April 23, 2019 Tuesday
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Ambassadors in Budapest
Working for Team Europe
Norway and Hungary have been partners in the European Economic Area (EEA) for 15 years. Norwegian Ambassador Olav Berstad says that such European cooperation is the best thing that could happen to the two countries. In an extensive interview, he also talks to Diplomacy&Trade about why Hungary is a challenging market for Norwegian firms and how ‘Norway Grants’ has helped hundreds of thousands of Hungarians.
Diplomacy&Trade online | April 3, 2019

Ambassador Berstad arrived in Hungary in the fall of 2016. When asked what his objectives were at that time, he says that “a standard answer would be something like ‘doing a good job for Norway and Norwegian interests, promoting bilateral relations and working for strong common benefit’. I don’t think I have significantly failed on those, on the other hand, I cannot point to marvelous success, either. I inherited a legacy of bilateral disagreement concerning what is known as EEA grants. It hasn’t been fully resolved. Generally, I have grown to regard myself as part of a kind of ‘Team Europe’. I cannot really see how Norway, or Hungary – or any other country – can succeed without ‘Europe’ succeeding. My broader objectives are therefore to be part of the majority of people who want to defend order, cooperation, reason and compromise throughout Europe. That is the best recipe for success, for nations small and big. For me, the highest European value is to learn from history, not to repeat the catastrophic mistakes of the past.”

Economic relations

“Trade between our two countries is unfortunately rather small, only about 0.2% (or some EUR 400 million) of total Norwegian trade of about EUR 175 billion. The sale of Telenor in Hungary last year diminished Norwegian direct investments here. The Norwegian Pension Fund’s investments are about USD 96 million (close to EUR 85 million),” the Ambassador notes.

A conclusion he draws is that Hungary is not a favorite market for Norwegian business or investors. “There are, of course, also real success stories. However, sometimes I hear that companies find Hungary to be a challenging market. Even if the macroeconomic figures are improving, there may be a feeling that this is mainly because of EU support to Hungary, and is not sustained by completely sound government policies, transparency and rule of law, including in the economic sphere. People are, I believe, sometimes surprised at the speed with which new economic and other legislation can be adopted here, without much public debate or serious stakeholder involvement.”

EEA partners

Norway and Hungary have been partners in the European Economic Area (EEA) for 15 years. Regarding the benefits of that partnership for the two countries, Ambassador Berstad explains that when Hungary became an EU member in 2004, it also became a member of the EEA. “It is difficult to overestimate the importance of the very large internal market, its harmonized and common rules, etc. It may be difficult to put exact numbers on this benefit. I think it is self-explanatory that the access to a high-standard, rules-based market of 500 million people has led to unprecedented growth, predictability and opportunity for all. I believe Norway and Hungary are among the clear winners in this equation. For us, trade with the European Union accounts for 75 % of Norwegian trade, with EUR 45 billion worth of import and EUR 85 billion export from Norway. The ease of movement of goods and services across borders is a really big achievement.”

Norway Grants

The EEA/Norway Financial Mechanisms (known as ‘Norway Grants’) are also 15 years old in Hungary. As regards the main aims of this program and the greatest achievements that this support has provided for the Hungarian people, the Ambassador stresses that this is one of his favorite themes. “The EEA/Norway Financial Mechanisms, as they are officially called, have made EUR 503 million available to Hungary since 2004, but only about 205 million EUR have been put into effect, or accessed by Hungary. But even the sum of 205 million has meant support for some 1,400 projects (big and small) in the period 2004-2017. All assessment points to a clear conclusion, that the programs have been effective, useful in delivering cooperation, new contacts and ideas and have strengthened bilateral relations. There is an EEA/Norway grant ‘footprint’ in so many places in Hungary, involving and benefitting thousands of people, if not hundreds of thousands.”

Exemplary Nordic integration

The Royal Norwegian Embassy promotes the Scandinavian model in Hungary in conjunction with the other Nordic embassies. The Norwegian ambassador says that the Nordic integration is a big success story. “We have had our conflicts and sharp disagreements in the past, in history, but have understood that our individual nations are stronger and more successful working together. To me, this is part of the European success story, with integration and cooperation based on openness and trust – in society and between societies and countries. The basic value here is the democratic, transparent, equal rights and rule of law communities we have. Last year, we were working with 40-50 young Hungarians, building two-way connections. The Nordic embassies hope to continue this program, called the Nordic Bridge, in 2019-20. The title is important. The value of cooperation also means learning and understanding Hungarian experience and knowledge.”

Energy supply

Norway is an important oil exporter. As such, it is often mentioned in Hungary and other countries of this region where there is talk about the diversification of energy resources.

“It is sometimes difficult to grasp how important Norway is for European energy supplies and security in oil, gas and electricity. Our daily production of hydrocarbons equals almost 4 million barrels of oil. Since the 1960s, we have produced and exported an estimated 47% of our resources. Production is on the increase again. We have always been used to price fluctuations. The reason we established the oil fund in the 1990s was to create a buffer against macroeconomic problems caused by oil price fluctuations. But the fund has grown much bigger and equals today more than twice the Norwegian GNP, more than USD 1 trillion dollars, with investments in 97 countries and more than 9,000 companies,” the Ambassador points out.

He adds that the drop in oil prices since 2014 clearly affected Norway’s oil and gas industry. “Amazingly, revenues have bounced back, thanks a lot to cost-cutting measures. Norwegian oil and gas fields are now profitable at considerably lower world prices than before. It is in evidence how cost concerns are a powerful driver for innovation and new technology. We see that Hungary wants to diversify its energy supply. On our part, we are looking forward to developing a strong energy efficiency, renewable energy and a smart energy use program in the next EEA/Norway grant cycle.”

Environmental concerns

Given its natural resources, fishing is a major industry in Norway. However, the current climate change (including the possible cessation of the Gulf Stream in the long run) may have a substantial impact on this industry. As to what measures Norway is taking, as an environmental conscious country, to slow down and/or prevent this and other problems like lice in fish farm pens, etc., the Ambassador stresses that “indeed, environmental concerns are very high on our agenda, including climate change. Our experience shows that even very challenging pollution issues can be effectively tackled: effluents and emissions, but also acid rain and ozone layer problems. The success criteria are good organization, including public administration, civic interest and advocacy groups, and technology and financing. Norway is a large exporter of fossil energy, but at the same time we have a very active CO2 reduction policy and strong international climate policy leadership. There may seem to be a dilemma or contradiction on the surface of the issue. But maybe not.”

He adds that his country has launched new policies and initiatives when it comes to the health of the oceans, pollution of micro-plastics, etc. “The fish industry is a very important part of our economy. Last year, we exported almost EUR 10 billion worth of fish, a large sum, but small in relation to oil and gas. In particular, the fish farming business has been innovative and successful. It is said that every day 30 million Norwegian salmon dishes are consumed worldwide. Norway is a large importer of grain and other fodder products, which in the fish pens are turned into high quality protein and other useful nutrients. There are sometimes problems with fish health, parasites, as in other branches of animal husbandry. Obviously, we have a strong brand when it comes to health, cleanliness and quality of fish and don’t take challenges easily.”

He finds forecasts on the fate of the Gulf Stream interesting. “There is a lot of speculation around this, stemming from the fact that the temperature in the Arctic is increasing at a fast pace. In fact, it is not unrealistic to expect that the average temperature in Svalbard, Norway, will be at least 10 degrees higher than the historic average, by the end of the century. The ‘dropping’ of chilled Gulf Stream water into the deep parts of the Arctic Ocean is one of the ‘engines’ of the Gulf Stream. Probably it will be affected, but exactly how, is another question. In any case, we expect to see big changes in the ocean flora and fauna around our coasts, as the water temperature rises.”

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