Is Norway “the country that became too rich”? The title of a bestselling local book has captured the zeitgeist in western Europe’s biggest oil and gas producer – home to the world’s largest sovereign wealth fund – in advance of parliamentary elections on Monday.
Recent examples of wasteful spending include a 1,700 metre-long tunnel for ships that could cost $700 million, a partial overhaul of parliament in Oslo that went six times over budget, and more than $400 million that went on a faulty IT platform for a regional health service.
But critics argue that the problems in Norway – while undeniably first-world issues – run deeper, as a result of what the former head of the $2 trillion sovereign wealth fund called the country’s move from being “an oil nation to an oil fund nation”.
Sylvi Listhaug, leader of the populist Progress party that is on course to take second place and become the main party on the right of Norwegian politics, said Norway just “throws more money at problems”, concluding: “There is something wrong with how we run Norway Inc.”
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“We are a country that uses enormous amounts of money, we have one of the highest tax levels in the OECD. Nonetheless, Norwegians don’t get better services than they do in Denmark, Sweden or Finland,” she said.
There is undoubtedly a dose of electioneering in her comments in a race that remains too close to call. The ruling centre-left bloc has maintained a slender lead in opinion polls, but much depends on which smaller parties make it over a 4 per cent threshold to gain extra representation.
But analysts and business executives say the criticism is justified when it comes to schools that lag behind poorer countries such as Estonia, and a health system that, while not in crisis, has its fair share of problems.
“The book hit a nerve, and it’s something that resonates with people. They think there’s something to it: there’s too much bureaucracy, we’re not solving problems in an efficient manner, there are public infrastructure projects that went way over budget,” said Johannes Bergh, political research director at the Norwegian Institute for Social Research.
A Norwegian chief executive added: “There’s an element of any hole we get into, we can use money from the oil fund to dig us out of. I worry that it breeds complacency and makes us all lazier.”
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Norway’s oil fund stands out as a public policy success of recent decades, taking the country’s petroleum revenues and turning them into financial assets worth more than $2tn, well above what anybody in Oslo thought possible.
Economists say that Norway in that regard avoided “Dutch disease”, the curse under which the rest of an economy is crowded out by natural resources such as oil or gold. But some worry that a “Norwegian disease” is developing through the use of an ever-increasing withdrawal from the fund each year.
That amount – which reached NKr542bn (€46bn) this year – amounts to about a quarter of the government budget. This year, it helped Norway boost contributions to Ukraine without having to cut spending elsewhere or raise taxes.
Spending on sickness and disability is the highest in the OECD group of rich countries, and four times the average. High-school dropout rates are well above the European average. Meanwhile, productivity growth has slowed, worrying policymakers.
Jens Stoltenberg, the former head of Nato who reinvigorated the fortunes of the ruling Labour party by returning as finance minister in February, said that until a decade or so ago Norway had coped by having high workforce participation rates. Now, other countries such as Sweden and the Netherlands have surpassed Norway while productivity has stalled, making it “a big challenge and a real concern”, Mr Stoltenberg said.
“There’s always a danger that we may become complacent and believe that the pension fund will save us. That’s not the case.”
Erna Solberg, the Conservative leader who is vying with Ms Listhaug to become prime minister if the centre-right opposition prevails, argued that Norway may have it “easier” than other European countries because of the oil fund, but that it suffered from the same competitiveness challenges.
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“The sense of urgency is less in Norway because we can use the income from the sovereign wealth fund to bridge the gap,” she said.
The main economic topic of the campaign has been Norway’s status as one of the only countries with a wealth tax. About 500 millionaires are estimated to have left the Scandinavian country for Switzerland in recent years, and opposition parties have battered Labour over the wealth tax, arguing that it should be cut or dropped altogether.
The oil fund has also unusually featured over its investments in Israel. If the Labour party wins re-election, it could face awkward demands from smaller parties that have pushed to exit Israeli assets and fire the fund’s chief executive.
Analysts and business people alike say that, while nearly all other democracies squandered their natural resource gains, Norway’s success with its oil fund means there is no roadmap for how to deal with dilemmas such as the Israel-Palestine conflict, or ensuring its wealth does not cause it other problems.
As Mr Bergh said: “We just don’t know what the long-term consequences will be.”
– Copyright The Financial Times Limited 2025
