The last top-level event between Ukraine and Norway took place 20 months ago, when Norwegian Prime Minister Erna Solberg and President Petro Poroshenko met on Oct. 18, 2016, and spoke to a business forum hosted in the Norwegian capital of Oslo.
At the time, Solberg told Poroshenko to his face that Ukraine needs to fight corruption, establish rule of law and create “better conditions” for business in order to attract more investment from Norwegian companies. She held up Poland as an example for Ukraine to emulate.
Since then, it appears that many Norwegian companies still have not found business conditions to their liking for entry into Ukraine.
About 60 Norwegian companies are doing business in Ukraine, the same number as in 2016, while foreign direct investment from Norway hasn’t changed much and is estimated at $8 million to $12 million.
Norwegian Ambassador to Ukraine Ole T. Horpestad, on the job since Sept. 1, 2016, said that Ukraine has made progress since then and the Norwegian business mood remains hopeful. But he emphasized that Ukraine needs to do more to entice investment.
“What companies tell us is Ukraine needs to do more work to improve the business climate,” Horpestad told the Kyiv Post in an interview at the Norwegian Embassy. “Ukraine has to create stable market conditions. Ukraine needs a well-functioning independent judicial system. Corruption must be reduced. The anti-corruption court is an important step to get in place in Ukraine. All in all: create predictable and transparent legislation, eliminate red tape, establish stable political conditions. These are important conditions for Norwegian business to engage here.”
Horpestad circled back to the need for an independent anti-corruption court once more during the hour-long interview, underscoring its importance to Norway and Ukraine’s other Western partners.
On the plus side, Horpestad said that, overall, “things are moving in the right direction.”
He cited the start of Ukraine’s much-delayed privatization process to selling off more than 3,000 state-owned companies. The sales, he emphasized, must be transparent.
He said that the Norwegian-Ukrainian Chamber of Commerce, which represents nearly 100 companies from both countries, also sees improvement in the protection of minority investors, employment permits and reduction of bureaucracy.
“Ukraine is definitely an interesting market and a potential market,” Horpestad said. “It’s in Central Europe with a huge, well-educated population and now with” a free-trade agreement with the European Union.
“The interest is definitely on the rise,” he said. “I think it will be an active year. I think we will have more political visits that I will inform you on as soon as I can. Our political and bilateral relations are very good and are developing well.”
Norweigan Foreign Minister Ine Marie Eriksen Søreide will, for instance, meet with Ukrainian Foreign Minister Pavlo Klimkin during the Feb. 16–18 Munich Security Conference.
Norway, with only 5.3 million people, is one of the world’s richest and most generous nations. It is among the few in the world to give at least 1 percent of its gross domestic product to development assistance around the world.
It also has a $1 trillion sovereign wealth fund, or state pension fund, with global investments to help ensure that Norwegians will never again be poor. Poverty in the late 19th century and early 20th century in Norway, fueled by too many farmers on not enough land, led to waves of emigration, including to America. Some 4.5 million people of Norwegian ancestry live in the United States today.
But it’s a different story today.
Norway is investing and donating its largesse. It has given Ukraine more than $100 million since the EuroMaidan Revolution drove President Viktor Yanukovych from power on Feb. 22, 2014. This year’s assistance will come to nearly $28 million alone.
Additionally, besides foreign direct investment, Norway’s state pension fund as of 2016 had $29 million in investments in Ukrainian agribusiness as well as $68 million in equity investments in other Ukrainian companies, Horpestad said.
The ambassador said that assistance is focused in four areas: energy & energy efficiency; rule of law and good governance; economic reforms, trade, EU integration; and humanitarian assistance to war-torn eastern Ukraine.
“We have been engaged. We will continue to be engaged,” he said. “At the same time, we expect Ukraine to stay committed and continue the reform program.”
Aside from support for independent anti-corruption institutions, Norway is involved in improving probation services in Ukraine’s prisons as part of a three-year program with the Ministry of Justice.
“It means that four Norwegian experts will work in Kyiv for three years — one judge, one prosecutor, one probation specialist from the prison/penitentiary system,” Horpestad said. The Ukrainian cities of Kharkiv, Kyiv and Bila Tserkva have been chosen for the pilot projects.
Another project is “Democracy in Schools,” a three-year program to train teachers and upgrade curriculumn teaching democratic, European values.
In the energy efficiency sphere, Norwegian money goes into changing boilers and upgrading heating systems — things that save money, energy and the environment, he said.
Both Norway and Ukraine are outside the EU but have free trade agreements with the 28-nation bloc. Norway’s agreement with the EU — the Agreement on the European Economic Area — dates back to Jan. 1, 1994. Ukraine’s deal only entered force last September and the nation still hasn’t adapted to EU standards in most areas.
“There is a lot of common ground for transferring some of our experience to Ukraine which can be useful in their adaptation to EU standards,” Horpestad said.
Trade shoots up in 2017
There’s no arguing with the optimistic statistics: 2017 bilateral trade shot up to $236 million, a 36 percent increase over the previous year, mainly due to increased seafood exports from Norway, Horpestad said.
The trade was lopsided, with Norway exporting $181 million to Ukraine, while Ukraine exported only $55 million to Norway. Norway bought textiles, manufactured goods and agricultural products — including feed for the Norwegian fishing industry.
Additionally, an estimated 5,000 Ukrainians work for Norwegian information technology companies.
“When it comes to other investments, more Norwegian companies are interested and active in the Ukrainain market, especially in the energy sector with Ukraine’s new strategy of independence and renewable energy,” Horpestad said. “Some companies are really engaged and I think and hope we will still see investment announcements soon. My impression is they are pretty close to making some investment decisions. That’s a promising area.”
One of the oldest Norwegian investments is in Fastiv, a city of 47,000 people only 76 kilometers southwest of Kyiv. The Elopack package factory opened in 1996 and employees 500 people. “It’s one of the major working places there,” the ambassador said.
Sanctions will stay
Horpestad said Norway has no intention of relaxing economic sanctions against Russia until it ends the war against Ukraine and the Kremlin’s occupation of Crimea.
“We will keep up the sanctions until Russia fulfills its conditions” in the 2015 Minsk peace agreements, he said.
The stance has caused friction with Russia, a neighbor with whom Norway has an “interest-based, pragmatic relationship,” Horpestad said. “At the same time, we are very clear on our position in Ukraine.”
Another Norwegian with the same view is Jens Stoltenberg, the former Norwegian prime minister who now is secretary-general of the NATO millitary alliance.
Kyiv-Oslo flight needed
Since his arrival in 2016, Horpestad has taken note of the two nations’ similarities.
“Norway and Ukraine have great nature. We love sports. We love the sea. We love mountains. We love skiing,” he said. “I enjoy it very much. I like Kyiv as a city. There’s lots of nice places to go here, lots of culture. I also enjoy traveling around the country a lot. I have been in most of the regions. What I feel as a Norwegian diplomat is a very positive attitude towards Norway all over the place.”
While Ukrainians have been able since June to travel visa-free to Norway, which is part of the 26-nation European Schengen Area, only an estimated 10,000 Ukrainians did so last year. Going the other way, the embassy estimates that 20,000 people went from Norway to Ukraine in 2017.
Norway counts 5,000 Ukranians living in its country, while it estimates the Norwegian population in Ukraine at only about 100 people.
More visits would take place if Kyiv and Oslo had non-stop, direct flights.
“I’m hoping that will come in place pretty soon,” Horpestad said. “That would be a very good boost for tourism and for business and for ordinary contacts. We’re not so far away — only a 2.5 hour flight.”