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How the war in Ukraine is changing Norway

Robin-Ivan Capar
Robin-Ivan Capar - [email protected]
How the war in Ukraine is changing Norway
In this article, we will take a closer look at some of the key changes that have taken place in Norway as a result of the war in Ukraine. Photo by Sonia Dauer on Unsplash

A lot has happened since the war in Ukraine started in February 2022, and the shockwaves that spread throughout Europe have affected Norway and continue to have an impact on the country.

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As is the case with the rest of Europe, Norway, too, has been profoundly impacted by Russia's attack on Ukraine.

It has left a deep mark on Norway's society and economy in a number of ways.

In this article, we will take a closer look at some of the key changes that have taken place in Norway as a result of the war.

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A critical supplier of energy to Europe

Norway has been an explorer and seller of energy resources for five decades. In 2022, its role as a vital supplier of energy – especially natural gas – to Europe became even more important as the Russian aggression in Ukraine led to shortages of both oil and gas across the Old Continent.

After Russia made radical cuts to its gas supplies to Europe, Norway stepped up its deliveries. It replaced Russia as the European Union's most important natural gas supplier.

Take Germany as an example – last year, Norway covered one-third of Germany's natural gas needs, taking Russia's place as the country's largest gas supplier (in 2021, gas imports from Norway accounted for less than 20 percent of Germany's supply).

Norwegian companies and operators continue to work on efforts related to mitigating the lack of energy in Europe, with the Norwegian government approving 24 new upstream projects in 2022.

Accusations of war profiteering

However, as a prominent fossil fuel producer, Norway has also had record revenue from the soaring energy prices. This, in turn, has led some critics to accuse it of profiteering.

Earlier this year, a letter-petition signed by numerous Norwegian intellectuals and activists called on the government to use more of these record-level revenues to increase aid to Ukraine.

The letter was published by the newspaper VG, and signatories claimed Norway was "the only country in Europe" profiting from the war in Ukraine.

The signatories of the letter claimed that Norway's budget would profit by an extra 180 billion euros from oil and gas revenue in the 2022-2023 period.

The allegations of war profiteering were quickly dismissed by Norwegian Prime Minister Jonas Gahr Støre, who said that Norway was not the one setting energy prices and that the country has been in the business of selling oil and gas for 50 years.

He also added that the higher energy prices also affect Norwegian households and industry, leading to significant pressures on the government from citizens, businesses, and opposition to step up its effort at mitigating the effects of the crisis.

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Soaring costs of living

While the disruptive COVID-19 pandemic played a role in the current cost of living crisis, Russia's attack on Ukraine was also a key factor in driving up prices across Europe – and in Norway.

Costs of living in Norway have grown substantially in the last 12 months, and the Norwegian government has said it was willing to consider any measure to help push down prices.

According to Statistics Norway (SSB), from January 2022 to January 2023, the Consumer Price Index (CPI) increased by seven per cent.

Unfortunately, numerous financial industry experts believe adverse developments will continue to affect global markets moving forward.

In a recent comment, Sparebank 1 SR-Bank's Knudsen stated that the prevailing drivers of inflation – Russia's war against Ukraine, global energy policy challenges, and issues with value chains and supply links – won't go away any time soon.

"The world order, not least in Europe, has been disrupted," Knudsen said.

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Support measures and increased public spending

The Norwegian government has implemented multiple packages of measures aimed at helping its citizens cope with the rising prices. At the same time, it also ramped up military spending and dedicated notable allocations of funds to support Ukraine.

Last week, the Støre administration committed to spending over 40 billion kroner on measures related to the Ukraine war in next year's budget, according to Norwegian Broadcasting (NRK).

"We are going to spend over 40 billion kroner on various measures related to the war in Ukraine. Both this year and next year, we will spend at least that level of funds," Finance Minister Trygve Slagsvold Vedum told NRK.

The 40 billion kroner will be used to support Ukrainian refugees in Norway and deliver military and civil aid to Ukraine.

In a recent comment, Prime Minister Støre pointed out that the expected Ukraine-related expenditure will affect other budget items and priorities – including pre-war political commitments from his own party.

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Influx of migrants

The stream of migrants from war-torn Ukraine has also spilt into Norway. At the start of 2023, there were 57,900 more immigrants living in Norway than the year before. According to the SSB, immigrants from Ukraine accounted for more than half of the increase.

A total of 877,200 immigrants were registered as residents in Norway at the beginning of the year, making up 16 percent of the population. As of January 2023, 36,800 Ukrainians were living in Norway, 30,300 more than at the same time the previous year.

"This is the largest increase in the number of settled immigrants from a single country in the course of a year," special adviser at Statistics Norway Minja Tea Dzamarija said.

The significant increase has led to people with a Ukrainian background becoming the third largest immigrant group in Norway in 2023 - Poles were in first place (107,400), while there were also 42,500 immigrants from Lithuania living in the country.

A year ago, there were only 6,500 Ukrainian immigrants in Norway, making them the 34th largest immigrant group at the time.

Since the beginning of 2022, 42,149 Ukrainians have applied for asylum in Norway. 

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New security landscape

By invading Ukraine, Russia triggered a chain of events that fundamentally changed the security landscape in Europe and the High North. The recent developments make Moscow an even more important factor in Norwegian security policy.

"A Russian military incursion into one or more of the Nordic countries is less likely today than it was before February 24th, 2022. That said, Russia has demonstrated a high willingness to take political and military risks and to use military force and other means of influence in the pursuit of political objectives. Russia is still a crucially important factor in Norwegian and Nordic security policy and defence planning," Kristian Åtland, Senior Research Fellow at the Norwegian Defense Research Establishment (FFI), told The Local.

He noted that Norway is now investing considerable sums into upgrading its military.

"Enhancing Norway's military capability is a priority issue. Significant sums are being invested in new military hardware, and the exercise activity in the High North has been stepped up. Norwegian defence planning relies to a large extent on the premise that NATO reinforcements can be transferred smoothly and rapidly to Norwegian ports and air bases in the event of a crisis or military contingency on NATO's northern flank. This is also the primary focus of much of the military training activity that takes place in the region.

"In the last year, measures have also been taken to enhance the security of Norwegian oil rigs, pipelines and underwater cables in the North and Norwegian seas. Norway's role as an energy supplier to the European continent has become more important in 2022, and this obviously has implications for Norway's defence priorities," Åtland noted.

Defence researcher Tormod Heier of the Norwegian Defence University College told The Local that the Ukraine war unsettled many politicians in Norway.

"The Ukraine war has spurred anxiety among politicians in Norway as well as in the rest of the Western world. Defence budgets are therefore rising throughout the continent, and Norway is no exemption.

"It is nevertheless a paradox that Norway's armed forces are 'budget winners' while the Armed Forces' existential enemy, Russia, suffers from a near collapse within its force. A weak Russia is very unlikely to challenge Norway and the Western security community where they are strongest.

"On the contrary, Russia will go for our vulnerabilities, and they are located in the civic communities, not within a Norwegian force that by and large is seen as an extended part of the United States' extended defence in the High North," Heier said.

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