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Updated June 10, 2022
The Nordic Countries and U.S. Relations
Political and Economic Overview
Nordic governments introduced tighter asylum policies and
The five Nordic countries—Denmark, Finland, Iceland,
curtailed some welfare benefits. These refugee and migrant
Norway, and Sweden—share deep historical, linguistic, and
waves also stirred debates about identity, integration, and
cultural ties and many political and economic similarities.
security (in relation to both terrorism and crime). Refugees
They are all stable democracies with parliamentary systems
from Russia’s 2022 war in Ukraine, however, generally
of government and prosperous market economies with
have been welcomed by Nordic governments and societies.
relatively high standards of living. With a total population
of roughly 27 million people (see Figure 1), the Nordics
Over the past decade, economic and immigration concerns
collectively form the world’s 12th-largest economy. They
have generated voter distrust of established center-right and
have extensive social welfare systems and relatively high
center-left political parties throughout the Nordics. This has
tax rates but are considered to be innovative, business-
fueled the rise of populist parties, increased fragmentation
friendly countries. The Nordics generally rank high on
in national parliaments, and upended some traditional
global competitiveness indexes. Foreign trade plays a key
political alliances. Most anti-establishment, populist parties
role in their economies. They also enjoy substantial natural
in the Nordics are on the right or far right and hold
resources. Norway in particular benefits from vast North
nationalist and anti-immigrant views. A right-wing populist
Sea oil and natural gas deposits.
party was part of successive Norwegian coalition
governments between 2013 and 2020. Far-right, nationalist,
Like most other countries, the Nordics were affected by the
anti-immigrant parties are the second- and third-largest
Coronavirus Disease 2019 (COVID-19) pandemic.
parliamentary parties in Finland and Sweden, respectively.
Denmark, Finland, Iceland, and Norway responded to the
onset of the pandemic in March 2020 with stringent
Figure 1. The Nordic Countries: Key Facts
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. All five Nordic
countries saw a significant spike in cases in early 2022 due
to the more transmissible Omicron variant, but they also
have high vaccination rates (between 75% and 85% of
populations are fully vaccinated). 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
Source: Graphic by CRS, based on Economist Intelligence Unit data.
impact of Russia’s war against Ukraine. The Nordics
typically have relatively low rates of income inequality, but
Foreign and Security Policies
the pandemic exposed and in some cases exacerbated
The Nordic countries generally share an international
socioeconomic inequality, especially in low-income urban
and rural areas and among some immigrant communities.
outlook that prioritizes cooperation, both among themselves
and with the international community. The Nordics work
Like other countries, the Nordics currently are grappling
together on regional issues in the interparliamentary Nordic
with rising energy prices and inflation. Aging populations
and fertility rates below replacement rates raise questions
Council and the intergovernmental Nordic Council of
Ministers. They promote Nordic defense cooperation
about the long-term sustainability of the Nordics’ social
through NORDEFCO, a forum that brings Nordic military
welfare systems.
officials together. Since the 1950s, the Nordic Passport
In recent years, migration policy has become a key political
Convention has allowed Nordic citizens to travel freely and
issue in the Nordics. The 2015-2016 spike in refugees and
reside in any Nordic country. The Nordics also are strong
migrants in Denmark, Finland, Norway, and Sweden—
proponents of the United Nations and multilateral solutions
mostly from the Middle East, Afghanistan, and Africa—
to global challenges. They are frequent contributors to
strained education, housing, and welfare systems. Most
international peacekeeping missions, major providers of
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development and humanitarian assistance, and supporters of
combating hybrid threats in which the United States is a
U.N. efforts to address climate change.
partner country. All five Nordic countries supported the
U.S.-led coalition against the Islamic State (ISIS/ISIL) with
As shown in Figure 1, Nordic membership in NATO and
military and/or humanitarian assistance. The United States
the European Union (EU) varies. Although traditionally
also is an important non-European trading partner for the
militarily nonaligned, Sweden and Finland applied to join
Nordic countries. As seen in Table 1, U.S.-Nordic
NATO in May 2022 given growing security concerns about
investment ties are extensive.
Russia (see below). Finland is the only Nordic country that
uses the euro, the EU’s common currency. Although not in
Table 1. U.S.-Nordic Economic Relations
the EU, Iceland and Norway participate in the EU’s single
(direct investment [historical-cost basis] and employment)
market and Schengen area of free movement.
Workers
Workers
Nordic Security, NATO, and Russia
Employed
Employed
Since 2014, Russia’s aggression in Ukraine and increased
U.S.
Nordic
in U.S. by
in Nordics
military activity near Nordic borders have alarmed Nordic
Direct
Direct
Nordic-
by U.S.-
officials. Nordic countries responded by enhancing defense
Inv. in
Inv. in
owned
owned
cooperation and working with NATO to strengthen
Nordic
Nordics
U.S.
Affiliates
Affiliates
deterrence. Since Russia’s invasion of Ukraine in February
Country
(2020)
(2020)
(2019)
(2019)
2022, all Nordic governments have provided military,
financial, and/or humanitarian assistance to Ukraine and
Denmark
$9.9 bil
$30.7 bil
40,000
41,100
have backed increasingly punitive sanctions against Russia,
including targeting Russia’s energy sector.
Finland
$5.3 bil
$15.1 bil
37,100
21,100
Russia’s war against Ukraine
Iceland
$796 mil
N/A
400
1,700
has upended decades of
Finnish and Swedish security policy that sought to balance
Norway
$21.5 bil
$30.4 bil
7,300
42,700
ties to the West and relations with Russia. Finland has long
Sweden
$63.8 bil
$55.4 bil
226,700
69,500
been particularly mindful of its relationship with Russia,
with which it shares an 830-mile land border. Since the end
Source: U.S. Department of Commerce, Bureau of Economic
of the Cold War, both Finland and Sweden have established
Analysis, International Trade and Investment Country Facts.
close partnerships with NATO; they have participated in
many NATO operations and have capable military forces
U.S.-Nordic defense ties are considered strong. Since 1951,
that are interoperable with those of the alliance. Public
the United States has provided for Iceland’s defense at the
support for NATO has skyrocketed in both countries since
request of NATO. Thule Air Base in Greenland is the U.S.
Russia’s invasion of Ukraine. Finnish and Swedish officials
military’s northernmost installation, providing missile
contend their countries would be “security providers,”
warning and space surveillance. Norway stores pre-
enhancing NATO capabilities and strengthening the
positioned U.S. military equipment and has hosted U.S.
alliance’s defense posture in the Baltic Sea region in
Marines for winter warfare training; a defense cooperation
particular. Nearly all allies, including the United States,
agreement signed in 2021 seeks to facilitate further U.S.
have welcomed Finland and Sweden’s NATO applications.
military training in Norway and permits U.S. infrastructure
Turkey, however, has voiced reservations and could slow
investment at certain Norwegian military facilities. In early
the accession process, which requires alliance consensus.
2022, the United States and Denmark began negotiations
that may provide for rotational deployments of U.S. troops
The Arctic
and storage of U.S. military equipment on Danish territory.
The Arctic region (or High North) is a key focus of Nordic
The United States also has bilateral defense cooperation
foreign policies. All of the Nordics are members of the
agreements with Sweden and Finland and, in 2018,
eight-country Arctic Council (along with Russia, Canada,
concluded a tripartite statement on further boosting defense
and the United States) and have long supported peaceful
cooperation. Norway, Denmark, and Finland are acquiring
cooperation in the Arctic. The Nordic countries are troubled
the U.S.-built F-35 Joint Strike Fighter.
by the environmental and geostrategic implications of
climate change in the Arctic. Warming temperatures and
U.S.-Nordic relations experienced some tensions during the
melting ice are increasing access to Arctic sea routes and
Trump Administration. Many Nordic officials worried
natural resources. Like the United States, the Nordic
about the extent of President Trump’s support for NATO,
countries are wary of enhanced Russian military and
the EU, and the multilateral trading system. U.S.-Danish
commercial activity in the Arctic, as well as of China’s
relations were strained in 2019 by President Trump’s
growing interests and investments in the region, including
expressed interest in purchasing Greenland due to its
with respect to the island of Greenland (a largely self-
strategic location and natural resources.
governing part of the Kingdom of Denmark, with a
The Biden Administration has sought to renew and
population of around 56,000).
strengthen relations with the Nordic countries. President
Relations with the United States
Biden has asserted robust U.S. support for Finland and
Sweden joining NATO. Many Members of Congress also
The United States and the Nordic countries largely enjoy
appear to support Finland’s and Sweden’s NATO bids; U.S.
close relations. About 11 million Americans claim Nordic
approval requires Senate advice and consent.
ancestry. The United States is known to appreciate Nordic
cooperation on a wide range of global and regional issues.
Kristin Archick, Specialist in European Affairs
For example, Finland hosts a multinational center for
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The Nordic Countries and U.S. Relations
IF10740
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