Thursday, September 01, 2005

Last Rich Soviet State?

Today's edition of Stavanger Aftenblad - the local newspaper in Norway's oil capital - had a first page headline saying that "Norway risks drowning in money".

With oil prices in average this year 40 Norwegian crowns over the assumption the Finance Ministry made as late as May, money is certainly flowing into the public coffers of the country.

If oil were to stay at 50 dollars a barrel - it's well over 65 today - for a lengthy period of time the effects on the country will be dramatic. There is a boom athmosphere on the markets of Norway.

It is in this athmosphere that the country is now approaching its parliamentary election. With few signs of campaign activities in the streets - where are the posters? - it all seems a rather timid affair.

But there are real issues. I have written earlier about those connected with the foreign policy of the country.

On the economic side, the prospective red-green coalition is promising more of public spending more or less across the board. And with oil prices being what thwey are, it's not entirely easy to argue against.

But increased public spending is almost certain to lead to increasing inflationary pressures which is almost certain to lead to higher interest rates which might well take the currency higher, thus risking the strangulation of what there is in the form of a non-energy and non-public sector of the economy.

When reading the election material of the Labour Party - Arbeiderpartiet - I find it difficult to avoid the impression that they have moved towards the left since I last had reason to look at their policies.

With Jens Stoltenberg - likely next Prime Minister - smiling at you from a leaflet, they start out by saying that they will "build but not sell" the country. Well, what that means is explained by saying that the government should own power-, energy- and other natural reserve resources and that mail, telecommunications and railway should remain firmly in state hands.

"We want to use our strong capital base to build long-term national ownership of the strategic industries for the country."

Once upon a time, there was a somewhat careless Swedish minister who happened to say that Norwaty was "the last Soviet state."

It was and remains an exaggeration. But when reading the election promises of the Labour Party, it is difficult not to notice the similarities in philosophy to some of the things we are now hearing coming out of Putin's Russia in these respects.

State capital. State control. State ownership.

This is certainly not the wave of the future. It's rather the words from those that can afford to ignore the future.

At least for some time.