Norway - Leadership

As Bondevik came to office in 1997, his party, opposed to abortion, sought to promote Christian values in both schools and society at large. His coalition was considered to be moderate on economic matters and conservative on social issues. He pledged to use more of the country's surplus oil revenues to raise the levels of grants to families and the elderly. He called for a rise in the minimum pension and increased spending on foreign aid and development. Norway has established a Petroleum Fund that is currently worth US $60 billion, but Bondevik and his coalition knew that it could not deplete this fund to increase welfare spending.

Upon coming to power for the second time in 2001, Bondevik promised to cut taxes, raise spending for foreign aid, and to further the privatization of state-owned companies that began under Stoltenberg's leadership— especially the state-owned communication company, Telenor, and the state-owned oil group and Norway's largest company, Statoil. Bondevik, however, has taken a nationalistic position in the banking sector by trying to keep the country's financial institutions Norwegian.

Although the international economic downturn has had an effect on Norway's economy, it remains strong as long as the price of oil is high. Since taking office in October 2001, Bondevik has focused on fighting poverty at home, on creating better schools and healthcare, and making a stronger environmental policy. Many of these promises had to be watered down, however. The coalition faced hard choices during the negotiations on the 2003 budget and increased spending on healthcare, child care, and foreign aid, but could not cut income taxes without creating large budget deficits. The government confronted an even tougher situation when it evaluated the 2004 budget the following year. Finance Minister Per-Kristian Foss has tried to include further tax cuts in the 2004 budget cuts while Prime Minister Bondevik promised more local government funding. Economic uncertainty, however, makes it unlikely that the coalition can both increase spending and offer tax cuts. Since the government does not enjoy a parliamentary majority it will have to make concessions to either the right, or less likely, the left, in order to pass the budget. The Labor Party suggested that Bondevik invite them into government but Bondevik has dismissed that possibility, at least for the time being.

As a consequence, one of the challenges of Bondevik's leadership continues to be his relationship to the populist Progress Party leader, Carl I. Hagen. Hagen is sometimes compared to Jean-Marie Le Pen, France's leading right-wing anti-immigrant politician, although Hagen is not as extreme. His party has come to be seen as the silent partner in Bondevik's government, since both parties share the priority of cutting taxes and injecting more of the country's oil wealth into the ailing health service. Tax cuts have been difficult to institute, however, and Hagen has asked the government to use the Petroleum Fund (containing around US $90 billion) to reduce taxes. The government is unwilling to dip into the Fund except to cover a budget deficit of US $1.3 billion. In March 2003, 100,000 Norwegians were unemployed leading many senior politicians to question the direction taken by Bondevik's cabinet.

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