Schröder Heads to EU-Wary Norway

It will be strictly business when Chancellor Schröder makes a one-day visit to Norway on Tuesday to hold talks with Prime Minister Kjell Magne Bondevik, who heads a center-right minority coalition.

"Bilateral relations and above all, economic interests, will be at the forefront. The chancellor will be accompanied by representatives of large German energy companies," a German government spokesman told DW-WORLD. "But Norway's relationship to the EU and Oslo's possible rapprochement with Brussels will also be on the agenda," he added.

Professor Heiko Uecker, a Norway expert at the University of Bonn said economics was at the heart of bilateral relations. "Gas and oil interests in particular largely define ties between Norway and Germany," he told DW-WORLD.

Oil and gas the focus

Germany currently relies on Norway for 20 percent of its oil and gas needs. Following recent deals signed between Oslo and Berlin, that share is expected to rise to over 30 percent by 2010, when the Nordic country will replace Russia as Germany's largest oil supplier. Germany remains Norway's most important export market for oil and gas.

Though individual German companies, among them several medium-sized industries, have set up shop in Norway, German oil and energy firms have hardly made a dent in Norway's massive offshore sector: Natural oil and gas company RWE/DEA is the only German company to be involved in oil production and exploration in Norway, though it accounts for less than one percent of total overall production.

In June this year during a visit to Norway, German Economics and Labor Minister Wolfgang Clement said it would be "exciting and sensible in the long-term" if German companies such as RWE or Ruhrgas, one of the biggest customers for Norwegian oil producers, were to get more oil production rights in Norway.

That issue is expected to be taken up by Chancellor Schröder on Tuesday.

Special attention to Berlin

Experts say that in addition to burgeoning economic ties, political relations between the two countries have never been better.

Stephan Michael Schröder, a lecturer on Scandinavian studies at Berlin's Humboldt University, said the Second World War did strain relations. Germany invaded Norway in 1940 and occupied it until the end of the war. "It was a painful period, but both Norway and postwar Germany joined the NATO fairly early against a common enemy and the historic rift has been forgotten. Traditionally good relations have been smooth since the 1960s."

Oslo, in particular, has been at pains to cultivate close relations with Germany. In 1999, the then Social Democratic Norwegian government unveiled a so-called "Strategy for Germany," an exhaustive report detailing areas of potential cooperation which touches upon developing intensive political, economic, cultural and scientific ties and includes measures such as encouraging Norwegians to learn German, setting up an online portal on Norway in German, and executing a labor exchange.

"There is enormous interest in Germany from the Norwegian side," said Stephan Michael Schröder. "There's a lot of money flowing for academics and cultural exchange and scientific research."

Wary of the EU

But there remains little doubt that one of the reasons for Oslo's wooing of Berlin is the country's difficult relationship to Brussels and its deep-seated reluctance to join the 25-member bloc.

"The very word 'European Union' is like a bad odor in Norway," said Uecker. "It's a young country, it doesn't want to lose its independence so soon."

But it's not just its political sovereignty that Norway, which voted against EU membership in referendums in 1972 and 1994, is scared of losing.

The country, with its 4.5 million inhabitants is the world's third-largest exporter of oil after Saudi Arabia and Russia and one of the richest in the world. Norway is expected to pump North Sea oil for another 50 years and gas for a century.

The country has also been cannily funneling 80 percent of its oil revenues into a petroleum fund that is invested overseas so the benefits can be used to finance its lavish social systems for generations to come.

"The prospect of EU membership, particularly after the bloc's eastward expansion, worries many Norwegians that illegal workers might come into their country and pick off their generous welfare system and that their country might become poorer," said Uecker. Neighboring EU member Sweden's thumbs-down to joining the common euro currency in a referendum last year didn't help to bolster pro-EU feelings in Norway either.

Can Norway afford to stay out?

However, near-daily EU barometer polls published in the country's media show that Norwegians may be gradually reconciling themselves to the fact that remaining on the fringes of the European Union may not be a viable option in the long run.

Norway -- along with Liechtenstein, Iceland and Switzerland -- is a member of the European Free Trade Association (EFTA), which provides for free movement of goods, services, capital and labor between the Union and European countries that have remained outside. But, as Norway is discovering, non-membership of the EU is still costing it money in other ways.

From 2004, Norway (along with Iceland, another non-EU Nordic country) will pay five times their present membership fee of the EFTA. In addition, Norway will also channel existing bilateral aid for eastern Europe through the EU, so its total transfer to the Union will top NKr1.7 billion (€203 million) a year, a tenfold rise.

In addition to the money, experts say Norway also has to adopt directives from Brussels such as export duties on fish products as its own law. "Norway just can't afford to remain on the sidelines in the long run because though it has to implement decisions from Brussels, it has no power to influence them," said Uecker. "They will be in the Union in ten years."

Germans could represent Oslo's interests

Germany, in the meantime, could play a vital role in representing Norway's interests in the EU on account of its location, size and clout in the club, experts say. "Right since Chancellor Helmut Kohl's time, the Germans have always been in favor of Norway joining the EU," said Uecker.

"Developing a so-called "Northern dimension," which includes involving oil-rich Russia in European cooperation, as a counterweight to the Southern part of Europe is also an idea that finds resonance both in Norway and Germany," he said.