Oil-Funded Spending Sprees Lose Their Magic in Norway Politics

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Norway’s Prime Minister Erna Solberg has so far managed to quell infighting in her center-right coalition by spending billions of dollars in oil revenue. But that may be about to end.

Her main ally, the anti-immigration Progress Party, has set Solberg an ultimatum after being sidelined on a decision to repatriate a Norwegian Islamic State member. If the Progress Party walks, Solberg would lose the majority she fought so hard to assemble.

So far, Solberg has tapped Norway’s enormous oil wealth and gone on a spending boom to smooth things over. Norway is western Europe’s biggest oil and gas exporter. It’s also home to the world’s largest sovereign wealth fund, which recently swelled to $1.1 trillion.

Solberg’s faced at least five major crises since she started in 2013. The most recent was in August over road tolls. Solberg ended that spat by agreeing to throw 20 billion kroner ($2.2 billion) into infrastructure.

But this time, a Progress Party struggling in the polls seems intent on breaking up, according to political science professor Tor Bjorklund from the University of Oslo.

“My clear impression is that Progress is on its way out,” he said by phone. “They’ve taken a confrontational line.”

Monday Meeting

Solberg will meet with Progress Party leader and Finance Minister Siv Jensen on Monday. The prime minister has already warned that there’s little room for negotiation. Jensen hasn’t revealed what demands she’ll be making.

Solberg is probably just as “fed up” as Progress, Bjorklund said.

Jensen hasn’t indicated whether her party would support Solberg in a minority coalition, or seek to topple the government outright. For now, it seems Jensen will refrain from the nuclear option of forcing the prime minister out of office before the next election in 2021.

The latest polls show that the parties inside the government have lost much of the support they gained in the 2017 election. The Progress Party is down about 5 percentage points to just 10%. The opposition, led by the Labor Party, looks set to win the vote next year.

To contact the reporter on this story: Mikael Holter in Oslo at mholter2@bloomberg.net

To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net, Stephen Treloar

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