Jrubles to Europe has an unexpected way of drifting to Norway, its northern border. The most literal example came in 1870, when two French soldiers sought to escape a months-long Prussian siege of Paris by using a hot air balloon to deliver battle plans to troops outside the city. It didn’t go well. What was meant to be a brief jump into the countryside became a 19-hour windswept odyssey over land and sea. The duo eventually crashed into an icy mountain west of today’s Oslo today, approximately 1,400 km from their intended destination. Residents dazzled by the flying craft rushed the frozen French towards the capital. Parties were held in their honor, poems written, lots of champagne consumed and a passion for France proclaimed. The thawed soldiers leave a week later with 23,800 francs in public donations, a substantial sum. The incident, according to Paal Frisvold, a political analyst, showed that the Norwegian people had “a strong desire to show their sympathy and support for resolving conflicts in Europe”.
Does this passion still stir in Norwegian hearts? For months, as Ukrainians struggled and Europeans shuddered to open up their energy bills, the continent’s wealthiest country (apart from Luxembourg) grew significantly richer. Europe’s energy supply has always been lucrative for Norway, the world’s fourth largest exporter of natural gas. It’s become indecent since Russia, once a rival to keep Europe warm, weaponized pipelines. As the war and ensuing power crisis drag on, the money flowing north proves embarrassing. A place concerned about its image as a force for good in the world must fend off accusations of war profiteering.
Norway would be prosperous even if it hadn’t fallen on offshore oil five decades ago. The massive amounts of energy it exports today are just a balloon-sized icing on the cake. In a normal year, sales of oil, gas and electricity bring in more than $50 billion, or $10,000 per Norwegian. That’s enough to energize a Scandinavian welfare state and plenty of summer cabins on scenic fjords. Today, thanks to the war, Norway’s energy export revenues have soared to more than $200 billion a year. Were it not for the fact that he reasonably accumulates this money in a sovereign wealth fund, at these prices every Norwegian could receive an annual check worth around $40,000, or about the gdp per inhabitant of EU. Instead, its 5.5 million people have to make do with a nest egg worth $1.2 billion, despite a recent drop in the value of its investments.
Until recently, Europeans, Norway’s main customers, did not quibble. Any non-Russian power source was welcome, and the alternatives were mostly in the Middle East and North Africa. For Western politicians, pleading for hydrocarbons with a Norwegian minister is less awkward than doing so with an authoritarian petropotentate. Norway merely demanded that the EU moderate his rhetoric about the need for the country to move away from fossil fuels more quickly. He increased gas production as much as possible, even suppressing union strikes to keep energy flowing. Norway sent money to support Ukraine and joined the sanctions against Russia imposed by the EU, a club to which he does not belong. (It’s in the wider European Economic Area, a form of distance it can afford thanks to its oil wealth.)
Yet the mood has deteriorated as the energy crisis has deepened. Faced with the bailout of public services and consumers, Europe is no longer keen to take over the Norwegian nest. Poland initially grumbled: in May, its Prime Minister denounced the “sick” prices of gas from the North. Others protest more quietly, suggesting that an enlightened supplier might choose to cap gasoline prices, at least while the war rages on. Norway has long insisted that market prices work and that large profits are now needed to fund its green transition.
Politicians in Oslo have to deal with their own power issues. Due to plentiful hydropower, Norwegians feel entitled to cheap juice: many consider turning off lights when leaving a room a quaint habit. But a drought has depleted reservoirs, driving up electricity prices in some parts of the country. Even in a rich country, it hurts. Some industries, such as the production of fertilizers or the smelting of metals, exist only by dint of cheap electricity. Most Norwegians heat their homes with electricity and buy electric cars. Oslo traffic jams can look like idle Tesla showrooms. A Facebook group that pokes fun at electricity prices has more than 600,000 members, many of whom blame power transfers to Europe for their woes. The government responded with generous subsidies, but also hinted that it might limit electricity exports, ostensibly to protect its depleted reservoirs. It irritated his EU neighbours, who want electricity markets to remain open so that what little energy is available can be allocated efficiently.
My way or Norway
The longer gas prices remain above a balloon out of control, the greater the pressure will be on Norway to donate some of its windfall. Solidarity with Europe is a form of self-interest, says Georg Riekeles of the European Policy Centre, a think tank. Good relations with its neighbors are more important to Norway than getting the last drop of profit. Beyond oil and gas, Norway’s wealth depends on being part of a functioning Europe.
Giving a gas discount to European customers may be too sensitive for Norwegian politicians. But Prime Minister Jonas Gahr Store suggested this week that his energy companies (the largest of which, Equinor, is mostly state-owned) could agree to long-term contracts that undervalue the price of gas today in exchange for stable profits later. It would be a start. Better yet, Norway should offer to participate in any aid program EU finds, possibly the kind that helped mitigate the effects of covid-19. As Ukraine discovered, Europe is ready to help its neighbors in the event of a disaster. For it to continue to do so, countries that encounter an unexpected windfall may have to put some of it back into the common pot. ■
Read more from Charlemagne, our columnist on European politics:
Is the EU going too far with new digital regulations? (September 1st)
As war in Ukraine drags on, costs to Europe mount (August 25)
What the EU looks like after a decade of horrors (August 18)