1
00:00:07,320 --> 00:00:11,120
Speaker 1: Hi, and welcome back to Bloomberg Benchmark, a podcast about

2
00:00:11,119 --> 00:00:15,080
Speaker 1: the global economy. This is a special bonus episode and

3
00:00:15,120 --> 00:00:17,720
Speaker 1: we're going to be talking about Brexit, but with a

4
00:00:17,800 --> 00:00:22,599
Speaker 1: Norwegian flavor. The so called Norwegian option for a post

5
00:00:22,760 --> 00:00:26,159
Speaker 1: Brexit Britain is something that's attracting quite a bit of

6
00:00:26,239 --> 00:00:30,400
Speaker 1: buzz and even some official interest. French President Oland raised

7
00:00:30,400 --> 00:00:34,080
Speaker 1: the prospect of Britain doing a Norway just yesterday. But

8
00:00:34,280 --> 00:00:37,800
Speaker 1: what is this Norwegian option and what does it mean

9
00:00:37,800 --> 00:00:41,440
Speaker 1: in practice and how different from EU membership would it be.

10
00:00:41,800 --> 00:00:44,480
Speaker 1: My colleague in d C Sileh Emotion knows a little

11
00:00:44,520 --> 00:00:47,680
Speaker 1: bit about this, having just returned from the better part

12
00:00:47,680 --> 00:00:51,879
Speaker 1: of a decade covering economics and government in Norway and

13
00:00:52,000 --> 00:00:55,760
Speaker 1: before that Britain. Selah, welcome to the show and welcome

14
00:00:55,800 --> 00:00:57,880
Speaker 1: back to the US, Hi, Dan, It's great to be

15
00:00:57,920 --> 00:01:00,720
Speaker 1: back and have your family arrived. Yet my son is

16
00:01:00,760 --> 00:01:03,480
Speaker 1: with me the restaurant on their way. So what is

17
00:01:03,560 --> 00:01:07,319
Speaker 1: this norwagean option for Britain. It feels a little obscure,

18
00:01:07,440 --> 00:01:11,920
Speaker 1: but perhaps it's not philosopye Well, Norway is part of

19
00:01:11,959 --> 00:01:15,120
Speaker 1: the e A, which is all of the EU countries

20
00:01:15,319 --> 00:01:19,840
Speaker 1: plus Norway. Lichtenstein and Iceland Um and those three countries

21
00:01:19,880 --> 00:01:23,199
Speaker 1: that are basically add on combine, they represent a little

22
00:01:23,200 --> 00:01:27,680
Speaker 1: bit less than six million people. So this a this

23
00:01:27,880 --> 00:01:34,160
Speaker 1: European Economic area you're saying, it's a decaf EU basically, yeah, okay.

24
00:01:34,280 --> 00:01:38,600
Speaker 1: And what does being a member of that entail as

25
00:01:38,600 --> 00:01:41,679
Speaker 1: opposed to being a full member of the EU. Well,

26
00:01:41,800 --> 00:01:44,679
Speaker 1: they do have access to the Single Market, they have

27
00:01:44,920 --> 00:01:48,280
Speaker 1: free movement of labor. What they don't have is a

28
00:01:48,360 --> 00:01:53,440
Speaker 1: voice when it comes to establishing EU laws and regulations.

29
00:01:53,960 --> 00:01:56,800
Speaker 1: For Norway, a very small country with lots of oil,

30
00:01:57,280 --> 00:02:00,520
Speaker 1: they joined the e A for access to the market

31
00:02:00,680 --> 00:02:03,440
Speaker 1: to you know, to sell oil. They probably don't need

32
00:02:03,480 --> 00:02:06,680
Speaker 1: the e A. But to bring up the oil they

33
00:02:06,760 --> 00:02:10,320
Speaker 1: needed skilled foreign labor and that came from different parts

34
00:02:10,360 --> 00:02:12,679
Speaker 1: of the EU. And they also need a way to

35
00:02:12,720 --> 00:02:15,840
Speaker 1: support their non oil economy and for that they definitely

36
00:02:15,880 --> 00:02:19,560
Speaker 1: need access to the EU. Now, the decaf EU also

37
00:02:19,680 --> 00:02:24,639
Speaker 1: involves the free movement of capital, that's right, okay. And

38
00:02:25,639 --> 00:02:30,440
Speaker 1: DECAF members also contribute to the EU budget. Yeah, Norway

39
00:02:30,600 --> 00:02:34,680
Speaker 1: spends roughly nine million dollars a year contributing to the

40
00:02:34,720 --> 00:02:38,000
Speaker 1: EU budget. But in return they have had to adopt

41
00:02:38,440 --> 00:02:42,800
Speaker 1: about use laws just to get access to the Single Market,

42
00:02:42,880 --> 00:02:47,079
Speaker 1: and those laws they did not have any direct access

43
00:02:47,080 --> 00:02:50,760
Speaker 1: to the debate or discussions behind making those laws. So

44
00:02:51,080 --> 00:02:54,320
Speaker 1: you have an inn, but you don't get any control

45
00:02:54,560 --> 00:02:58,360
Speaker 1: or have any influence over the terms of those in Yeah,

46
00:02:58,360 --> 00:03:01,320
Speaker 1: that's pretty much the case. Well again, I'm struggling to

47
00:03:01,440 --> 00:03:04,480
Speaker 1: see why serious people are bringing this up as an

48
00:03:04,520 --> 00:03:07,880
Speaker 1: option for Britain. What's the appeal? I mean, For one thing,

49
00:03:07,919 --> 00:03:09,960
Speaker 1: I would imagine that a lot of people in London

50
00:03:10,080 --> 00:03:12,880
Speaker 1: at this point probably want an option that will lessen

51
00:03:12,919 --> 00:03:16,320
Speaker 1: the blow of what they are now facing for members

52
00:03:16,480 --> 00:03:20,200
Speaker 1: of AFTA, which is the European Free Trade Association, which

53
00:03:20,240 --> 00:03:24,720
Speaker 1: is Norway and Switzerland, Iceland and Lichenstein for those members.

54
00:03:24,760 --> 00:03:27,679
Speaker 1: If the UK rejoins they were part of it until

55
00:03:27,720 --> 00:03:30,560
Speaker 1: the seventies. If they rejoined, it kind of brings a

56
00:03:30,680 --> 00:03:35,040
Speaker 1: bit more weight to this group of nations. And has

57
00:03:35,080 --> 00:03:38,720
Speaker 1: it served Norway will? I think it has? Um Norway

58
00:03:38,760 --> 00:03:41,880
Speaker 1: is a small economy. It can't really afford to not

59
00:03:42,040 --> 00:03:44,280
Speaker 1: be part of the e A and not open itself

60
00:03:44,400 --> 00:03:48,920
Speaker 1: up to Europe. Finance Minister C Vjensen, who leads the

61
00:03:48,960 --> 00:03:52,160
Speaker 1: Progress Party UM, which actually has a very strict stance

62
00:03:52,200 --> 00:03:55,120
Speaker 1: on immigration. She said in the last couple of days

63
00:03:55,280 --> 00:03:59,480
Speaker 1: to local media that she when the when Norway had

64
00:03:59,480 --> 00:04:02,600
Speaker 1: a reference um, she voted to join the EU. But

65
00:04:02,720 --> 00:04:05,560
Speaker 1: now she's saying, after having seen how that model has

66
00:04:05,600 --> 00:04:08,600
Speaker 1: worked out for them, she's happy with what they've chosen

67
00:04:08,760 --> 00:04:11,200
Speaker 1: and if asked today she would say, no, we should

68
00:04:11,200 --> 00:04:14,360
Speaker 1: not join. We'll get back to Norway's referendum in a second.

69
00:04:15,200 --> 00:04:18,480
Speaker 1: So what you're saying is that there is broad support

70
00:04:18,800 --> 00:04:23,520
Speaker 1: within the political community in Norway for things being just

71
00:04:23,640 --> 00:04:27,080
Speaker 1: as they are. Pretty much. The two larger parties, Labor

72
00:04:27,200 --> 00:04:30,480
Speaker 1: and the Conservative Party both have come out to say

73
00:04:30,480 --> 00:04:33,080
Speaker 1: that they support the model that they have. Now there

74
00:04:33,120 --> 00:04:38,200
Speaker 1: are some outliers. There's a small farming farming population in Norway.

75
00:04:38,240 --> 00:04:40,159
Speaker 1: They have a small party that's kind of dedicated to

76
00:04:40,200 --> 00:04:42,880
Speaker 1: what they want and they are kind of always unhappy

77
00:04:42,960 --> 00:04:46,479
Speaker 1: with the status quo. Is there a Nigel Farage in

78
00:04:46,600 --> 00:04:49,240
Speaker 1: Norway who stirs up trouble. I don't know if there's

79
00:04:49,279 --> 00:04:53,000
Speaker 1: a single person, but the farmers have been known to

80
00:04:53,040 --> 00:04:56,479
Speaker 1: bring their tractors and farm animals and cow bells to

81
00:04:56,520 --> 00:05:00,120
Speaker 1: the capital to make their statement. And what does that

82
00:05:00,240 --> 00:05:03,039
Speaker 1: look like, Well, they roll through the capital. They show

83
00:05:03,160 --> 00:05:06,479
Speaker 1: up at Parliament when it comes to negotiating producer prices,

84
00:05:07,080 --> 00:05:08,960
Speaker 1: and what they have is a lot of power. They

85
00:05:08,960 --> 00:05:12,279
Speaker 1: have some of the highest government subsidies in the O, E, C. D,

86
00:05:13,200 --> 00:05:15,159
Speaker 1: you know, support from the government for what they do.

87
00:05:15,720 --> 00:05:18,960
Speaker 1: Let's get back to the referendum, because that sounds familiar

88
00:05:19,000 --> 00:05:24,400
Speaker 1: to me. Did nor I have a referendum on EU membership? Yes? Twice.

89
00:05:24,440 --> 00:05:26,960
Speaker 1: Actually they had a referendum in nineteen seventy two and

90
00:05:27,000 --> 00:05:31,080
Speaker 1: then a second one in Was it closer the second time? No,

91
00:05:31,320 --> 00:05:35,400
Speaker 1: actually it was. It was a resounding no to stay

92
00:05:35,480 --> 00:05:38,880
Speaker 1: a separate nation, complete separate from the EU. What happened

93
00:05:38,960 --> 00:05:43,880
Speaker 1: was that two years before Ino, they joined the e A.

94
00:05:44,560 --> 00:05:48,520
Speaker 1: For our listeners, e A again is EU dcalf right,

95
00:05:48,600 --> 00:05:51,840
Speaker 1: That's what we're talking about, basically, And it's sometimes easy

96
00:05:51,880 --> 00:05:55,360
Speaker 1: to get lost in the alphabet soup of these things. Yes,

97
00:05:55,480 --> 00:05:59,920
Speaker 1: in Norway opted to start the process of becoming part

98
00:06:00,120 --> 00:06:04,640
Speaker 1: EU decalf They joined the e A, and two years later,

99
00:06:04,720 --> 00:06:06,960
Speaker 1: when they were asked in a referendum, do you want

100
00:06:07,000 --> 00:06:10,360
Speaker 1: to join the EU, they could afford to say no

101
00:06:10,520 --> 00:06:12,720
Speaker 1: because in their back pocket they already knew that the

102
00:06:12,720 --> 00:06:17,159
Speaker 1: e A process EU decalf had already started. There's some

103
00:06:17,320 --> 00:06:22,320
Speaker 1: history here prior to the referendums. My understanding is that

104
00:06:22,480 --> 00:06:27,719
Speaker 1: Norway was in line eligible the membership of the group

105
00:06:27,800 --> 00:06:31,280
Speaker 1: that preceded the EU, along with the UK and a

106
00:06:31,279 --> 00:06:35,240
Speaker 1: couple of other countries, and degoal shafted them. Is that correct?

107
00:06:35,480 --> 00:06:37,560
Speaker 1: That is true. I think it was actually a wrap

108
00:06:37,680 --> 00:06:40,200
Speaker 1: up of the UK, Norway and a couple of under

109
00:06:40,400 --> 00:06:44,080
Speaker 1: other countries that together he vetoed there. Did Norway get

110
00:06:44,080 --> 00:06:46,880
Speaker 1: thrown under the bus just because it was with the UK?

111
00:06:47,520 --> 00:06:49,000
Speaker 1: I don't know if I can say it was just

112
00:06:49,080 --> 00:06:51,160
Speaker 1: because of the UK, but they were definitely wrapped up

113
00:06:51,160 --> 00:06:55,960
Speaker 1: in that storm. So again, I'm struggling this EU DCALF.

114
00:06:56,120 --> 00:06:59,159
Speaker 1: It seems like the UK has gone through an awful

115
00:06:59,440 --> 00:07:03,880
Speaker 1: lot of trouble. There's been an awful lot of market upheaval,

116
00:07:03,920 --> 00:07:07,520
Speaker 1: There's been an awful lot of political turmoil and capital spent,

117
00:07:08,400 --> 00:07:11,920
Speaker 1: maybe just to arrive at a place that's not that different. Well,

118
00:07:12,040 --> 00:07:15,000
Speaker 1: the EU decalf option is one of many that have

119
00:07:15,040 --> 00:07:18,040
Speaker 1: been thrown out there. I don't know if the Leave

120
00:07:18,120 --> 00:07:21,080
Speaker 1: campaign really had this in mind when they were making

121
00:07:21,120 --> 00:07:24,160
Speaker 1: promises to voters in the UK. If this is one

122
00:07:24,200 --> 00:07:26,840
Speaker 1: way of going. I think now it seems like it's

123
00:07:26,880 --> 00:07:30,040
Speaker 1: one of those situations where they're scrambling to find the

124
00:07:30,120 --> 00:07:34,000
Speaker 1: best solution in a messy situation. Now Norway has oil

125
00:07:34,360 --> 00:07:38,400
Speaker 1: and lots of it. Did that give the Norwegians the

126
00:07:38,480 --> 00:07:41,000
Speaker 1: feeling that, well, okay, it's not to the end of

127
00:07:41,000 --> 00:07:43,920
Speaker 1: the world, because we're still rich in commodities. You know,

128
00:07:44,120 --> 00:07:47,080
Speaker 1: by the nineties they probably could say that. In the

129
00:07:47,200 --> 00:07:52,040
Speaker 1: late sixties seventies they were still discovering oil, trying to

130
00:07:52,080 --> 00:07:54,480
Speaker 1: figure out how to bring up this oil, trying to

131
00:07:54,520 --> 00:07:58,840
Speaker 1: get enough labor force support to to sort of logistically

132
00:07:58,840 --> 00:08:01,600
Speaker 1: do everything. By the nineties they knew that they had

133
00:08:01,640 --> 00:08:03,520
Speaker 1: a lot. In the early two thousands and late two

134
00:08:03,520 --> 00:08:06,360
Speaker 1: thousands or you know, recently they have found even more oil.

135
00:08:06,880 --> 00:08:10,120
Speaker 1: By now they have an eight d billion dollars server

136
00:08:10,160 --> 00:08:13,520
Speaker 1: in wealth fund that gives tiny little Norway a lot

137
00:08:13,560 --> 00:08:16,120
Speaker 1: of leverage. You know that that sovern Wealth Fund is

138
00:08:16,120 --> 00:08:19,720
Speaker 1: Europe's largest investor. And the funny thing is that now

139
00:08:20,120 --> 00:08:23,440
Speaker 1: Norway could have a bit of power just through its

140
00:08:23,480 --> 00:08:27,200
Speaker 1: membership on the FTA Council if the UK wants back

141
00:08:27,360 --> 00:08:30,840
Speaker 1: into the European Free Trade Association for some kind of

142
00:08:30,880 --> 00:08:34,520
Speaker 1: EU decalf Norway has a say in that and is

143
00:08:34,559 --> 00:08:38,560
Speaker 1: the norwagean economy evolving in ways that make the EU

144
00:08:39,080 --> 00:08:44,000
Speaker 1: more or less appealing because you know, underlying most political sentiment,

145
00:08:44,080 --> 00:08:48,280
Speaker 1: there's an economic shift definitely. You know Norway more and

146
00:08:48,320 --> 00:08:52,680
Speaker 1: more needs the EU s support. Norway has kind of

147
00:08:52,720 --> 00:08:56,280
Speaker 1: reached its peak in its oil boom. Now it is

148
00:08:56,320 --> 00:09:00,880
Speaker 1: really looking to drive growth in non oil will industries.

149
00:09:01,400 --> 00:09:03,720
Speaker 1: Ever since the Brexit boat, I mean it was very unfortunate.

150
00:09:03,720 --> 00:09:06,600
Speaker 1: The day of the Brexit vote, the Norwegian Central Bank

151
00:09:06,640 --> 00:09:09,480
Speaker 1: had a rate decision where they came out very positive.

152
00:09:09,480 --> 00:09:12,840
Speaker 1: They took one rate cut off the table, and that night,

153
00:09:13,200 --> 00:09:16,760
Speaker 1: you know, spurred a lot of conversation that maybe zero

154
00:09:16,880 --> 00:09:21,240
Speaker 1: rates are ahead for Norway because they really need the UK.

155
00:09:22,360 --> 00:09:24,360
Speaker 1: Exports a lot of gas to the UK. They need

156
00:09:24,360 --> 00:09:27,800
Speaker 1: a good relationship there, and in the meantime they need

157
00:09:27,840 --> 00:09:30,480
Speaker 1: to find a way to support their economy. They're not

158
00:09:30,600 --> 00:09:34,520
Speaker 1: oil economy which relies on the EU. Well, sell, this

159
00:09:34,559 --> 00:09:37,120
Speaker 1: has been helpful. I really appreciate you joining us in

160
00:09:37,120 --> 00:09:40,080
Speaker 1: this bonus episode of Bloomberg Benchmark. Are you going back

161
00:09:40,080 --> 00:09:42,720
Speaker 1: to Norway for the summer vacation? I will be in

162
00:09:42,800 --> 00:09:44,720
Speaker 1: d C for the Timmer. I'm looking forward to it

163
00:09:45,040 --> 00:09:47,680
Speaker 1: and thank you all for listening to Bloomberg Benchmark. We'll

164
00:09:47,679 --> 00:09:50,280
Speaker 1: be back next week. Until then, you can find us

165
00:09:50,280 --> 00:09:53,520
Speaker 1: on the Bloomberg Terminal and Bloomberg dot com, as well

166
00:09:53,559 --> 00:09:57,600
Speaker 1: as iTunes, pocketcast, stitch, and Google Play. Why do they

167
00:09:57,840 --> 00:10:00,240
Speaker 1: take a minute to write and review the show so

168
00:10:00,320 --> 00:10:03,080
Speaker 1: more listeners can find us? You can get me at

169
00:10:03,200 --> 00:10:07,280
Speaker 1: at Daniel masst c and our guest Celea at Celea

170
00:10:07,400 --> 00:10:10,439
Speaker 1: most in s A L e h A m O

171
00:10:10,920 --> 00:10:13,199
Speaker 1: h s I N talk to you soon.