Norway government resigns

OSLO, Norway -- Norway's Labour government has resigned five weeks after its worst election defeat in nearly a century.

Prime Minister Jens Stoltenberg told the opening autumn session of the Storting, or parliament: "It became clear today that a majority in parliament wants a change."

The move was forced by the right-wing Progress Party which declared its support for a minority government comprising the Conservatives, Christian Democrats and Liberals.

Stoltenberg formally presented his resignation to King Harald at an extraordinary session of the council of state.

The leader of the coalition, Christian People's Party (CPP) leader Kjell Magne Bondevik, will now take over as PM, probably on Friday.

Bondevik, a 54 year-old Lutheran clergyman, returns to te office he left in March 2000.

"Our ambition is to come up with a better taxation system than that of the outgoing government," Bondevik told reporters at a brief news conference in parliament after the King had asked him to try to form a new government.

The minority coalition has promised to cut taxes by 25 billion crowns ($2.85 billion)over four years, to rationalise state ownership and boost privatisation.

It has just 62 of 165 seats in parliament and needs support from the far-right Progress Party's 26 deputies to form the majority necessary to pass legislation.

Progress announced its backing late on Tuesday, saying its support was based on promises to invest more in defence, open more private hospitals and pave the way for more competition in the public sector.

It also welcomed the coalition's tougher stance on crime, though said it was disappointed at its failure to propose reforms in a range of areas, from local government to pension plans.

Outgoing PM Stoltenberg suffered a crushing defeat at the polls

The anti-tax, anti-immigrant party will have a strong influence on the new government's policy even though it is officially excluded from the coalition.

The Conservatives have 38 seats in parliament, the CPP has 22 and the Liberals only two. Labour is still the biggest party in parliament with 43 deputies.

For many years Norway's most dominant party, Labour was hammered in the September 10 election with its worst showing since 1924.

Its seats in parliament fell to 43 from the 65 it had gained in the previous national elections in 1997 as many of the country's three million voters warmed to their promises of tax cuts, feeling the Norwegian welfare state had become too big and inefficient, despite the country's vast oil wealth.

Norway, which produces 3.1 million barrels of oil per day, is the world's third biggest oil exporter and stacks away most of the surplus from oil exports in a fund for the benefit of future generations.

The country's 2002 draft budget, presented by the outgoing Labour government last week, included an oil-backed surplus of 193.4 billion Norwegian crowns.

Analysts say there is such common ground in Norwegian politics that there is unlikely to be much international impact from the changeover.

Issues like membership of NATO, remaining outside the EU and oil policy are unlikely to be much affected, the analysts say.

Both the CPP and the Liberals oppose EU membership, ensuring Norway will have no plans to join the bloc during the next four years.

Norwegians voted "no" to EU membership in referendums in 1972 and 1994.