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1 1 (July 27, 2022)

handle is hein.crs/goveiin0001 and id is 1 raw text is: Congressional Research Service informing Ih legisIlive d bate sin'0 1914 The Nordic Countries and U.S. Relations PoeitaI and Economic Overview The five Nordic countries-Denmark, Finland, Iceland, Norway, and Sweden-share deep historical, linguistic, and cultural ties and many political and economic similarities. They are all stable democracies with parliamentary systems of government and prosperous market economies with relatively high standards of living. With a total population of roughly 27 million people (see Figure 1), the Nordics collectively form the world's 12th-largest economy. They have extensive social welfare systems and relatively high tax rates but are considered to be innovative, business- friendly countries. The Nordics generally rank high on global competitiveness indexes. Foreign trade plays a key role in their economies. They also enjoy substantial natural resources. Norway in particular benefits from vast North Sea oil and natural gas deposits. Like most other countries, the Nordics were affected by the Coronavirus Disease 2019 (COVID-19) pandemic. Denmark, Finland, Iceland, and Norway responded to the onset of the pandemic in March 2020 with stringent restrictions on social and business activity. Sweden initially largely trusted its population to practice social distancing but adopted somewhat more restrictive policies in subsequent waves, following a higher death toll per capita and public and parliamentary criticism. Nordic countries saw a significant spike in cases in early 2022 due to the more transmissible Omicron variant, but all five have high vaccination rates (70%-80% of populations have completed initial vaccination protocols). Policies throughout the Nordics have shifted to learning to live with the virus. Gross domestic product (GDP) contracted in all five Nordic countries in 2020 because of the pandemic. Iceland's heavy reliance on tourism led to a 7% decrease in GDP, while economic contraction in the other four Nordics was less severe (between 1% and 3%). All Nordic governments introduced financial support measures. Growth returned in all five countries in 2021 (between 3% and 5%) but is expected to slow in 2022, partly due to the economic impact of Russia's war against Ukraine. The Nordics typically have relatively low rates of income inequality, but the pandemic exposed and in some cases exacerbated socioeconomic inequality, especially in low-income urban and rural areas and among some immigrant communities. Like other countries, the Nordics currently are grappling with rising energy prices and inflation. Aging populations and fertility rates below replacement rates raise questions about the long-term sustainability of the Nordics' social welfare systems. In recent years, migration policy has become a key political issue in the Nordics. The 2015-2016 spike in refugees and migrants in Denmark, Finland, Norway, and Sweden- mostly from the Middle East, Afghanistan, and Africa- strained education, housing, and welfare systems. Most Updated July 27, 2022 Nordic governments introduced tighter asylum policies and curtailed some welfare benefits. These refugee and migrant waves also stirred debates about identity, integration, and security (in relation to both terrorism and crime). Refugees from Russia's 2022 war in Ukraine, however, generally have been welcomed by Nordic governments and societies. Over the past decade, economic and immigration concerns have generated voter distrust of established center-right and center-left political parties throughout the Nordics. This has fueled the rise of populist parties, increased fragmentation in national parliaments, and upended some traditional political alliances. Most anti-establishment, populist parties in the Nordics are on the right or far right and hold nationalist and anti-immigrant views. A right-wing populist party was part of successive Norwegian coalition governments between 2013 and 2020. Far-right, nationalist, anti-immigrant parties are the second- and third-largest parliamentary parties in Finland and Sweden, respectively. Figure 1. The Nordic Countries: Key Facts Membership(s)* NATO Q European Union (EU) *Sweden and Finland applied for NATO membership in May 2022. £ Population $ GDP (nominal, 2021) Icefand £369,000 $26 billion No ay -$46 bilo $397,illio L Source: Graphic by CRS, based on Economist Intelligence Unit data. Foreign and Security Policies The Nordic countries generally share an international outlook that prioritizes cooperation, both among themselves and with the international community. The Nordics work together on regional issues in the interparliamentary Nordic Council and the intergovernmental Nordic Council of Ministers. They promote Nordic defense cooperation through NORDEFCO, a forum that brings Nordic military officials together. Since the 1950s, the Nordic Passport Convention has allowed Nordic citizens to travel freely and reside in any Nordic country. The Nordics also are strong proponents of the United Nations and multilateral solutions to global challenges. They are frequent contributors to international peacekeeping missions, major providers of

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