Nordic co-operation crumbles at the Norway-Sweden border

Sweden never entered into coronavirus-induced lockdown, but for the country’s biggest shopping centre it has made little difference: sales have plummeted 95 per cent.

The location of the Nordby centre, which houses 110 shops and restaurants, is everything: it is minutes from the Norway border and was built to attract shoppers from Oslo and southern Norway with offers of cut-price meat, cheese and sweets.

Norway this week reopened its borders to the rest of the Nordic region, but kept them closed to mainland Sweden because of the stubbornly high infection rate, meaning any Norwegian who shops at Nordby needs to go into quarantine for 10 days afterwards.

“The whole idea of Nordby is to sell to people on the other side of the border. Without any customers, our idea isn’t functional,” said Stale Lovheim, the head of the shopping centre, which turned over SKr4.7bn ($500m) last year, making it the biggest mall in Scandinavia.

The border trade between Norway and Sweden has been one of the most visible signs of decades-long Nordic co-operation. Passport-free travel has been allowed between Denmark, Finland, Norway and Sweden since 1952, fostering a system of cross-border workers and eventually shoppers. But that pan-Nordic spirit is now fraying owing to Sweden’s high death rate, with its per capita Covid-19 mortality rate more than 10 times higher than Norway’s.

Known in Norway as “Harryhandel” — literally “Harry shopping”, after a Norwegian word for vulgar or tasteless — border shopping has become a lucrative business, in large part because of the high taxes or import duties Oslo puts on everything from alcohol and tobacco to sugar, dairy and meat products. Norwegian and Swedish estimates for its size vary from NKr16bn-NKr25bn ($1.7bn-$2.6bn) a year.

Map showing Norway/Sweden border

“We go three or four times a year — we buy everything from dishwasher tablets to wine, and lots of sweets,” said Marthe, an Oslo office worker who would take her husband and children on the 90-minute car journey to Nordby. “It’s not a disaster that we can’t go, but I feel the higher prices when we shop here.”

The Swedish border shops are now paying the price for the country’s no-lockdown policy. That approach — under which there are fewer formal restrictions on people and businesses than other countries — has been hailed by some for limiting the hit to Sweden’s economy. However, the government in Stockholm still expects the economy to shrink by 6 per cent this year — worse than estimates from Norway and Denmark.

In Charlottenburg, a Swedish town of just 2,000 people, Tommy Johansson, manager of the local Maximat supermarket, estimated there are enough shops for 50,000 as Oslo is less than two hours’ drive away. From mid-March when the border suddenly closed, he has lost 90 per cent of revenues, having to throw away fresh fruit and vegetables for days. His staff are working a fifth of their normal hours.

“A lot of shops around here will go bankrupt. We’ve lost lots of good employees, who have moved to jobs in schools, hospitals. I think it will get back to normal, but it will take some time — maybe a year or even two years,” Mr Johansson said.

Norway’s government has said it will use objective criteria to evaluate if it can open up to individual Swedish regions, but so far has said visitors are allowed only from the Baltic Sea island of Gotland, which is more than 400km from the Norwegian border.

People involved in border trade argue the policy leads to absurd results where Nordby is punished because its region includes Gothenburg, Sweden’s second-largest city, whereas the area around the shopping centre has had low infection rates.

“For us, it’s difficult to understand that strategy,” said Ole Christian Hallerud, the deputy chief executive of Thon Eiendom, the Norwegian company that owns several Swedish shopping centres, including Nordby and Charlottenburg.

“If you have 10,000 Norwegians that go to Gotland on holiday and meet 10,000 people from Stockholm on holiday then we can’t see the difference between going to Stromstad and Charlottenburg. Ninety-five per cent of customers would be Norwegians,” he added.

Norwegian stores close to the border, on the other hand, have benefited from the temporary ending of the Harryhandel. Oystein Bjerke, who manages a Coop supermarket in Kongsvinger, 40km from Charlottenburg, said his sales had increased by 75 per cent in April and 70 per cent in May, better than the national average.

Ingvill Storken, the director for groceries at Virke, a Norwegian employers’ association, said the increase demonstrated the “astoundingly” high level of cross-border shopping and the extent to which it undercut Norwegian jobs as well as health policies against alcohol, tobacco and sugar consumption. “Norwegian politicians must drop their myopic stance,” she added.

Sweden’s centre-left government has warned of the risk of permanent damage to Nordic co-operation because of the crisis. “In many regions, people have been co-operating since the 1950s — all of a sudden, there are rivalries and hard feelings between people where there have been no borders at all,” foreign minister Ann Linde told newspaper Dagens Nyheter.