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Updated July 27, 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. Nordic countries
saw a significant spike in cases in early 2022 due to the
more transmissible Omicron variant, but all five have high
vaccination rates (70%-80% of populations have completed
initial vaccination protocols). 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
outlook that prioritizes cooperation, both among themselves
and rural areas and among some immigrant communities.
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
Council and the intergovernmental Nordic Council of
and fertility rates below replacement rates raise questions
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
cooperation on a wide range of global and regional issues.
U.N. efforts to address climate change.
For example, Finland hosts a multinational center for
combating hybrid threats in which the United States is a
As shown in Figure 1, Nordic membership in NATO and
partner country. All five Nordic countries supported the
the European Union (EU) varies. Although traditionally
U.S.-led coalition against the Islamic State terrorist group
militarily nonaligned, Sweden and Finland applied to join
(ISIS/ISIL). The United States is an important non-
NATO in May 2022 given growing security concerns about
European trading partner for the Nordic countries. As seen
Russia (see below). Finland is the only Nordic country that
in Table 1, U.S.-Nordic investment ties are extensive.
uses the euro, the EU’s common currency. Although not in
the EU, Iceland and Norway participate in the EU’s single
Table 1. U.S.-Nordic Economic Relations
market and Schengen area of free movement.
(direct investment [historical-cost basis] and employment)
Nordic Security, NATO, and Russia
Workers
Workers
Since 2014, Russia’s aggression in Ukraine and increased
Employed
Employed
military activity near Nordic borders have alarmed Nordic
U.S.
Nordic
in U.S. by
in Nordics
officials. Nordic countries responded by enhancing defense
Direct
Direct
Nordic-
by U.S.-
cooperation and working with NATO to strengthen
Inv. in
Inv. in
owned
owned
deterrence. Since Russia’s invasion of Ukraine in February
Nordic
Nordics
U.S.
Affiliates
Affiliates
2022, all Nordic governments have provided military,
Country
(2021)
(2021)
(2019)
(2019)
financial, and/or humanitarian assistance to Ukraine and
have backed increasingly punitive sanctions against Russia,
Denmark $16.4 bil
$34.6 bil
40,000
41,100
including targeting Russia’s energy sector.
Finland
$6.5 bil
$10.1 bil
37,100
21,100
Russia’s war against Ukraine has upended decades of
Iceland
$878 mil
N/A
400
1,700
Finnish and Swedish security policy that sought to balance
ties to the West and relations with Russia. Finland has long
Norway
$30.6 bil
$32.5 bil
7,300
42,700
been particularly mindful of its 830-mile land border with
Sweden
$57.7 bil
$71.5 bil
226,700
69,500
Russia. At the same time, both Finland and Sweden have
close partnerships with NATO; they have participated in
Source: U.S. Department of Commerce, Bureau of Economic
many NATO operations and have advanced militaries that
Analysis, International Trade and Investment Country Facts.
are interoperable with those of the alliance. Nearly all
allies, including the United States, assessed that Finnish and
U.S.-Nordic defense ties are strong. Since 1951, the United
Swedish accession would enhance NATO capabilities and
States has provided for Iceland’s defense at the request of
strengthen the alliance’s defense posture in the Baltic Sea
NATO. Thule Air Base in Greenland is the U.S. military’s
region. Turkey, however, voiced objections—citing its view
northernmost installation, providing missile warning and
that Finland and Sweden supported terrorist groups (related
space surveillance. Norway stores pre-positioned U.S.
especially to the Kurdistan Workers’ Party, or PKK)—and
military equipment and has hosted U.S. Marines for winter
delayed the start of the accession process for both countries.
warfare training; a defense cooperation agreement signed in
In late June 2022, an agreement to address Turkey’s
2021 seeks to facilitate further U.S. military training in
concerns allowed the accession process to go forward. For
Norway and permits U.S. infrastructure investment at
Finland and Sweden to accede, all NATO members must
certain Norwegian military facilities. In early 2022, the
ratify changes to NATO’s founding treaty (a process NATO
United States and Denmark began negotiations that may
officials hope will be completed by the end of 2022).
provide for rotational deployments of U.S. troops and
storage of U.S. military equipment in Denmark (a separate
The Arctic
agreement covers the U.S. presence in Greenland). The
The Arctic region (or High North) is a key focus of Nordic
United States also has defense cooperation agreements with
foreign policies. All of the Nordics are members of the
Sweden and Finland. Norway, Denmark, and Finland are
eight-country Arctic Council (along with Russia, Canada,
acquiring the U.S.-built F-35 Joint Strike Fighter.
and the United States) and have long supported peaceful
cooperation in the Arctic. The Nordic countries are troubled
U.S.-Nordic relations experienced some tensions during the
by the environmental and geostrategic implications of
Trump Administration. Many Nordic officials worried
climate change in the Arctic. Warming temperatures and
about the extent of President Trump’s support for NATO,
melting ice are increasing access to Arctic sea routes and
the EU, and the multilateral trading system. U.S.-Danish
natural resources. Like the United States, the Nordic
relations were strained in 2019 by President Trump’s
countries are wary of enhanced Russian military and
expressed interest in purchasing Greenland due to its
commercial activity in the Arctic, as well as of China’s
strategic location and natural resources.
growing interests and investments in the region, including
The Biden Administration has sought to renew and
with respect to the island of Greenland (a largely self-
strengthen relations with the Nordic countries further. The
governing part of the Kingdom of Denmark, with a
Biden Administration and many Members of Congress
population of around 56,000).
support Finland’s and Sweden’s NATO bids; U.S. approval
Relations with the United States
requires Senate advice and consent. Also see CRS Insight
IN11949, NATO: Finland and Sweden Seek Membership.
The United States and the Nordic countries largely enjoy
close relations. About 11 million Americans claim Nordic
ancestry. The United States is known to appreciate Nordic
Kristin Archick, Specialist in European Affairs
https://crsreports.congress.gov
The Nordic Countries and U.S. Relations
IF10740
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