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Updated August 26, 2019
The Nordic Countries and U.S. Relations
Political and Economic Overview
part of successive Norwegian coalition governments since
The five Nordic countries—Denmark, Finland, Iceland,
2013. Far-right, nationalist, anti-immigrant parties are the
Norway, and Sweden—share deep historical, linguistic, and
second- and third-largest parliamentary parties in Finland
cultural ties and many political and economic similarities.
and Sweden. In Denmark’s June 2019 elections, a center-
They are all stable democracies with parliamentary systems
left party embraced certain populist positions, including
of government and prosperous market economies with
stricter migration policies, and is now the governing party.
relatively high standards of living. With a total population
of roughly 27 million people (see Figure 1), the Nordics
Figure 1. The Nordic Countries: Key Facts
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.
Despite many advantages, the Nordic countries face some
challenges. The Nordics struggled economically following
the 2008-2009 global recession and subsequent European
financial and banking crisis. Economic growth has
rebounded since (to around 2% in 2018 in all but Iceland,
where it was over 4%), but unemployment is relatively high
in Sweden and Finland (over 6% in each). Iceland’s
economy has slowed in 2019 due to difficulties in its
tourism and fishing sectors; many experts expect an
economic slowdown in other Nordic countries amid current
Source: Graphic by CRS, based on Economist Intelligence Unit data.
global trade tensions and uncertainties. Aging populations
and fertility rates below replacement rates also raise
Foreign and Security Policies
questions about the long-term sustainability of the Nordics’
The Nordic countries generally share an international
social welfare systems.
outlook that prioritizes cooperation, both among themselves
and with the international community. The Nordics work
In recent years, migration policy has become a key political
together on regional issues in the interparliamentary Nordic
issue in the Nordics. The spike in refugees and migrants in
Council and the intergovernmental Nordic Council of
Denmark, Finland, Norway, and Sweden during the height
Ministers. They promote Nordic defense cooperation
of the flows into Europe in 2015 strained education,
through NORDEFCO, a forum that brings Nordic military
housing, and welfare systems in all four countries. Most
officials together. Since the 1950s, the Nordic Passport
Nordic governments introduced tighter asylum policies and
Convention has allowed Nordic citizens to travel freely and
curtailed some welfare benefits. Refugees and migrants also
reside in any Nordic country. The Nordics also are strong
have stirred debate about identity, integration, and security
proponents of the United Nations and multilateral solutions
in the Nordics. Promoting societal integration has received
to global challenges. They are frequent contributors to
heightened attention given that several hundred Nordic
international peacekeeping missions, major providers of
citizens fought and/or trained with the Islamic State terrorist
development and humanitarian assistance, and supporters of
group (also known as ISIS or ISIL) in Syria and Iraq, and in
U.N. efforts to address climate change.
light of two terrorist attacks carried out by asylum-seekers
in Sweden and Finland in 2017.
Some foreign policy differences exist among the Nordics.
As seen in Figure 1, Nordic membership in NATO and the
Economic and immigration concerns have generated voter
European Union (EU) varies. Although Sweden and
distrust of established center-right and center-left political
Finland are close partners of NATO, they maintain a
parties throughout the Nordics. This has fueled the rise of
nonaligned status. Finland is particularly mindful of its
populist parties in the Nordics, increased fragmentation in
relationship with Russia, with which it shares an 800-mile
national parliaments, and upended some traditional political
land border. Finland is the only Nordic country that uses the
alliances. Most anti-establishment, populist parties in the
euro, the EU’s common currency. Iceland and Norway
Nordics are on the right or far right and hold nationalist and
remain outside the EU but participate in the EU’s single
anti-immigrant views. A right-wing populist party has been
market and the Schengen area of free movement.
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Nordic Security and Russia
Table 1. U.S.-Nordic Economic Relations
Russia has reemerged as a key security concern for the
(direct investment [historical-cost basis] and employment)
Nordics in light of the conflict in Ukraine and increased
Russian military activity near Nordic borders. In response,
Workers
Workers
the Nordic countries have sought to enhance defense
U.S.
Nordic
Employed
Employed
cooperation and work with NATO to strengthen deterrence.
Direct
Direct
in the U.S.
in Nordics
Norway and Denmark contribute to NATO’s Enhanced
Inv. in
Inv. in
by Nordic
by U.S.
Forward Presence (EFP) to bolster allies particularly
Nordic
Nordics
U.S.
Affiliates
Affiliates
vulnerable to Russia; each provides 200 soldiers to EFP
Country
(2017)
(2017)
(2016)
(2017)
battalions in Lithuania or Estonia. Sweden and Finland also
Denmark $13.9 bil
$18.0 bil
38,600
40,600
have drawn closer to NATO; both have concluded host
nation support agreements to facilitate potential NATO
Finland
$3.3 bil
$6.5 bil
23,400
19,300
deployments on Swedish and Finnish territory for military
assistance or training exercises.
Iceland
N/A
N/A
800
1,400
Norway
$29.2 bil
$26.0 bil
6,900
40,500
Russia’s actions have increased speculation that Sweden
and Finland may seek to join NATO, but opposition to
Sweden
$34.6 bil
$50.9 bil
211,900
71,500
doing so remains significant in both countries. Most
Source: U.S. Department of Commerce, Bureau of Economic
analysts do not expect either country to join NATO in the
Analysis, International Trade and Investment Country Facts.
near future. Nordic governments continue to back sanctions
on Russia in response to the crisis in Ukraine, despite some
U.S.-Nordic defense ties are considered strong. Since 1951,
economic costs (especially for Nordic dairy and fish
the United States has provided for Iceland’s defense at the
exporters affected by Russia’s retaliatory sanctions). At the
request of NATO. Norway stores U.S. military equipment
same time, many Nordic officials caution against isolating
as part of the Marine Corps’ Prepositioning Program and
Russia completely.
hosts 700 U.S. Marines for winter warfare training. Thule
The Arctic
Air Base in Greenland is the U.S. military’s northernmost
installation, providing missile warning and space
The Arctic region (or High North) is a key focus of Nordic
surveillance. The United States signed bilateral defense
foreign policies. All of the Nordics are members of the
cooperation agreements with both Sweden and Finland in
eight-country Arctic Council (along with Russia, Canada,
2016 and a tripartite statement on boosting defense
and the United States) and have long supported peaceful
cooperation further in 2018. Norway and Denmark plan to
cooperation in the Arctic. Iceland currently holds the two-
acquire the U.S.-built F-35 Joint Strike Fighter.
year rotating chairmanship of the Arctic Council. Denmark
is an Arctic country because of the island of Greenland—a
At the same time, some tensions exist between the Nordic
self-governing part of the Kingdom of Denmark—with a
countries and the United States. Like others in Europe,
population of around 58,000.
Nordic officials have questioned the extent of support in the
Trump Administration for NATO, the EU, and the
The Nordic countries are troubled by the environmental and
multilateral trading system. Most Nordic policymakers have
geostrategic implications of climate change in the Arctic.
expressed concern about U.S. tariffs on steel and aluminum
Warming temperatures and melting ice (including in
products and possible future auto tariffs. Nordic leaders
Greenland and Iceland) are increasing access to Arctic sea
also largely oppose President Trump’s decisions to
routes and natural resources. Like the United States, the
withdraw the United States from the 2015 multilateral
Nordic countries are wary of enhanced Russian military and
nuclear deal with Iran and the Paris climate agreement.
commercial activity in the Arctic, as well as China’s
growing interests and investments in the region.
Although Nordic leaders welcome recent U.S. efforts to
Relations with the United States
enhance engagement on Arctic issues, this area also poses
challenges for U.S.-Nordic relations. Many Nordic officials
The United States and the Nordic countries largely enjoy
were dismayed by the U.S. decision to block a reference to
close relations. About 11 million Americans claim Nordic
climate change in the May 2019 Arctic Council joint
ancestry. The United States is known to appreciate Nordic
statement. In August 2019, President Trump expressed
cooperation on a wide range of global and regional issues.
interest in purchasing Greenland due to its strategic location
For example, Finland hosts a multinational center for
and natural resources. After Greenlandic and Danish
combating hybrid threats in which the United States is a
officials asserted that Greenland is “not for sale,” President
partner country. All five Nordic countries supported the
Trump cancelled a planned visit to Denmark. This incident
U.S.-led coalition against the Islamic State with military
has led some to raise concerns about the future trajectory of
and/or humanitarian assistance. The United States also is an
U.S.-Nordic cooperation, especially with respect to the
important non-European trading partner for the Nordic
Arctic. Despite current frictions, however, many experts
countries. As evident in Table 1, U.S.-Nordic investment
expect that the Nordic countries will seek to preserve strong
ties are worth billions of dollars, and affiliates of Nordic
and close relations with the United States for the long term.
multinational enterprises collectively employ approximately
281,300 workers in the United States.
Kristin Archick, Specialist in European Affairs
IF10740
https://crsreports.congress.gov
The Nordic Countries and U.S. Relations
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