Norway's Budget Standoff: Political Tensions Over Oil and Wealth Fund

Norway's Labour government faces challenges over its 2026 draft budget, amid disagreements on oil drilling and wealth fund investments. Prime Minister Jonas Gahr Stoere may face a vote of confidence if no compromise is reached. Talks continue to secure support from smaller parties.

Norway's Labour government is in a tight spot as it struggles to secure backing for its 2026 draft budget. The current impasse centers on contentious issues like oil drilling and the sovereign wealth fund's investments in Israel. A compromise needs to be reached by Friday to avoid a potential vote of confidence that could destabilize the minority government led by Prime Minister Jonas Gahr Stoere.

The Labour Party, having narrowly secured a second term, must navigate a fragmented political landscape where it depends on four smaller left-wing parties to pass the budget. Thus far, only the agrarian Centre Party and the far-left Red Party have shown support. Political scientist Jonas Stein from UiT the Arctic University of Norway finds the situation surprising so soon after the elections.

Key disagreements include the Green Party's call for a gradual oil phaseout by 2040 and the Socialist Left's opposition to Israeli investments by Norway's wealth fund. Norway's largest industry and political stability are at stake, with the political environment growing increasingly polarized, reflecting wider European trends.

(With inputs from agencies.)