norwegian company fell on the stock exchange following an acquisition in Asia, Mr. Djupedal said this proved the shareholders opposed a layoff in Norway. In 2003, he claimed that taking out dividend from your company increased your wealth.

Socialist Left promises no change in interest rate. Has Mr. Djupedal ever heard about inflation?

Best Country for Business in Europe

The International Finance Corporation (IFC), a commercial arm of the World Bank, has ranked Norway 5th in the world and 1st in Europe for doing business. IFC's director Michael Klein stated that Norway has reformed over the past decade, and this has greatly improved business evironment. The German Klein added that "to make life easy for business does not mean that you have to be like the USA with regards to public services."

Making life easier for business is not excactly a top priority for the new government, which is more concerned about the mood of Labour Unionleader Gerd-Liv Valla. I wonder where we are on this list in 4 years...

Tuesday, September 13, 2005

Bildt Comments: New Scene in Norway

Carl Bildt is the former Prime Minister for Sweden, representing the Swedish Conservative Party, Moderatorna. He is currently active in various businesses, as well as policy related think-tanks.

Centre-right won more votes

After 99.2% of the votes are counted, the centre-right has 1,271,903 votes against the socialists' 1,250,888. Yet the socialists will control the Parliament with 87 MPs, while the centre-right will have by 82. This is caused by a system in which votes in rural areas give more mandates for the parliament than the urban areas, which favours the left. Contrary to many other countries, centre-right parties are broadly speaking more urban and liberal (as defined by the European term) than the socialists.

Labour Union demands

Labour Union LO, which was the new socialist government's sponsor in the election, has made urgent demands to the parties forming the coalition.
  • Employees who get sacked should have the right to stay in their position while challenging the decision in court
  • Reverse legislative change in overtime work
  • Higher unemployment benefits, including holiday pay
  • A law guaranteeing everyone under 25 a job
  • Develop CO2-"free" power plants fuelled on natural gas
  • Labour union leaders should have access to view everyone's salary
  • Double the subsidies to the labour unions (from $300/member/year)
The guaranteed work or education to everyone under 25 is likely to be the most controversial of these, although the demands have clearly been tailor-made to unite the three coalition parties. It would come as a surprise if the demands are not met.

By making these demands before the current government has officially resigned, Labour Union leader Gerd-Liv Valla (left) has shown her intentions to influence the day-to-day business of the new government, and use her influence to change its policy.

The socialists have won


With 79% of the votes counted, it seems inevitable that the socialists will take a majority of the Members of Parliament (MPs) , with 88 of 169 members. Current prime minister, Kjell Magne Bondevik (left) from the Christian Democratic party has promised his resignation tomorrow if the result holds.

The leader of the Labour Party, Jens Stoltenberg (right), will now try to form a new government with his two coalition parties, Socialist Left and the Farmers Party. The latter has been in coalitions with the centre-right parties and Conservative party previously, while Labour and Socialist Left have never been in coalition before. In fact, Socialist Left has never had power at all! Negotiations over a cabinet program will start at the end of this week, and the question that naturally arises, is: How will they be able to agree on the many unsolved and controversial differences between the parties?

Monday, September 12, 2005

Election night Sep 12th, 2005

Socialists ahead in the vote count

This night, Norway is about to lose its centre-right government and get the most left-winged socialist government for decades. Right now we're looking at a coalition government with a majority in the parliament, a coalition consisting of special-interest Farmers Party (Senterpartiet), anti-US/anti-NATO/anti-capitalism Socialist Left (Sosialistisk Venstreparti) and the slightly more sensible Labour Party (Arbeiderpartiet). If they win, they will be elected because of the financial support from the largest labour union (LO), which has been promised considerable influence over the cabinet.

This honestly scares me. Norway is a rich country, and we can probably afford a socialist government. But I fear the devastating long-term consequences such a government can have on our economy and society. I've decided to start blogging about the new government (if they do indeed win), their politics and the consequences. It won't be a neutral blog, but I will tell you what happens, good and bad.