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Norway, a major producer and supplier of energy, is well placed to help alleviate Europe’s energy crisis — and reap the profits, a situation not all of its European partners welcome.

The Nordic country was already a leading exporter of electricity thanks to its many hydroelectric dams.

But since the cut in natural gas supplies from Russia following the invasion of Ukraine, it has now emerged as Europe’s main supplier in that field.

Offshore, Norwegian platforms and facilities are running at full capacity to make up at least some of the shortfall.

“The most important contribution Norway can make in the current situation is to maintain high gas production,” oil and energy minister Terje Aasland told parliament last month.

The country is set to increase its gas exports by eight percent this year, bringing production to a record 122 billion cubic metres, according to Aasland. 

But the sharp rise in gas prices also means greater profits.

The state’s oil and gas revenues are expected to smash last year’s record 830 billion Norwegian kroner ($83 billion), potentially reaching 1.5 trillion in 2022 and 1.9 trillion next year, according to projections by Nordea Markets.

– ‘Gigantic profit’ –

With such a spectacular windfall, there are those who worry that the country risks being viewed as a “war profiteer”.

Already in May, Polish Prime Minister Mateusz Morawiecki said Norway should share “this excess, gigantic profit”.

The country was “indirectly preying”, albeit unintentionally, from “the war started by Putin”, Morawiecki argued.

So far, Oslo has turned a deaf ear to calls for a cap on gas prices, instead emphasising its role as a stable and predictable supplier.

“Without imports from Norway, the situation in the European gas market would have been much more serious” Elisabeth Saether, state secretary for Norway’s petroleum and energy ministry, told AFP.

Some countries are also worried however that Oslo is considering limiting electricity exports to Europe, when there are already concerns about winter power supplies.

Norway is not a member of the European Union, but it is closely associated through its membership of the European Economic Area.

Its power grid is linked to its Nordic neighbour Sweden and Finland, and to Denmark, Germany and the UK via long undersea cables.

However, Norway’s water reservoirs this week were only 68,5 percent full, 12 percent lower than normal, after two years of low rainfall, according to the Norwegian Water Resources and Energy Directorate (NVE).

A lower production output and a higher share of the electricity going abroad means much higher energy bills for households and businesses in the south of the country, which were used to cheap kilowatt hours.

In this context then, not all Norwegians are happy about electricity being exported.

Analysts at Volue Insight have calculated that Norwegians would pay 25 percent less for their electricity this winter without the cables to Germany and the UK, which came into operation last year.

– Nordic concerns –

Norway does not support the idea of countries being left to fend for themselves in the energy market. It also opposes manipulating the market prices.

But when it comes to electricity exports, the message is a little different.

“Norway is considering measures that could limit export short term when the multi-year reservoir levels are low, to secure supply,” Saether confirmed.

“This has never been done before.”

The details of the restrictions have yet to be unveiled, but she gave assurances that they would respect EEA rules guaranteeing the free movement of services and goods, including electricity, between member states.

Nevertheless, the news alarmed energy grid operators in Sweden, Denmark and Finland enough to prompt them to publish a joint letter in August.

Svenska kraftnat, Energinet and Fingrid said they were “deeply concerned” that the Norwegian plan “seems not to acknowledge that it is through a well-functioning market that electricity security of supply is ensured in the most efficient way”.

Under the watchful eye of an instructor, Munira al-Rubaian spreads fresh bed linen in a mock hotel room in the Saudi capital, aiming to land a job in the desert kingdom’s growing tourism sector.

The unemployed 25-year-old is one of thousands of Saudis enrolled in the state-run “Tourism Pioneers” programme, which aims to prepare 100,000 job-seekers for a field that government officials insist is set to take off.

At two facilities in Riyadh, Rubaian and other trainees study tasks like welcoming hotel guests, plating food in upscale restaurants and keeping luxury suites squeaky-clean.

Others are sent abroad for short courses in countries with far more advanced tourism industries, including the Netherlands, Spain, Switzerland and France.

This army of newly minted bellboys, cleaners and higher-paid hospitality managers is expected to help Saudi Arabia — a famously conservative and closed-off Gulf kingdom that only opened its doors to tourism three years ago — make a positive impression on first-time visitors.

The scheme also supports the government’s goal of employing more Saudis in roles traditionally occupied by migrant labourers.

The niqab-wearing Rubaian signed up for Tourism Pioneers after her own efforts to find a job at a hotel went nowhere.

She is optimistic the experience will help her get a foot in the door.

“I’ve had the opportunity to learn and improve my capabilities for employment,” she told AFP. 

“I will now have the experience and self-confidence to deal with people.”

– Aiming high –

Crown Prince Mohammed bin Salman, Saudi Arabia’s 37-year-old de facto ruler, is counting on a tourism boom to diversify the economy of the world’s largest oil exporter.

In 2019, two years after Prince Mohammed became first in line to the throne, the country introduced tourist visas, but the coronavirus pandemic dashed hopes of an immediate influx.

Authorities nonetheless remain committed to their eyebrow-raising goal of drawing 30 million foreign guests annually by 2030, up from just four million last year.

That’s on top of 70 million targeted domestic trips each year by Saudis and foreign residents.

Of the combined 100 million a year hoped-for tourists, officials project some 30 million will be making religious pilgrimages, largely to Mecca and Medina, Islam’s two holiest sites, in western Saudi Arabia.

The rest, officials hope, will be partially powered by new attractions like Al-Ula, a budding arts hub set amongst ancient Nabatean tombs, and the Red Sea Project, a Maldives-style resort destination.

But while the kingdom has in recent years relaxed rules barring cinemas, mixed-gender concerts and sports events, other regulations including an alcohol ban remain in place, potentially denting its appeal.

In a bid to lure more Arab tourists and better compete with regional rivals like the United Arab Emirates, the tourism ministry announced last week that residents of the Gulf Cooperation Council could apply for electronic tourism visas.

That right has already been granted to 49 countries, mainly in Europe and North America.

– Overseas exposure –

To make their dreams a reality, Saudi leaders recognise the need to dramatically increase the number of people working in tourism.

Some 850,000 currently work in the sector, only 26 percent of them Saudis, according to official figures.

Prince Mohammed’s Vision 2030 reform agenda aims to create one million new tourism jobs and boost the portion of Saudis filling them to 70 percent.

Tourism Pioneers, launched in June, has a budget of $100 million, with programmes for 52 specific jobs from entry-level to management.

“We need to build the knowledge, the skills, the competencies for Saudis at the highest levels,” said Mohammed Bushnag, deputy tourism minister for human capital development.

Al-Waleed al-Zaidi, who works as a sales manager in Riyadh for a foreign hotel chain, visited Switzerland for a week-long course and got a taste of what it’s like to serve leisure travellers — an altogether different challenge from the business clientele he’s accustomed to.

Instead of questions about dry-cleaning services and international call rates, he was being pressed for recommendations on attractions and how best to use public transportation.

The experience “opened my understanding of the different needs of tourists in terms of activities, food and places they would like to visit”, he said.

For Bushnag, this kind of education will ensure Saudis can provide a high level of service.

“We are extremely keen about quality and global exposure for Saudis” who, until now, have seen little of how other countries’ tourism industries operate, he said.

“We need to bridge this gap.”

Germany has a shortage of plumbers. The United States needs more postal workers. Australia is lacking engineers. In Canada, hospitals are looking for more nurses. 

“The Great Resignation” that countries have experienced since Covid pandemic restrictions were eased is not over yet.

Michael Blume, chief executive of a software company in eastern Germany, said he had “a lot of difficulties finding workers”.

“Wherever we look, we are lacking qualified workers,” Blume, whose firm Currentsystem23 is based in eastern Germany, told AFP.

There were 887,000 job vacancies in Germany — Europe’s biggest economy — in August, some 108,000 openings more than last year.

“Help Wanted” signs are plastered in front of restaurants and other businesses in the United States, where there were more than 11 million job openings in late July, or two for every employment seeker.

“Vacancy rates are very high across the world. Surveys and firms are saying it is still very hard to fill positions,” said Ariane Curtis, a Toronto-based economist at research firm Capital Economics. 

Countries in Western Europe and North America are having a particularly tough time filling jobs, though the problem is also present in eastern Europe, Turkey and Latin America, Curtis said.

Vacancy-to-unemployed rates rose sharply in Australia, Canada and Britain in later 2021 compared to pre-pandemic levels, an OECD report said in July.

– Businesses closing early –

The shortages have persisted even as the world economy has begun to slow since Russia invaded Ukraine earlier this year.

It affects a broad range of sectors: from a lack of teachers in Texas to not enough staff in the hospitality industry in Italy or the Canadian health system.

The shortages have forced businesses to adapt.

Pharmacies in the US state of Wisconsin, services at hospitals in Canada’s province of Alberta and restaurants in Australia’s Sunshine Coast have had to close for parts of the day, according to local news reports.

White-collar workers are also in short supply.

Clement Verrier, who co-heads an executive recruiting firm in Paris, said it used to be difficult to find companies looking to hire. Now it’s the opposite. 

“We’re seeing an unprecedented number of candidates who disappear in the middle of the recruitment process, without calling back,” Verrier said.

– ‘Shift in mindset’ –

Aging populations were already starting to cause shortages before Covid, but the problem exploded with the pandemic.

There are multiple factors behind the phenomenon: some people have chosen to retire early, while others have struggled with long Covid symptoms. Others have simply had enough of poor working conditions or low salaries.

Other factors include a drastic drop in immigration due to lockdowns, people moving out of cities and workers seizing the moment to rethink their career choices.

“The pandemic drove a fundamental shift in mindset and priorities, and employers aren’t keeping pace with that change,” said Bonnie Dowling, expert associate partner at McKinsey, a global consultancy that conducted a study on the wave of resignations around the world.

To keep or woo workers, companies are offering higher salaries. Other benefits that have emerged include the option of working from home, “bonus” holidays and more personal days.

Some countries are easing their immigration rules to attract more workers.

Germany unveiled plans Wednesday to make it easier for people to hold multiple nationalities and make naturalisation of foreigners easier.

“The big question is if what we have seen in the last months will cool down or not,” said Mike Smith, CEO of Netherlands-based international recruiter Randstad Sourceright.

“From our position we don’t believe it is transitory,” he said.

“We think it is a structural change in the way employees are looking to interact with work. Trends continue to point to that. The shift in worker expectations is here to stay.”

New British Prime Minister Liz Truss was on Thursday expected to unveil a costly plan to freeze domestic fuel bills to help ease the burden of a soaring cost-of-living crisis.

Truss only took over from Boris Johnson on Tuesday, but has vowed to hit the ground running as calls mount for urgent action to help hard-pressed households and businesses.

Reports suggest the plan could top more than £100 billion ($116 billion), surpassing Britain’s Covid-era furlough jobs support scheme.

Neither Truss nor her office have confirmed the eye-watering sums. Downing Street on Wednesday night said only that it would be a “bold plan of action”.

“I know families and businesses across the country are worried about how they are going to make ends meet this autumn and winter,” she said.

“Putin’s war in Ukraine and weaponisation of gas supply in Europe is causing global prices to rise –- and this has only made clearer that we must boost our long-term energy security and supply.

“We will take action immediately to help people and businesses with bills but also take decisive action to tackle the root cause of these problems, so that we are not in this position again.”

British households are facing a colossal 80-percent jump in domestic electricity and gas prices from October, which have stoked fears millions will be unable to heat their homes this winter.

A further rise is predicted from January.

– ‘Immediate action’ –

Britain is heavily reliant for its energy needs on gas, but prices have surged this year after key producer Russia’s invasion of Ukraine. 

Truss is also expected to slash taxes to boost the economy, which the Bank of England forecasts will tank in an inflation-induced recession.

Bloomberg last month quoted Treasury estimates that British gas and electricity producers were on course to make excess profits of up to £170 billion in the next two years.

Truss on Wednesday reaffirmed her opposition to windfall taxes on energy giants, although aides said she would not row back on one imposed by former finance minister Rishi Sunak.

She also called for more North Sea oil and gas projects while Downing Street hinted that a moratorium on fracking could be lifted to secure more valuable energy.

Fracking was banned in 2019 after causing tremors in northern England, and easing restrictions could be problematic, as it runs counter to the Tories’ 2019 general election manifesto.

Truss, who was elected only by a vote of Conservative members, has no wider public mandate to rip up the commitment.

“The manifesto stands,” her spokesman told reporters on Wednesday.

– Slump –

Media suggest Truss wants to cap the average annual household energy bill at £2,500 per year — £1,000 less than October’s planned level.

The Times newspaper reported that this move would be financed by taxation revenues and debt.

Such a plan would contrast with Truss’ comments during the Conservative leadership campaign, when she rejected “sticking plaster” solutions to the cost-of-living crisis such as direct government aid.

Financial markets are meanwhile fretting over the prospect of worsening public finances, which were already ravaged by emergency Covid expenditure.

On bond markets, the UK’s 10-year borrowing rate topped 3 percent on Tuesday for the first time since 2014.

That imperils Britain’s ability to borrow cheaply if the markets reject Truss’s plans.

Recession fears then sent the pound slumping Wednesday to its lowest dollar level since 1985 — when Margaret Thatcher was in power.

UK inflation spiked to a 40-year peak of 10.1 percent in July, with some experts predicting a jump to 18 percent.

– Sticking plaster –

An energy freeze would be a costly measure that might not improve the situation in the long run, according to economist Neil Shearing at research consultancy Capital Economics. 

“If the new Truss government implements a freeze on domestic gas and electricity prices then inflation may peak at around 11 percent in October this year,” Shearing said.

“A freeze in retail gas and electricity prices is an expensive sticking plaster, but not a long term solution,” he added, noting that the UK economy was still likely to enter recession.

Added to the backdrop, Truss also faces the prospect of growing industrial unrest as more UK workers protest over wages that have failed to keep pace with sky-high inflation.

Most Asian markets enjoyed a rare advance on bargain-buying Thursday, tracking a Wall Street rally after a series of losses, though the dollar resumed its upward march with the Federal Reserve expected to announce another bumper interest rate hike.

Equities have been ravaged for weeks by fears that global central bank moves to rein in runaway inflation by ratcheting up borrowing costs will spark fresh recessions in some leading economies.

In turn, the greenback has moved ever higher against its major peers as investors flood into the currency hoping for better returns and as a safe-haven hedge against uncertainty and worldwide turmoil.

On Wednesday, the US unit hit a 37-year high against sterling, while it was also closing in on a 32-year peak above 147.60 yen owing to the Bank of Japan’s refusal to tighten its monetary policy, seen as the key driver of that rally.

Still, Japanese officials said they were tracking the price movements and hinted at possible action if things did not improve.

The euro is holding its own for now, ahead of a hefty expected rate hike by the European Central Bank later in the day.

While the dollar saw a brief moment of weakness Wednesday, observers are certain it will continue to attract strong interest for as long as the Fed keeps ramping up interest rates.

Those views were justified by Vice Chair Lael Brainard, who warned that policymakers will keep hiking rates until they have finally brought prices under control.

“We are in this for as long as it takes to get inflation down,” she said in comments prepared for a conference in New York, adding that she understood this would have a severe impact on families. 

The rate “will need to rise further” and “policy will need to be restrictive for some time to provide confidence that inflation is moving down to target”, she said.

The Fed holds its next policy meeting on September 21, with a third successive 75-basis-point lift forecast.

– Oil under pressure –

Equity traders mostly followed their US counterparts in returning to buying, with many believing the market had fallen too far too fast.

Tokyo led the gains, helped by data showing the Japanese economy performed better than initially thought in the second quarter, while there were also gains in Shanghai, Sydney, Seoul, Singapore, Wellington, Taipei, Manila and Jakarta.

Hong Kong bucked the trend.

Still, the mood on trading floors remains downbeat, with news that China had extended a lockdown in the megacity of Chengdu adding to worries about the world’s number two economy as officials stick rigidly to their growth-killing zero-Covid strategy.

The shutdowns in China, which have impacted tens of millions across the country, were adding to hefty oil sales as traders fret over the impact on demand.

The commodity was already under pressure owing to bets on a recession caused by bank rate hikes, with both main contracts down around $50 from the peaks seen in the immediate aftermath of Russia’s invasion of Ukraine. They are now around eight-month lows.

And while Brent and WTI rose Thursday, they were nowhere near recovering the previous day’s rout of more than five percent, which came despite Russian President Vladimir Putin warning he would cut off energy to Europe if it imposed price cap sanctions.

“Some bargain-hunting buying is to be expected after a dive like” Wednesday’s, said Vandana Hari at Vanda Insights. 

Still, she added that “the approach of the September 21 Fed meeting, where another 75-basis-point rate hike is expected”, could add headwinds to crude.

– Key figures at around 0230 GMT –

Tokyo – Nikkei 225: UP 2.1 percent at 27,992.25 (break)

Hong Kong – Hang Seng Index: DOWN 0.3 percent at 18,993.00

Shanghai – Composite: UP 0.1 percent at 3,249.99

Dollar/yen: UP at 144.12 yen from 143.79 yen on Wednesday

Euro/dollar: DOWN at $0.9989 from $1.0012 

Pound/dollar: DOWN at $1.1509 from $1.1535

Euro/pound: UP at 86.79 pence from 86.74 pence

West Texas Intermediate: UP 0.8 percent at $82.61 per barrel

Brent North Sea crude: UP 0.7 percent at $88.64 per barrel

New York – Dow: UP 1.4 percent at 31,581.28 (close)

London – FTSE 100: DOWN 0.9 percent at 7,237.83 (close)

European Central Bank policymakers could reach for a historically large interest rate hike at their meeting on Thursday as they seek to tame soaring inflation.

Steep increases in the price of energy in the wake of the Russian invasion of Ukraine have heaped pressure onto households and businesses.

Inflation hit 9.1 percent in August, an all-time high for the eurozone and more than four times the two-percent rate targeted by the ECB.

“We expect a 75-basis-points rate hike,” said Franck Dixmier, head of fixed income at Allianz Global Investors.

“Given the level of inflation and the uncertainties about its evolution, for the ECB, there is less risk in doing more than in doing less,” he said. 

If confirmed, that would be the largest regular interest rate hike in the history of the ECB since its founding in 1998.

At its last meeting in July the ECB exceeded expectations with a 50-basis-point increase in interest rates, its first hike in more than a decade.

The increase also brought an end to eight years of negative interest rates, leaving its key rates sitting in a range between zero and 0.75 percent.

– ‘Determination’ –

The July hike set the stage for policymakers to take a new “meeting-by-meeting” approach, with the ECB ditching so-called forward guidance, which had constrained its response to rising inflation.

The ECB’s chief economist Philip Lane has counselled his colleagues on the governing council to raise rates at a “steady pace” and to go “neither too slow nor too fast”.

But a growing chorus of voices from within the central bank have called on the bank to show greater “determination”, in the words of board member Isabel Schnabel. 

Speaking at the annual Jackson Hole central banking symposium at the end of August, Schnabel urged the central bank to respond “more forcefully to the current bout of inflation, even at the risk of lower growth and higher unemployment”.

August’s red-hot inflation reading called for a “strong rise in interest rates in September”, said Joachim Nagel, the influential head of the German central bank.

“Further interest rate steps are to be expected in the following months,” the Bundesbank president predicted.

The ECB is already playing catch-up with the US and British central banks that started raising rates harder and faster in response to inflation.

Meanwhile, a weak euro, which fell below $0.99 for the first time in 20 years this week, has bolstered the case for bigger interest rate hikes.

– Recession rising –

While needing to quickly tame inflation, the ECB is also faced with the quandary of a weakening economy that could speak against over-hiking rates. 

A updated set of economic forecasts for the eurozone is due to be unveiled Thursday that would guide the ECB’s monetary policy decisions.

In its last estimates, published in June, the ECB said it expected inflation to sit at 6.8 percent in 2022 before falling to 3.5 percent next year, while growth would slow from 2.8 percent this year to 2.1 in 2023.

The threat of a recession in Europe was “rising”, EU economic affairs commissioner Paolo Gentiloni said Wednesday.

“We may well be heading into one the most challenging winters in generations,” he added.

A more severe energy shock could push the eurozone into a “deeper winter recession” and hold growth to zero percent in 2023, said Frederik Ducrozet, head of macroeconomic research at Pictet.

At the same time, the soaring cost of energy would drive inflation close to double digits by the end of the year, he predicted.

The ECB had “no choice but to commit to faster monetary tightening as long as inflation keeps rising”, even as a recession looms, said Ducrozet.