Introduction

The purpose of this chapter is to analyse the contested relationship of Norway as a semi-peripheral power with the European Union (EU) as a core regional block.� Our analytical challenge derives from the opposing perspectives that can be brought to the problem.� On the one hand the EU can be seen as either a promoter of or a bulwark against neo-liberal globalism. For its part, Norway's being party to the agreement on the European Economic Area (EEA) can be presented either as an arrangement necessary to retain or as an emasculation of national sovereignty (Andersen 2000).

 

We first present an historical outline of Norway's foreign economic relations since independence in 1905 in order to answer the question why Norway adapted to the EU.� We then discuss two mechanisms of adjustment, i.e. how Norway adapted to the EU�slegal obligations and incentives for change -- and address its normative, institutional, and policy consequences.� Finally, we ask: to what extent Norway's adaptation to the EU was consistent with or in opposition to its economy's and society's general pattern of globalisation.

 

Norway and the World Around It

Norway is no stranger to complex relations with the outside world.� As �sterud has already noted in chapter ##, its foreign policy has historically striven to strike a balance between internationalism and national self-assertion.� Although united under a common king as early as 872, it lost its independence in the late Middle Ages, was ruled by Denmark from 1390 to 1814, and was then the possession of the Swedish king until obtaining independence in 1905.� The country's national identity drew heavily on peasant folklore and traditions as well as on the European ideas with which Norwegian elites in Copenhagen were enamoured.

 

In his maiden speech to the parliament in 1905 the first Minister of Foreign Affairs, Jorgen L�vland, reflected on Norway's relationship with the rest of Europe.� He distinguished between a commercial strategy of interaction and co-operation and a security policy stance of neutrality that was maintained up to World War 11.� The government's foreign policy orientation was altered when it joined NATO in 1949 and became such an active participant in many international organizations that it was widely considered a 'humanitarian giant', despite its mere 4.5 million inhabitants.

 

The Norwegian economy has long been highly dependent on a limited range of resource exports, most important of which were timber and fish at the beginning of the 20^th century.� At the end of the century the overwhelmingly dominant sector was petroleum.� Due to these sectors' dependence on international markets, Norwegian commercial interests have thus always been externally oriented.

 

In 1960 Norway joined the European Free Trade Association (EFTA) which included the UK, Finland, Sweden, Austria, and Liechtenstein.� Oslo's applications to join the European Community in 1962 and 1967, were vetoed by France.� After a small majority (53.5 percent) of the population, rejected adhesion by referendum in 1972 and Norway negotiated a trade agreement with the Community to ensure duty-free trade for manufactured goods, 'the European question' receded from its political agenda.� Elite interest in Europe revived in the 1980s, when the prospect of the Single European Market triggered negotiations to link the EFTA states with the EU through the European Economic Area agreement (EEA). This implied de facto inclusion in the EU's Internal Market , � although� Norway obtained important exemptions in agriculture and fisheries.

 

Norway entered the EEA prior to submitting its next application for EU membership in 1994.� As an intergovernmental agreement between the EU and the three remaining EFTA partners, Iceland, Liechtenstein, and Norway, the EEA became the backbone of Norway 's economic relationship with the EU. [1] � Taking this relationship well beyond the economic realm, Norway joined the Schengen agreement on police co-operation and border control and performs surveillance on the European perimeter as if it were another EU member-state.� It has also established close co-operation with the EU on its Common Foreign and Security Policy (CFSP).

 

Although, Norway is an arctic country with a small proportion of arable land, its farmers have been important political actors.� The population is unusually decentralised in part because of the security requirement for maintaining a population in Northern Norway to bolster its border with Russia.� The wide dispersal of people also has deep domestic roots.

 

Norwegian society demonstrates multidimensional cleavages with divisions between centre and periphery, the rural and the urban, producers and consumers, the secular and the religious, and among classes and linguistic groups (two official Norwegian languages, as well as Saami). Norwegian political culture has sought to deal with these tensions by entrenching consensus formation through institutions such as a multiparty system based on proportional representation.

 

Reconciling Norway's reliance on the world for exports with the protection of industrial and rural interests has also necessitated political bargaining.� For instance, in the 1930s two deals laid the foundation for the Norwegian Labour government's subsequent handling of the country's external economic openness and internal political stability.� In 1935 trade unions and employers' organizations signed the first general national agreement, initiating a long and strong tradition of consensual relations in the industrial sector.� During the 1990s these consensual relations were exercised under the heading of the "solidarity alternative", in which the government stimulated the competitiveness of the export sector by keeping the exchange rate in line with European trade partners (i.e. the EU/Euro area).� In return, the workers moderated their wage claims, contributing to a low inflation rate; while the employers accepted the principle of national regulation and a low degree of competition in the labour market.� This trade-off constituted the core of the Norwegian version of what Peter Katzenstein has named 'democratic corporatism' (Katzenstein 1985).

 

In 1935 the Labour party also made a budget agreement with agricultural interests in parliament, which guaranteed subsidies for farmers.� The government combined determining farmers' incomes and setting farm prices with strong import restrictions to protect against foreign competition in the food sector, As large exporters, the fishing sector called for free trade in order to expand.� Norwegian food policy has thus always displayed a tension between an interest in free trade for fish and protectionism for farm products.

 

More recently, Norway's development has been profoundly shaped by its accumulating petroleum wealth.� To start with, it has no public debt and no trade deficit. The economy was working at or near capacity throughout most of the 1990s, hence it could not absorb its petroleum riches.� Recognizing this, a fund was established in 1990 to invest the public revenue from the oil sector abroad. The fund had reached about $78 billion by the end of 2001. Given the present oil price the fund is set to increase substantially in the near future.� Hence, Norway is in the enviable position of having a great fiscal resource with which to face the future.� The question is what such leverage entails in an increasingly globalised world to which the country is tied through a complex and multifaceted web of relations.

 

Adapting to what? - the EU as a political system

Membership in an international Organisation generally reduces a country's decision-making autonomy.� In the case of a tightly integrated entity such as the EU, which claims legal preponderance, the loss of independence extends from a formal to a de facto abdication of sovereignty.� Given the EU's unprecedented depth and breadth of integration and its complex links to the outside world, such losses occur beyond its boundaries because its influence extends well beyond its formal bounds causing neighbouring states to gravitate far closer to it than they might want.� In this chapter we explore Norway's characteristics as a semi-peripheral country so closely linked to the EU as to make it a halfway member.� More specifically, we ask to what extent the EEA-agreement imposes an institutional restructuring on its domestic political order and, if so, whether this constitutes a neo-liberal turn in Norwegian foreign and domestic economic policy.

 

As McBride and Fossum's chapter # shows, the EU was not intended to be a neo-liberal project, although its approach to integration does bear a certain liberalising imprint.� That the process of integration has proceeded furthest within the economic realm is evident in the pillar structure of the Treaty of the European Union, in which the first, economic� pillar is both the most integrated and the one with the strongest supranational content.

 

In its present form, the EU is not a neo-liberal juggernaut that imposes itself upon the member states but a complex mixture of principles and governance arrangements, (Schmitter 2000) its political system exhibiting a mixture of supranational, transnational, transgovernmental, and intergovernmental features.� At present the EU stands at a crossroads, having completed its economic project and launched a remarkably open debate with regard to its future development including its possible enlargement to the East and South.� Its very weak overall sanctioning ability, its consensus-based system, and its cumbersome decision-making procedures leave each member-state considerable room for manoeuvre, subject to the constraints emanating from the legal system and the Common Market.� Ironically, these constraints, may emit stronger adaptive signals to non-members like Norway which is less included in those aspects of the EU that may help undo some of the negative effects of the market.

 

Because Norway's relation to the EU is highly asymmetrical and because the EU is undergoing rapid and dramatic changes, it is not enough to understand the formal arrangement between the two entities A more enlightening approach comes from examining the relationship as a process of adaptation (Sverdrup 2000) whose mechanisms we will now address.

 

Mechanisms: How Norway adapts

Two sets of adaptive mechanisms, each of which permits cross-sectoral analysis, are rooted in broader explanatory schemes in social science, and tells us about the extent of convergence between the EU and the nation.� Each such mode of adaptation relates to a set of behavioural expectations, the first rule-oriented, the second incentive-based.� The rule-based mode of legal obligation involves processes where national authorities abide by rules and regulations established at the EU level. [2] � Norwegian authorities transpose EU directives and regulations into national law not only because of their beneficial effects, but also because of norm compliance, that is from fear of sanctions or from internalising the norms.� Studies have shown that the EU suffers from a considerable implementation deficit (cf. Olsen 2001, Schmitter 1996).� Hence, the process generated by the logic of legal obligation is not sufficient to explain all aspects and cases of domestic adaptation to the EU.� We thus also need to understand how the EU alters "domestic opportunity structures, and hence the distribution of power and resources between domestic actors" (Knill and Lehmkul 1999:2).

The second mode of adaptation occurs when the EU causes changes in the incentives motivating domestic or national actors.� Changing incentives influence actors' calculation of interest and can affect both societal agents and state actions.� For instance, changed incentives can lead to policy change if the EU sets standards that national authorities consider necessary to provide a competitive business environment.

 

This sort of regulatory competition can occur without specific threats of exit from business.� It is sufficient that governments believe they have to compete with other governments to remain attractive.� Societal actors can obtain new incentives through Europeanisation, because rules designed for the sake of the Internal Market can be used as levers against governments in fields, which have so far been tightly regulated.� One important source of such tensions is to be found at the intersection of social policy - largely the preserve of the nation state - and competition rules at the core of the Internal Market.� Pensions are a good example because they are at the core of social policy and are integral to the financial services industry, a key component of the internal market.� Let us now track these adaptation mechanisms in the Norwegian case.

 

Legal obligation: The nature of the formal ties: the EEA agreement

Under the EEA, Norway implemented the regulations pertaining to the free movement of goods, capital, labour, and services, thus providing its enterprises with opportunities equal to those of their EU competitors inside the Internal Market.

 

This economic agreement was never intended to allow the EFTA-countries to participate in the internal EU decision-making process, although they are permitted to appoint experts to the European Commission's various preparatory committees.� Lack of access to EU�s decision-making process underlines the one-sided nature of the relationship.� In practice, Norway is obligated to include all relevant internal market regulations into national law, adapting its internal laws and regulations to those of the EU -- regardless of political opposition -- where the agreement and other binding agreements between Norway and the EU apply.� Although the agreement provides EFTA-partners with option to reject EU legislation, Norway has so far never exercised this right of veto.

The case of the alcohol monopoly is a prominent example. The state monopoly for import, distribution and sales of alcohol had strong political support as an important part of the Norwegian health- and social-policy. Through the EEA-agreement and a few court rulings all parts of the state monopoly was abolished except the retail monopoly (Br�in 1999).� Likewise, Norway voiced strong opposition towards the legislation liberalising the gas market, but backed down after threats of legal actions by the EU Commission. Also, the Norwegian support of the Netherlands in a court case opposing legislation regarding the legal protection of biotechnological inventions failed.

 

The EEA agreement does not cover the total EU body of law, but where it applies it does not distinguish between Member States and EEA members (with the important proviso that the Member States are co-legislators and hence can make the rules).� It might be thought that a non-member would be more relaxed in the implementation of EU law, but this is not borne out in practice since the EEA is more important to� Oslo than Norway is to the EU.� Because the EU can punish Norwegians for non-compliance, and because a single case might have wider implications, Norwegian authorities will do much to avoid a breakdown of the whole agreement.� Legally, Norwegian law is presumed to be in conformity with international law in general and subsequently also EEA relevant EU legislation. This so-called presumption principle also implies that Norwegian courts will tend to interpret Norwegian laws as corresponding to relevant EU legislation.

 

Under the agreement EFTA has set up a Brussels-based surveillance agency (ESA) which finds it more important to have a high standing with the Commission than with the Ministries in the EEA countries (Martens 2001).� Although this independent body has to cover Iceland and Liechtenstein, it is Norway that has by far the largest number of cases considered.� Compared to the number of compliance cases concerning member-states handled by the Commission, ESA has a far higher staff to case ratio, but research has shown that there are no real differences in rule enforcement.� In fact, in some periods the EFTA-countries have had a lower rate of transposition �of legal rules than the EU members have.� However, ESA has initiated fewer complaints than the Commission has against member countries. (Graver and Sverdrup 2002).

A member state might more easily get away with a relaxed attitude to compliance with EU rules than would a non-member, because the latter has to prove itself all the time.� As we see from the ESA's behaviour, this may have less to do with rule enforcement as such and more to do with the asymmetrical nature of Norway's relationship to the EU.� Moreover, a non-member will have much greater difficulty using informal channels within the EU institutions and during decision-making processes in order to increase its leeway than have member-states.

 

Adaptation as changed incentives

External forces can influence the interests of political actors both at the state and at the societal levels by either shrinking or expanding the scope of their options. The EU triggers actors at the societal level through changing existing policies of the nation states and providing interest groups with new arguments and resources, which increase their influence on national policies. The EU can also change the balance of power among groups and so replace the key players who dominate the interest-representation or societal-corporate channels.� This re-balancing can lead to subsequent changes in national policies.

 

Norwegian companies or organisations can initiate cases based on EU law against their public authorities.� In such situations EU law is not applied in Norway unless some actors actually triggered the judicial process.� In practice, this particular instance would thus not count as a rule-based adaptation because a domestic actor sets the process in motion.� However, this can take place precisely because there is a system of laws in place that has already been injected into the nation-state.� But this mode of adaptation is more voluntaristic than the first, in that it is triggered only when some actors find it worth pursuing.

 

Even without these rules, domestic actors or the Norwegian government might adapt to the EU's norms.� EU decisions that the Norwegian government is not legally obliged to follow still influence its actions, as they set a standard that Oslo has consistently chosen to follow.� For instance, for Norway to have weaker environmental protection than the EU would undermine its high profile in the international environmental community.� Similarly, the Norwegian government decided to follow the EU's competition laws, in order to ensure that Norwegian businesses could compete on the same terms as their European competitors.� Here concern with standards interacts with strong business pressure.� In regulatory terms, such 'Race to the top' or 'Race to the bottom' pressures apply identically to members and nonmembers, as long as the actors whose interests are to be served interact with actors outside each state.

 

The Schengen agreement also illustrates this incentive mechanism.� Norway was under no obligation to enter this agreement, but when Denmark and later Sweden decided to join, the existing Nordic Passport Union was threatened and it became impossible for Norway to preserve the status quo.� Whilst theoretically possible, it was practically impossible to re-introduce passport and full custom border controls between Norway and Sweden.� Oslo's interest in retaining the rules regulating its relations with its Nordic neighbours led it to embrace a set of European rules and linked it more tightly to the EU.

 

The interaction of rules and incentives

Claes and Tran�y (1999) conducted a comparative study of eleven Norwegian policy-sectors inter alia identifying variations regarding the mechanisms of adaptation. [3] � In two sectors, security and welfare, there was either minimal or non-existent EU law, so it is hard to determine the relative importance of rules and interest-based incentive change.� The other two sectors where interest-based incentives prevailed over rules-based change are the two largest export sectors of Norway, energy and fisheries.� These sectors are of major macroeconomic importance and contain strong lobby groups.� In the EEA negotiations the possible effects for the Norwegian energy sector were very high on Oslo's agenda.� The fisheries sector was not part of the EEA agreement, although this issue has traumatised Norwegian membership negotiations, both in the early seventies and in the early nineties.

 

Most of the remaining policy-areas were characterised by various combinations of rules-based and interest-based adaptive change.� Such combinations point to the way in which rules create incentives for actors to act in certain ways or how rules might structure the set of possible and perceived options for the actors.� All legal texts are open to interpretation, and the spirit in which national governments interpret new texts from Brussels can run from idealistic to conspiratorial.� This new supra-national legal system ties Norway much closer to the EU than was previously the case and is the case with most other international organizations.� This legal integration can take different forms:� First, issues that used to be discussed in terms of what is desirable or possible from a political viewpoint, and decided through deliberations and negotiations, are turned into questions of legal compliance and are decided through legal settlements or in courts.� Second, there are new procedures for political decision-making.� Third, new actors, such as judges and attorneys, become more important in the decision-making process, at the expense of politicians and/or interest group representatives.� Finally, political decisions that are still based on actors' interests to a larger extent will have to be legitimised by normative arguments.� This does not mean an abdication of politics. The law frames the political game and channels policies into new forms and frames, but it is still possible to identify political actors, their interests, and their strategies.

 

However, since EU integration relies to a large extent on regulation through law, the sheer volume of directives and regulations increases the possibility that law becomes politicised.� National laws have generally enjoyed a high degree of legitimacy, because they are subject to democratic procedures.� In Norway, EU laws and regulations are politically contested, because their formation is not subject to these democratic procedures and controls.� Further, the precision of laws and regulations varies considerably so these are very often subject to dispute.� For instance, there might be legitimate disagreement about whether a national regulation is in accordance with the EEA-agreement.� Concerning the Internal Market, national arrangements will come under attack from the ESA which asks to what extent their political goals could be achieved by more competition-friendly alternatives.� This forces national courts and especially the ESA to evaluate the relationship between political goals and the means adopted to reach them.� Norwegian courts have traditionally regarded this means-ends issue as a political issue outside their field of operation.� The possibility for individuals, companies, and others to take up cases against national authorities with reference to EU law, increases the potential for law(s) to be part of political struggle.

 

With the EEA-agreement, all government efforts to compensate particular groups for losses due to external changes have to be based on the EU's legal order.� For small states like Norway it is not new to assert that international regimes restructure their members' domestic legal orders by setting the rules of the political game, by establishing decision-making and law-making institutions, and by turning the national government into a rule-taker (see Clarkson's chapter ##).� Egeberg (I 980) pointed to the international regional level as a 'fourth level of government' causing a multi-level standardization of public policy.� The rule-based adaptation to the EU brings this tendency to an unprecedented level, diminishing in particular the ability of the Ministry of Foreign Affairs to co-ordinate the foreign relations of the other ministries (see Claes 2001:18-21 and Trondal and Veggeland 1999).

 

The consequences of adaptation

The EEA-agreement in general and the Norwegian adaptation to the EU in particular, have had important effects on the role of Norway's democratic institutions, and the substantive contents of its public policy.

 

Democratic institutions

The extent of the EEA agreement and the other arrangements creates a challenge for the Norwegian government simply to keep track of ongoing policy processes in the EU. The implementation of EEA-relevant EU directives has become a demanding task for all the various ministries and government agencies involved.� Norwegian authorities are often placed in the role of adapting to these policies, without their being subjected to domestic democratic procedures.. In this regard the Norwegian experience is different in the areas covered by the EEA-agreement from that of the EU Member States whose elected representatives (in the Council and in the European Parliament) are directly involved in most stages of the decision-making process. [4] � The oft -cited democratic deficit of the European Union - for instance the weak ability of the representative bodies at the EU and at the member state levels to hold the executives accountable - is exacerbated in Norway's relationship with the EU.

 

With new directives being constantly created, the EEA's dynamism only serves to heighten concerns about democratic representation and accountability.� There being no ceiling on the amount of EU legislation to be adopted by Norway, this situation can continue to increase indefinitely and affect an increasing number of issues.� If Norway continues to commit itself to EU projects in the same manner as with the EEA, the Schengen and the Common Foreign and Security Policy, this problem will spread.� The democratic deficit aside, importing 'pre-packed' policies into the domestic realm can work only as long as the political elite and the most powerful interest groups are satisfied.� Nothing guarantees this will be the case indefinitely.� If the domestic political conflicts over EEA-legislation increase, the whole agreement might be in jeopardy.� Another source of uncertainty in Norway's relationship with Europe is the EU's commitment to it in the context of further enlargement to the East and South.

 

Direction of policy change

Whether adaptation has taken place through rules or incentives, we need to know how substantial are the contents of the changes that have occurred and to what extent they have gone in a neo-liberal direction.

 

Claes and Tran�y's study focused on the convergence of Norwegian policy with that of the EU and EU members-states' policies in the same sectors by tracking the amount of substantive change in various policy areas.� Seeking to distinguish both the question of external pressure and goodness of fit, [5] whilst also recognizing that adaptation is more than a one-way street, they started out with a wide definition.� Norway-EU adaptation refers to Oslo's authorities doing something that they would not otherwise have done.� They found few differences between Norwegian and EU policy in the issue areas they studied.� In other words, the goodness of fit assumption was confirmed, not their assumption of divergence.� They also found some differences across policy sectors regarding the importance of the two mechanisms of Europeanisation.

In environmental policy, Norwegian regulations generally mandated a higher level of protection than did the EU regulations prior to the EEA-agreement.� After the agreement was signed the Norwegian level of protection fell in relative terms and is today to some extent lagging behind the EU protection level.� The EU has thus raised its levels during this period more so than has Norway.

 

In the realm of foreign and security policy, Norway as a non-EU member has not been part of the transformation from one of territorial defence from invasion to a stress on intervention in non-EU areas.� This has caused changes in the threat perception, in the organization of forces, weapons systems, and so on.� In these policy areas there is not a good fit in that Norway is far behind the EU.

 

Of more direct interest to the question of neo-liberal globalism is the way adaptation to the EU has changed Norwegian economic policy, both on the macro-economic level and in particular industrial sectors.� Claes and Tran�y showed that adaptation in various economic sectors has increased liberalisation and the use of market instruments in areas where the state previously held a strong regulatory position.� The goals behind this change of instrument are the same for Norway as for the EU: increased economic growth through a freer movement of persons, goods, capital, and services.� At the macroeconomic level three issue areas can be highlighted:

 

Monetary policy.� Norway has with different intensity and within different regimes shadowed European monetary co-operation since the breakdown of the Bretton Woods system in the early seventies.� Prior to 2001, the exchange rate of the Norwegian krone was tied to the ECU or the euro.� In 200 1, Norwegian monetary policy changed from stabilizing the exchange rate against the Euro to maintaining low and stable inflation, defined as 2.5% increase in consumer prices.� With the 2001 decision, Norway's ties to the EU here were weakened.

 

Fiscal policy.� At the same time, fiscal policy guidelines were adjusted to allow for a modest and gradual increase in the use of petroleum revenues which had come to dominate the Norwegian economy in general, and public budgets in particular.� Combined with an unemployment rate of three percent, the challenge for Norwegian fiscal policy had become whether and how to spend this increased revenue from the oil sector without increasing the pressure in the economy - and thus creating inflation.

 

Competitiveness.� With the introduction of a common currency and a common monetary policy, the Economic and Monetary Union (EMU) does not resolve this fiscal challenge or change the premises upon which Norwegian monetary policy is based.� The single currency will increase price transparency and reduce transaction costs among the participating member states, increasing their competitiveness and thus affecting Norwegian businesses inside the Internal Market.� Most Norwegian export businesses will make expenditures in Norwegian kroner and receive income in Euro and will have to carry the risks of exchange rate changes.� On the other hand, Denmark, Sweden and the UK, which are major Norwegian trade partners remain outside the EMU.

 

Claes and Tran�y (1999) also identified substantial changes in several sectors of the Norwegian economy, findings that have been corroborated by other studies.� In sectors such as telecommunications, energy, alcohol, food, and transport there has been a profound change from a high degree of state regulation to an increased use of the market as a key regulatory instrument.� Public monopolies have been abandoned, and different forms of regulations of economic activities have been lifted.� In sectors characterized by natural monopolies such as telecom and electricity, new regulatory instruments have been introduced to prevent the formation of private monopolies when the public monopolies were dismantled.� These changes fit well the pursuit of economic integration in the EU since the middle of the 1980s.� Norway's decision to join the Schengen co-operation agreement also indicates a support for the idea of free movement - an idea that is intrinsic to the Internal Market process.

 

Conclusion - towards neo-liberal convergence.

The EEA-agreement has accelerated for Norway the breakdown of the traditional distinction between foreign and domestic policy. Many political issues which used to be handled by Norwegian authorities are now decided by the EU.

 

Roughly 70% of Norwegian exports go to the EU and about 67% of Norwegian imports come from it.� Norway is thus in trade terms as dependent on the EU as Canada is on the US.� Being subject to the same set of laws and regulations is thus important to a very substantial part of the Norwegian economy.� From this observation one can see the EEA arrangement as a workable national compromise that grants Norway's businesses (and to a lesser degree households) access to the EU market. At the same time it grants the �No-majority� of Norwegians a level of autonomy from Brussels that they would have lost if their country had become a full member.� Autonomy to control fish and petroleum resources and to provide the agricultural sector with higher levels of subsidies than those which can be obtained within the common agricultural policy were prime goals of the �No-movement�.� In addition, it argued that Norway's democracy and welfare state, with its relatively high level of benefits and service delivery, would be better served by remaining outside the EU.

 

Supporters of Norwegian membership countered that the Norwegian economy would have responded to full membership by boosting rather than weakening the foundations for public welfare provision.� Secondly, that the EU would have brought about congruence between the scope of expanding markets and the sphere of political authority, thus strengthening democracy through European political integration.

 

The fact that Norway has applied for membership four times underlines the importance its the political and economic elite along with a significant portion of the populace attach to the EU, in particular to the vital need for securing access to the European market.� Popular resistance has precluded full membership through winning popular referenda but it has not prevented a tight integration into the Common Market.� For all intents and purposes, Norway is a halfway member of the European Union, with secure access for the most vital economic sectors to the large internal market, albeit excluded from most of the EU's decision-making structures.� In formal terms, this arrangement abdicates less sovereignty than would full-fledged membership, but in real terms the issue is more complex.� Because EU membership is such a highly divisive issue, most parties are content to let it rest and not address the fundamental democratic and constitutional problems that the EEA agreement raises.� Whether Norwegian adaptation to the EU would not have happened without Norway's formal ties through the EEA-agreement is not entirely clear because other factors heavily influence both the Internal Market project itself and the liberalisation of Norwegian economic sectors.

 

Globalisation is an additional force whose influence is independent of and different from the EU.� As a prominent example of globalisation's independent effect, Norway deregulated the electricity market in 1990, long before the EU had developed any substantive deregulatory directives for the energy sector.� The aim of Oslo's deregulation policy was to reap the societal benefits from integrating local electricity markets into one national market, an integration that was extended when the Norwegian market was joined with the Swedish market in 1996.� Integration with the European market followed the adoption of the EU electricity directive in 1998, but even then the process of deregulation in the EU lagged behind the Norwegian.

 

The Norwegian telecommunications sector was partly liberalised in the first half of the 1980s, without any direct influence from the EU.� The general idea behind this liberalisation derived from the neo-liberal ideology associated with Thatcherism and Reaganomics prevailing at the time.� Until 1994 Norwegian deregulation preceded similar deregulation at the EU-Ievel (Skogerbo and Storsul 1999:200).

 

In both these cases of deregulation, there were also domestic forces involved, more so in the electricity sector than in the telecommunication one.� The telecommunications sector experienced a dramatic technological change that made national borders virtually non-existent and vitiated the natural-monopoly rationale for its structure.� The electricity sector remained a natural monopoly and could still be easily divided and controlled through its transmission networks.� Thus, in the telecommunications sector the approach to a large extent was to abandon regulation, whereas competition in the electricity sector to a larger extent had to be created by public regulation.� In both sectors, domestic and foreign private companies pushed for liberalisation.� But in the electricity sector several private companies were more concerned with protection of acquired rights and concessions, than with the potential for increased market shares.� The role of more general ideas of liberalisation also played a part in both sectors, but more so in telecommunications where the international trend had developed further.� All in all this goes to show how the EU is both intensifying and constraining the forces of globalisation.� It follows that Norway's adaptation in some sectors will imply increased liberalisation compared to the initial situation and in other sectors the EU might increase public regulation and control.� Such effects are not new for a country with a highly open economy.� What is novel in the EEA-agreement isits processes being entirely defined by the EU and to some extent non-negotiable.Thus the process of adaptation is taking place by the use of law and law enforcement, rather than political bargaining and compromises.

 

Why has Norway adapted to the EU and even pursued de-regulation further than the EU in some fields given its petroleum-based wealth which gives it more fiscal leverage than other states Although Norway has never had a government committed to neo-liberalism as an ideology, it has a general propensity to embrace the market as a problem-solving mechanism.� This helps entrench it further, as more heads and hands are prone to uncritically pursue it.� Policy-makers - private and public alike - copy and imitate and learn from each other and hence reinforce prevailing patterns and philosophies.� This leads to a dearth of alternatives and also reinforces established political power relations.� Policy-making is both a political act and an intellectual exercise.� Reinvigorating the intellectual search for alternatives must go hand in hand with critical efforts to assess the effects of Norway's rather uncritical embrace of the market within the context of its overwhelming relationship with its European centre.

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Notes