Norway's Government Crisis: A Pre-election Turmoil
Norway is currently facing a government crisis just eight months ahead of the scheduled elections on September 8. The coalition that has been in power since 2021 crumbled on January 29 when the Centre Party (Senterpartiet) withdrew its support from Prime Minister Jonas Gahr Støre of the Labour Party (Arbeiderpartiet), which is center-left. The Centre Party has held eight out of 20 ministerial positions, including critical roles in Defense, Justice, and Finance, all of which will now be filled by representatives from the Labour Party. Despite the power shift and increased challenges, Støre has expressed his intention to remain in office until the elections, although his government is now even weaker in parliament. The Labour Party was already in a minority and frequently depended on the votes of the Socialist Left party.
The rift between the Centre Party and the Labour Party has been primarily over three European directives concerning environmental and energy issues. It is notable that Norway is not a member of the European Union, having rejected membership in referendums held in 1972 and 1994. However, as a member of the European Economic Area (EEA), Norway has access to the EU's single market and must keep substantial alignment with EU regulations.
The Labour Party favors the adoption of the three directives that relate to renewable energy, energy performance in buildings, and energy efficiency. Conversely, the Centre Party, which tends to hold Eurosceptic views, finds these directives unacceptable. The discussion surrounding these directives is hugely tied to energy prices, a significant and divisive topic in Norwegian political discourse.
Trygve Slagsvold Vedum, the leader of the Centre Party and outgoing Minister of Finance, justified the decision to dismantle the government as essential to restoring national control over electricity prices. This opposition seems to serve as an electoral strategy to regain support among voters, as both the Centre Party and the Labour Party have been witnessing a decline in popularity.
Norway, emerging as a principal supplier of natural gas to the European Union following Russia's invasion of Ukraine, is an oil-exporting country with fossil fuel resources playing a crucial role in its economy. The state holds a 67 percent control over Equinor, the oil giant, which contributed a staggering 238 billion euros in taxes in 2023 and is projected to deliver around 179 billion euros in 2024. Including dividends, the total transfers from Equinor to the state last year amounted to approximately 264 billion euros—considerable for a country with a GDP of 449 billion euros in 2023.
Interestingly, despite its significant fossil fuel resources, Norway primarily generates its electricity from hydropower. Over time, interconnections with European electricity networks have grown, leading to increased volatility in Norwegian electricity prices. Both the Centre Party and the Labour Party agree on the need to sever ties with the Danish grid, slated for renewal in 2026, but the Centre Party has ambitions to renegotiate the current agreements with Germany and the United Kingdom. This isolationist stance is echoed by the right-wing populist Progress Party (Fremskrittspartiet), which is significantly ahead in current polls.
The recent press conference announcing the Centre Party's exit from the coalition government underscored the evolving political landscape in Norway. As the government covers 90 percent of electricity costs above a set threshold, there is a proposal from the right-wing populists to increase this coverage to 100 percent, reflecting the significant public concern over electricity pricing.
With the Centre Party’s withdrawal, Norway is facing a single-party government led exclusively by the Labour Party—an unusual situation, as this hasn't occurred since 2001. However, the Labour Party's future appears precarious, with polling suggesting a shift towards a right-wing majority in the upcoming parliament. As the legislative term draws to a close, Støre will need to solicit support from other parties to push through any measures, especially the three European directives that triggered the coalition's collapse. The European Commission has issued a deadline for Norway to adopt these directives by May.
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