A political shift as the country ponders the future of its welfare state

Stavanger, Norway — The National Review cruise pulled in on Tuesday to this coastal city, which clearly is the center of the country’s fabulously successful oil industry.

Outside of Texas, it’s unlikely you would find a Petroleum Museum in the United States like the one that occupies a prominent place on Stavanger’s waterfront. We depend on the oil industry for our daily needs, but then either disparage it or ignore it.


Not so Norway. The museum in Stavanger, which opened in 1997, makes obligatory nods toward climate change and alternative fuels. But among the pictures of modern windmills and solar panels is the cautionary note that such technologies resemble a ketchup bottle in that they deliver either a lot at one time or nothing at all.

The museum guides aren’t oil evangelists, but they make clear that oil from Norway is drilled following strict safety standards, and is then processed and shipped by a dependable NATO member. The profits are invested in stock markets all over the world rather than being siphoned off by corruption.

This country was transformed by the discovery of huge oil deposits off its shores in 1969. Although Norway’s state-owned oil company, Statoil, was quickly established to lead the development of the new oil discoveries, the industry has been open to private investment and participation on a scale seldom found outside the United States. That has led to an extremely efficient and profitable energy sector, which provides 36 percent of the national government’s revenue. The Government Pension Fund, into which much of the oil profits are channeled, had $445 billion in assets in 2010 and represented nearly 2 percent of the equity in European stock markets. The value of the pension fund’s assets approximately equals the value of all the real estate in Manhattan.


“Oil has turned Norway from a sleepy, largely rural economy into an economic powerhouse,” says Norwegian businessman Olaf Halvorssen. “So much money comes in to the government that Norway has largely escaped the trimming of the welfare state that many other European countries are going through.”


But more and more people recognize that the oil wealth won’t last forever, and a real debate is just starting in this country of 4.9 million people over what direction its economy should go. Norway will be holding elections for Parliament on September 9, just two weeks before Germany votes. If polls taken over the last year are accurate, the eight-year-old Labor-party government of Jens Stoltenberg is headed for a landslide defeat.

Normally, you would think it would be a shoo-in for reelection. Labor’s social democrats have long thought of themselves as the natural party of government — Labor has been the leading party in Norway for all but 16 of the last 78 years. While much of Europe is wracked by recession, Norway’s economy grew by 3 percent last year, and the unemployment rate is only 3.5 percent. Norway’s GDP per capita is now over $60,000 a year.


But Norwegians appear likely to elect a conservative coalition government for the first time in over a decade. Polls show the Conservative party leading with 32 percent of the vote, which should give it 58 seats in the 169-seat parliament, a dramatic increase from 2005, when it won only 23 seats. The Labor party has about 30 percent of the vote, and its left-wing allied parties are floundering. The Progress party — a populist party that supports low taxes and stricter limits on immigration, and that worries about Muslim extremism – has about 16 percent of the vote, and it and the Conservatives, together with their smaller allies, look to have a clear majority in the new Parliament. Both the Conservative party and the Progress party are headed by women — former local-government minister Erna Solberg and economist Siv Jensen, respectively — making it very likely that Norway will soon have its second woman prime minister.


The two parties agree on some basics: lower taxes and reform of the welfare system to encourage more entrepreneurship and less dependence on oil money. But the Conservatives have moved to the center in a bid to pick up disillusioned Labor voters — backing gay marriage and membership in the European Union. Being pro–gay marriage won’t hurt them (it has been legal in Norway since 2008), but the public is highly skeptical about joining the EU in the wake of the recent bailouts of insolvent nations — over 70 percent of voters turn thumbs down on EU membership.


Unlike the Progress party, the Conservatives accept the basis of the Norwegian welfare state and largely promise to make it more efficient. Solberg’s slogan is clearly humanist if somewhat gauzy: “Human beings, not billions.”

Siv Jensen is taking a different approach. An unapologetic admirer of Ronald Reagan and Margaret Thatcher, she has appeared frequently at gatherings of U.S. conservatives such as CPAC to champion individual liberty. “We are rooted in Norwegian values and believe the best way to improve them is to create more opportunity,” she told me last year during a visit to the U.S. Her party has slipped in support since 2011, when it was (largely unfairly) linked to an insane gunman’s attack on Norwegian schoolchildren in which 77 people died. But it is still likely to enter a conservative government led by Solberg’s Conservatives, with Jensen a possible finance minister. It would be the first time Norway’s own variant on the Tea Party would ever have been part of a government. It will be interesting to see just how many compromises the Progress party will have to make as it transitions from noisy critic of the status quo to actually being part of the government. Here’s hoping it can help the Conservatives demonstrate that it is possible to reform the welfare state even when there is no immediate crisis facing it.

— John Fund is national-affairs columnist for NRO.

EDITOR’S NOTE: This article has been amended since its initial posting.