Norway's Labour will hold trade talks with London only after Brexit settled

Reuters News
Posted: Jun 01, 2017 4:34 AM

By Gwladys Fouche

OSLO (Reuters) - The Norwegian Labour party, which most polls suggest will win a September election, will not open bilateral trade talks with Britain until after it has concluded a deal with Brussels, its leader told Reuters.

Jonas Gahr Stoere, who would be Norway's prime minister if Labour form the next government, also said he would not hurry to let the country's $950 billion wealth fund invest in new assets, as it wishes to.

Britain wants to open bilateral dialogues with non-EU nations before it concludes divorce talks with Brussels. Non-EU Norway is Britain's largest gas supplier, accounting for some 40 percent of all supplies in 2015.

"(We should) respect first that Britain should settle its relationship with the EU. It requires a lot of attention from the government and the British. I would not break into that calendar," Stoere said in an interview.

He was not planning to look again at the European Economic Area (EEA) agreement, as many Labour supporters have called for, arguing it undermined Norwegian pay and conditions.

The Nordic country pays for access to the European common market via the EEA agreement. "There is a broad consensus in this house (parliament) ... to maintain the EEA," said Stoere. "We are clear on that."

Nine polls in May suggested Labour and two supporting parties will win a majority in parliament. Two surveys see the current ruling coalition and its backers winning a second term.

It is one of few center-left parties in Europe that is thriving, unlike the Socialists in France and Spain or Labour in Britain.

For Stoere it is because Norway's Labour is anchored in the world of work through close partnership with unions and employers' organizations and favors policies limiting the downsides of globalization, like generous childcare provisions.

"We see throughout Europe now a kind of revisiting of what an active state really means. For us, it means a state that is fully respecting this open economy requirement of being able to compete at world market levels," said the 56-year-old leader at his office in parliament.

"But the state is, at the end of the day, the key player to provide key opportunities and to pick up the bill when things go wrong."


Regarding the country's sovereign wealth fund, the world's largest at $950 billion, Stoere said he wanted to be "careful" in allowing the fund to invest into new asset classes.

Today the fund can only invest in stocks, bonds and real estate abroad. It has asked permission to invest in higher-yielding investments such as unlisted infrastructure, but was denied by the finance ministry, citing political risk.

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"Broadly speaking, we are on the same footing as the government in its analysis of not making a major change on this now, because these issues about the investment universe should always be followed closely," he said.

"Political risk is clearly one issue. Spreading the focus of the fund too much is another one."

The government is allowed to spend a small proportion of the fund's value each year and in 2017 will use that money to cover a 221 billion crown ($26 billion) budget deficit.

If it wins, Labour would spend less oil money but still roll back tax cuts introduced by the current government, arguing that the growth in oil revenue spending must come down.

"Sound public finances are critical for welfare and critical for productivity," said Stoere, backing a government proposal to cut back how much of the fund it is allowed to spend each year to three from four percent.

"We support that (the three percent goal). It is more consistent to have that as a target," he said.

(Editing by Toby Chopra)