Charlemagne: The Norwegian option

Those strange European countries that have kept out of the European Union

THE mention of Norway or Switzerland tends to bring a strange gleam to the eye of British Eurosceptics. This is not because they have a deep love of alpine pastures or misty fjords. Rather it is because the Norwegians and Swiss are the only two decent-sized western European nations who have resisted the temptation to join the 25-country European Union. What is more, they are extremely rich. Norway and Switzerland boast the highest incomes per person of any European countries, bar micro-sized Luxembourg.

The wealth of Norway and Switzerland is arguably more a cause than a consequence of their decisions not to join the EU. Norway is one of the biggest oil-and-gas producers in the world, and Switzerland has long been richer than the European norm. But, at the very least, the two countries have demonstrated that it is possible to stay out of the EU and still prosper. On a recent pilgrimage to Oslo, Peter Hitchens, a Eurosceptic British journalist, discovered a “real nation which controls its own destiny”.

But does it? When Norwegian voters rejected membership of the EU in 1994, Norway opted instead to join the European Economic Area. The EEA gives it access to the EU's internal market and its “four freedoms”: freedom of movement for goods, services, people and capital. But this comes at a price. The Norwegians are obliged to accept every single piece of internal-market legislation, and they have no vote on these laws. Norway had to restructure its entire natural-gas industry to satisfy the EU's competition authorities. All European environmental and social legislation has also had to be adopted, including those irksome EU regulations on working-time and parental leave that drive British right-wingers to distraction. Norway even makes a sizeable contribution to the EU budget - as large as that made by a comparable-sized EU member, such as Denmark.

All this has led many to conclude that Norway would actually be better off joining the EU. At least it would have some say over all the legislation it is forced to adopt. Jens Stoltenberg, leader of Norway's opposition Labour Party, bemoans his country's “fax democracy”, in which officials sit by the fax machine waiting for the latest directive from Brussels to arrive.

But there are still many areas of EU policy from which Norway remains genuinely independent. Unlike the ten countries that joined the EU this year, the Norwegians are under no obligation to adopt the euro. Norway is not bound by the EU's embryonic common foreign policy. Perhaps most significantly, from the viewpoint of a maritime nation, it has not signed up to the EU's common fisheries policy. The Norwegians have been able to maintain their own 200-mile coastal exclusion zone, which remains well stocked with fish, unlike the EU's grossly depleted waters. Nor are they paying members of the common agricultural policy - although before free-marketeers cheer too much, it should be conceded that both Norway and Switzerland subsidise their farmers far more heavily even than the EU.

The cuckoo-clock model

For those who find even the Norwegian relationship with the EU a little too intimate, Switzerland offers a more detached one. The Swiss rejected membership of the EEA in a referendum in 1992. That has meant that, rather than having guaranteed access to the four freedoms of the internal market offered to Norway, Switzerland has had painstakingly to negotiate agreements sector-by-sector. By and large, its diplomats have been remarkably successful. Since 2002, all Swiss citizens have been free to live and work anywhere in the EU. Swiss multinationals enjoy full access to the European market. But the Swiss have more freedom than the Norwegians to opt out of bits of legislation they dislike. EU limits on working hours do not apply in Switzerland; nor does the demand that sales tax be set at a minimum of 15%. Above all, Switzerland is able to retain its tradition of direct democracy. The constitutional provision that laws can be thrown out by citizens' ballots is incompatible with the EU's demand that all would-be members implement all 80,000 pages of EU law.

The downside of this sturdy independence, however, is a lingering sense of insecurity and a feeling that Swiss business is losing competitiveness because it is excessively sheltered. Goods and services are often much more expensive in Switzerland than in the EU, and Swiss growth has been feeble recently. The Swiss are also uncomfortably aware that, as a nation of 7m negotiating with a behemoth of 455m, they can always be leant on. When negotiations with the EU over banking secrecy were going badly recently, Swiss travellers to Germany suddenly found that their documents were being checked more rigorously, causing huge queues at the border.

Will Switzerland and Norway eventually throw in the towel and join the European mainstream? There is not much sign of a change of heart in the short term. But in the longer run, history seems to point only one way. The four-country European Free Trade Association, to which Switzerland and Norway, along with Iceland and Liechtenstein, belong, used to have a much larger membership. But Britain, Denmark and Ireland joined the EU in the 1970s; and Austria, Sweden and Finland quit in favour of the EU in 1995. Even some of the officials who run EFTA seem to believe that it is only a matter of time before their organisation is wound up.

Yet it is also just possible that things could go the other way. Switzerland and Norway are outside the EU mainly because their governments could not win referendums to join. A number of EU countries will hold referendums on the new constitution over the next two years. Those that reject the constitution will have the right to stay in the EU - but, if they are a small minority, they might have to negotiate a new kind of relationship. And if that happens, the Swiss and Norwegians might end up as role-models, rather than eccentric exceptions.

Feature looks at the situation of Switzerland and Norway outside the European Union.