Norway's Chill

When oil and gas were discovered under their harsh, frigid waters in 1969, Norwegians felt confident that North Sea energy riches would give them the means to create a perfect society. Even before the money came in, they started spending it to enhance an elaborate social-welfare system that has given them one of the world's highest living standards. But the state budget crept up, until today this system takes an astonishing 54.9% of the gross national product. Belatedly, Norwegians discovered that they were living well beyond their means.

Unrealistic oil production and revenue predictions, expensive delays and 100%-to-200% cost overruns at offshore platforms have led to economic crisis. Norway has greatly overspent its oil revenues. Prime Minister Odvar Nordli, whose Labor Party has governed for five years, felt it necessary to submit an austerity budget for 1979 and propose a wage-and-price freeze through the end of next year; the Norwegian parliament last week approved the freeze proposal.

To curb the country's 8.3% inflation, controls have also been put on private lending, investment and installment buying. Nordli frets that there is too much reliance on government. Says he: "Each job in industry is now supported by an average $1,000 to $1,200 per year in government funds. In shipbuilding the figure is $8,000 to $10,000. It is obvious that we have to reduce this load on the state budget considerably."

Still, Norwegians will hardly go without. Unemployment is a slim 1.3%; government officials figure that it may creep up during the austerity period, but only to 2%. Oil production doubled this year, to 102 million bbl., or about one-third as much as Mexico produces, and next year it is expected to rise by 35%. The government has decided to award seven of its remaining North Sea concessions between December and February, several months ahead of schedule.

Though public opinion polls show that an overwhelming 75% of the country's people favor restrictions on the growth of private consumption over the next two or three years, labor is already bucking the wage guidelines. The liquor deliverers, who are demanding a 15.6% pay raise, have begun a strike that presents aquavit-loving Norwegians with the sobering prospect that their country may have its first dry Christmas since prohibition ended in 1927. Whether or not that happens, Norwegians caught in the freeze can take at least some solace from the fact that King Olav V's annual stipend of $740,000 is frozen for the next 14 months as well.

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