Nicolai Tangen: Hi everyone, I'm Nicolai Tangen the CEO of the Norwegian Sovereign Wealth Fund and today I'm really excited because I'm here with a guest uh who has defined the last 30 years of Norway's place in the world. So warm welcome to Jens Stoltenberg.

Jens Stoltenberg: Thank you so much for having me.

Nicolai Tangen: Now um you created the fiscal rule uh that turned Norway's oil money into the world largest sovereign wealth fund. You've been prime minister twice. You led NATO for 10 years. Uh and now you are back as finance minister running the fund. you helped create. Uh so very very interesting.

Jens Stoltenberg: It is a fascinating history and of course there have been many decisions making this fund possible. But actually when I was when I became finance minister 30 years ago in 1996 that was the year we made the first installment into the fund and since then I've followed the fund very closely.

Nicolai Tangen: Now this week you compared Norway and Britain, two countries who basically produce the same amount of oil. Right? Now we got a big uh so wealth fund. Britain has uh quite a bit of debt. What what happened here? How do how did we prioritize differently?

Jens Stoltenberg: It's al always very difficult uh to compare different countries but uh but the fundamental message is that uh United Kingdom they have produced more or less the same amount oil and gas as we have in Norway.

Nicolai Tangen: Mhm.

Jens Stoltenberg: Uh in Norway we have a sovereign wealth fund of more than two trillion US dollars. Uh in in UK there is no sovereign wealth fun. And of course there are many differences. For instance the UK is a much larger country more more people. Uh but I think that the the main difference the main reason why we have and and the UK doesn't have a certain wealth fund is that uh we decided to have a big government take as part of the oil and gas industry. we have 78% tax rate.

Jens Stoltenberg: uh and we have strong uh direct state ownership. So much of the cash flow goes directly into the uh state coffers and uh and second we have we have a generally relatively high tax level in Norway. So the when we started to earn net revenues from the oil gas uh we were able to save everything and uh and that has not been the case in the United Kingdom.

Nicolai Tangen: you have um there were there's been some pretty big calls uh done here. So one to save the revenues, invest in in equities uh and then of course you also have the the spending rule. So what do you think are the most important ones and were they obvious at the time?

Jens Stoltenberg: No, all of them were politically controversial and I think what we have learned in Norway is that when you when you if you want to make or to create a so wealth fund, you have to make three important political decisions.

Jens Stoltenberg: Uh one is how much to save. M the second is uh how much to uh use so how much to put in and then how much to take out of the fund. Uh and then the third decision is uh uh where to invest.

Jens Stoltenberg: And to the first question how much to save by law uh we are we decided that all the oil and gas revenues uh are saved. Every cent every every every dollar earned is saved into the fund. That's the first decision how much to pay to put to put in.

Jens Stoltenberg: The second important political decision is about how much to take out. And then we created the golden fiscal rule back in 2001. Uh and uh and that says that the only thing we can withdraw from the fund is the expected financial real return meaning that that we have estimated that to be 3%.

Nicolai Tangen: So do do you think you would have done that differently if you knew how big the fund would become?

Jens Stoltenberg: No, I don't think so. Do you think that we for instance would have been a clause that the fund cannot account for more than I don't know now it's 25% of the state budget. Do you think for instance you would have put in one max at 10%. No I don't think so. Uh but but of course I I I was prime minister when we decided that rule. So maybe I'm very biased. It has served nowhere well for now 26 years. The fiscal rule to only spend the the expected real return.

Jens Stoltenberg: Um and I will always be open to to other models to listen to to alternative ways of doing this. But but fundamentally I think we need to understand that the oil and gas wealth wealth is is not for the Norwegian state. It's for the Norwegian people and by uh spending the financial return we ensure that the Norwegian people today and in the future will benefit from the oil and gas wealth.

Jens Stoltenberg: But then just the third political decision is then where to invest and we decided back in 1997 actually in this room this very room in the ministry of finance to then start to invest in equity.

Nicolai Tangen: Uh in 2001 uh in the white paper uh it said that the money should go to three things incentives for working in investments knowledge and infrastructure. Do you think that's been

Jens Stoltenberg: Yes. First of all, it was not the only thing we should spend on. Uh the main the main purpose of the fund is to support the state budget, healthcare, defense, police, whatever it is. Um um uh uh second we we said that we should spend some on uh on on on infrastructure. We have spent very much on infrastructure. I think one of the challenges we face in Norway is that not all our infrastructure investments are very much let's say are are very profitable meaning that that that if you look at the the kind of cost benefit the cost is quite high but we have spent a lot on infrastructure

Jens Stoltenberg: uh research and education well we spend a lot on research and education at least government funded uh and uh and on taxes well roughly onethird of the total total oil and gas revenues have financed reduced taxes in particular uh reduced taxes on uh electric cars. So one of the reasons why Norway you know more than almost 100% of all new cars in Norway are electric and the main reason is that we have removed almost all taxes on them and that has been quite expensive.

Nicolai Tangen: Absolutely.

Nicolai Tangen: Now [clears throat] uh the fund was set up to avoid the Dutch disease. Some people would argue that we've caught some Norwegian disease instead. What do you what do you think about what how do you think about that?

Jens Stoltenberg: Well, the the Norwegian economy is not perfect. We have problems uh related to for instance the fact that we have many people on different kind of disability uh uh uh schemes, welfare schemes. uh uh we struggle to increase the work participation uh rate uh and and of course we are vulnerable just by by the fact that uh uh 25% of our uh expenditures are financed but by the fund which is very much dependent on fluctuations in the uh financial markets. Uh so yes we have to be aware of those challenges and I think the most important thing we have to do in Norway is to look into how can we increase the work participation. and how can we ensure that more people uh work

Jens Stoltenberg: and therefore we we have implemented the big pension reform. We are looking out we can further reform our welfare system to make it more profitable and to encourage more people to work.

Nicolai Tangen: What do you think it does to a country where you don't really have to prioritize when you have kind of you don't have to have either that or that you can have both.

Jens Stoltenberg: No, I yeah I I compared to most of the countries we are extremely privileged. That's correct. But my message is that in one way it's luck that we are that we found oil and gas on the continental shelf. But it's a result of political decisions that we have managed this income better than most other countries with big income from uh natural resources. uh uh through those important political decisions that we saved every cent that we uh uh only use or withdraw from the fund the financial return and that we invested in in in equity. This is not luck. This is political decisions that enable the fund to become so big.

Jens Stoltenberg: Now everyone supports this golden rule that we only spend the financial return. But in the beginning and I remember that well because that was 10 years I was prime minister it it it it was extremely controversial that we didn't spend more because then 3% of a small fund was not a big amount of money. Now 3% of big fund is a big amount of money and therefore it's more accepted today than some years ago.

Nicolai Tangen: Do you think it's making the country complacent?

Jens Stoltenberg: At least there is the risk uh and and and therefore we we need to be aware of that risk because we have seen other countries become too complacent if they have too much oil and gas uh revenues. Again, it helps that we save everything. So the only thing we spend is uh is 3%. that that because if if if we spent it as we earned it, we would have spent much more and then uh we would have been without any oil and gas revenues when the when the production uh now has started to go down. M um uh but but again it's not a problem uh uh to be rich uh but there is a challenge to not become complacent

Jens Stoltenberg: and uh and uh the main message from from me as minister of finance is that the the main source for our wealth is not oil. The main source for our wealth is is labor work. uh and uh and uh and therefore we need to do whatever we can uh to mobilize more uh in which to work more.

Nicolai Tangen: Changing uh tax submit here. Last year you suspended the ethics council. Uh why?

Jens Stoltenberg: Because it had some unintended consequences. Uh uh that was not foreseen by the Norwegian Parliament when they decided these ethical guidelines back in 2004 and adjusted them in in in in 2024. Um uh the fund is still managed uh within a ethical uh framework. Uh you know better than anyone that there's still responsible management there are expressed expectations to the companies. Uh the fund can be in dialogue with different companies and and in in some cases also dest from from from those companies. the thing we uh and of course it had to follow Norwegian law. It has to uh to follow international law.

Jens Stoltenberg: The the thing that and actually and the management of the fund is based on um core guidelines uh from the OCD and the and the UN. the the thing we suspended was a part of the ethical guidelines a system where we have a independent ethical council giving advice uh to uh to to to the which bank to uh to to defund uh to withdraw from companies

Nicolai Tangen: and then you set down a a committee to review this. What what do you hope they will come up with?

Jens Stoltenberg: I hope they will come up with uh guidelines that will ensure that we continue to have a solid ethical framework around the fund but which will uh work in a better way uh than uh the previous guidelines uh did at least towards over the last years because what we have seen is that these ethical guidelines have led to that we are not invested in major uh uh defense producing companies producing using key defense capabilities which Norway are dependent on. Norah buys F-35s but we cannot be invested in Loen Martin producing those F-35s. We cannot be invested in Boeing which are delivering key military capabilities not only to Norway but to NATO allies and to Ukraine. And for me that's a paradox that country that companies which are so critical for our security we buy a lot from them but we cannot own 1% of their ch.

Nicolai Tangen: So when you uh of course you got more experience than anybody else having been the NATO secretary general. What so when you were NATO secretary general and you saw that Norway had these things in place did you just um realized that it was increasingly untenable or

Jens Stoltenberg: Yeah. Yeah. The reason why I took the initiative or one of the part one one of the reasons I I took the initiative last fall to adjust the the ethical guidelines was the experience I had from from NATO. As NATO sector general, uh I traveled around and urged allies to to build up the defense industry to work more closely with all these companies. And then I realized that the pension fund which I had been, you know, working so closely with for so many years had a guideline, a rule saying that we cannot be invested in those companies I wanted more of and and and that was a contradiction. It was a paradox.

Jens Stoltenberg: uh and uh and of course in one way that didn't matter so much when the fund was smaller and the pe and the world war was more peaceful. Now we live in a full scale uh we have a fullscale war going on in Europe in Ukraine. We do whatever we can to support Ukraine. Again the key capabilities the Patriot missiles the interceptors the air defense systems we are delivering to Ukraine are delivered by companies that Norway cannot be invested in. That's a paradox.

Nicolai Tangen: you but you have five political parties in the coalition. Do you think you'll get them to come along to your view?

Jens Stoltenberg: I Yes. So I cannot guarantee on behalf of them uh uh but at least I hope that we will we will have a recommendation from this uh independent expert council actually shared by former governor of the central bank sed um uh then we will have their proposal. It will be a public hearing about uh that proposal starting later on this year and then we will propose present the proposal to the parliament next spring. Um uh let's see uh I hope that we can have broad agreement on uh revised ethical guidelines. Uh and also another paradox is that we see that tech and defense it's more and more integrated.

Nicolai Tangen: Yeah. And of course a broadbased international sovereign wealth fund as the Norwegian sovereign wealth fund is if we cannot be invested in the big tech companies which deliver of course different services to uh many defense companies then we cannot be a broad-based national uh uh wealth fund anymore. So that's another paradox another challenge we have to solve. the challenge that um that you've had an ESG backlash in other parts of the world whilst the Norwegian uh political parties basically have unchanged views just how is that opening up uh what should we say challenges and I guess we saw that with Caterpillar in particular right

Jens Stoltenberg: yes but yes but but I think that Norwegians and I and the Norwegian government we are concerned about environment uh uh sustainability governance all those uh uh uh considerations s which are in alo the SG framework but but sometimes the way this has been applied it has been understood has not functioned very well and and Caterpillar is not example for the witch malfun um the this independent ethical council based on the guidelines the the parliament had decided uh uh recommended that which we welf should sell out D invest from the uh from from from Caterpillar.

Jens Stoltenberg: Caterpillar is an important provider of you know a lot of trucks and other things we use in Norway then which government is a customer. Um uh but on a small amount of those trucks are then sold to the US government which then sell them to Israel and then in Israel they use them to to to to violate international law destroying uh homes Palestinian homes. We all agree that that's bad. But the question is whether Norway cannot be invested in a company where a tiny part of what they do contributes through two governments the US government and Israel government to to do bad things. If that's in itself is sufficient to totally uh leave the company to not be invested then it's very hard to see how we can be invested for instance in the big tech companies.

Nicolai Tangen: Absolutely.

Jens Stoltenberg: Yeah. Big tech companies. Now some people ask you know who are the big gainers from what's going on in the in the tech bowl and it's basically one of them is the Norwegian sovereign wealth fund right uh I think last five years one 1,600 billion uh Norwegian croner from the top uh from the top companies now now uh the top 10 companies in the portfolio accounts for 25% of the fund what are your reflections about that

Jens Stoltenberg: first it's the same as you just stated that hardly anyone in the world has earned more money from tech companies than Norway uh because we have been invested in them for a long time. We have followed the up as the equity and share prices have increased and also the returns from those investment has been incredible. Uh then of course if something goes up uh it's also is that also is that it can fall down. uh and I will not speculate about the likelihood of what will happen in the US stock market or or with these specific companies as you said 10 companies uh roughly 25% of the wealth uh of the so wealth fund uh but my uh main challenge is uh uh to um address the issue should we change the guidelines

Jens Stoltenberg: because the guidelines decided uh by Norwegian government uh is that you should be broadin invested uh uh in in all listed companies follow the international markets and a kind of index fund. Uh and uh I think that if I started to politicize that and to say that no no now I believe that the the market will in the US will go down because it is so high. First of all it has been kind of concern for many years and that will continue to to increase. Uh so if we had made that decision four five years ago we have lost a lot of money. Second, I'm just afraid that if we try as politicians to forecast the market, we will end in a very bad place.

Jens Stoltenberg: So, I'm confident that we should still remain a broad-based international uh uh uh index fund with some active management by the by by by you and and your people and then and then there will be downturns. But do you think it makes sense to own do you think it makes sense to own 7,000 companies given that the big ones are so important and given that uh if something happens if something bad happens somewhere in the world we the fund typically owns it. Do you really need all these companies?

Jens Stoltenberg: Well, again, whether it's 7,ou it actually used to be close to 10,000, then we have reduced to 7,000 uh to to to minimize a bit also the the administrative costs. And of course, I'm not ruling out that there will be also adjustments in the future. But the fundamental idea that we should be broadly diversified over different markets, different companies, uh uh that that's the best way to have the best return over time and the lowest risk that I still believe in. uh it has served us well for all these 20 uh no 30 years actually uh and I believe that's a basic right approach also for a government-owned serwell phone in a democratic nation

Nicolai Tangen: um Mr. Stolenberg, we have uh some big privately held companies coming to the to the stock market this year. You know, SpaceX, Entropic, OpenAI. Do you think the fund should be able to uh also own private companies?

Jens Stoltenberg: Well, this is a very sensitive political issue in Norway. Um and of course it has been a great advantage that we have a very high degree of transparency. we have easily defined the benchmarks and that's e more straightforward at least to establish when you have listed companies as as we invest in uh uh uh today then I I I admit that that there is a dilemma that some of the some of these big uh private companies uh uh will uh most likely soon become public companies and then we will buy into them. Uh so the par parallel is as as soon as SpaceX or Antropic whatever or open AI becomes public companies then Norware will invest uh based on the fact that we follow the markets and are invested in almost all listed companies. That's a paradox. Uh whether that's what I say a big enough paradox to change our policy, I think it's far too early to decide. Uh uh but at least I think we should be aware of uh that that's that's a challenge that we face that we buy as soon as they are listed.

Nicolai Tangen: We run stress tests which say for instance that the fragmented world is generally negative for markets. Uh we are seeing uh rivalries between some of the superpowers. We are seeing trade barriers and so on. Just what are your what are your reflections on the uh how the current geopolitical situation is impacting the fund

Jens Stoltenberg: that we have to be prepared as also you have stated many times that the value of the fund uh may actually fall uh substantially uh and that will have a direct impact on state budget. Um we have just uh presented the revised budget and in the revised budget to the parliament we have some uh some some scenarios. If we have a the same development in the international stock market today uh as we had after the oil crisis in the 70s uh the value of the fund would have gone dramatically down and it would have taken uh more than 15 years before we came back uh to the to the to the starting point. And of course since we spend 3% of the fund uh uh into the state budget it will affect our state budget.

Jens Stoltenberg: Um the the way to try to prepare for that is that actually when the now the the value of the fund and the stock markets have increased substantially over the last years we have actually spent a bit less. So we have spent like 2.7% 2.8% uh over now many years. So we have actually saved you kind of buffer. Uh there's no way to totally avoid consequences. Uh but by being careful when the uh market go up uh we have some buffer when and we and if the market goes down

Nicolai Tangen: so where do you think the biggest risk to the fund is now?

Jens Stoltenberg: to be honest I think that's an extremely difficult question to answer because uh it is the unpredictability uh that uh anyway characterize uh the world both financial economically but also uh when it comes to security their geopolitical unpredictability wars are bad for business uh at least for uh global business maybe specific companies and we have a very dangerous situation in the Middle East and we have a full-scale war in uh in in Ukraine train. I hope that there will be ways to end this war, but wars are dangerous. They can they can spiral and come out of control and then it will affect the global markets and the value of the fund. Uh so it's not only the human cost of war but also the economic cost.

Jens Stoltenberg: Um and then of course um I believe that AI is changing global economy. I believe that AI is creating a lot of value. Um but of course with this enormous increase uh in in the share prices there is a risk that it may uh go down. But again my question my task is not to speculate. My task is not to uh forecast future stock prices. My task is to uh uh define the best strategy for Norway to manage uh uh the uncertainty and again diversify many markets. Uh that's the best way to reduce the risk for Norway.

Nicolai Tangen: the technology company share prices have gone up because there is um because there's so much potential in the technologies right do you feel that Norway is using AI enough

Jens Stoltenberg: is I think to say enough will be wrong um but we we are actually quite good at using AI according to Euro we are the European country that is using AI the most So based on EU statistics, we are quite good in Norway using AI

Nicolai Tangen: but given that we are but given that we are highly educated, very digital and not too keen on working. Should we not use it much more?

Jens Stoltenberg: Absolutely and uh and and I think it is a great potential and but but but again if you use it so whether the glass is half full or half empty depends what you compare with. If you compare with other European countries we're doing quite well. We're using AI a lot in Norway. If if you compare with what should be ambition, yes, I think we should use it more.

Jens Stoltenberg: Then I think the issue is not only about using AI, it's about using AI in the right way and and in the right say frameworks. In this ministry, we have just uh really upgraded the way we use AI. We have developed a a new way of integrating AI into our daily work. We have uh integrated uh u the AI models we use here with the data banks of the central bureau of statistics and the minister of finance. So now I can just go into my computer and make the most beautiful charts and and and and figures uh uh uh by just using the enormous amount of data that the ministry of finance is responsible for including the central bureau of statistics.

Jens Stoltenberg: So, so and I think that the public sector could and should use AI much more. I think it's a great advantage that the average kind of Norwegian is quite quite educated and is used to use the different digital things and therefore we should just stimulate more use of AI.

Nicolai Tangen: Talking about uh beautiful graphs and figures uh so you uh were out of the country for 10 years. Yeah. What was the biggest uh change or surprise that you had when you came back into into the ministry?

Jens Stoltenberg: Uh well as the biggest change from because I I'm in that paradoxal I I I've experienced that I I'm back now in the ministry I was 30 years ago. I was minister of finance in 1996 and the biggest change from from that time was that at that in 96 it was zero uh in the Norwegian ser now it's more than two2 trillion US um um if you compare with the last 10 years 10 years I I was out in NATO uh so politically I think the biggest change is that we have an even more fragmented political landscape so be a responsible minister being a minister of finance is in one way more challenging now because we just have to negotiate more. We have to make more compromises uh to get things agreed in region uh parliament.

Nicolai Tangen: So Mr. Sber just to to round off what do you think are the most important things to remember for the next 30 years?

Jens Stoltenberg: It is that oil and gas is good but it's not enough uh to ensure that a country develops in a good way. Uh uh the most important is as always that we are able to ensure that people uh work uh uh and uh and that they are well educated and that we invest for the future. Uh the oil and gas helps us but it's not a guarantee.

Nicolai Tangen: And if you were to give uh some advice to the people running the fund, what would you say?

Jens Stoltenberg: Continue as you do because you do an excellent job. uh and I'm proud uh always when I work or meet you but also when I travel uh abroad uh to see the the great respect that you but also the fund has because you are such a professional such a well-managed uh fund which serves Norway so well.

Nicolai Tangen: Thank you and thank you for everything you've done for the fund and for the nation.

Jens Stoltenberg: Thanks so much.

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