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INTRODUCTION

The Scandinavian and the so-cal led "like-minded" countr ies in gene ra l , have earned a reputation for being among the most "p rogress ive" countr ies of the Northern Hemisphere in dealing with the developing sou th . This report will take a critical look at this reputa t ion, which we believe is only partially d e s e r v e d .

The reputat ion, it would seem, has been gotten from a va r i e ty of social , economic, and political sou rces . The social fabric of these countr ies is, re la t ively egal i tar ian, al though c lass contradict ions and conflicting group interes ts still ex i s t . They are "mixed economies" with a re la t ively wide support for public intervention in the economy. In the context of the NIEO deba te , important political factions draw analogies from these domestic equalizing and public regula tory processes to the international sys tem: What is achieved domestically must be to the larges t possible ex tent achieved internationally. One question is whether t h e r e real ly is public support for such international solidari ty and , if s o , to what e x t e n t .

In their foreign pol ic ies , Scandinavian countries follow different paths due to their respec t ive s t ra tegic geopolitical posit ions in the East-West con tex t . With r ega rd to their policies toward developing count r ies , the Scandinavian g o v e r n ments jointly have come out re la t ively s t rong ly in support of decolonization and the liberation movements in Africa, and in denouncing apar theid . Their development aid policy is i l lustrated by the fact that Sweden and Norway now rank on top of the DAC list of industr ial ized donor countries in terms of the percentage of GNP channeled as official development ass i s tance , a position they share with the Netherlands. Also,

46 WESTERN EUROPE AND THE NIEO

the Swedish-Norwegian "axis" has come to form the backbone , with the Dutch, of the l ike-minded countr ies of the nor th . This grouping was formed dur ing preparat ions to the 1975 7th Special Session of the UN General Assembly . It made its first major demarche through the initiative taken at UNCTAD IV and resul t ing In" TS mostly minor industr ial ized countr ies vot ing in favor of Resolution IV (93) on the Integrated Program for commodities.

Despite these fac t s , to which we shall r e tu rn , why is the "p rogress ive" reputation of these countries partially undese rved or at least exaggera ted? Scandinavia is economically and cul tura l ly closely integrated with the Western world . The quest ion therefore is whether the economic basis of the Scandinavian societies is so fundamentally' capitalist and so much a part of the "international division of labor" established by the economic power-houses of the capitalist North, that both capital and the state in these countr ies are bound to follow the logic of the system? In other words , the economic s t ruc tu re pu ts absolute limits on what these countr ies can do with their international environments . If such a view is c o r r e c t , i t follows that whatever p rog re s s ive image is por t rayed internationally is mostly due to a political and cultural system which on the one hand ref lects a certain ideological tradition (socialist internationalism) and on the other r ep re sents cer tain internal p ressu re g roups and idealistic factions within public opinion.

An al ternat ive hypothes is would be that the combination of economic realism and political idealism, which is what we expec t to f ind, is del iberate or inevi table . It is del iberate in the sense that the Scandinavians have chosen the path that can be descr ibed as the "Peer Gynt approach . " This approach is named after the main charac ter in the famous Ibsen play .who, when faced with a dilemma, followed the "realist" choice of his companions, but made it clear that he "protested to the whole world" while doing s o , knowing there was an al ternat ive " ideal is t 1 choice . It is inevitable that the Scandinavian s t a t e s , represent ing relat ively small economies, have no choice but to accommodate themselves to the dominant t rends and actors in the international system with which they are in tegra ted .

We sugges t that there are five basic obs tac les to the implementation of the NIEO. The first and most basic is the considerable d i sc repancy between words and d e e d s . Second, this d i sc repancy ar i ses from the need to accommodate var ious factions of society pursu ing different in t e res t s . Th i rd , Scandinavian countr ies have to adapt to their international environments . There is some truth in the al legation, often repeated by represen ta t ives of both state and bus iness , that these countr ies cannot ac t ive ly implement the written principles of the NIEO as long as other and more powerful industr ial ized countr ies do not do the same in multilateral! y agreed upon

SCANDINAVIA/LIKE-MINDED COUNTRIES 47

schemes. We wish , however , to explore whether this is necessar i ly t rue under all condit ions.

Four th , another possible obstacle to the implementation of the NIEO in the context of Scandinavia , is the insufficient information on and awareness of the NIEO issues among the publ ic . Furthermore, there is still a lack of s t rong political support among the informed public to ensure that pract ice follows the espoused pr inc ip les . These hypotheses coincide in part with the first obstacle that assumes that a d iscrepancy ar ises from the need to accommodate contradicting in te res t s , al though they br ing in additional factors as well .

Fifth, the effect of the European economic cr is is is to postpone, or work agains t , the NIEO. Present ly , most people in the l ike-minded countries of Europe seem to be concerned with the economic cr is is and with unemployment at home rather than with the cr is is of the NIEO. In one vers ion of the unequal exchange theory , the obstacle to just ice in the world economy is not only capital , but also labor in industr ial ized coun t r i e s . Instead of reorganizing their foreign economies to meet NIEO demands, the industrial ized countries re-emphasize the unequal international division of labor , although doing so in new forms.

These are some of the quest ions and hypotheses to which the paper will address i tself . It will do so by reviewing the main NIEO i ssues according to the attention paid by various groups to them, the political support for the NIEO pr inciples , and the main obstacles to Implementing the pr inc ip les .

Information has been collected from a var ie ty of sources , including public statements, stat ist ical material, information through uns t ruc tured in te rv iews , and o the r s . With this material the f irs t section documents and d iscusses stated policies on the NIEO g iv ing special attention to the policies of Norway and Sweden regard ing the NIEO. The selection of Norway and Sweden seems to be warranted for other reasons as wel l . Denmark has been a member of the European Community only since 1973; and Finland's and Iceland's relations with developing countries have evolved much less than those of the other th ree .

In the second sect ion, the main obstacles to the NIEO in the two Scandinavian countr ies will be identified and d i s c u s s e d . In the third and final sect ion, some al ternative ways are s u g g e s t e d that Scandinavian and like-minded countr ies may consider should multilateral nor th-south agreements on e s tablishing the NIEO not be .forthcoming.


RELATIONS BETWEEN SCANDINAVIAN COUNTRIES AND THE THIRD WORLD

Trade

High levels of expor t s and imports , taken as a share of g ross national p roduc t , is a common feature of small industr ial ized nat ions, such as the Scandinavian coun t r i e s . They are open economies, a character is t ic they share with many developing count r ies . The increase in Scandinavian foreign trade in the period after 1960 was , however , not quite as s t rong as the res t of the world 's (see table 4 . 1 ) . Thei r countr ies ' share of world expor t s was 4.5 percent in 1975, as compared with 4.7 percent in 1962. In 1976 the total t rade between Scandinavian countr ies and the Third World amounted to $6.1 billion, of which $5 billion was the share of import and e x p o r t .

Since 1960, Norway has had a substantial and steadily increasing import su rp lus in t rade with developing count r ies . In 1976, 11 percent of the imports came from developing coun t r i e s , and 12 percent was expor ted to them. However, if we ignore oil imports , it appears that the developing countr ies ' share of Norway's total imports declined from about 9 percent in 1960 to somewhat over 6 percent in 1974. This share is v e r y low compared with the ave rage for the industrialized OECD countr ies (approximately 19 percent in 1975 ) . .

In the case of Sweden, the, trade with developing countr ies decreased dur ing the 1960s and the beginning of the 1970s. From 1974, howeve r , there has been a substantial inc rease . In 1976 the developing countr ies ' part of Swedish imports reached 13 percent and 14 percent of e x p o r t s . For Sweden , expor t s to developing countr ies are as important as expo r t s to North America, Japan, Aust ra l ia , and New Zealand put toge the r .

Developing countr ies have had a re la t ively small share in Finnish foreign t rade , v a r y i n g from 12 percent in the mid-1950s to 6 percent in the mid-1960s. During the 1970s, the developing count r ies ' share has been steadily g rowing . This concern* first of all imports, which have increased from 5.4 percent in 1970 to 11 percent in 1977. For all the Nordic countr ies such increases may be explained by the rise in the price of o i l , although for Finland, oil imports from the Soviet Union play an essential ro le . Exports to developing countr ies have only r isen from 6.6 percent in 1970 to 7 .7 percent in 1977.

As an ave rage for the Nordic count r ies , t rade with the Third World in 1976 represen ted 1 2 . 1 percent for imports and 1 1 . 0 percent for e x p o r t s .

SCAN DIN A VIA/LIKE-MINDED COUNTRIES 49

Table 4 . 1 . The Stand of the Scandinavian Countr ies on Concre te Proposals(a) Presented by the Group of 77

Developing Countr ies Concerning the New International Economic Order (b)

(a) T h e enumeration is based on the following vo tes : Char te r on the economic r igh t s and obligations of the s ta tes : A r t . 1, A r t . 2a, 2b, and 2c, A r t . 6, A r t . 26.

The Lima declaration and the action program concerning industrial development and cooperation: A r t . 19 , A r t . 32, A r t . 33, A r t . 47, A r t . 59 ( i ) . A r t . 60 (e) and ( f ) , A r t . 61 ( e ) , A r t . 76, on the whole declarat ion. [Transnational Corporations and Expansion of Trade in Manufactures and Semimanufactures, r e s . 97 ( i v ) , UNCTAD I V ] ,

(b) The table is quoted from Holm, 1979, p. 5

Source : Bo Huldt, The Nordic Countr ies and the NIEO: C o n sensus and Dissension within the Nordic Group, LuncTj 1978. Report from the Danish delegation t o U N I D O ' s Second General Conference In Lima March 12-26, 1975, Copenhagen: The Ministry of Foreign Affa i rs , 1975. Proceedings of the United Nations Conference on Trade and Development, Fourth Session, Nairobi, May 5 -31 , 1976, New Y o r k : United Nations. 1977.


POLITICAL AND CULTURAL RELATIONS

The extent of political relations with the Third World is well indicated by the establishment of permanent diplomatic miss ions . In 1978, Sweden had permanent missions in 42, Denmark in 35, Norway in 17 and Finland in 20 developing count r ies . Diplomatic missions are usually establ ished in the major t rading par tner countr ies and the major recipients of development assis tance and cooperation.

During the 1970s there was a rapid growth in Nordic diplomatic missions in the Near East . The trend may be explained by the increased political and economic influence of the oil producing count r ies . This explanation also applies to the growing number of diplomatic missions in other par ts of the wor ld . The re la t ively low number of permanent missions for Norway and Finland is to some extent offset by a high number of non-permanent diplomatic missions and by a c creditation to neighboring coun t r i e s . The Nordic countr ies thus have established diplomatic relations with most of the developing coun t r i e s .

Bes ides agreements with some Mediterranean countr ies and with India, Cuba , and China, cul tural relations with developing countr ies is still poorly deve loped .

This may be offset to some extent by more intense cultural e x c h a n g e s in the pr ivate and semi-public s ec to r s . Radio and television in all Nordic countr ies are a s tate-owned monopoly ins t i tu t ion. The share of news and cul tural ly re levant programs concerning developing count r ies , produced by inst i tut ions or individuals in these count r ies , is not g r e a t , however .

NIEO-RELATED POLICIES OF THE S T A T E AND MAIN INTEREST GROUPS

General Positions

All five Nordic countr ies have stated their general support for NIEO principles in multilateral encoun te r s , notably in the United Nations. Sweden had been the most outspoken Scandinavian country in support ing NIEO demands dur ing the first round of conferences dur ing the period of 1974-1976, followed closely by Norway. Denmark was somewhat more re t icen t .

This pat tern was revealed in a s tudy of Nordic voting behavior in almost 20 rol l-cal ls at three different s e s s i o n s . ( 1 , 2 ) After a period of ear ly enthusiasm, however , differences between the countries have become smaller in


recent y e a r s . What most likely has h a p p e n e d is that the Swedish and Norwegian "p rogress ive spirit" has been modera ted , a function both of external factors - the political and economic cr i ses - and the way important factions of the economic interest groups and public opinion have reacted to the NIEO message .

All five countr ies have s t r e s sed , in various forms, their support for in terdependence , their own role of a mediator, and their wil l ingness to make concessions and cooperate without political s t r ings a t tached. It is thus probably correct to say that their pol icies , as they like to draw them, are not only more p rog res s ive than those of most of the other industrial ized count r ies , but also somewhat more incoherent . The best example of incoherence is probably found in official Norwegian po l icy . In what is still the main express ion of state policy toward the developing countr ies in Norway, Parliamentary Report no. 94 (1974-75) , on Norway's economic dealings with developing count r ies , a dependency relationship is reflected when it is stated that the developing countries

still find themselves in a position of economic dependence on the rich part of the world through a system of ownership control , division of labour and power which effect ively p reven t s them from attaining full economic and social independence, ( p . 9)

A similar, but less pronounced, view is expressed by the Swedish government in i ts repor t , Guidelines for Sweden 's international development policy (1978) , where it is stated that

for Sweden it is se l f -evident that we must acknowledge the fundamental lack of balance in the relationship between poor and r ich count r ies , ( p . 73)

In the Norwegian parliamentary repor t , there is also manifest support of the view that there is a causal relationship between development and wealth in the nor th , underdevelopment and pover ty in the sou th .

In many ways we (Norway) are reaping the benefi ts of an economic system which sets i ts mark on the relations between the rich and the poor count r ies , ( p . 13)

and the report goes on to cri t icize the present order in rather unmistakable terms:

It is recognized that the exis t ing international economic sys tem produces effects which are de t r i -


mental to the l e s s developed count r ies . The free market mechanism has not led to equitable r e su l t s , but has on the contrary s e rved to widen the dispari ty between the r ich and the poor count r ies , ( p . 26)

Th i s s t ruc tura l -sys temic cr i t ique is not exp re s sed as clearly by any of the other Nordic count r ies . It has reappeared in the Swedish Social Democratic Pa r ty ' s statement on the Swedish Guidelines and in later statements by Norwegian off icials . One ge t s the impression, however , that the s t ruc tura l -sys temic cri t ique has been modified over the last two or three y e a r s , especial ly in Norway. Ins tead, more emphasis is put on the need for internal redis tr ibut ion initiated by necessary sociopolitical reforms in the developing countr ies themselves . But instead of siding ent irely with those representa t ives of developed countr ies who have concentrated on the issues of basic needs - apparent ly par t ly in order to deliberately weaken the NIEO demands - they are t ry ing to s t r ike a balance between the NIEO and basic needs pol i t ick ing . In the words of the Swedish government

We must continue to g i v e s t rong suppor t to the ideas behind a new international economic o rde r , at the same time as we st ick to the demand that improvements (internationally) should be at the benefit of the poor people , ( p . 73)

Th i s is worded more s t rongly by the Swedish Social Democrats, p resen t ly in opposi t ion, in terms of a c r i t ique :

The unjust dis t r ibut ion of power and resources in developing countr ies (is) part of the inequality -more to those who already have - which the international capitalist system en fo rces . ( p . 3 in Motion 1977/78 , 1912)

The emphasis on mass-oriented development s t ra teg ies in the developing countr ies is not a new idea to the Nordic g o v e r n ments . Since the early 1970s the Swedes , and later the Norwegians , have s t r e s sed that development aid policies should favor countr ies which conduct a "socially just" s t r a t egy of redis t r ibut ion, and that special emphasis is to be put on development actions which favor the poorest s t ra ta . Thus their emphasis on domestic development programs is based on political decisions taken before the NIEO became an i s sue , al though there may have been some change of vocabulary and emphasis since the NIEO was offset by the s t ra tegy regard ing basic needs by the Western powers .


Both Finland and Denmark have taken part in discussions conducted within the l ike-minded industr ial ized countr ies . They h a v e , however , been rather pass ive pa r tne rs ; the core of the group has remained the Netherlands, Sweden, and Norway. Danish participation is conditioned by the extent to which the Netherlands and Belgium, two members of the like-minded group that are also members of the EEC, can side with like-minded posi t ions . As these two countr ies seem to have moderated their act ive interest in the like-minded g roup , Denmark also has taken l e s s in te res t .

Denmark's position on the NIEO has been influenced mainly by two, possibly th ree , fac tors : the economic cr i s i s ; the need to accommodate to and , in case of a conflict of in te res t , to follow the EC pol icy; and a somewhat unstable parliamentary si tuation. The Danish support of the Common Fund in Nairobi, for example, was full of r e se rva t ions , (3) despite the fact that it is in Denmark's interest to achieve s table pr ices on vital raw material imports . Denmark, howe v e r , is a s t rong suppor te r of free trade regimes in international t rade and has indirect ly sided with the developing countr ies in protest ing great power protectionism on manufactured goods . Danish represen ta t ives have been more down-to-ear th in their public statements than their Swedish and Norwegian counte rpar t s , s t r e s s ing the need for go-slow implementation of the NIEO proposals , in order not to cause economic harm to the industr ial ized world, and pointing out that Denmark itself only concedes to developing countr ies ' demands at the v e r y optimum of i ts economic capac i ty . As one o b s e r v e r commented.

It is somewhat surpr i s ing that conference speeches (of Danish officials) clearly manifest specific Danish in te res t s . One should think that the opportuni ty to get s ta tus and an improved standing would make these statements more value-promotive , more dominated by ideology than they prove to be . (4 )

The political instabili ty is only re la t ive ; compared with most other countr ies , Denmark is a stable pol i ty . The turnover of governments in Denmark, however , is g rea te r than in Sweden and Norway, al though much less than in Finland. More importantly, the social problems seem greater due to an unemployment rate of about 10 pe rcen t . This further explains the relat ive se l f - in teres t in Danish NIEO pol ic ies .

One recent and quite outspoken express ion of this se l f - in teres t are the proposals of the Federation of Danish Industr ies for a closer link between aid and trade policies and the interes ts of i n d u s t r y . The Federation (Inndustr ien og u- landene, 1977) proposes that Danish development aid be used


to promote Danish i ndus t ry ' s search for new markets and its participation in the industrialization of developing count r ies . In order to make this poss ib le , the Federation proposes that aid extended th rough the United Nations system be cut by half, so that loans and credi ts to finance the purchas ing of goods in Denmark, and Danish participation in industrialization projects of the developing countr ies can be increased . T h i s , according to the Federat ion, would create employment in Denmark, improve balance of payments and suppor t "the Danish i ndus t ry ' s natural Interest in gaining a foot-hold in developing coun t r i e s . " As one commentator points out , these proposals attempt to l ink the interes ts of Danish indust ry and capital to the NIEO target of a 25 percent share for developing countr ies in world industr ial production by the year 2000. They do th i s , however , in a narrow per spec t ive and through an outmoded perception of development goa l s . At the same time they reject a number of other NIEO principles s t rongly backed by developing count r ies . (5)

Finland's position is influenced by an over r id ing foreign policy concern der ived from East-West pol i t ics , that i s , to reduce international tens ions . Its position underwent changes in the mid-70s, as a di rect resul t of the oil c r i s i s . (6) In the fall of 1974, the Finnish government publ ished the "Program of Principles for International Development Coopera t ion ." T h e report ref lects the growing emphasis in the OECD countr ies on in terdependence and "cr is is management" as a response to the even t s of 1973-1974. This is further developed in the report of the State Committee for Development Cooperation (1978) . The repor t notes that Finland, for i ts own economic in teres ts as well as in the name of international peace , must take a posi t ive s tand toward the NIEO. On a continuum Finnish policy seems c loser to the Danish 'national in teres ts ' than to the Swedish and Norwegian principled and more ideologically motivated s t and . Finland's policy on NIEO i ssues appears dictated by trade and industr ial relat ions; the chemical and the woodpulp indus t r ies being par t icular ly influential . Deve l opment aid still is v e r y modest in volume and geographical ex tens ion , but the government seems to emphasize the role of aid as part of the Scandinavian-Nordic contr ibut ion. In that s e n s e , Finland acts as a " f ree - r ide r" : It benefi ts from the posi t ive image which Nordic aid ge t s internationally, but does not contr ibute much to the creation of that image. (7) It may be a recognit ion of this that prompted the Committee to propose to double the volume of aid by 1982, and the g o v e r n ment to accept this in pr inc ip le .

Finnish indus t ry t akes a mixed view of the NIEO i s s u e s . It has adopted a ra ther negat ive position on the In tegra ted Program of Commodities and the Common Fund. I ts v iews of the Code of Conduct on Technology seem pos i t ive , however , because Finland, as a net importer of technology, has a com-

mon interest in this area with developing count r ies . When it comes to res t ruc tur ing and market a c c e s s , however , the indus t ry ' s position is not clear because of internal contradictions between home market-oriented and t rade or foreign product ion-oriented indus t r ies . There is a mixed att i tude toward protectionism and internationalization as well . The most dynamic sec tors (those that are the most expor t -or iented) seem, however , to favor a Swedish- type position in the "new international division of labor ." (8)

Iceland lacks the resources necessary to take an act ive part in the NIEO discussions at the level of the other Nordic coun t r i e s . Iceland was hit much more s t rongly and much ear l ier by the international economic c r i s i s . Its trade with developing countr ies is concentra ted in export ing fish and fish products and importing raw materials and oi l . Its aid program was initiated in the beginning of the 1970s, having been d i scussed since 1965. In 1977, total appropriat ions reached 0.6 million US dol lars . This made Iceland for the first time a net contr ibutor of development a id . Until 1976, Iceland itself rece ived aid, mainly th rough UNDP. Aid for the period 1971-1976 amounted to $1 million. A similar amount had been env i saged for the period 1977-1982, but in December 1976 the Icelandic government declared it would no longer ask for foreign economic assis tance of this kind. Since 1973, a small part of Iceland's ODA is channeled through the joint Nordic aid program, establ ished by an agreement in Oslo In the same y e a r . Pr ivate Icelandic investments in developing countr ies are not known.

Industrialization

All the Nordic countr ies have accepted the principle of r e s t ruc tu r ing their own economic systems and the Lima target for Thi rd World industr ial izat ion, al though in v a r y i n g degrees and forms. In this sect ion, the position of Norway and Sweden will be reviewed with part icular emphasis on the industr ia l i zation of developing countr ies , market access for manufactured products from developing count r ies , and res t ruc tur ing in the Scandinavian countries within that con tex t .

As already noted, Swedish manufacturers are deeply involved in production and marketing in a number of d e veloping coun t r i e s . There is a clear tendency in the other count r ies , including Norway, to copy the "Swedish pa t te rn , " al though conceptions of how this should be done v a r y .

Norway 's official position on the principle of international r e s t ruc tu r ing is as posi t ive as the Swedish one , but is less concre te . Development aid has so far not been channeled to promote Thi rd World industr ial izat ion, except for funds which are extended to firms making pre-investraent s tudies and those



seek ing guarantees against economic r i s k s . Until r ecen t ly , these facilities have been little used by Norwegian i n d u s t r y . In repor t 94, the government ra ised the idea of creat ing another credi t facility which was to be financed by public g ran t s in e x c e s s of the official 1 percent of GNP target for development aid appropr ia t ions . Th i s facility was to finance industr ial cooperation projects of an experimental na ture . The Norwegian s ta te was not to assume a d i rec t role in such pro jec t s , but inter alia finance the r e spec t ive developing coun t ry ' s share in the equi ty capital and provide the rest of the capital as needed. As appropriat ions for development aid had to be flattened out in 1978 due to s tagnat ing income from oil production and a mounting domestic economic c r i s i s , this scheme was postponed until 1979. Then Parliament adopted i t , vot ing a first installment of 50 million Norwegian k rone r .

T h e r e i s , howeve r , increas ing Norwegian act iv i ty r e gard ing the expor t s of manufactured goods , including capital goods , to aid the industrialization of developing count r ies . The state has increased the volume of expor t c red i t s and subs id ies considerably in order to finance such expor t s and to assis t in obtaining con t rac t s . This per ta ins in par t icular to the expor t of sh ip s , which are financed through special guarantee schemes , to help p r e s e r v e employment in the c r i s i s - s t r i cken sh ipyard i n d u s t r y .

T h e Norwegian Association of Indus t r i e s , in a comment on Government Report 94, proposes the establishment of a Norwegian industrial ization fund for developing countr ies and s u g g e s t s a g rea te r role for Norwegian indus t r i e s , provided the r igh t incent ives are made avai lable . These incent ives include r i sk capi ta l , more ty ing of aid to purchases of Norwegian capital goods as well as other goods and s e r v i c e s , and state suppor t of pr iva te Norwegian investments in developing coun t r i e s . T h e Association also opposes the government ' s proposal to limit industrialization ass is tance to the least developed countr ies and those ten or so developing countr ies that a l ready rece ive aid from Norway. It s u g g e s t s that state suppor t to industrialization be extended to o ther , more economically developed countr ies in the south , where there are pr iva te Norwegian inves tments . The Association maintains that o ther industr ia l ized countr ies are g iv ing more state suppor t to their indust r ies ' ac t ivi t ies in the south; that most of the mult i -bi-assis tance (such as UNDP funds) to which S c a n dinavian countr ies are major cont r ibu tors , are being channeled to industr ies in other industr ial ized count r ies ; and that for both these reasons the state ought to in tervene to secure more contracts and expor t s for Norwegian companies. The general view of the Association cor responds to the concept of a "new international division of labor" : less economically profitable and labor - in tens ive , t e chno logy-ex tens ive industrial act ivi t ies should be t ransfer red to developing count r ies , while Norwegian

SCANDINAVIA/LIKE-MINDED COUNTRIES 57

indus t ry should concentrate on the more profi table, advanced-technology a reas .

Sweden established a Fund for industrial cooperation with developing countr ies in 1978, with an anticipated basis capital of 100 million Swedish k roner . The purpose of the fund is to support process ing indus t ry projects in developing countries which have "a posit ive development effect in the coun t ry . Special emphasis should be placed on the employment e f fec t . " (Guidel ines , p. 121) Small and medium-sized projects are especial ly singled out , but otherwise there are no part icular conditions to be met. Obv ious ly , Swedish firms are to be g iven priori ty when contract par tners are se lec ted . The Fund is to become an independent share-holding company which can own shares in projects in developing countries with the purpose of t ransferr ing ownership (of at least the Fund's own share) to the local government or its agen t .

Unlike Norway, Sweden has long pract iced a policy of ex tending development aid for industrialization projects . Aid for projects in the manufacturing sector accounted to 33 percent of total Swedish public aid in 1976-1977, against only 2 percent in 1970-1971. In addition, expor t c redi ts to finance the purchase of equipment and capital goods in Sweden i n creased rap id ly . A considerable number of Swedish firms have taken part in the expor t credi t a r rangements . The newly es tabl ished Fund will cover an aspect that has been mostly absent from expor t credit arrangements so far: the possibili ty of engag ing Swedish firms d i rec t ly in developing countries in joint ven tu re s suppor ted by the Swedish s ta te .

Market Access

All the Nordic countr ies are members of OECD and G A T T ; Denmark is a member of the EC; Iceland, Norway and Sweden are members of EFT A. Finland is an associated member of EFTA and has an agreement with CMEA. These commitments s t rongly influence their trade policy toward developing count r i e s . Norway and Sweden in addition have free trade agreements with the EC which means that they are part of a trade system which is pract ical ly free of customs bar r ie rs for manufactured goods .

These formal commitments are as important in explaining res t r i c t ive policies toward developing countr ies as are the weight of domestic interest g r o u p s . Indust r ies like textile and clothing are f ighting against both fac tors , since imports from OECD countr ies account for the lion's share of global texti le and clothing imports. But it is imports from developing countr ies and Hong Kong which are the most affected because no international multilateral commitments, involving a ser ious potential for retaliation, p reven t governments from taking protectionist measures .


The Danish leaders have openly s t r e s sed the free trade principle in their comments on the NIEO. Th i s support of a pr inciple , which in fact all the Nordic countr ies have favored , is not v e r y well matched in p rac t i ce . In a s tudy of import res t r ic t ions applied by OECD countr ies on 49 products or product g roups of par t icular interest to developing count r ies , the UNCTAD Secretar ia t ranks Denmark as the most res t r i c t ive of the . four Nordic count r ies . Since the countr ies of the European Community are the most res t r i c t ive in the overal l r a n k i n g , EC membership must have influenced Denmark's policy toward developing countr ies in the direction of g r e a t e r protectionism. ( U N C T A D , 1979, TD/229 /Supp 2, p . 26)

Like other Nordic count r ies , Norway has introduced its own G S P . The sys tem, which was introduced in 1971 , had only marginal effects on t r ade . It increased the percentage of manufactured imports from developing countr ies exempt from import tariffs from 92 under the p re -1971 G A T T arrangement to 96 to 97. St i l l , the GSP system covered only 2.5 percent of Norway 's total imports from developing count r ies , and 83 percen t of imports under the GSP came from only 9 count r ies , mostly newly industr ial ized ones . The system has thus only s l igh t ly contr ibuted to increasing the share of manufactured produc ts in Norway 's imports from developing count r ies . The share rose from 6 percen t in 1961 to 16 percent in 1977.

During the "oil boom," the Norwegian government p r o posed more ac t ive utilization of the GSP and introduced a special office in the Ministry of Trade to promote imports from developing countr ies (NORIMPOD). The purpose of the office was to reduce some of the nontariff trade b a r r i e r s . The effect has been v e r y limited. Norwegian home market indust r ies acted to prevent imports of d i rect ly competing p roduc t s . Text i le and clothing are thus not included in the G S P , and the government has to set a global quota for imports from d e veloping countries in this sec to r . It is mostly "exotic" p roduc t s that have been promoted by NORIMPOD.

The policy dur ing the mid-70s was based on the e x pectat ions of a fur ther oil boom. The Norwegian labor market was expec ted to be extremely t igh t , thus favoring domestic r e s t ruc tu r ing and the t ransfer of labor into new jobs . A controlled phas ing-out of some sec to r s , such as textile and c lothing, was e n v i s a g e d . Expor ts were not to be s t rongly promoted because there would be a surp lus of capital a n y w a y , which would have to be expo r t ed . These expecta t ions did not materialize; instead an adverse trend in t rade coupled with r is ing unemployment o c c u r r e d , and Norwegian economic policy was r e v e r s e d . From 1976 and 1977 on, emphasis was no longer on stimulating imports from developing count r ies , but on expor t ing .

Sweden has pract iced a policy of t rade liberalism which has resul ted in lower tariffs than in most other industr ial ized


count r ies . Free trade agreement with the EC has , as in the case of Norway, fur ther lowered tariffs for trade with Western Europe. Swedish policy toward developing countr ies is v e r y similar to that of Norway. It is par t ly a resul t of Swedish indus t ry ' s foreign production pol icy .

The Swedish GSP system contains protect ive clauses and does not cover the most competitive developing country p roduc t s , notably text i le , c lo thing, and leather . I t i s , as with Norway, heavi ly concentrated on the newly industrialized s t a t e s : nine countr ies accounted for 86 percent of imports under the GSP system in 1974. Products , which developing countr ies have a comparative advan tage , face effect ive tariffs of up to 60 pe rcen t . (9 ) St i l l , these seem not to be par t icularly high compared with tariffs and res t r ic t ive measures imposed by other industr ial ized coun t r i e s .

In some b ranches , the import share of the Swedish market is as high as 90 pe rcen t . In the case of clothing it is 75 percent on the a v e r a g e . Only 10 to 15 pe rcen t , however , comes from developing countr ies and Hong Kong . A grea t deal comes through affiliates of Swedish companies in Finland and Portugal - comparatively low-cost countr ies in the OECD g r o u p . It has been estimated that 29 percent of Swedish expor t goes as inter-company t rans fe r s , i . e . , through Swedish t r a n s n a t i o n a l (UNCTAD Secre ta r ia t , 1976) . We have no data to indicate whether inter-company t ransfers are more or less dominant in Sweden 's economic exchanges with developing countr ies than the above percentage shows . A logical a s sumption, however , is that expor t s from Sweden are more tied to such t ransfers than Imports to Sweden .

Domestic Res t ruc tur ing

As a consequence of general developments in soc ie ty , and the changes in the product ive systems that have favored cent ra l ization (rationalization and urbanization) all Nordic countr ies have undergone a fundamental res t ruc tur ing over the last decades . This trend has probably been most prominent in Sweden , where migration from the count rys ide has been act ive to supply labor to a rapidly growing manufacturing industry and se rv i ce sec to r . In Norway, due to the part icular emphasis on fisheries and small-scale farming, the trend has been much less prominent.

Regarding their policies on NIEO demands for industrial count ry r e s t ruc tu r i ng , Norway seems to have modified i ts initial favorable att i tude at the state l e v e l . The Foreign Ministry in 1977 prepared an internal s tudy that ended up proposing a fund for financing domestic industrial readjustment resul t ing from the increased imports of goods from developing count r ies . The s tudy was a follow-up of the principles set


down in Report no . 94, on future industrial policies (1974-1975) , and of expecta t ions of a tight labor market as a resul t of the oil boom. The s tudy sugges t ed that the role of such a fund should be to finance ex t r a financial ou t lays as a resul t of lost employment, while the companies concerned work out a l ternat ive employment oppor tuni t ies . The s tudy was not endorsed poli t ical ly, apparent ly because of opposition from both the Association of Indust r ies and the Federation of Labor ( L O ) .

In a recent s t u d y , no clear t rend in present Norwegian policy was r epo r t ed . (10 ) It seems fair to say that the intentions of government , as exp re s sed in Report no . 94, and later repeated in i ts long-term program for 1978-1981, have been put on i c e . Instead of the planned increase in manufactured imports from developing countr ies and gradual r e adjustment at home, import increases are barred and grea ter emphasis is put on promoting expor t s to the Third World. This takes place par t ly in order to make up for s tagnat ing or decreas ing expor t s to developed count r ies . Present policies for expor t expansion to Third World countr ies are based on two broad measures : special guarantees against political and commercial r i sks in connection with expor t s of capital (which is still little u s e d ) , and subsidies on in teres ts in connection with expor t c r e d i t s . The lat ter has been ex tens ive ly used to ge t cont rac ts on expo r t s of ships to developing count r ies , involving state guaran tees to the sh ipyard indus t ry which present ly totals 2.5 billion Norwegian k roner .

In Sweden , readjustment and res t ruc tur ing are d i scussed as economic, commercial necess i t i es , independent of the NIEO. Until the beginning of the 1960s, Sweden 's position in the international division of labor was charac ter ized by production based on domestic raw materials , with a high deg ree of process ing and h ighly capital intensive expor t s ec to r s . During the 1960s this position was transformed into a more and more labor intensive product ion, ( 11 ) Indus t ry and its spokesmen want this trend to cont inue. According to the v iews of the expor t -o r i en ted , internationalized sec to r s , not only the labor-in tens ive industr ies ( tex t i le , lea ther , e t c . ) but even those par t s of the expor t indust r ies that still produce from local raw materials and with re la t ively unsophist icated technology (par ts of the s tee l , pape r , sh ipyard indus t ry , e t c . ) should move production abroad. These are industr ies in c r i s i s which seem to su rv ive only because the state has in tervened heavi ly to suppor t them.

If these t rends are not related to demands for a NIEO, the NIEO issue may never the less become linked with them. Location of production abroad may be defended against protests from workers in Sweden , by reference to the demands of developing countr ies even though the real motive behind the t ransfer is increasing prof i tabi l i ty . On the other hand, the


demands of developing countr ies in this field are quite broad and nonspecific; this invi tes deals where a community of interest is poss ib le . The socioeconomic effects on Sweden and on the recipient coun t ry , and the question of whose interes ts are actually s e rved by such deals are not a lways clear , nor are they a lways based on a domestic community of in te res t . Cr i t ics of the Swedish pract ice make this point s t r o n g l y . ( 1 2 , 1 3 )

Transnational Corporat ions , Direct Inves tments , and Technology Trans fe r

Sweden occupies a part icular ly prominent role in the above a r ea s . Only a v e r y few transnational corporat ions (TNCs) from other Nordic countr ies can actually match the great number of Swedish internationalized companies. (See table 4 .2 . ) T h e present share , about 15 pe rcen t , of the Swedish T N C s 1 foreign sales in developing countr ies will , no doubt , increase in the fu ture . Sweden will probably be followed by the o ther countr ies in this r e spec t .

There is general suppor t , both in government and among labor unions in all Nordic count r ies , for the need to control transnational corporat ions. ITT in Chi le , foreign investments in Southern Afr ica , and similar highl ighted cases of obvious political-economic exploitation of Thi rd World economies have met with political reactions in Scandinavia . In such cases governments , par t icular ly in Sweden, have intervened to control "their" corporations and stop new investments . These a re , howeve r , exceptional c a s e s . Suppor t in principle at the international level has not been matched by corresponding action at the national l eve l .

Labor does not come forth with an act ive policy in this a rea , but confines its act ivi t ies to the European section of the ICFTU and to Nordic cooperation. In a statement issued by the Nordic labor federations in 1977, Nordisk facklig sam- organisation och en ny ekonomisk var ldsordnlng , a more act ive line is called for in the ILO, together with a major revis ion of the OECD "Code of conduct" and a guarantee of workers ' r igh ts to organize and negotiate with T N C s in developing count r ies .

Norway suppor t s the claim of developing countries to assume national control over their own resources through nationalization. Norwegians have , however , r e se rved their position on the question of legal procedure in the compensation i s s u e . In Report no . 94, i t is envisaged that increased control over T N C s "can be done par t ly by means of agreements between the interested countr ies , par t ly by providing the international organizat ions with the necessary instruments to superv i se the operations of these corpora t ions ." ( p . 26)

Table 4.2. Foreign Content of Major Nordic Industrial Corporations. 19761

fore l,,, •• 1 ••

Tolal Saf •• 01 '°"'1" Con 0011- laporta ov.,. ..... emplo""e.nt Coy~rnme1'lt dated ',.om home- .rnH.t~. .. ptrc«nl

... jo1 o_nc,.ah.ip .al •• tDuntry to th ird . f total C:C-pany "ationanl, lndu.try (percent ) (Mm . I I 2ar tie • et!Iplo'f"'"T'll

X. pucent o! lotal conaoJidated ,al ••

~T",SIATISK ~OIlPACNI Denmark rood )2U I I'7)

YOI-VO S •• dcn Wotor JUS 44 24 27 •• tud •• , .,.rt.

S1" A TSfORETAK S • ..cSen Mi nin, 100 Z231 '2 C R OUP

C' S",Aa- SCAPiOIA S.eden Wotor 2207 )2 n 14

N .thicl •• l parte

ASEA S .. "dtn E).e.ctrical un n Z9 ,. £l.ECTROI-UX S.eden £ lKtrica1 17S6 )I 55 " LN ER ICSON T S •• den Electrical 1.7~ 2l .1 .0

SKf AKTIE8 0l-ACET S.edcn Nonelectrical 0 aOl 14 n " M£STE 'inland 'etroa .. wn 100 1360 .7 li l A li l A

IOOltSK HYI7RO NOT •• , Ch~icaJ. SI.4 '44 1) 7) n

E:.KEII- SPIC£It VERKET "OTWay Ch.-nlcala !IOO S~

. ORUCAAltO Nor •• ., Chemic.b- 410 )4 n 20 'aper

ASV Norway M.laI 100 400 71 10 U ,..linln,

1"01 an e..hau.tty. lbt o f compan.i ••.

• 'Il . Not applicable .

Government officials confide, however , that there is a growing disbelief in international regulation of TNC act ivi t ies and that the only ef fect ive Way is to equip individual developing countr ies with the means to bargain with TNCs themselves .

Vagueness as to the concrete action to be taken on the international level is matched by uncertainty as to the action to be taken on the national l eve l . As noted above , there are v e r y few Norwegian T N C s , but those that exis t are increasing their act ivi t ies abroad. Most investments still go to developed count r ies , but investment in developing countries is inc reas i n g , par t icular ly in the manufacturing, t rade , and shipping s e c t o r s . ( 1 4 , 1 5 ) Two-f i f ths of all individual investment in developing countr ies was made after 1968. Indus t ry claims that the main reason why they are not ye t approaching a substantial level of investment is the lack of incent ives by government . For its par t , government maintains that proper incent ives are offered subject to an assessment as to "whether the investment schemes in quest ion do in fact foster deve l opment ." (Repor t , p . 57)

Political concern has been concentrated more on the volume than on the form and the effects of p r iva te , direct investments in developing count r ies . Such investments are present ly separated from ODA in Norway's official pol icy, a l though it is acknowledged that to some extent they s u p plement each o ther . New credit arrangements to promote industr ial development in developing countries have been c rea ted , but the government has not had an opportuni ty to apply formally the intended conditions and cri teria for e x tending credi t s (see Report no . 94, p. 60 and pass im) . The quest ion a r i se s , however , whether such conditions would have been applied even if there were means to in tervene formally. As an example, two "parastate" companies Invested in a huge mining project in the Amazon despite political and public questioning of its social , economic, ecological , and political implications. Government spokesmen have stated publicly that they do not have the political and legal means to in tervene , even if they wanted to, to ins t ruct these companies to act o therwise . (16)

Sweden ' s official policy follows from its mixed economy, which Is actively adapting to the changing international division of labor. The government and the labor movement follow the social democratic tradition of p rogress ive policies on T N C s and investment in developing count r ies . The cri teria set down by the present Swedish government for support ing i n d u s t r y ' s investments in developing countries are s t r ic te r , more conc ise , and - more oriented mass-based development than the Norwegian ones . And the Swedish labor movement has been par t icular ly act ive in proposing action to be taken in TNCs and a rgu ing for direct investments in developing count r i es , internationally as well as domestically. Such action

includes ass is tance to workers In affiliates of Swedish T N C s abroad, and even sympathy s t r ikes and embargos , and co ordination of policy to avoid being subjected to sp l i t -and-ru le tact ics by T N C s , e t c . ( 1 7 ) The demand for a social c lause to be included in the G A T T rules test if ies to the international concern of Swedish social democracy.

On the o ther hand, cr i t ics of Sweden ' s postwar policy have pointed out that i t was under social democracy that Swedish indus t ry was able to internationalize at a high speed and on a broad scope . Swedish investments abroad quintupled over the last IS yea r s and represent four times the value of foreign investments in Sweden . Th i s trend seems to be continuing and may cause economic s tagnat ion, increased unemployment and increased concentration in Swedish s o c i e t y . (18) In some cases Swedish capital p re fe rs to go abroad if the worke r s pers is t in demanding industr ial democracy, a part ial control o v e r the company's su rp lus (Lontagar fond) , and that new factories be located in per ipheral reg ions of Sweden . In the short run Swedish T N C s are expec ted to affect pos i t ively domestic employment because they increase demand for expor t s from Swedish factories to the new affiliates abroad. But in the medium and long run , they will demand more and more input , raw materials and other goods froin abroad, thus having a negat ive effect on Swedish economy and employment.

Science and Technology Policy

Science and technology in the context of development problems in the Thi rd World is a re lat ively new field for Scandinavian coun t r i e s . In terms of t ransfers of knowledge to developing coun t r i e s , Sweden again occupies a special position by v i r tue of the interest of Swedish capital in internationalized p ro duct ion. But even in terms of the public sec tor , Sweden is in the forefront compared with i ts Nordic ne ighbors . Genera l ly , the role of sc ience and technology for development so far has been marginal in the debate on development aid s t r a t eg i e s . Expor ts and pr iva te investments t ransfer r ing technology have also been by and la rge outside the control of government . The government , however , has not tr ied to exerc i se such control .

Swedish preeminence in this field can be explained by the coun t ry ' s position in the international division of labor . While the other Nordic countr ies are adapting more pass ive ly to their international environment , Sweden pu r sues a more act ive s t r a t e g y . (19) Accord ing to Katzens te in , Denmark and Norway (and presumably Finland, which he does not d iscuss) follow a policy of defens ive adaptat ion. Other small countr ies with some part icular comparative advan tage , l ike Switzer land (pharmaceutical indus t ry and banking) and the Netherlands

(some big T N C s ) follow a policy of o i l ens lve adaptation. Sweden occupies an in-between position in the international division of labor , but in the crucial field of science and technology it is quite close to the Swiss and Dutch . While Denmark and Norway spent 1 percent of their GNP on research and development in the beginning of the 1970s. Sweden spent 1.7 percent and the Netherlands 2.0 percent - a percentage comparable with that of the f ive big capitalist countr ies in the world. (20)

All the Nordic countr ies are heavily dependent on imports of capital goods and technology In other forms, Sweden again being a partial excep t ion . This dependence , which c o r responds in some respec t s to that which developing countries face, is s t rongly felt in many key industr ial s ec to r s . As an example, Norway is building its oil economy with the help of massive and cost ly imports of foreign technology. Th i s had a profound impact on Norwegian balance of payments over the last few y e a r s , s ince expor t s have stagnated and earnings from the shipping sector have dec reased .

Norway 's official policy on science and technology for development is still in the making. The national paper presented to the UN Conference on Science and Technology for Development (UNCSTD) s t r e s sed the need for developing countr ies to become more autonomous in science and technology and that a priori ty for international cooperation, including t ransfer of technology, is to s t rengthen their capaci ty in that r e spec t . It also called for more emphasis on the development and utilization of endogenous and available technology in developing countr ies and sugges t ed assis tance to achieve th is . As the paper puts i t , "The aim should be to develop science and technology as direct ly as possible where people need them, bearing in mind that the insight and the technology already present represented a rationality that should be maximally exploi ted and improved upon ."

Official ly, NORAD monitors technology in bilateral development aid pro jec ts . However , this monitoring seems not to have been v e r y effect ive so fa r . One important form of technology t ransfer through Norwegian aid programs is consul tancy s e r v i c e s , where a small number of firms dominate the market . One of them, NORCONSULT, has done extremely well commercially even by international s t anda rds . (21) T h e r e is no public control over technology in pr ivate expor t s and in ves tments . Until 1977 NORAD had a formal responsibil i ty to evaluate e x p o r t s , before state support is granted in the form of expor t c redi ts on in te res t s . Th i s responsibil i ty was withdrawn in 1977, and the decision on subs id ies , inter alia with r e g a r d to shipbuilding contracts has been ves ted solely with the Ministry of T r a d e .

Sweden 's contr ibut ions in this field der ive mostly from unplanned benefi ts from research and development act ivi t ies

due to the internationalization of Swedish indus t ry and planned act ivi t ies within the state sec tor . I n d u s t r y ' s research and development policy has been oriented toward i ts own needs , and a global profit s t r a t e g y . Since the late 1960s, the public sec tor concerned with development aid has been engaged in comparatively la rge-sca le research programs related to d e veloping coun t r i e s .

Sweden 's financial contribution to research and development problems grew from 5 to 50 million Swedish kroner from 1967 to 1973 and continued i t s expotential growth to reach 100 million in 1978 and 1979. About two- th i rds is channeled to international organiza t ions , with a concentration on family planning, employment, and nutr i t ion. About 12 percent of total appropriat ions were channeled di rect ly to research inst i tut ions in developing countr ies (1972-1973) . In order to organize and coordinate these ac t iv i t ies , the government es tabl ished in 1975 a separate inst i tut ion, the Swedish Agency for Research Cooperation with Developing Countr ies ( S A R E C ) . The insti tution, which is la rge ly independent of Swedish International Development Agency ( S I D A ) , has the twin function of suppor t ing developing countr ies in their effort to build their own capaci ty in research and accumulate and spread knowledge about development quest ions in Sweden .

In a s u r v e y of technology t ransfe rs by Swedish indus t ry , it was found that only in a few cases Swedish firms had developed technology produc ts and processes especial ly adapted to the needs of developing count r ies . Examples included transportat ion equipment and wood-treat ing mac h i n e r y . Profitability considerat ions are still dominant in the firms' thinking about their act ivi t ies in developing count r ies , but a few firms showed concern about their social implications. (UNCSTD National Repor t , p . 43 f f . ) T h e government seems to have no part icular intention to interfere with the act ivi t ies of Swedish pr iva te firms in this field, beyond the general pr inciples it has set down for ex tending loans through the newly es tabl ished industrial ization fund. T h e r e will be more concern for sell ing appropriate technology to developing count r ies , according to government th inking , when these countr ies become more important markets for Swedish firms.

Raw Materials

All the Nordic countr ies have publicly suppor ted , in va ry ing d e g r e e s , the In tegra ted Program for Commodities (IPC) and the establishment of a Common Fund (CF) from the outse t . Norway has been the most expres s ive ly pos i t ive , Finland and Denmark the least so . Th i s difference probably has a political b a c k g r o u n d . Al though Finland's re la t ive low-keyed policy on the CF could be explained by her dependence on the im-

portation of raw materials, national economic interes ts have probably not played a major role . It may, however , be said that high import dependence on raw materials and their re lat ively small size make the Nordic countries recep t ive to NIEO demands. All four Nordic countr ies are dependent on imports of raw materials other than food, as shown in table 4 ,3 . Whereas the dependence as compared with the position of the l a rge OECD countr ies is clearly considerable , the difference between the Nordic countr ies is insignif icant . Hence, import dependence is only part of the explanation for the v a r y i n g Nordic support of the IPC and the Norwegian p r o -g re s s ivenes s on the i ssue . It should be noted, however , that Sweden is a major expor te r of iron and steel products and an important producer of suga r and that Norway produces and expor t s sizable quantit ies of copper and iron p roduc t s . State subs id i e s , to save employment in these sec to r s , have been considerable . In 1977 the Norwegian government spent more on subs id ies to the copper i ndus t ry , which is some 60 percent controlled by the s ta te , than i t inves ted in the C F .

Table 4 . 3 . Import of Selected Raw Materials (Excluding Agr icul tura l Goods)

as Percentage of Gross Factor Income 1972,

Norway ' s position on the IPC and the CF has been consistently in support of developing countr ies ' demands, while at the same time t ry ing to balance this suppor t with the need to s tay in line with the OECD g r o u p . This balancing act led to Under-Sec re ta ry of State S to l tenberg ' s election as chairman of the nor th-south committee for the CF d iscuss ions . Norway was the first among the industrial ized countr ies to pledge a contribution to the C F . The $25 million offered at UNCTAD IV was far in access of the contribution expec ted of Norway according to the formula worked out , $22 million out of the $25 million had been directed to the "second window."

The Norwegian position on indexation has been largely nega t ive . T h e implicit reason seems to be twofold. Fi rs t , al though the present social democratic government favors certain regula tory dev ices for the international economy, indexation has been found to be too politically unacceptable both to major OECD par tner countr ies and to the industr ies at home that still adhere to the free trade ideology. Secondly , there is the argument of the neo-classical economists that an indexation s c h e m e would not be technically feasible .

At f i rs t , government took a negat ive att i tude toward p roduce r -expor t e r associat ions , despite i t s general support for col lect ive se l f - re l iance among developing count r ies . (Par i . Report) An offer to join the iron ore association was thus declined without being d iscussed ser iously at the government l eve l . La te r , however , government spokesmen exp re s sed unders tanding and some degree of suppor t for the idea of producer associa t ions .

A major factor behind this luke-warm suppor t is the political implication of being a member of the Western free t rade a rea , while at the same time being committed to the trade unionist idea of col lect ive act ion. These two concerns often contradict each o ther . The solution sought is the one that was chosen in the case of oi l : As a Western capitalist economy, Norway would logically become a full member of the International Energy A g e n c y ( I E A ) ; as an oi l -producing and expor t ing country i tself , the logical position would be to join OPEC or IEA. Norway chose , against some domestic political opposi t ion, to become an associate member of IEA and not to associate formally with O P E C .

Sweden does not match the Norwegian generos i ty when it comes to IPC donations but is taking a more posit ive s tance toward producer associat ions . Th i s was shown at the Lima Conference in 1975, when Sweden , as the only Nordic count ry voted in favor of pa ragraphs 47 and 60 a of the Declaration, and in Sweden ' s full membership in the Association of Iron Ore Expor t ing Countr ies ( A I O E C ) .

Sweden does not, however , seem to follow a v e r y ac t ive policy in the A I O E C . Rather , her emphasis is on promoting cooperation between p roduce r - expor t e r and consumer count r i e s . (22) She has voted against the indexation proposal and has promoted a S T A B E X - l i k e scheme, inter alia, in d iscuss ions at the C I E C . This may be explained by the change of government from Social Democrat to a cen te r - r igh t coalition in 1976.

Swedish policy on raw materials ref lec ts i ts position in the international division of labor and i t s mixed economy. G r a n g e s , the major pr iva te Swedish s teel-maker with considerable in teres ts in Liber ia ' s iron ore i ndus t ry , opposed Swedish membership in the AIOEC. On the other hand, membership was favored by the s ta te-owned steel indus t ry

which haa considerable expor t in t e res t s . (Liberia did not join the AIOEC. ) The Swedish involvement in Liberia has been cr i t ic ized for indirect ly support ing exploi tat ive p rac t i ces . (23) It is not known whether the company has influenced Liber ia 's decision not to join the A I O E C .

The Serv ice Sectort The Case of Shipping

The Scandinavian governments have comparatively few vested in te res t s in the world 's financial credi t institutions except as donors of ODA through the World Bank (IDA) and the regional development b a n k s . The pr iva te sec tor , however , p lays a role . The Swedish state and some pr iva te financial insti tutions have loans in developing count r ies . The Swedish government cancelled debts related to these loans for the least developed countr ies in 1978. In some developing count r ies , Scandinavian insurance companies have considerable in te res t s . The b igges t Norwegian company, S to rebrand , is reported to have a l a rger turnover on its act ivi t ies in developing count r ies , especially Centra l America, than in Norway.

Shipping is the most .important se rv ice sector in Scand inavian-Thi rd World relat ions. Sweden and Norway, and also Denmark, have important shipbuilding sec tors that to some ex ten t depend on expor t s to developing count r ies . More importantly, their merchant fleets la rgely depend on t ransport of raw materials between developing and industrial ized count r i e s . Nine ty- three percent of the Norwegian and about half the Swedish fleet is engaged in transport between foreign por t s ; more than 80 percent of the Swedish fleet is engaged in such t ranspor t . (Aktuel t i handelspoli t iken, no . 5, 1974) A c cording to est imates, 83.4 percent of the Norwegian tonnage (ships over 500 g ross reg is te red tons only) was engaged in t ranspor t loading or unloading in a developing country port in 1978. The net income to Norwegian shipowners of t ransport with developing countr ies can be estimated at more than 2 billion kroner per yea r ( 1 9 7 7 ) .

The code on l iner conferences does not seriously affect the shipping i ndus t ry , s ince only 3 percent of the Norwegian tonnage is engaged in that market . It is feared that the l iner conference formula will be applied to other shipping t rades , especial ly tank and bulk , which has prompted the government to s ide with the Shipowners ' Association and oppose the code . At UNCTAD V, the Norwegian Foreign Minister, Mr. F ryden -lund, announced that the government is now prepared to accede to the code provided the al ternative formula which Norway has sponsored , a 40/60 divis ion, is accep ted . This formula presupposes that developing countries rece ive 40 percent of the t rade , while the rest is to be subject to i n ternational competition, in pract ice among shipowners in the


industr ial ized world. Whether shipowners and the government will eventual ly accept this formula for tank and bulk t ranspor t is not c l ea r .

There are political r easons , including p ressu re from developing coun t r i e s , behind this change in pol icy . Another probable explanat ion, however , is the fact that since the mid-1970s, Scandinavian shipowners have increas ingly Invested in and become establ ished in developing countr ies to capture or p r e se rve freight markets and to increase profitabili ty by avoiding regula t ions , t a x e s , and the high cos ts of operat ing from the home coun t ry . So far , v e r y few Scandinavian ships have been reg i s te red in f lag-of -convenience or open- reg i s t ry count r ies ; at the beginning of 1978, the number of such regis t ra t ions were 36 for Norway and 9 for Sweden . (24) Even these reg i s t r a t ions , however , ' seem to be on the inc rease .

THE MAIN O B S T A C L E S TO THE NIEO IN SCANDINAVIA

Present Policies: An Overview

We have descr ibed and d iscussed the actual policies of the Scandinavian countr ies toward developing countr ies in some selected a r ea s . The conclusions to be drawn can be summarized t hus :

1 . T h e r e i s , re la t ive to other industr ial ized count r ies , p r o g r e s s i v e n e s s in Sweden and Norway in their officially s ta ted po l i cy .

2. In actual l ife, however , the p r o g r e s s i v e charac ter of Scandinavian policy is modified by the realit ies of the international economy and the necess i ty to compete in a tough international environment . Scandinavian capital does not behave much differently from capital in other industr ia l ized coun t r i e s . The s t a t e , a mixed economy, is as much the assis tant of capital as i ts master .

3. In all the Scandinavian count r ies , labor p lays an i n fluential ro le . Organized labor seems in many i s sue areas to share common interes ts with capi tal , al though in some cases d ive rg ing in teres ts are important.

4. The apparent contradict ions between stated and actual policy are par t ly explained by the necess i ty of adapting to the international environment, which is d i v e r g e n t , part ly by the need to accommodate conflicting group in teres ts domestically.

5. T h e NIEO as an issue is losing ground in political milieus and the mass media. The u r g e , by capital especial ly and in par t icular i ndus t ry , to Internationalize the economy and to compete within the "new international division of labor"

SCAN DIN A VIA/LIKE-MINDED COU1NTK1KS. 71

is more and more becoming a major concern . In this p r o c e s s , the interes ts of capital and of labor may confl ict . This may affect NIEO policies negat ive ly especial ly as long as there is an economic c r i s i s , bu t it could also g ive r ise to new coalitions between labor in Scandinavia and workers and peasants in developing count r ies .

An issue approach to Scandinavian policies would g ive the following overal l v iew: As far as development assis tance is concerned , the Scandinavian countr ies are certainly p rog re s s ive compared with other industr ial ized countr ies both in the volume of ODA and how and to whom it is g i v e n . There i s , on the other hand, a growing tendency to link ODA to expor t and indus t ry in teres ts in all the count r ies . This goes along with an increasing use of expor t c r ed i t s , s ta te subsidies for indus t ry and, not the leas t , a growing internationalization of important indus t ry and se rv i ce s ec to r s . Res t r ic t ive policies toward imports from developing countr ies are maintained and, in some c a s e s , even further hardened. At the same time, trade policies toward other industr ial ized countr ies are fur ther l iberalized according to the requirements imposed by i n ternational agreements within EFT A and with the European Community.

The s t ruc tura l i s t cr i t ique of the prevai l ing world order is less pronounced. Ins tead, the s t r e s s is on interdependence and a "l ife-boat" view of the world. Such a vision has been present in Scandinavian world outlook but has g iven way to a more crit ical view in the mid-70s. There is still a wil l ingness to adopt a concessionary att i tude as long as it does not ser ious ly hur t national, or important sectoral , economic in te res t s . When it does , as when nationalization of foreign investments and regulation of shipping markets , the Scandinavian governments seem prepared to adopt a defens ive , even completely nega t ive , a t t i tude .

The Economic Cr is is

With s t rong labor unions and social democratic part ies the interes ts of organized workers are bound to have an effect on the economic po l icy . How great is a matter of d i spu te . The s t rong Scandinavian emphasis on maintaining full employment i s , however , an indication that the interes ts of labor are backed by t h e . s t a t e .

The relationship between a policy of full employment and of f ighting inflation has been a matter of debate for some time. Indus t ry has made its influence felt in order to have the government more act ively fight inflation. According to i n d u s t r y , the high wage level seemed to pr ice important sectors of indus t ry out of world markets . Wage increases are now


frozen with the support of the labor unions. This will last until the spr ing of 1980. The suppor t of labor is conditioned on the government being able to hold down inflation so that wage ea rner ' s real income on the ave rage is not r educed . Severa l economists and labor g roups a rgue that the lack of competi t iveness of Norwegian indust r ies is not only due to high wages but to the lack of marketing sk i l l s , bad management and p lanning , and irrational use of r e sou rce s .

Sweden has had a slower growth in pr ices than Norway in the same per iod; Finland and par t icular ly Denmark have had an even slower g rowth . (25) The Danish policy has thus been closer to the West German anti-inflation policy than the Scandinavian full-employment po l icy , a conclusion that is warranted if the cost t rend is compared with employment f i g u r e s . We have summarized data on some basic indicators of the economic and social situation in the Scandinavian countr ies and Finland, in table 4 .4 . These data show that whereas Denmark and Finland have unemployment f igures well above the OECD ave rage of about 5 percent (1978) , Sweden and Norway are among the best at maintaining full employment.

There are s t rong indications that the Swedish and the Norwegian policies a re being changed toward the West German model - cu rb ing inflation and accept ing some unemployment as unavoidable in order to improve the competi t iveness of the i n d u s t r y . Norwegian unemployment f igures have gone up ove r the last yea r and are expec ted to increase fur ther , despite recent Improvements in the expor t s ec to r . The Norwegian t rade balance has been extremely unfavorable , causing s e v e r e balance of payment problems, agg rava ted by commitments due to a 20 billion dollar foreign debt (1978) . Th i s t rade deficit has been cons iderably reduced dur ing the first par t of 1979.

The Swedish exper ience is similar. The cr is is hit Sweden later than in most other industr ial ized countr ies because the state in tervened to check it and because important sec tors of the Swedish expor t indus t ry had been res t ruc tu r ing ove r the las t couple of decades in order to maintain compet i t iveness internat ional ly. When it hit at the end of 1975 and dur ing 1977, it sparked off another round of demands for rationalization and other res t ruc tu r ing measures . State in te rvent ion , both in Norway and Sweden, is of a rather short-terra type and cannot , therefore , be financed indefin i te ly . If the recent improvements in the expor t performance do not pe r s i s t , dras t ic r e s t ruc tu r ing measures will have to be t aken .

NIEO demands will hardly play any role in discussions about these measures . Capital is making plans according to expec ted developments in the International division of labor and for the measures these developments imply. I r respec t ive of whether industrial investments meet NIEO principles such as a real t ransfer of r e s o u r c e s , appropriate technology, maximum

Table 4 . 4 . A Socioeconomic Profile of the Nordic Countr ies , 1978 (Indicators Calculated from Latest Available Monthly Data)

Consumer Money prices supply

Jobless total

Industrial Industrial production wages Unemployment

rate

Export as percent of import

Percent change over 12 months earlier

Percent change over 6 months earlier

Percent 1 )

in latest month

in same month

last year

Finland 6.5 12 •20 +1.5 5.4 7.4 116 102

Norway 8.0 18 +60 +6.5 4.3 1.8 78 62 2 )

Sweden 7.5 11 0 -2 1.4 2.1 114 104

Denmark 7.0 19 - 1 1 +20.4 3.0 9.9 77 79

1) For Finland, Norway, and Sweden from "Labour sample force" and for Denmark from "Employment office s ta t i s t ics ." Figures from December 1978. The figure according to the Norwegian employment authorities went up to 2.2% for Sweden and 2.1% for Norway, as of April 1979.

2) For 1979, the Norwegian Bureau of Statistics reports on trade surplus as exports surpass imports for the first time since the mid-70s.

Source: VISION, January and February 1979; ILO Labour Statistics, 1/1979.

73


use of local r e sou rces , e t c . , the mere location of indus t ry in developing countr ies may be refer red to by capital as sufficient proof that the NIEO is being implemented. Host governments in many developing countr ies seem willing to accept foreign investments almost uncondit ional ly. In other words , NIEO may be used as an excuse for internationalizing and t ransfer r ing industr ial production to " low-cost coun t r i e s . " T h u s i t may be used to counteract pro tes ts by labor which, through the posi t ive att i tude of the labor pa r t i e s , are po lit ically committed to favor NIEO measures .

In a situation of h igh and r is ing unemployment, labor will be under p r e s s u r e . On the one hand, it will want to fight increasing unemployment and oppose any job runaways d i r e c t l y . Labor will thus be under p re s su re to accept some res t ruc tu r ing for the sake of making indus t ry more efficient (competitive) and to secure j o b s . Since developing countr ies do not possess the same amount of bargain ing power v i s - a - v i s the Scandinavians as do other industr ial ized count r ies , they will probably lose out in competing for investments and marke t s unless they a re accorded par t icular ly advantageous condi t ions.

As al ready noted, r es t ruc tu r ing has a l ready gone a long way in Sweden . This means that the potential for further r e s t ruc tu r ing may be limited. Even if there were not enough popular opposition to stop i t , government , labor , and indus t ry may find it difficult to proceed for fear that the social fabric will su f fe r .

In Norway, where res t ruc tur ing and adjustment have not been carr ied out as ambitiously as e lsewhere in Scandinavia , the potential may be g rea t e r . Ye t so far there has been effect ive popular opposition to i t . Part of the explanation why there was a majority "no" to EC en t ry in 1972 is the feel ing, Strongest in the per ipheral reg ions and among industr ia l w o r k e r s , that en t ry would mean centralization and other forms of r e s t ruc tu r ing represent ing a threat to employment in the reg ions where people l i v e . (26) Adding to that , small farmer and fishing communities represent another s t rong force against r e s t r u c t u r i n g . Final ly, some of the most l abor - in tens ive , low-ski l l and low-profi tabil i ty indus t r ies , which capital p r e sents as candidates for r e s t ruc tu r ing , are located in communities which are typical ly monocultural. This holds for t ex t i l e , c lo th ing , cer ta in raw material process ing industr ies , , and par ts of the paper and wood i n d u s t r y . Popular res is tance to change is par t icular ly s t rong in these regions as long as no public or pr iva te agency in te rvenes in the res t ruc tur ing p rocess to offer a l ternat ive employment.

The social , cu l tu ra l , and economic processes in the Scandinavian societ ies are relat ively t ransparent and ident i fiable. Y e t , the polit ics of these p rocesses at the macro-level are made up of a l l iances, and a va r ie ty of social con t rac t s . In

the mixed Scandinavian economies, the state is a set of adminis t ra t ive s t ruc tu res that s e r v e as a framework for negotiating the social order and the distribution of r e sources , among group in teres ts and between in teres ts in the macro-soc ie ty . (27)

Norway 's import of the 20 raw materials listed in the UNCTAD of potential IPC candidates amount to 4.2 billion N . k r . pe r y e a r , while Norway's expor t s (pract ical ly all of i t iron and copper) amount to 700 million N . k r . (1975) . A 100 percent increase in the pr ices of these raw materials in world markets represen ts an increase in the GNP of 1.0 percent and an increase in the consumer pr ice index of 2.6 pe rcen t . With no tax reduct ions to stimulate demand, employment would be down 0.7 percen t ; balance of payment would be down by 500 million N . k r . , and the volume of the GNP would be reduced by 0.9 pe rcen t . With tax reduct ions , the balance of payments deficit will increase by 1.4 billion N . k r . , while GNP volume, pr iva te consumption, and employment will remain s table.(28)

With the p ressu re on the employment market plus ser ious problems with the balance of payments , a major pr ice hike on raw materials would clearly meet with opposit ion. Such a h ike , even if it were less than the 100 percent used in the model, would save employment in some metal indust ry s ec to r s . But despi te the political s t reng th of these , they would not have leverage enough - not even within the Metalworkers ' Federation - to get a price increase accepted .

In another s t u d y , the effects on capital , labor , consumers , and macroeconomic parameters (balance of payments , e t c . ) were analyzed for imports of goods from "low-cost coun t r i e s , " in part icular developing countr ies . Two al ternat ives were cons idered: increased volume of imports with no pr ice change , and reduced pr ices on imports through tariff reduct ions with no change in volume. The resul t s show that re turn on capital is negat ive ly affected, in both c a s e s . In those branches that do not compete with low-priced imports, however , capital owners would gain from an increased import volume, because they would be us ing imported goods as inputs in their product ion.

Consumers would gain from both measures as pr ivate consumption Increases . Employment would suffer under both a l te rna t ives , which is obvious since low priced goods account for most of the domestic i ndus t ry ' s market . The resul ts show, however , that the unemployment-creating effect is widely different in the two cases : The effect is almost four times as much when Import pr ices are reduced as when the import volume is inc reased . (29)

These resul ts are , needless to s a y , the resul t of analysis with a short- term perspec t ive and based on a number of assumptions that can be quest ioned. They do g i v e , however , some clues to policy options and choices . Increased volume of

Imports seems to be the type of policy that causes the least problems for the Norwegian economy. Th i s policy option seems to be advantageous to other factions of capital than the one running the domestic market i ndus t ry . Increased market access seems to be the logical choice if some concession is to be made to developing countr ies ' demands. So far , however , capital and labor in the sec tors competing with low-pr iced imports have jointly and successfu l ly opposed such measures and have secured an increasingly protectionist policy from the government . Th i s seems to provide evidence that in quest ions where there is no s t rong ves ted in teres t domestically there is no u rge to make a c h a n g e .

T h e analys is re fe r red to here seems to indicate that increas ing produc t iv i ty per man-hour through technical i n novations could mean as much of a loss of employment as would NIEO concess ions . (30) Ve ry few people seem to be willing to d i scuss the NIEO in terms of such comparisons, ye t r e s t r u c tur ing due to technical innovation seems to be accepted as unavoidable . The re i s , however , a growing questioning of this in the Scandinavian socie t ies , among groups act ive in the ecological movement. Even among wel l - reputed economists, there are voices who ask for more emphasis in cr i ter ia o ther than output efficiency and for job-creat ion in non-product ive but socially re levant occupat ions .

In Sweden , h igher pr ices on raw materials would benefit comparatively large sec to rs of the expor t economy, notably the iron and fores t ry i ndus t r i e s . These sec tors are up against an increas ingly competitive international climate where new producers with comparative advantages offer a g rea te r output at cheaper p r i c e s . Overproduct ion combined with the coming of new competitors thus enforce an open economy, which so far has adjusted ac t ive ly and sometimes a g g r e s s i v e l y to the international environment.

Another factor of increasing importance to Sweden is that comparative advantages are no longer controlled nationally but by corporat ions operat ing internat ional ly . Such corporate know-how, information, organizational abi l i ty , and o t h e r advan tages are internationally mobile by na tu re . T h e present policy of capital in the Scandinavian countr ies is to r e s e r v e production in these countr ies for advanced products with a h igh- technology component. The role of developing count r ies - whether the goal is re fe r red to as the NIEO 25 percen t ta rget or the establishment of a 'new international division of labor 1 - would be to take over l e s s technology- in tens ive indus t r ies . And the role of the s ta te , as ass igned by industrial l eaders , would be to provide new jobs for laid-off labor in an eve r expanding se rv ice sec tor , or simply to finance more le isure time.

More and more people in the Scandinavian countr ies question the wisdom of such a pol icy, which is going to lead to

77

increasing conflict ove r policy in these socie t ies . Another round of automation by the introduction of the la rge-sca le use of microprocessing techniques will further exacerbate this confl ict .

Public Opinion

During the last ten to fifteen y e a r s , Scandinavian public opinion on development i ssues has been analyzed through nation-wide polls and s tud ies . These show a growing awareness of an increasing al though highly mixed suppor t to action in favor of developing count r ies . Since the role of public opinion in these matters is re lat ively important, some major t rends in the evolution of public opinion will be d i scussed . We will draw upon s tudies of Sweden(31,32) and Norway. (33,34,35) There is considerable similarity between Swedish and Norwegian opinion g roups . (36 ,37 ) Since we shall primarily make use of Norwegian data, we may only make inferences from this data about the Swedish c a s e .

Most of the polls have centered on people 's at t i tudes toward development aid appropr ia t ions . There has been an increas ingly posi t ive trend in public opinion over the y e a r s . T h i s , however , is an observat ion that is h ighly conditional in at least two r e s p e c t s . Fi rs t , favorable at t i tudes are shared by between 60 and 70 percent of the publ ic , as long as the quest ion is put in general terms. When the actual volume (amount expressed in millions of kroner) of aid is mentioned to r e sponden t s , posi t ive responses drop to about 50 pe rcen t . This 50/50 division of the public seems to be re la t ively s table . Second , an increase in ODA appropriat ions, according to public opinion pol ls , r anks low among measures to be taken by the government . It does not seem to be a v e r y salient i s sue . (38)

A few nationwide polls go somewhat deeper into the s t ruc tu re of opinion. They reveal three or four explanations for underdevelopment and pover ty in the Third World. One explanation v iews these phenomena as natural def ic iencies , and a second view emphasizes endogenous political fac tors . A third explanation views exogenous factors as the main course . Finally there is a point of view that combines several of the above listed fac tors . In a poll taken in 1977, 60 percent re fe r red to endogenous deficiencies in developing countries as the main explanation; i l l i teracy and overpopulation were the two most cited fac tors . About 24 percent mentioned exogenous fac tors , such as colonial rule and foreign exploitat ion, as the main reason, while 7 percent bel ieved that the foremost reason was to be found in natural fac tors , such as lack of r e sources , climate, e t c .

78

When people were asked which remedies they thought were the most important, they first of all mentioned t rade reform. S i x t y - f o u r percent thought this to be the most important NIEO i s sue ; only 11 percent re fe r red to development a id. (39) The emphasis on t rade improvements is even s t ronger in Swedish public opinion. (40) T h e Norwegian data may indicate that peoples ' v iews are not v e r y consis tent . If they see endogenous factors as the most important ones in expla ining underdevelopment , changing those factors th rough inter alia development aid would also seem to be more important.

Pollsters also asked quest ions about market access and raw material p r i c e s . On the market access i s sue , public opinion in Norway* takes a more l iberal , less protectionist s tandi fifty percent favor tariffs on goods imported from other industr ial ized count r ies , 25 pe rcen t , only on imports from developing count r ies . (A similar pat tern has been shown to apply to United Sta tes public opinion.) (41) When the issue is shown as down- to -ea r th , suppor t of liberalism predictably dec r ea se s . T h u s , 31 percent in a 1977 poll thought that texti le or other manufactured goods ought to be imported even if it c reated problems for Norwegian indus t ry , while 41 percent thought o therwise . T h e corresponding f igures in a poll taken in 1964 were 24 and 66 percen t , r e spec t i ve ly . There was , in other words , a s l ight increase in suppor t for the NIEO. And in the 1977 sample, the negat ive response was reduced from 41 to 28 percent when the option of the state guaranteeing new jobs was mentioned.

Th i s genera l public view cont ras ts with that of a special t a rge t g r o u p , the text i le w o r k e r s . No systematic s tudy of their view has been under taken . But it is symptomatic of their att i tude that some texti le workers published an advertisement in major Norwegian newspapers s t rongly opposing NIEO demands. Since organized labor is h ighly Influential, the specif ic group interest is less promoted than the former when the pract ical state policy is determined.

On raw material p r i ces , people seem to favor another aspect of l iberal economic pol icy: About 50 percent of the 1977 sample thought that pr ices ought to be determined by the market mechanism, while 36 percent accord developing count r ies the r igh t to demand h igher p r i c e s . Almost 75 percent of the public said they agreed that Norway should support the demand for h igher raw material p r i ce s , while only 15 percent said they were against i t . The ques t ion , however , may have been too posi t ively leading. (42)

T h i r t y - t h r e e percent of the Norwegian public bel ieves that conditions in developing countr ies will affect them, while about 40 percen t bel ieve they will not . Those who bel ieve they will be affected also point to h igher pr ices for raw materials as the most l ikely source of Impact. The next l ikely source is bel ieved to be a cut -down in the consumption of

Western products in developing countr ies as a resul t of h igher growth and thus grea te r domestic use of resources in the developing count r ies .

Mass Consumerism ve r sus the "New Life Style"

In Sweden , a pamphlet was published in 1977 entitled "How much is enough?" (Hur mycket ar lagom?) . The pamphlet created a heated public debate as it a rgued for reduced growth and consumption in a way which many found original and p rovoca t ive . It advocated emphasizing quality of l i fe , not only material l iving s t andards . (43) The Swedish intellectual milieu has taken up the debate and drawn implications of the "new life s ty le" message both at the domestic(44) and the international leve l . (45 ,46)

Much the same att i tude has developed in Norway th roughout the 70s. There has been a growing "green wave" based on a coalition of conservat ionis ts , ecologis t s , and groups advocat ing reduced growth and an internally balanced economy. Th i s coalition cu ts across established par ty l ines , but the new policy has in part icular influenced two or three of the pa r t i e s . In addition, a g ra s s - roo t s movement called "Future in Our Hands" (Fremtiden i vare hender) is playing an important role as a mobilizing force and a p r e s su re -g roup on the political milieu. (47)

The practical political impact of these new movements is so far not g r e a t . The reason for this seems to be a weakness in plans for the implementation of the new thinking ra ther than in a lack of popular suppor t . The inertia in the economic sys tem and s ta te pract ice is v e r y c lea r : the day - to -day fighting of the cr is is and the need to think about maintaining one ' s position at the next election takes precedence over long-term thinking and planning. The logic of the capitalist system is to produce more and to consume more. This is how employment is p r e s e r v e d . This recipe has been coupled with a policy of stimulating demand as expressed under social democracy in its response to periodic economic s tagnat ion.

The problem does not seem to be that the public feels threatened by a new pol icy , at least not at the general level of th ink ing . In a poll taken a few years ago , 52 percent of the Norwegians thought the l iving s tandard in their country was too h igh , while 41 percent found it appropriate and only 1 percent thought it too low. These f igures are almost totally matched by Swedish public opinion data: For ty-nine percent were prepared to reduce their l iving s tandard , while 35 percent felt sympathy for the idea, 11 percent opposed it somewhat and only 3 percent opposed it s t r o n g l y .

Also , problems of resource conservat ion and pollution of the environment now rank as i ssues ove r which people are

v e r y much concerned . There is latent support for the e c ological message that an increas ingly material l iving s tandard reduces the quali ty of l i fe .

These ideas , however , do not ye t decide the election of government nor the prac t ices of the s t a t e .

The Missing L ink : No Ves ted Popular Interest

Labor union and social democratic leaders who act ively promote NIEO policies are few in number but not without inf luence. They have been f ight ing a losing battle since 1977 and ac cording to many of them the main reason is the lack of a ves t ed popular in teres t in NIEO-type pol ic ies . In other words , the public has not g rasped the va lue of in te rdependence with the developing world.

According to this hypo thes i s , what is lacking is a network of l inkages between Norwegian workers and consumers . As the la t ter ca tegory is la rge ly unorganized and the former is well o rgan ized , conflicts of interest may o c c u r . It is the workers ' d is interes t in NIEO policies that worr ies pro-NIEO leader s . The i r solution is to c rea te markets in developing countr ies that Norwegian workers can depend on for their j o b s . If these workers can be assured of j obs , they will be prepared to defend the interests of developing countr ies with the same v igo r as workers in the expor t sec tor defend t rade in te res t s of o ther industr ia l ized countr ies in Norway.

T h e . l inkage s t r a t e g y is said to be par t ly behind the s t rong effort to sell ships to developing count r ies . According to one informant, however , the s t r a t e g y has not worked well in this c a s e . Sh ipyard workers have not come out in favor of NIEO pol ic ies , al though some labor g roups in this indus t ry are considered among the most p r o g r e s s i v e and militant within their labor federat ion.

Consumers represen t a potential a l ly , but they lack organizat ion and have little political l e v e r a g e . There are a few consumer movements that have potential . In Sweden , re la t ive ly success fu l campaigns to boycot t South African goods have been carr ied ou t . In Norway, a small nonprofit company is importing Tanzanian instant coffee, dis t r ibut ing it through some retail s tore chains and marketing it with the help of vo lun tee r s .

The NIEO issue became a major political i ssue in Scandinavia only at the end of 1975 when repor ts of the Lima Conference and the 7th Special Session appeared in the media. A preliminary content analysis of the debates on the foreign minister 's major speech to the Norwegian parliament revea l s the following obse rva t ions : F i r s t , the NIEO as an issue rece ived the h ighest attention dur ing 1976 and 1977, peaking in 1977. Second , the NIEO has been considerably reduced in importance

as a foreign policy issue as well as a domestic issue from 1978 onwards .

The c u r v e may have peaked higher in the case of Norway than in the case of Sweden . As one of the central Norwegian policy makers put i t , "We pushed the NIEO i s sue , in part icular the issue of res t ruc tur ing at home, much too hard throughout 1976 and 1977 and almost got a boomerang effect out of i t . People, especial ly industrial w o r k e r s , simply were not prepared for the message . " Th i s general t rend is probably equally evident in the case of Sweden . If these observat ions are co r rec t , there is reason to expec t less act ive suppor t of NIEO work internationally from the Scandinavian governments .

At the level of poli t ics , capital , and labor, NIEO support is founded on a loose alliance of leaders who are dependent on a suppor t base that is dwindl ing. Moreover, other audiences call for at tention. In both Norway and Sweden , there have been revital izations of European continental bonds . Almost seven yea r s after a referendum turned down Norwegian membership to the EC, the social democratic government reopened the debate on Norway 's relationship to the Community s t ress ing cultural and other t i es . At the same time, talks with continental state and corporate leaders took place in order to make oi l - for- indust ry investment deals with them. In Sweden, revitalization of EC ties are taking the form of the creation of a new European Association sponsored by social democratic and labor , as well as industr ia l , l eaders . According to political leaders in both count r ies , these t rends do not d iver t attention and support from the NIEO. For small count r ies , however , the danger of an e i ther-or solution is v e r y rea l . Resources do not permit them to follow several lines of popular mobilization at the same time.

"Peer Gynt" Politics

The pic ture that emerges from these observat ions is mixed and a true mirror of the p rocesses at work in a mixed polity and economy. There are apparent contradictions in the polity r ega rd ing images and a t t i tudes . On the one hand, there is widespread popular support for NIEO measures . Rest ructur ing is called for on the basis of efficiency and profi tabil i ty, as defined by capi tal , not on the basis of a new conception of soc i e ty . Never the less , important g roups do harbor such concepts and the future seems bound to offer more conflict over policy than was the case dur ing the yea r s of national unity after World War II. The fragmentation of societal goals and ideas at the g rass - roo t s is also r ep resen ted , though to a lesser ex ten t , at the highest l e v e l s . In that r e spec t , it was a matter of some importance that a move to t ransfer decision-making respon-

sibi l i ty on NIEO matters in Norway from the ministry of foreign affairs to the ministry of t rade was blocked by political in te r vention through the Parliament. There is a s t ronger p r o -NIEO mood in the former than in the la t ter since the la t ter is known to follow a bus iness -as -usua l policy when dealing with developing count r ies .

At the level of policy makers , the differences of opinion are explained by the necess i ty to balance contradict ing group in te res t s into one formula. The solution is the Peer Gynt pos tu re . Ibsen 's ant i -hero could address the main audience and then presen t a different argument to the gal lery in one and the same s t roke . There are Peer Gynts all ove r the world and in all r a n k s ; the type is not only found in Scandinavia . But Scandinavian politicians have to respond to pro-NIEO sentiments which ca r ry more weight in domestic policies than is the case in other industr ia l ized countr ies with the except ion of the Nether lands . A good number of people really want to push the NIEO publ ic ly in order to create a p rog re s s ive international image. And the Norwegian government promises pr ior i ty handling of i n d u s t r y ' s modernization plans and expor t d r i v e s and continues i ts policy of nonintervention in shipping af fa i r s . Both governments at the same time keep repeat ing their s t rong suppor t for NIEO demands, a great number of which are at odds with the measures jus t mentioned. One month after the UNIDO meeting in Lima where the 25 percent goal was a g r e e d , the Norwegian government told Parliament that the trade pat tern with non-OECD countr ies would continue unchanged . (Par i . Report no . 67, 1974-75)

Attention to NIEO is on the dec l ine . This is sometimes covered up in order not to create more boomerangs from labor or o the r s . One such i s sue , the proposed readjustment fund, has been dropped in favor of using exis t ing funds . Readjustment measures would be met with host i l i ty , whereas using already ex is t ing funds would go unnoticed. So far , no s ingle case of NIEO-related readjustments have been under taken .

Because of external and internal obs tac les to action, the role of the Scandinavian governments as mediators between the core nor thern and southern countr ies is seve re ly r e s t r i c t ed . There a re , in addit ion, important c leavages within the state administration as to what policy to follow. These c leavages follow ideological or general political l ines . One example of this is a certain disagreement between those who wish to do more in the "like-minded" grouping and those who urge that one should in tegra te ent irely in the OECD fold. The la t ter seem, in the pract ical political mat ters , to have gained ground r ecen t ly . Another important source of in t ra-s ta te conflict is that different factions of state administrations are linked to special sector in teres ts pursu ing opposing pol icies .

ALTERNATIVES

The main purpose of this report has been to descr ibe and analyze obstacles to the NIEO in Scandinavia . The conclusion to it can be formulated in two pa r t s : f i r s t , among the industrialized count r ies , the Scandinavians are the most favorable to NIEO demands; secondly , in practical political action, their behavior does not differ appreciably from that of other in dustr ial ized countr ies , with the exception of development aid. We also concluded that the reasons for this are to be found both in endogenous and exogenous factors .

The argument is often heard that with respect to de veloping countries the Scandinavians cannot operate alone, but must coordinate action with the rest of the OECD count r ies . T h e y cannot do anything to promote NIEO internationally unless other industr ial ized countr ies do the same. The implicit reason for this is that this policy will create a d isadvantageous position to Scandinavian industr ies in International markets .

T h e r e are a number of plausible reasons why the best s t r a t egy for developing countr ies is to build through national, co l lec t ive , and regional se l f - re l iance , and to rely less on the international economic system as an engine of growth and development. (48,49) S t i l l , there are logical , economic as well as political reasons to advocate continued emphasis on taking par t in the sys tem.

The Potentials and the Limitations of a "Like-minded 1 1 Group

Scandinavian NIEO politics at the ' international ' level has attempted to play the role of the moderator. Sweden took part in the C I E C , while Norway 's role at UNCTAD IV earned her the chairmanship of the nor th-south committee. T h e y both belong to the soft- l iners in OECD Group B and form the backbone of the "like-minded" g r o u p .

The stated goal of the group is to advance the cause of the NIEO by exer t ing political p r e s su re , not the least within the OECD. Its role is potentially grea ter the more north-south relations are character ized by confrontation. This is t rue, however , only to a point . If the confrontations were to become too s t rong , then the l ike-minded would have to take their national in teres ts into account and most l ikely side with the res t of the nor th . The like-minded approach is bound to be gradua l i s t . They are small countr ies with little influence as s u c h . Being small, they also have a ves ted in teres t in p r e s e r v i n g the sys tem; They are fragile because they are open economies. This is why they can bet ter see the need for change to accommodate NIEO demands. At the same time, however , they have to fall back on big power positions in a tough nor th-south confrontation in order to be protected.

Also , when negotiations move from principles to pract ical implementation, the l ike-minded seem to re t reat to the impera t ives of international competition. Government has to see to it that its policy does not g i v e industr ies a comparative d i sadvantage v i s - a - v i s competi tors . The like-minded posit ion, however , is c loser to the maximum demands of the developing count r ies .

The re are obvious constra ints on the l ike-minded g r o u p . F i rs t , one may question how like-minded they really a re . At some of the meet ings , the total number of part icipat ing countr ies reached a dozen . It included the United Kingdom under the Labor government . With the cur ren t Br i t i sh stand on some key NIEO i ssues being closer to the United States and West German conservat ism than the Scandinavian or Dutch p r o g r e s -slvisra, one must real ly ask whether th is g roup is s t re tch ing the concept of l ike-mindedness too far . More members mean potentially more weight and influence; bu t , as a matter of fact , the impact of the grouping has faded rather than in creased after it began with the original th ree , added the two Nordic count r ies , then included Belgium and Aus t r ia , and finally ended up with the United Kingdom, Canada, Austra l ia , and a few o t h e r s .

While the external limitations, such as the lack of in fluence and the lack of international cohesion, are probably the most ser ious cons t ra in t s , the l ike-minded also suf fer from a lack of plan and program. It i s , loosely defined, a type of consultation machinery , not an organizat ion. S teps to create a more organized group would probably meet with s t rong o p position from other OECD countr ies because it would be considered as an inappropriate d iv is ion . The lack of a program could be explained by the same reasoning, but also by the fact that the countr ies belonging to the group are not only competitors in international markets ; they also have somewhat different domestic economic sy s t e m s .

T h e l ike-minded countr ies did have a program on the IPC in Nairobi and a f te r . That the final IPC vote in March 1979 did not meet the. expecta t ions set by the Nairobi resolution 93 is not proof that the like-minded are without influence when programs are implemented. It seems, however , that the g roup lost some of the Nairobi spiri t in the process of negotiat ing the Common Fund. Some vo ice s , both in Norway and Sweden , are quest ioning the wisdom of the guiding principle of the group -to act as a moderator as often as the other part ies wish . These people ask whether the time has come for a group such as the l ike-minded countr ies to play a more determined role in the NIEO p r o c e s s . As an example, Norway 's election to important chairmanships in the negotiations may be more constrained because of this role as moderator than some foreign policy decision makers may des i r e . Outside such a role Norway would have been more free to take political

ini t iat ives on such i ssues as the IPC question in Nairobi. Others may question the wisdom of t ry ing to pose as mediator at all. Realpolitik reasoning claims that big powers decide whether and how much the industrialized world shall concede to developing count r ies . There is therefore no use in t ry ing to break out of the fold.

T h e r e are indications that this view is gaining ground . The b igges t Norwegian newspaper , conserva t ive Aftenposten, commented at the end of UNCTAD V that it would probably mean the end of Norway 's mediation ro le . The reason a c cording to the paper , was to be found in the shipping policy of the developing countr ies that were opposed to Norwegian in t e r e s t s . ( Aftenposten, 5 June 1979) Swedish capital had less reason to feel antagonized by the conference resul ts since pract ical ly no concrete recommendation was made on in ternational r e s t ruc tu r ing , so vital to its in t e res t s . In comments by government spokesmen in both count r ies , the conference was considered a disappointing even t , which did not leave much hope for the continued north-south dia logue.

One may therefore expec t more discussion and conflict in Scandinavian societies both over the content of the NIEO and the s t r a t egy to be adopted toward the demands of developing coun t r i e s . The climate is becoming tougher . The re seems to be less room for the kind of "idealism" that some par ts of the pol i ty , suppor ted by some of the public , have been advanc ing . The evolution of Scandinavian NIEO policy depends on the nature and extent of p r e s s u r e , foreign as well as domestic, and on the final outcome of the working of countervai l ing forces on policy making at the level of government and i ndus t ry .

The Role of the Netherlands

As one of the founders of the like-minded grouping and a member of the EC, the Netherlands is in a potentially i n fluential posi t ion. In prac t ice , it has been in the forefront of innovating development aid policy in both quanti tat ive and quali tat ive terms. The Dutch government has also been central in the negotiations that took place in the 7th Special Session of the U . N . General Assembly in 1975.

T h e question now is how far and in which sense does the Dutch political pract ice differ from that of the Scandinavian count r ies , and their "Peer Gynt s t r a t e g y . " It is also a q u e s tion of whether the Dutch government can follow, not to mention init iate, an eventual like-minded program of implementing NIEO principles against the in teres ts of Dutch capital and those of fellow EEC count r ies . The economy of the Nether lands , probably even more than that of Sweden is dependent on the foreign production facilities and markets of

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i ts T N C s . And Dutch T N C s . notably Shel l , Phil l ips, and Uni lever , a re among the world leaders in their s e c t o r s . Their in teres ts are bound to have an impact on state pol icies . As it i s , coordination within the EEC in matters related to d e veloping countr ies is inc reas ing . This is acknowledged in the latest repor ts on development policy in Denmark and Holland. The Dutch government report to Parliament (1979) s t a t e s :

It is inevitable that we shall increas ingly place our policies on cooperation with developing countr ies in a European (Community) context ; and indeed, this is a v e r y desirable t r end , ( p . 17)

In the same repor t , official Dutch adherence to the consula-tions of the l ike-minded g roup is affirmed. The policy of the l ike-minded h a s , according to the government ' s assessment , "often proved to be v e r y close" to EEC pol ic ies . T h u s , continued consultat ions among the l ike-minded "are in no way detrimental to those taking place within the E E C . " ( p . 15)

If EEC policy in these matters i s , to a considerable e x t e n t , the resul t of compromises between Bonn and Par is , then the potential for conflict between the EEC and the l ike-minded, non-EEC members cannot be underest imated. There is a widespread belief in Swedish and Norwegian "NIEO c i rc les" that the Dutch (and Danish) position on the IPC and the Common Fund was noticeably weaker than in Nairobi, when the common EEC policy was e v o l v e d .

Trade policies are the responsibi l i ty of the Community. The Nether lands , howeve r , p r e s e r v e s a re la t ive ly independent position on development aid and was the first industrial ized count ry to introduce a special scheme for domestic r e s t ruc tu r ing in favor of developing countr ies through public adjustment ass i s tance . In these sectors there is room for a common Scandinavian-Dutch po l icy . On monetary and financial p roblems and on control over T N C s , howeve r , the Dutch position is not different from that of other EEC coun t r i e s . The emphasis on regula t ion , found among Swedish and Norwegian Labor and Social Democratic par t ies has no parallel in the Dutch c a s e . T h e r e , capital and cen te r - r igh t in t e res t s -a re s t r o n g e r . This expla ins why the new Dutch government , while s t ress ing NIEO pr inc ip les , has put more emphasis on expor t in te res t s , l iberal t rade pol ic ies , and interdependence in nor th-south re la t ions . (50)

According to a document published by the Development Cooperation Information Department of the Ministry of Foreign Affairs of the Netherlands Government , the Netherlands is pursuing a two-pronged policy v i s - a - v i s the developing coun t r i e s .

Without wishing to infringe upon the s o v e r e ign ty of developing countr ies over their internal a f fa i r s , the Government is convinced that the two goals - a position of equali ty in international economic relations and speedy and direct relief for the many hundreds of millions who are still ex is t ing below the minimum level of subs is tence - can and must be pursued simultaneously, and not consecut i v e l y . Th i s means that different s t ra tegies must be followed concur ren t ly , calling for a two-pronged policy directed towards both macro-s t ructures and the direct alleviation of pover ty in the developing count r ies .

The Government has chosen in favour of this " two-pronged pol icy , for two reasons : f i r s t ly , b e cause the pover ty of the poorest population groups is so gr inding that it would be inhumane to postpone efforts to help them until after external s t ruc tu res have been improved: secondly , because measures promoting a position of international equality for de veloping countr ies can in some cases be implemented in such a way that they can at the same time improve the position of the most vulnerable sections of the population. For ins tance , development funds could be used more often to finance measures relat ing to primary commodity agreements when the commodities concerned are of major importance for the poorest developing countr ies , which have the poorest populat ions.

Such a fusion of goals will not be possible in all c a s e s . What will then be required is to examine s t ruc tura l measures on their own merits in conjunction with the wish of developing countr ies to occupy a position of g rea te r equality in international economic relat ions. (51)

While organized labor is somewhat weaker in the Netherlands than in Scandinavia , var ious pr ivate organizations and development action movements represent Important p ressure g r o u p s , which any Dutch government will have to take into account . T h e y represent a reservoi r of support for a l ike-minded policy that could become a political force during the 1980s if international and national conditions are favorable . As th ings stand at p resen t , Dutch participation in a l ike-minded NIEO program appears dependent on Scandinavian governmental in i t ia t ives , and support by an activist public movement in the Nether lands.

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SELECTIVE NORTH-SOUTH APPROACHES: ROOM FOR A MINI-NIEO?

We assume that it is of importance to the continued NIEO negotiations and the North-South dialogue that the Scan dinavian count r ies , preferably with the support of o ther like-minded count r ies , maintain their pro-NIEO posit ion. We also assume that , not withstanding some current t rends to the con t ra ry , there is enough suppor t for such a policy in S c a n dinavia for a discussion of al ternat ive actions to be feasible. New ways of breaking the deadlock in the NIEO negotiations must be d iscussed and ser iously cons idered . We now point to some possible ways in which this could take p lace .

As noted above , it has been a key principle in the policy of the Scandinavian and the l ike-minded countr ies to insist on multi-lateral solutions in the implementation of the NIEO. The caucus ing that has taken p lace , e . g . , within Group B and OECD, has only occur red at the leve l of d iscuss ions of p r in c ip les and v o t i n g . In some c i r c l e s , the idea of implementing par ts of the NIEO package on a se lec t ive basis has also been d i scussed . (52) A few h igh- rank ing Scandinavian politicians have informally part icipated in these d i scuss ions . Through new channels , such as the International Foundation for Development Action ( I F D A ) , and established organs such as the Dag Hammarskjold Foundation, they have met with official and semi-official represen ta t ives of developing coun t r i e s .

Building on these deliberat ions and on their own p r e liminary ideas , (53) three different schemes are proposed, each of which could be implemented on a one-sector or a multi-sec tor ba s i s :

1. a s t r ic t ly bilateral arrangement between one Scandinavian count ry and one or a few developing count r ies ;

2. an arrangement between one Scandinavian country and all developing countr ies ; and

3. an arrangement that includes severa l Scandinavian and/or l ike-minded countr ies and severa l or all developing coun t r i e s .

The purpose of a l ternat ive 1 would be to present a model or an initiative that might act as a t r i gge r to other i n d u s tr ial ized count r ies . The al ternat ive presents a number of political and other diff icul t ies: It may smack of paternalism; it may be unacceptably se lect ive to other developing countr ies ; and it may break too much with internationally accepted nondiscrimination pr inc ip les . Al ternat ive 2 would be less subject to such cri t icism, but only from the point of view of developing count r ies . To the extent that i t contains concess ionary elements, which affect nega t ive ly the international

position of indus t ry in the g iven Scandinavian coun t ry , indus t ry would no doubt oppose the scheme. If it contains elements that favor the country v i s - a - v i s other industrialized count r ies , the lat ter countr ies would oppose it with reference to the non-descr ipt ion c lause .

Never the less , both these al ternat ives have p rece dents in the field of development a id , the Lome convention, the GSP sys tem, e t c . One might, for instance, ex tend the present ODA program to cover fields other than technical and financial ass i s tance . To the extent that ODA is l inked to t rade , investment and other I s sues , this is de facto taking place a l ready . It seems quite possible to finance higher pr ices for raw material imports by appropriat ing for that purpose a share of the funds that would otherwise- go to ODA. The difference between capital 's expectat ions for fair profitability and competi t iveness v i s - a - v i s foreign competitors, and a developing coun t ry ' s expecta t ions concerning pr ices and other concess ions , could be covered by state in tervent ions .

This sugges t ion , which is not new to either capital or government , inv i tes a number of questions on cri teria for what sort of agreement is just for the developing country and remunerat ive to the developed one or i ts agen t . Such ques tions would have to be answered through negotiat ions. Even tenta t ive answers would be beyond the scope of this s t udy , but we wish to insist that they can be solved if the necessary political will is there .

The third al ternat ive is the preferred one of the three . It comes closer than the others to meeting the principle of universal ism. It builds on the premise, questionable as it may b e , that a grouping such as that of the like-minded countr ies possesses g rea te r political will to move to the s tage of implementation than do other industr ial ized count r ies . Also , i t somewhat reduces the fear of capital and labor that the part icular count ry from which they operate will have to shoulder new burdens that put them at a d i sadvan tage . And , for developing countr ies it is the most interest ing a l ternat ive , s ince i t involves several developed countr ies as pa r tne r s .

The NIEO platform has a firm back ing , both formally and l ega l ly . The Lome convention is also a precedent for .a scheme of this k ind . T h u s , the bar r ie rs to a mini-NIEO along the l ines sugges t ed in al ternative three should by no means be insurmountable. These bar r ie rs are mostly of a political nature - which are surmountable in pr inciple .

The pract ical implications of the scheme, as well as its concrete content , would be a matter for negotiation. An important means to break the present deadlock over the NIEO would be for the Scandinavian countr ies to initiate discussions of such a scheme. It it were to be se lect ive in the sense that only a few of the developing countr ies were to take par t , it might be politically difficult to make the se lect ion. The


countr ies with which the Scandinavian governments mostly deal through their ODA programs would be a natural first choice . Many of them meet the two pr inciples of selection which both Norway and Sweden employ - that the recipient is among the least developed or poorest count r ies , and that there is a political will to c a r r y out socially responsible domestic d e velopment policy. . Given the limited size and resources of the Scandinavian count r ies , and of the s ix or seven core , l i ke -minded coun t r i e s , a se lect ive approach seems warran ted . It would not mean a dec i s ive s tep forward in pract ica l , concrete resu l t s in the shor t term. It may, however , set the pace in making it politically difficult for other OECD countr ies not to follow sui t . As it was said in the beginning of 1979,

T h e chal lenge in front of us now is to translate this unders tanding (of the mutual dependence of developed and developing countries) into a framework of mutual commitments and obl igat ions . (54)

Sweden and Norway may take the initiative to d i s c u s s , and later implement, a se lect ive scheme with four or five other industr ia l ized countr ies - the Nether lands, Denmark and Belgium from the EEC and Finland and possibly Austr ia from the outs ide . No final list of the developing countr ies which would be invi ted to join can be made at this point . But consider ing the cr i ter ia set out above , countr ies such as Tanzania , A lge r i a , Sr i Lanka , Jamaica, and Nicaragua could be among the countr ies inv i ted .

Domestic res t ruc tu r ing and ODA could be chosen as a point of depa r tu re . These are areas where some init iat ives have already been taken , where other g roupings ( such as the EEC) do not ye t pose a ser ious obstacle to act ion, and where some minimum unity of policy has in fact been ach ieved . C lea r ly , the Belgian adjustment policy is not the same as that contemplated by Norway; on the other hand, is is not far from the Dutch . (55) On the basis of past exper ience in these a r e a s , some scheme for the coordination of industrialization policy and for policy on science and technology for d e v e l opment could be worked out in parallel legislat ion.

Assuming that this could be done among the s ix or seven industr ia l ized countr ies in the first place and then modified by the invited developing count r ies , a scheme could be worked out for applying the agreed pr inc ip les , along lines set down in the multilateral NIEO negotiat ions. This could take the form of a comprehensive development cooperation program. Such a program could be implemented on a multi- or on a bilateral b a s i s , the former implying that severa l (or all) countries on both s ides apply it joint ly; the latter implying that it is applied in coun t ry - to -coun t ry projects where only two countries take p a r t . Nordic governments already c a r r y out joint

projects of technical, and financial assis tance in developing coun t r i e s . Hence the former al ternative is not unthinkable , a l though the latter would normally be p re fe r r ed .

In such a program not only new development concepts and th ink ing , but even new channels and ways of cooperation can be exp lored . One example is the field of technology. Exist ing R I D as well as product ive facilities should be explored with a view to tap their potential for development ass i s tance . The idea is to enter into work that secures employment in the industr ia l ized countr ies while at the same time - and this is the primary goal - it c reates new creat ive and product ive capaci t ies in developing count r ies . By playing deliberately on small and medium-size firms which are not internationalized but which have a hitherto unsupposed potential for development ass i s t ance , such a program could also help to reduce the dominant position of TNCs in the nor th-south sys tem.

Regarding other NIEO i s sues , coordination seems to be more diff icul t . Market access and natural resources are a community responsibi l i ty in the case of the EEC count r ies . And while it may be possible to agree on t ry ing out small and medium-sized firms in t ransfer of resources schemes, it will be difficult to get the Netherlands and Sweden to significantly reduce the position of their big T N C s , not to speak of r e g ulating them. The corporations are bound to have a dominant role in nor th-south relations for some time to come. The quest ion is whether the like-minded countries may also be able to initiate new forms of TNC presence in the Third World, that ge t the bes t from their performance, control their profit and market s t ra teg ies to balance them with the needs of Thi rd World people for the satisfaction of basic needs , se l f - re l iance , and thus development.

In this connection direct investments by like-minded count ry T N C s could be reorganized into "fade out" joint en ter p r i s e s , an idea that has been taken up in the Andean Pact . A l so , l ike-minded country T N C s should be asked to enter into social contracts with workers in developing countr ies on the lines s u g g e s t e d inter alia by Swedish labor . This might take the form of the l ike-minded governments agreeing on a "code of conduct" for the operations of their pr ivate sectors in the Th i rd World. . Without economic incen t ives , such a code could hardly become more binding than the one introduced by OECD. Bu t the possibili ty, of i t could and should be explored .

Besides secure jobs , labor in the developed world wants secure supplies of resources and input to production - a concern they share with capital - and consumers want secure suppl ies of basic consumer goods . One possible way of implementing the intentions of the Integrated Program of Commodities, as i t was set out before and during UNCTAD IV, is to enter into long-term supply and price agreements for raw materials and food commodities. By ty ing such agreements

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expl ic i t ly to the Second Window fo the IPC and providing financial and technical ass is tance for diversif icat ion and industrial ization projects in developing count r ies , they would ge t a c learer orientation toward the achievement of development goals within the framework of the NIEO.

It is important to s t r e s s that the total impact of such a program should be beneficial first of all to developing count r i e s , but second that it would not have a s t rongly nega t ive impact on the par t ic ipat ing industr ia l ized count r ies . In economic terms, s u c h a program would most probably not mean as much to the economic viabil i ty of the Northern Economies as the p rocess of automation, and adjustment due to inter-OECD competition.

T h e i s sue , in final ana lys i s , is a matter of politics and information. So far , the political will to implement the NIEO is not s t rong enough . And the information about its effects -negat ive as well as posi t ive - is not penetrat ing the community of workers and consumers . The social and political p rocesses at work in the advanced developed societ ies must take new direct ions before the political will is created and the information is p resented and accep ted . The fate of the NIEO may eventual ly depend on whether or not this v ic ious c i rc le can be b roken .

ACKNOWLEDGMENTS

The author would l ike to thank the Nordic Cooperation Committee for International Relat ions, including Conflict and Peace Resea rch , for ex tend ing financial suppor t for the research and wri t ing of this s t u d y . It is a r ev i sed vers ion of a draft completed in May 1979. K jartan S t igen acted as my research ass is tant ; he is responsible for the tables and f igures and draf ted par t s of the first sec t ion . His ass is tance has been of great he lp . I am also indebted to Staff an Laestadius of the Office of Future Studies in Stockholm for advice on the ana lys is of Sweden ' s posit ion, and to Hans-Henrik Holm, S v e r r e Jervel l and Martin Saeter for comments on the draft pape r . Last but not leas t , I should like to extend my thanks to those represen ta t ives of the public administration, the bus iness community, labor , and var ious pr iva te organizat ions in Sweden , Norway as well as in Iceland who have granted in terv iews and provided important documentary information upon r e q u e s t .

REFERENCES

(1) Hans-Henrik Holm. De Skandinaviske Land os Kravene om en Ny Okonomisk Verdensorden (The Scandinavian, Countries and the Demands for a New International Economic Order). InsUtute of Political Science. University of Arhus. February. 1979.

(2) Bo Huldt. The Nordic Countries and the New International Economic Order: Consensus and Dissension within the Nordic Group (Paper prepared for the seminar. 'Like-minded Countries and a New International Economic Order. I Copenhagen. December 7-9. 1978). mimeographed.

(3) Hans-Henrik Holm. Danish DeVelopment Policy: Reactive and Like-minded (Paper prepared for the seminar 'Likeminded Countries and a New International Economic Order. I Copenhagen. December 7-9. 1978). mimeographed. '

(4) Ibid •• p. 8. (5) Uffe Torm. 'Industriradets forslag til en Aendret

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(6) Esko Antola. 'The Evolution of the Official Development Policy of Finland' (Paper prepared for the 5th Nordic Conference in Political Science. Bergen. August 27-30. 1978). mimeographed.

(7) Ibid. (8) Helena Rytovuori and Helena Tuomi. 'Business Ideoloqy

and Economic Relations with the Developing Countries. The Case of Finland. Dept. of Political Science. University of Tampere. 1978.

(9) Kenneth Hermele and Karl-Anders Larsson. Solidaritet eller ImVerlalisme. Om Sverige. Varidsordninsen och den Tredle erden (Solidarity or Imperialism. On Sweden. the New International Order and the Third World) (Stockholm: Liber Forlag. 1977).

(10) Arve Ofsted. Noen Forelopige Notater om Virkningene pi Norsk CJkonomi av Industriutviklingen i U-Iand (Some Preliminary Notes about the Effects on the Norwegian Economy of Industrial Development in Developing Countries). DERAP working paper A lSI. Bergen. 1979.

(ll) L. Ohlsson. Svenskt Industriarbete I en internationell Ekonomi (Swedish Industria! Work In an InternatiOnal Economy). Sekretariatet for framtidsstudler. 1976. p. 32.

(12) Hermele and Larsson. 1977. (13) Bjorn Beckman. Aid and Foreign Investments: The

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. mimeog raphed. (16) Dan Borge Akero, Per Erik Borge, Helge Hveem, and

Dag Poleszynski, Nor ~ i Brasil. MUitaerdiktatur, Folkemord oK Norsk Aluminium Norway in Brazil. Military! Dictatorship, Genocide and Norwegian Aluminium) (Oslol H. Aschehoug • Co., 1979).

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(Stockholm: .Unga FUosofer, 19(8). (24) U NCT AD Secretariat, Beneficial Own~rship of Open

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