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Updated April 28, 2023
The Nordic Countries and U.S. Relations
Political and Economic Overview
with nationalist, anti-immigrant views may join a coalition
The five Nordic countries—Denmark, Finland, Iceland,
government led by a center-right party.
Norway, and Sweden—share deep historical, linguistic, and
cultural ties and many political and economic similarities.
Figure 1. The Nordic Countries: Key Facts
They are all stable democracies with parliamentary systems
of government and prosperous market economies with
relatively high standards of living. With a total population
of over 27 million people (see Figure 1), the Nordic
countries collectively form the world’s 11th-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.
Like most other countries, the Coronavirus Disease 2019
(COVID-19) pandemic posed public health and economic
challenges for Nordic governments. Gross domestic product
(GDP) contracted in all five Nordic countries in 2020 due to
the pandemic, but rebounded in 2021. Growth was lower
Source: Graphic by CRS, based on Economist Intelligence Unit data.
than initially predicted in 2022, however, partly due to the
economic impact of Russia’s war against Ukraine (launched
Foreign and Security Policies
in February 2022). Like other European countries, most
The Nordic countries generally share an international
Nordic governments are grappling with high energy prices
outlook that prioritizes cooperation, both among themselves
and inflation (between 6% to 8%). Growth is expected to
and with the international community. The Nordics work
slow in all five Nordic countries in 2023 (to between 0%
together on regional issues in the interparliamentary Nordic
and 2%). Aging populations and fertility rates below
Council and the intergovernmental Nordic Council of
replacement rates raise questions about the long-term
Ministers. They promote Nordic defense cooperation
sustainability of the Nordics’ social welfare systems.
through NORDEFCO, a forum that brings Nordic military
In recent years, migration policy has become a key political
officials together. Since the 1950s, the Nordic Passport
issue in the Nordics. The 2015-2016 spike in refugees and
Convention has allowed Nordic citizens to travel freely and
migrants in Denmark, Finland, Norway, and Sweden—
reside in any Nordic country. The Nordics also are strong
mostly from the Middle East, Afghanistan, and Africa—
proponents of the United Nations and multilateral solutions
strained education, housing, and welfare systems. Most
to global challenges. They are frequent contributors to
Nordic governments introduced tougher asylum policies
international peacekeeping missions, major providers of
and curtailed some welfare benefits. The refugee and
development and humanitarian assistance, and supporters of
migrant waves also stirred debates about identity,
U.N. efforts to address climate change.
integration, and security (in relation to both terrorism and
As shown in Figure 1, the five Nordic countries are either
crime). Refugees from Ukraine, however, generally have
NATO members or aspire to join NATO. Although
been welcomed by Nordic governments and societies.
traditionally militarily nonaligned, Finland and Sweden
Over the past decade, economic and immigration concerns
applied for NATO membership in May 2022 given growing
have generated voter distrust of established center-right and
security concerns about Russia. Finland joined NATO in
center-left political parties throughout the Nordics, fueling
April 2023, but Sweden’s accession has faced a delay (see
the rise of populist parties and upending some traditional
below). Nordic membership in the European Union (EU)
political alliances. Most anti-establishment, populist parties
varies. Finland is the only Nordic country that uses the
in the Nordics are on the right or far right and hold
euro, the EU’s common currency. Although not in the EU,
nationalist and anti-immigrant views. In Sweden, a far-right
Iceland and Norway participate in the EU’s single market
party has provided parliamentary support for a center-right
and Schengen area of free movement.
government since October 2022 (in exchange for tightening
Nordic Security, NATO, and Russia
immigration, asylum, and criminal justice policies).
Since 2014, Russia’s aggression in Ukraine and increased
Following Finland’s April 2023 election, a far-right party
military activity near Nordic borders have alarmed Nordic
officials. Nordic countries responded by enhancing defense
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cooperation and working with NATO to strengthen
European trading partner for the Nordic countries. As seen
deterrence. Since Russia’s invasion of Ukraine in February
in Table 1, U.S.-Nordic investment ties are extensive.
2022, all Nordic governments have provided military,
financial, and/or humanitarian assistance to Ukraine and
Table 1. U.S.-Nordic Economic Relations
have backed increasingly punitive sanctions against Russia,
(direct investment [historical-cost basis] and employment)
including targeting Russia’s energy sector.
Workers
Workers
Russia’s war against Ukraine has upended decades of
Employed
Employed
Finnish and Swedish security policy that sought to balance
U.S.
Nordic
in U.S. by
in Nordics
ties to the West and relations with Russia. Finland has long
Direct
Direct
Nordic-
by U.S.-
been particularly mindful of its 830-mile land border with
Inv. in
Inv. in
owned
owned
Russia. At the same time, both Finland and Sweden have
Nordic
Nordics
U.S.
Affiliates
Affiliates
long maintained close partnerships with NATO; they have
Country
(2021)
(2021)
(2020)
(2020)
participated in many NATO operations and have advanced
Denmark $16.4 bil
$34.6 bil
46,000
37,100
militaries that are interoperable with those of the alliance.
Nearly all allies, including the United States, assessed that
Finland
$6.5 bil
$10.1 bil
35,600
21,200
Finnish and Swedish NATO accession would enhance
Iceland
$878 mil
N/A
400
1,700
allied capabilities and strengthen the alliance’s defense
posture in the Baltic Sea region. Finland and Sweden had
Norway
$30.6 bil
$32.5 bil
7,700
37,500
intended to join NATO at the same time, but consensus is
Sweden
$57.7 bil
$71.5 bil
217,300
61,800
required to admit new members and Turkey (Türkiye) and
Hungary have yet to give final agreement to Sweden’s
Source: U.S. Department of Commerce, Bureau of Economic
accession. Turkey remains concerned about what it views
Analysis, International Trade and Investment Country Facts.
as Sweden’s support for terrorist groups, especially those
linked to the Kurdistan Workers’ Party (or PKK)
U.S.-Nordic defense ties are strong. Since 1951, the United
.
Hungary’
States has provided for Iceland’s defense at the request of
s delay in completing the approval process for
Sweden’s accession may be linked to EU and Swedish
NATO. Thule Air Base in Greenland is the U.S. military’s
criticisms of the Hungarian government’s respect for the
northernmost installation, providing missile warning and
space surveillance. Norway stores pre-positioned U.S.
rule of law. NATO leaders hope Sweden will join the
alliance by NATO’s July 2023 summit.
military equipment and has hosted U.S. Marines for winter
warfare training; a 2021 defense cooperation agreement
The Arctic
seeks to facilitate further U.S. military training in Norway
The Arctic region (or High North) is a key focus of Nordic
and permits U.S. infrastructure investment at certain
foreign policies. All of the Nordics are members of the
Norwegian military facilities. In 2022, the United States
eight-country Arctic Council (along with Russia, Canada,
and Denmark began negotiations that may provide for
and the United States) and have long supported peaceful
rotational deployments of U.S. troops and storage of U.S.
cooperation in the Arctic. Warming temperatures and
military equipment in Denmark (a separate agreement
melting ice are increasing access to Arctic sea routes and
covers the U.S. presence in Greenland). The United States
natural resources, with environmental and geostrategic
also is negotiating new bilateral defense cooperation
implications. Like the United States, the Nordic countries
agreements with Finland and Sweden to deepen defense and
are wary of enhanced Russian military and commercial
security relations further. Norway, Denmark, and Finland
activity in the Arctic, as well as of China’s interest in the
are acquiring the U.S.-built F-35 Joint Strike Fighter.
region, including with respect to Greenland (a largely self-
U.S.-Nordic relations experienced some tensions during the
governing part of the Kingdom of Denmark, with a
Trump Administration. Many Nordic officials worried
population of around 56,000). Russia’s war against Ukraine
about the extent of President Trump’s support for NATO,
has affected the functioning of the Arctic Council. The
the EU, and the multilateral trading system. U.S.-Danish
Nordics, the United States, and Canada paused participation
relations were strained in 2019 by President Trump’s
in the Council in March 2022; they resumed work on
expressed interest in purchasing Greenland due to its
projects not involving Russia in June 2022. Norway is to
strategic location and natural resources.
assume the two-year rotating chair of the Arctic Council
from Russia in May 2023, but questions remain about the
The Biden Administration has sought to renew and
Council’s future due to Russia’s aggression in Ukraine.
strengthen relations with the Nordic countries. The
Relations with the United States
Administration and many Members of Congress support
NATO enlargement to Finland and Sweden. The Senate and
The United States and the Nordic countries largely enjoy
President Biden completed the steps necessary for U.S.
close relations. About 11 million Americans claim Nordic
ratification of Finnish and Swedish accession to NATO in
ancestry. The United States is known to appreciate Nordic
August 2022. The Biden Administration continues to urge
cooperation on a wide range of global and regional issues.
Turkey and Hungary to approve Sweden’s accession. Also
For example, Finland hosts a multinational center for
see CRS Insight IN11949, NATO: Finland Joins as
combating hybrid threats in which the United States is a
Sweden’s Accession Faces Delay.
partner country. All five Nordic countries supported the
U.S.-led coalition against the Islamic State terrorist group
(ISIS/ISIL). The United States is an important non-
Kristin Archick, Specialist in European Affairs
IF10740
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The Nordic Countries and U.S. Relations
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