Speaker 1: Hi, and welcome back to Bloomberg Benchmark, a podcast about
Speaker 1: the global economy. This is a special bonus episode and
Speaker 1: we're going to be talking about Brexit, but with a
Speaker 1: Norwegian flavor. The so called Norwegian option for a post
Speaker 1: Brexit Britain is something that's attracting quite a bit of
Speaker 1: buzz and even some official interest. French President Oland raised
Speaker 1: the prospect of Britain doing a Norway just yesterday. But
Speaker 1: what is this Norwegian option and what does it mean
Speaker 1: in practice and how different from EU membership would it be.
Speaker 1: My colleague in d C Sileh Emotion knows a little
Speaker 1: bit about this, having just returned from the better part
Speaker 1: of a decade covering economics and government in Norway and
Speaker 1: before that Britain. Selah, welcome to the show and welcome
Speaker 1: back to the US, Hi, Dan, It's great to be
Speaker 1: back and have your family arrived. Yet my son is
Speaker 1: with me the restaurant on their way. So what is
Speaker 1: this norwagean option for Britain. It feels a little obscure,
Speaker 1: but perhaps it's not philosopye Well, Norway is part of
Speaker 1: the e A, which is all of the EU countries
Speaker 1: plus Norway. Lichtenstein and Iceland Um and those three countries
Speaker 1: that are basically add on combine, they represent a little
Speaker 1: bit less than six million people. So this a this
Speaker 1: European Economic area you're saying, it's a decaf EU basically, yeah, okay.
Speaker 1: And what does being a member of that entail as
Speaker 1: opposed to being a full member of the EU. Well,
Speaker 1: they do have access to the Single Market, they have
Speaker 1: free movement of labor. What they don't have is a
Speaker 1: voice when it comes to establishing EU laws and regulations.
Speaker 1: For Norway, a very small country with lots of oil,
Speaker 1: they joined the e A for access to the market
Speaker 1: to you know, to sell oil. They probably don't need
Speaker 1: the e A. But to bring up the oil they
Speaker 1: needed skilled foreign labor and that came from different parts
Speaker 1: of the EU. And they also need a way to
Speaker 1: support their non oil economy and for that they definitely
Speaker 1: need access to the EU. Now, the decaf EU also
Speaker 1: involves the free movement of capital, that's right, okay. And
Speaker 1: DECAF members also contribute to the EU budget. Yeah, Norway
Speaker 1: spends roughly nine million dollars a year contributing to the
Speaker 1: EU budget. But in return they have had to adopt
Speaker 1: about use laws just to get access to the Single Market,
Speaker 1: and those laws they did not have any direct access
Speaker 1: to the debate or discussions behind making those laws. So
Speaker 1: you have an inn, but you don't get any control
Speaker 1: or have any influence over the terms of those in Yeah,
Speaker 1: that's pretty much the case. Well again, I'm struggling to
Speaker 1: see why serious people are bringing this up as an
Speaker 1: option for Britain. What's the appeal? I mean, For one thing,
Speaker 1: I would imagine that a lot of people in London
Speaker 1: at this point probably want an option that will lessen
Speaker 1: the blow of what they are now facing for members
Speaker 1: of AFTA, which is the European Free Trade Association, which
Speaker 1: is Norway and Switzerland, Iceland and Lichenstein for those members.
Speaker 1: If the UK rejoins they were part of it until
Speaker 1: the seventies. If they rejoined, it kind of brings a
Speaker 1: bit more weight to this group of nations. And has
Speaker 1: it served Norway will? I think it has? Um Norway
Speaker 1: is a small economy. It can't really afford to not
Speaker 1: be part of the e A and not open itself
Speaker 1: up to Europe. Finance Minister C Vjensen, who leads the
Speaker 1: Progress Party UM, which actually has a very strict stance
Speaker 1: on immigration. She said in the last couple of days
Speaker 1: to local media that she when the when Norway had
Speaker 1: a reference um, she voted to join the EU. But
Speaker 1: now she's saying, after having seen how that model has
Speaker 1: worked out for them, she's happy with what they've chosen
Speaker 1: and if asked today she would say, no, we should
Speaker 1: not join. We'll get back to Norway's referendum in a second.
Speaker 1: So what you're saying is that there is broad support
Speaker 1: within the political community in Norway for things being just
Speaker 1: as they are. Pretty much. The two larger parties, Labor
Speaker 1: and the Conservative Party both have come out to say
Speaker 1: that they support the model that they have. Now there
Speaker 1: are some outliers. There's a small farming farming population in Norway.
Speaker 1: They have a small party that's kind of dedicated to
Speaker 1: what they want and they are kind of always unhappy
Speaker 1: with the status quo. Is there a Nigel Farage in
Speaker 1: Norway who stirs up trouble. I don't know if there's
Speaker 1: a single person, but the farmers have been known to
Speaker 1: bring their tractors and farm animals and cow bells to
Speaker 1: the capital to make their statement. And what does that
Speaker 1: look like, Well, they roll through the capital. They show
Speaker 1: up at Parliament when it comes to negotiating producer prices,
Speaker 1: and what they have is a lot of power. They
Speaker 1: have some of the highest government subsidies in the O, E, C. D,
Speaker 1: you know, support from the government for what they do.
Speaker 1: Let's get back to the referendum, because that sounds familiar
Speaker 1: to me. Did nor I have a referendum on EU membership? Yes? Twice.
Speaker 1: Actually they had a referendum in nineteen seventy two and
Speaker 1: then a second one in Was it closer the second time? No,
Speaker 1: actually it was. It was a resounding no to stay
Speaker 1: a separate nation, complete separate from the EU. What happened
Speaker 1: was that two years before Ino, they joined the e A.
Speaker 1: For our listeners, e A again is EU dcalf right,
Speaker 1: That's what we're talking about, basically, And it's sometimes easy
Speaker 1: to get lost in the alphabet soup of these things. Yes,
Speaker 1: in Norway opted to start the process of becoming part
Speaker 1: EU decalf They joined the e A, and two years later,
Speaker 1: when they were asked in a referendum, do you want
Speaker 1: to join the EU, they could afford to say no
Speaker 1: because in their back pocket they already knew that the
Speaker 1: e A process EU decalf had already started. There's some
Speaker 1: history here prior to the referendums. My understanding is that
Speaker 1: Norway was in line eligible the membership of the group
Speaker 1: that preceded the EU, along with the UK and a
Speaker 1: couple of other countries, and degoal shafted them. Is that correct?
Speaker 1: That is true. I think it was actually a wrap
Speaker 1: up of the UK, Norway and a couple of under
Speaker 1: other countries that together he vetoed there. Did Norway get
Speaker 1: thrown under the bus just because it was with the UK?
Speaker 1: I don't know if I can say it was just
Speaker 1: because of the UK, but they were definitely wrapped up
Speaker 1: in that storm. So again, I'm struggling this EU DCALF.
Speaker 1: It seems like the UK has gone through an awful
Speaker 1: lot of trouble. There's been an awful lot of market upheaval,
Speaker 1: There's been an awful lot of political turmoil and capital spent,
Speaker 1: maybe just to arrive at a place that's not that different. Well,
Speaker 1: the EU decalf option is one of many that have
Speaker 1: been thrown out there. I don't know if the Leave
Speaker 1: campaign really had this in mind when they were making
Speaker 1: promises to voters in the UK. If this is one
Speaker 1: way of going. I think now it seems like it's
Speaker 1: one of those situations where they're scrambling to find the
Speaker 1: best solution in a messy situation. Now Norway has oil
Speaker 1: and lots of it. Did that give the Norwegians the
Speaker 1: feeling that, well, okay, it's not to the end of
Speaker 1: the world, because we're still rich in commodities. You know,
Speaker 1: by the nineties they probably could say that. In the
Speaker 1: late sixties seventies they were still discovering oil, trying to
Speaker 1: figure out how to bring up this oil, trying to
Speaker 1: get enough labor force support to to sort of logistically
Speaker 1: do everything. By the nineties they knew that they had
Speaker 1: a lot. In the early two thousands and late two
Speaker 1: thousands or you know, recently they have found even more oil.
Speaker 1: By now they have an eight d billion dollars server
Speaker 1: in wealth fund that gives tiny little Norway a lot
Speaker 1: of leverage. You know that that sovern Wealth Fund is
Speaker 1: Europe's largest investor. And the funny thing is that now
Speaker 1: Norway could have a bit of power just through its
Speaker 1: membership on the FTA Council if the UK wants back
Speaker 1: into the European Free Trade Association for some kind of
Speaker 1: EU decalf Norway has a say in that and is
Speaker 1: the norwagean economy evolving in ways that make the EU
Speaker 1: more or less appealing because you know, underlying most political sentiment,
Speaker 1: there's an economic shift definitely. You know Norway more and
Speaker 1: more needs the EU s support. Norway has kind of
Speaker 1: reached its peak in its oil boom. Now it is
Speaker 1: really looking to drive growth in non oil will industries.
Speaker 1: Ever since the Brexit boat, I mean it was very unfortunate.
Speaker 1: The day of the Brexit vote, the Norwegian Central Bank
Speaker 1: had a rate decision where they came out very positive.
Speaker 1: They took one rate cut off the table, and that night,
Speaker 1: you know, spurred a lot of conversation that maybe zero
Speaker 1: rates are ahead for Norway because they really need the UK.
Speaker 1: Exports a lot of gas to the UK. They need
Speaker 1: a good relationship there, and in the meantime they need
Speaker 1: to find a way to support their economy. They're not
Speaker 1: oil economy which relies on the EU. Well, sell, this
Speaker 1: has been helpful. I really appreciate you joining us in
Speaker 1: this bonus episode of Bloomberg Benchmark. Are you going back
Speaker 1: to Norway for the summer vacation? I will be in
Speaker 1: d C for the Timmer. I'm looking forward to it
Speaker 1: and thank you all for listening to Bloomberg Benchmark. We'll
Speaker 1: be back next week. Until then, you can find us
Speaker 1: on the Bloomberg Terminal and Bloomberg dot com, as well
Speaker 1: as iTunes, pocketcast, stitch, and Google Play. Why do they
Speaker 1: take a minute to write and review the show so
Speaker 1: more listeners can find us? You can get me at
Speaker 1: at Daniel masst c and our guest Celea at Celea
Speaker 1: most in s A L e h A m O
Speaker 1: h s I N talk to you soon.