Norway elections: Perils of becoming “too rich”

The Financial Times raises a provocative question in its latest feature: is Norway “the country that became too rich”? Derived from the title of the Norwegian eponymous bestseller, the question underscores the paradox of Europe’s largest oil and gas producer, which is also home to the world’s biggest sovereign wealth fund. 

The piece argues that Norway’s immense wealth has delivered not only success, but also structural complacency and inefficiency, just as the nation held its parliamentary elections on September 8.

The Financial Times highlights examples of wasteful public spending. A 1,700 metre-long tunnel for ships with a $700 million price tag, a partial overhaul of parliament in Oslo that went six times over budget, and a $400 million faulty IT system for regional healthcare are all cited as symptoms of deeper governance challenges.

Critics interviewed by the paper argue that these are not isolated mishaps, but the manifestation of what Yngve Slyngstad, former head of Norway’s $2 trillion sovereign wealth fund, described as the shift from “an oil nation to an oil fund nation.”

“Norway just throws more money at problems … There is something wrong with how we run Norway Inc.,” Sylvi Listhaug, leader of the populist Progress Party, said. 

She went further, noting that despite “one of the highest tax levels in the OECD,” Norwegians “don’t get better services than they do in Denmark, Sweden or Finland.”

Much depends on whether smaller parties cross the 4 per cent threshold for extra representation. Johannes Bergh of the Norwegian Institute for Social Research has said the book’s critique “hit a nerve” with the public. 

Widespread concerns about inefficiency, bureaucracy, and infrastructure projects gone awry resonate with voters. A Norwegian CEO voiced similar unease: “There’s an element of any hole we get into, we can use money from the oil fund to dig us out. I worry that it breeds complacency and makes us all lazier.”

Moreover, Norway has the highest sickness and disability spending in the OECD—four times the average—alongside high-school dropout rates that exceed the European mean. Productivity growth, once buoyed by high workforce participation, has slowed.

Economists interviewed by the Financial Times caution that while Norway avoided “Dutch disease”—the phenomenon where natural resources crowd out other sectors—an alternative malaise may be setting in. The government’s annual withdrawal from the sovereign wealth fund, which reached NKr542bn ($54 billion) this year, now accounts for a quarter of the state budget.

This financial cushion enabled Norway to increase aid to Ukraine without raising taxes or cutting elsewhere, a flexibility most governments would envy. But as the FT underscores, it raises fears of what might be called a “Norwegian disease”: excessive reliance on the fund that discourages hard choices and reform.

“There’s always a danger that we may become complacent and believe that the pension fund will save us. That’s not the case,” Jens Stoltenberg, now finance minister, warned. 

In turn, Erna Solberg, the Conservative leader, agreed that while the fund makes life “easier,” Norway suffers the same competitiveness problems as its neighbours.

Meanwhile, the country’s wealth tax has become a flashpoint. The FT reports that 500 millionaires have moved to Switzerland in recent years, fuelling opposition attacks on Labour. At the same time, the fund’s investments—particularly in Israel—have sparked political and ethical dilemmas that Oslo has no precedent for navigating.

As the Financial Times concludes, Norway stands almost alone among democracies in successfully transforming its natural resource revenues into lasting wealth. But that very success leaves it with unique dilemmas: how to prevent complacency, sustain productivity, and manage the political fallout of its fund’s investments.

By Sabina Mammadli