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1 1 (April 4, 2024)

handle is hein.crs/goveoxi0001 and id is 1 raw text is: Congressional Research Service Informing 1h1 .eg Iative debate sinco 1914 The Nordic Countries and U.S. Relations Political and Econormic 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 collective population of nearly 28 million people, the Nordic countries have a combined gross domestic product (GDP) of roughly $1.9 trillion (see Figure 1). 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 and innovation 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. The Nordic countries were affected economically by the COVID-19 pandemic and, since 2022, by Russia's war against Ukraine. GDP contracted in all five Nordic countries in 2020 due to the pandemic, rebounded in 2021, but slowed in 2022 and 2023 amid the conflict in Ukraine, elevated energy prices, high inflation, and rising interest rates. GDP growth is expected to remain modest in all five Nordic countries in 2024 (between roughly 1% and 2%) as inflation eases and interest rates stabilize. Aging populations and other demographic and societal changes raise questions about the long-term sustainability of the Nordics' social welfare systems. Migration policy is 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 Nordic governments introduced tougher asylum policies and curtailed some welfare benefits. The refugee and migrant waves also stirred debates about identity, integration, and security (in relation to both terrorism and crime). Refugees from Ukraine, however, generally have been welcomed by Nordic governments and societies. Over the past decade, concerns related to migration, globalization, and other political and economic challenges have generated voter distrust of established center-right and center-left political parties throughout the Nordics and fueled the rise of populist parties. Most anti-establishment, populist parties in the Nordics are on the right or far right and hold nationalist and anti-immigrant views. In Sweden, a far-right party has provided parliamentary support for a center-right government since October 2022 (in exchange for tightening immigration, asylum, and criminal justice policies). Following Finland's April 2023 election, a far- right party with nationalist, anti-immigrant views joined a coalition government led by a center-right party. Updated April 4, 2024 Figure 1. The Nordic Countries: Key Facts Membership(s) NATO NATO and European Union (EU) A Population $ GDP (nominal, 2023) 1388,000 Norway na $31 billion £j.4mr I5. m lon $48 billon I $30 bilio Denmark w $433 bdion) Z $594'x ilIin Source: Graphic by CRS, as of April 2024, 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 Control Agreement 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 development and humanitarian assistance, and supporters of U.N. efforts to address climate change. As seen in Figure 1, all five Nordic countries are NATO members. Finland and Sweden were militarily nonaligned for decades, but Russia's war against Ukraine upended Finnish and Swedish security policies that had sought to balance ties to the West and relations with Russia (Finland has long been particularly mindful of its 830-mile land border with Russia). Both Finland and Sweden applied to join NATO in May 2022. Finland acceded to NATO in April 2023 and Sweden acceded in March 2024 (see below). Finland, Sweden, and Denmark also belong to the European Union (EU). Finland is the only Nordic country that uses the euro, the EU's common currency. Although not in the EU, Iceland and Norway participate in the EU's single market and Schengen area of free movement. Nordic Security, Russia, and NATO Relations between the Nordic countries and Russia have been strained for over a decade in light of Russia's military

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