Norway caught in the Brexit debate

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NEWS ANALYSIS: As campaign hype reaches fever pitch ahead of Britain’s vote on EU membership on Thursday, Norway has found itself used and abused by both sides in the so-called “Brexit” (British Exit) debate. Norwegians twice turned down EU membership themselves, but researchers say they probably aren’t any richer for it.

The European Union was praised for promoting "fraternity between nations," one of the key criteria for the Nobel Peace Prize according to the will of its founder, Alfred Nobel. PHOTO: European Commission

Norway never joined the EU but has had to abide by its rules and pay huge annual fees to retain access to EU markets. Now Britain may leave the EU, pointing to how Norway has managed outside the union, but most now agree that Norway’s deal with the EU is no model for Britain. PHOTO: European Commission

Norway has been held up for months as an argument both for staying in the EU and for leaving it. The pro-Brexit camp that wants to leave the EU points to Norway as a sterling example of being able to prosper outside the EU. The anti-Brexit camp points to the expensive terms of Norway’s position outside the EU as a great example of the pitfalls of not being a member.

That’s because of the so-called EØS avtale, the agreement Norway secured with the EU back in 1994 to retain access to EU markets. It requires Norway to pay huge sums of money to the EU, currently NOK 3.3 billion (EUR 391 million) every year until 2021, and to go along with nearly all EU rules and regulations without having any vote on them.

A professor at the London School of Economics told newspaper Aftenposten earlier this spring that Brexit proponents leading the “Vote Leave” campaign became more cautious about using Norway as an argument in favour of exiting the EU. Pointing to how well things have gone for Norway was more popular before the Vote Leave advocates really studied the (EØS) agreement, said professor Simon Hix, and discovered what it involved.

After that, the “Vote Leave” campaigned clarified that it did not support a “Norwegian alternative” for Great Britain. “Norway’s deal with the EU is terrible, in fact almost as bad as ours,” claimed British MP Douglas Carswell. The “Vote Leave” side then began pointing to Canada and Switzerland instead, with proponents for an exit remaining confident that Britain could cut its own deal with the EU. They also believe they can get a market agreement with the EU that would be better than Norway’s.

“They realized that Norway has to accept nearly all EU directives without having any influence over them,” Hix told Aftenposten. “That came as a shock.”

Norway as ‘Europe’s Puerto Rico’
The other side that wants to remain in the EU also seized upon Norway’s agreement with the EU. The Confederation of British Industry (CIB), an employers’ organization similar to NHO in Norway, noted that Norway, because it refused to join the EU, must still accept “around 75 percent” of the EU’s laws without having any say in how they’re formed. Norway also has far fewer free trade agreements than the EU and is among the 10 countries paying the most to the EU on a per capital basis even though it’s not a member.

“It’s a strange situation Norway has landed in,” Hix told Aftenposten. He said he tends to view Norway as “Europe’s Puerto Rico,” comparing Norway to the small island state in the Caribbean that must accept US federal law and free flow of commerce without being able to vote in US elections. “But Norway has to pay as well, so the situation is in fact worse for Norway,” Hix said, even though Norway has the oil wealth to pay the EU’s price.

Some British researchers, meanwhile, suggest Norway would have been even wealthier if it had joined the EU in 1994, when Norwegians held their last referendum on the issue. In an article published last year, researchers at Brunel University London said they found “relevant economic advantages” to being a full member of the EU that Norway has never enjoyed. The researchers claimed productivity in Norway would have been 6 percent higher between 1995 and 2000 if it had joined the EU “and there is little reason to believe the gap has disappeared today,” one of the Brunel University researchers, Nauro Campos, told Aftenposten. He noted that development in Norway has been “solid” despite its lack of EU membership, but believes it could have been even better if Norway was part of the EU. Being outside the EU, for example, may have discouraged more foreign investment.

“It’s totally legitimate to want to retain your sovereignty,” Campos said, “but it’s important that everyone realizes it has its price.”

The EU and British flags may no longer fly side-by-side. PHOTO: Europabevegelse

The EU and British flags may no longer fly side-by-side. PHOTO: Europabevegelse

Researchers at major British institutions like CIB and even the country’s own finance ministry also believe it will be more expensive for Britain to leave the EU than to remain a member. Any agreement it now must strike with the EU will demand an equivalent of taxation without representation, even if Britain manages to strike a better deal than the Norwegian model. The British finance ministry estimates British GNP would be as much as 4.3 percent smaller after 15 years if it has a Norwegian-type agreement with the EU instead of full membership in the EU. CIB believes Great Britain needs full influence in Brussels and full market access.

Norway’s anti-EU lobby hopes Britain will leave the EU and team up again with Norway and other non-members like Switzerland, Iceland and Liechtenstein through the European Free Trade Association (EFTA). Norway’s Nei til EU (No to the EU) movement also thinks that if Britain needs to negotiate a new agreement with the EU, it may give Norway a chance to do the same. It even notes that since Britain alone is an important trading partner for Norway, its exit would reduce the EU’s importance for Norway as a market and supplier.

Embassy deluged
Norway’s embassy in London, meanwhile, has been deluged in recent months with requests for information about Norway’s position and its agreement with the EU. The embassy gave the “Vote Leave” lobby cause for pause when it could document that Norway has taken in more labour migrants than Britain on a per-capita basis from other countries in the European Economic Area. Many British have latched on to Brexit in the hope it would curb immigration.

“I think we’ve seen references to Norway in nearly every Brexit debate,” Norway’s ambassador to Great Britain, Mona Juul, told weekly magazine A-magasinet. “Here at the embassy, we try to contribute as best we can with factual information, without getting involved in the debate itself.”

On Thursday night, both proponents and opponents of Britain leaving the EU will gather to follow referendum results as they stream in. Norway’s pro-EU lobby, Europabevegelsen, is co-hosting an election vigil with several other organizations to monitor election returns and debate the issue themselves. Much is at stake for those fearing the krone will weaken, for companies doing business with Britain and not least for British citizens living in Norway and eligible for various social welfare benefits as part of the EU. All that will need to be renegotiated directly with Norway if Britain leaves the EU. Thursday night is also Midsummer Eve in Norway, often celebrated outdoors by a bonfire or on a boat on the fjord. This year, many Norwegians will join others all over Europe in following the news from London closely instead. Berglund