Norway is ranking well past the 20th in Russia's European trade, while Russia is 15th in Norwegian foreign trade, accounting for a mere 1% of its foreign trade turnover. Russian exports make 1.8% and imports 1%.
Distinguishing Russian exports to Norway from exports to a majority of other European countries is a negligible share of oil and related products, and coal. At the same time, the share of raw materials and semi-finished articles is approximately at the level of exports to Europe's leading industrial countries, approaching 90%. The recent years saw the three basic items--fish, seafood and non-ferrous metals-- account for almost two-thirds of total exports. Notable among other major Russian exports are chemicals, mineral fertiliser raw materials, and timber. The share of engineering produce in Russian exports fluctuates between 1.5% and 2% (all rises are mainly due to supplies of ships, which have been only occasional of late) and of finished articles between 0.7% and 1%. Of essential importance for Russian exports from the viewpoint of trade arrangements are Norwegian import customs duties, which are lower than in the EU for a number of commodities. This is why the Norwegian market situation is favourable for Russian exports.
Imports from Norway are quite different from Russian exports: dominated in 1997 by foodstuffs--mainly fish and fish products--52%, machinery and industrial equipment, 15%, and chemicals, 9%. A rise in imports from Norway was due to increased fish supplies, however. Purchases in Norway are traditionally characterised by a much lower volume in value terms than in exports, roughly 40% of the total turnover, with a far wider range of commodities--the ratio between export and import items is 1:3.
As it energetically supports Russian reforms, especially in Russia's north, Norway is helping, on the one hand, to retain jobs in North Norwegian industrial companies and, on the other, promotes stability in the neighbouring parts of Russia, which is essential for Norway.
As it uses its geographical situation, Norway is increasingly advancing in the part of a bridge between Russia and Western Europe--as exemplified, in particular, by its launching of cooperation in the Barents Sea/Euroarctic region.
Commodity flows have taken shape between the two countries in a process lately extending. Thus, Norway has a steady demand for Russian aluminium supplied through the London metal exchange and used by Norwegian companies, among other purposes, to produce car parts for West European automotive industry. As the Norsk Hydro concern sees it, apatite concentrates from the Kola Peninsula are best suited for its production methods. North Norwegian fish processors need Russian cod and haddock to load their production facilities, while the Russian market demands herring and mackerel, though Russians are also buying ever more Norwegian-made delicacies--salmon, fillets and canned fish.
Falconbridge Nikkelwerk is interested in larger purchases of Russian-manufactured nickel converter mattes, while shipping companies eagerly purchase Russian-built ships. On the other hand, Norwegian shipbuilders and naval equipment manufacturers have an excellent reputation in Russia and are actively seeking to take part in a current updating of the Russian merchant marine and fishing fleet.
Fish is ever more notably dominating mutual trade. It accounted for a third of the entire turnover in 1997. The last nine years saw an increase in Norwegian imports of Russian cod and haddock 15-fold, while Russian of Norwegian herring and mackerel, tenfold. The two countries are each other's basic markets for reciprocal sales of these kinds of fish. The reason is clear: Norway has a shortage of cod with its stringent catch quotas as it is in great consumer demand in that country and on the world market, while Russia is undersupplied with cheaper fish--herring and mackerel, the most affordable for a majority of the public in its current dire straits.
As Russia shifted to a market economy, its trade with Norway received a mighty impetus--the turnover grew 4.5-fold since 1987, and its geography and the range of goods has been notably expanded.
A revival came to Russian-Norwegian contacts in the North, to give us reason to assume that old trading traditions, going back to the Middle Ages, have been reborn.
As all-round cooperation between Norway and the Russian northwest has become so active that a Russian Consulate-General was established in Kirkenes, bordering on the Murmansk Region, and reciprocally; Norway's Export Council established its offices in Murmansk and St. Petersburg; many Norwegian companies opened their offices in the same cities. The EBRD fund for economic and industrial development of the Russian northwest opened its offices in Murmansk, Arkhangelsk and Petrozavodsk with active Norwegian encouragement. Tromso and Kirkenes are now linked by direct flights with Murmansk and Arkhangelsk.
At present, Norway is the Murmansk Region's principal foreign trade partner. Its companies have more joint ventures there than any other country. Certain fish-processing factories based in Norway's north receive 60% to 70% of their raw fish from Russia. There are over 150 companies round Kirkenes which regard the Russian market as their principal. The canton Sor-Varanger, bordering on the Murmansk Region, received so many new jobs and increased its population so spectacularly as to eclipse the achievements of the Sudvaranger mining company, whatever sizeable government allocations it may be having. Sor-Varanger companies made a billion kroner (over US million), on Russian trade in 1997 alone.
Norwegian companies are just as active in the Arkhangelsk Region, with military-industrial conversion programmes in shipbuilding and shelf development equipment manufacture. There are prospects for oil drilling in the Timan-Pechora basin, lumbering complex partnership, and cooperation in the field of telecommunication services.
Karelia is debating an interesting project for a hydroelectric station to be built with Norwegian corporate assistance for later electricity exports to Norway.
Norwegian trade and other economic contacts are progressing apace with other parts of Russia--mainly St. Petersburg, Moscow, and the Leningrad, Vologda, Novgorod, Pskov and Kaliningrad regions.
Over 120 joint ventures are operating in essential Russian economic branches, and all major Norwegian-based concerns have sizeable interests in the Russian market.
Partner companies. Many of Norway's largest companies are active trade partners of Russian companies. Even more importantly, they are elaborating diverse cooperation projects with Russian organisations.
The Kvaerner, Norway's largest engineering concern, acquired 75% of the Vyborg shipbuilders' shares. Under one of its major contracts, the latter company is assembling a launching pad for Sea Launch satellites, a project exemplifying multilateral high-tech cooperation. Apart from the Russian Energia Corporation, it involves the Ukrainian research-and-production amalgamation Yuzhnoye and the USA Boeing concern. The Kvaerner later intends to order in Vyborg special purpose and design vessels for shelf hydrocarbons production. In 1994, the Kvaerner and the Zvezdochka company in Severodvinsk established a joint venture to work on contracts with Kvaerner-affiliated wharves. The venture is expected to manufacture shelf-development machinery.
The concern Norsk Hydro purchased 8% of shares in the Apatit combine as it was privatised in 1995, and now considers opportunities to further invest in Russian mineral fertiliser companies. The concern has permanent contacts with the Gasprom and is interested in the development of the Shtokmanskoye gasfield in the Barents Sea. Negotiations are underway for on-shore oilfield development in the Nenets autonomous area on the Timan-Pechora Company efforts. The Norsk Hydro also owns a sawmill in the Murmansk Region.
The Telenor government telecommunication company and the Murmansk Electrosvyaz established the Kola-Telecom joint venture. The Norwegian company has a joint venture, the Teledvina-Telecom, set up in Arkhangelsk together with the Arkhtelecom, and another, the Tele-Barents, with the Rostelecom to operate a digital television network in Russia's northwest.
The Statoil oil and gas concern is ever more active in the Russian market. In 1997, it signed a contract with the Gasprom for joint shelf exploration of the Medyn oilfield. Work is underway on another contract, for cooperated shelf exploration of the Varandeiskoye field.
The Statoil is considering the chances to join the Gasprom in the development of the Prirazlomnoye oilfield in the Pechora Sea shelf.
The Elkem concern finds its business in Russia highly promising in terms of further trade and supplies of its environment protection and other machinery for the metal industry.
The Elkem may make direct investments in the Solikamsk magnesium plant and the Novosibirsk electrode works. Both companies are exporting their produce to Elkem factories. In 1996, the concern obtained a licence for chromium ore prospecting in the Kola Peninsula. There are prospects for its direct involvement in deposit development.
The Elkem and the Norilsk Nickel signed a framework agreement, September 1997, to establish the Norelko, a joint venture to develop chromium deposits in the Kola Peninsula and put out ferrochromium using Severnickel combine foundries in Monchegorsk to cater for Russian and foreign markets. Management of a shop was ceded to the Elkem by the Irkutsk aluminium plant to produce metal silicon and update Irkutsk company production processes.
An explosive manufacturing joint venture established by the Dino Industrier concern and Pechenganickel was commissioned in 1998. Its produce will replace TNT derivatives in ore mining to cut its costs. The Dino cooperates with the Norwegian government and several companies to set up a Norwegian industrial park in Murmansk, which will bring together all Norwegian companies operating in the region.
The concern Moelven Industrier commissioned a cantonment in Luga close to St. Petersburg in September 1997 to accommodate Russian soldiers withdrawn from former Soviet Baltic republics. The project helped the MI to establish extensive contacts in Russia. Local companies and agencies promptly offered it participation in more construction projects. As the MI receives new orders, it intends to get its own construction unit production going in Russia. On MI initiative, it was joined by Norway's government fund for regional and economic development (SND) to establish Nor East Timber Company, which purchases timber in the Russian market, and has an office in St. Petersburg. The Moelven purchased 200,000 cu m of Russian timber in 1997 alone.
The pharmaceutical concern Nycomed is having negotiations with the All-Russia Cardiological Centre for joint pharmaceutical production. Nera Company (telecommunication equipment) also intends direct investment to establish a Russian-based production of radio relay communication systems.
Investment. Of major importance in extending regional contacts is the implementation of the East European Package, an assistance programme for Central and Eastern Europe, drawn up by Norway's government and approved by the Storting in 1992.
Package allocations are distributed, on government behalf, by the Foreign Ministry's East European Secretariat, with its multi-faceted activities. To make allocations promoting Russian economic reforms and aid Norwegian companies which are considering opportunities for contacts with Russian industries, mainly in the northwest, is the basic responsibility of that agency.
The Secretariat has distributed among Russian regions since its establishment 73.7 million kroner in 1992; 159 million in 1993; 117 million in 1994; and 212 million in 1995. A rough annual 200 million kroner was planned for 1996-98.
As regional contacts expand and diversify, attention is focused on cooperation in mining, transport and communications, forestry, fishery, shipbuilding, banking and finance, environmental protection and certain other fields. There are ambitious projects for a latter-day infrastructure in Russia's northwest, in particular, highway upgrading, a port to be build in the Pechenga bay, hydropower station modernisation and construction in Karelia, re-equipping aluminium works, etc.
As they regard construction projects, Norwegian authorities and business circles give preference to those promising environmental efforts.
Ecology has pride of place in Russo-Norwegian contacts. One of the worst bilateral issues was presented for several years by the Pechenganickel combine, with its rampant air pollution reaching Norway's north. Among the many prospective improvements, proposals by the Norwegian Kvaerner Engineering and Elkem Technology, and Sweden's Validen Konetsj were recognised the best. Vitally interested in reducing pollution, Norway announced its readiness to subsidise combine updating with 300 million kroner (US million).
Vnesheconombank and the Norwegian Exportfinance signed a credit line agreement, 1 November 1995, to finance 85%, at most, of the overall costs of Norwegian investment commodities, services and ships. Every particular project will be financed under an individual credit agreement. Vnesheconombank makes a number of demands on Russian companies aspiring to loans on the line. Among the principal is confirmation of chances to pay the currency debt following from an economic feasibility study of a proposed project. Anxious to borrow for Norwegian ship purchases are the New Trawler fishing consortium of Kamchatka, the Karelian and Caspian fishing fleets, and the Ocean Fleet Pioneer Base company.
As King Harald V of Norway was visiting Russia, May 1998, Vnesheconombank and Exportfinance signed a US million credit line agreement for icebreaker equipment supplies.
A Russian governmental decree of 24 June 1998, deemed it expedient to attract a Norwegian loan of 689 million kroner, including 400 million to finance trawler purchases by the Arkhangelsk fishing base and 289 million for its ship maintenance and updating.
The debts of former Soviet foreign trade agencies to Norwegian companies, which arose in 1992, and delays in the settlement of this issue by both governments brought several Norwegian companies to bankruptcy and so had a destructive impact on bilateral trade and other economic contacts.
An agreement has been signed in the Paris Club by now to reschedule Russia's foreign debt and put off its payments to foreign companies--a decision which helped to bring Russo-Norwegian monetary relations back to normal. At the end of 1996, the total Russian debt to Norwegian companies amounted to US million and 9.1 million kroner (US million), mainly for previous pulp-and-paper and certain other supplies.
Agreements. Prominent among documents making up the legal basis of Russo-Norwegian trade and other economic contacts are agreements on trade and economic cooperation, on the avoidance of double taxation, and mutual encouragement and protection of capital investments. The trade and economic cooperation agreement, signed during President Boris Yeltsin's official visit to Norway in March 1996, proceeds from the basic premises of the GATT/WTO. Certain clauses of a 1925 treaty on trade and navigation also retain validity.
As King Harald V of Norway was paying an official visit to Russia on 25-30 May 1998, a number of intergovernmental agreements were signed, in particular, on research and technological cooperation, radiation safety of nuclear power plants, and on law-enforcement agencies' cooperation.
Intergovernmental commission. The Russo-Norwegian commission for economic, industrial, research and technological cooperation held its third session in Moscow in February 1997. The Parties confirmed the expediency of extending bilateral contacts in power and other industries, fishing, environmental protection, infrastructural development, promotion of small and medium business, and exchanges of knowhow.
In conformity with commission recommendations, an ad hoc team for economic contacts between Russia's and Norway's northern regions held its fourth session in October 1997. The Parties evaluated practical projects for the Arkhangelsk and Leningrad regions, Karelia and St. Petersburg. Commission deputy chairmen for Russia and Norway met in Oslo and Moscow, in April and May 1998, to discuss preparations for the Royal visit to Russia in May 1998, and topical cooperation issues. The commission scheduled its fourth session to be held in Oslo in the second half of 1998. Kjell Magne Bondevik, Norwegian Prime Minister, was to go to Russia on a routine visit in September or October the same year.
Norwegian companies are ever more active in Central Russia, especially Moscow with its capacious and dynamic market, and solvent demand, unlike the Russian northwest, which has traditionally drawn Norwegian political attention due to proximity.
Norwegian corporate presence in Moscow can be conventionally subdivided into two categories: (1) companies which maintain offices in Moscow as Russia's capital to keep in contact with federal agencies but prefer cooperation with Russian companies in other parts of Russia, proceeding from their own industrial specialties, and (2) companies conducting business in Moscow.
Category One comprises the following:
Category Two: