An Outside Observer

 When I first entered the Foreign Service, a trainer talked about why he loved the Foreign Service. He explained that as a diplomat you are a close outside observer to the happenings in any particular country. You are able to get to know and become friends with the people in the country you serve but are insulated from many of the challenges unique to each country. When he was talking to us he was primarily referring to third world countries or places with major problems. Over the last few days I have really begun to appreciate the unique challenges we are insulated from because of our position as diplomats.

Oslo is consistently on the list of most expensive cities in the world. Depending on the report you look at, it ranks anywhere from one to twenty. Taxes and a booming economy are the largest contributors to the cost.

Taxes

A treaty called the Vienna Convention on Diplomatic Relations signed in 1861 applies to all countries where we have diplomatic relations. It establishes diplomatic relations, diplomatic immunity, and also exempts diplomats from taxes levied by a host country. Without those financial protections in Norway all I can say is ouch.

Norway has a national sales tax called a value added tax.  Goods and services have a 25% VAT and food is 15%.  So the Ipad I so desperately want to buy is going to cost $625 instead $500. It also means that our $100 grocery bill really costs $115. I pay the VAT upfront and then quarterly submit a spreadsheet and with receipts to the Norwegian foreign ministry for reimbursement.

Even through Norway is flush wish petroleum resources that make it both wealthy and a huge exporter, gasoline costs about $10 per gallon because of the taxes. We have a special charge card that we use at Statoil, the state owned gas company. At the end of each month we get a gas bill that is only for the price of gas and has no tax. On average I will pay $4.50 per gallon.

Car prices are many times what they are in the US because of taxes. You get taxed for the number of seats, engine size, and base price. Here is one example, A Jeep Grand Cherokee. In the US the price ranges from $27,000 to $60,000 for the fire breathing SRT-8 model. I just pulled this price list from www.jeep.no with a price range of 799,900 NOK to 1,790,000 NOK. Doing the conversion of 5.76 kroner to the USD the range is $138,715 – $310,763.

The State Department ships one vehicle for us. If we wanted to purchase the car here I would have to buy new through Volvo, BMW, or Mercedes using the manufacturer’s diplomatic sales program. It would be far cheaper buying a new BMW than a used compact Toyota on the local market. Not only would I get the Volvo SUV for 30% off US prices I would also get a factory tour. Too bad I already have the swagger wagon.

A Booming Economy

Besides taxes, the cost of goods and services are expensive here because wages are high, unemployment is low, the strong currency, and many items are locally sourced.

Milk, eggs and meat are usually locally sourced. Milk comes in at $10 per gallon, eggs around $6 for a dozen eggs, and $20 or more per pound for beef depending on where you find it. A mans haircut will cost $50 and a ladies will cost $250. A cleaner will charge $30-50 per hour and I would hate to think what a skilled electrician or plumber would cost. If you're curious, check out this circular and divide everything by 5. These are the best prices in town, Smart Club is like Costco.  http://kundeavis.smartclub.no/aviser/smartclub/hoved/index2.htm

We receive an allowance called a cost of living allowance. The State Department does periodic surveys of what goods and services cost in each location around the world. At some point Janet will get a survey and be asked to go to the local grocery store, hair salon, and a few other places to find write down the cost of certain benchmarked goods and services. Adjusted against Washington DC as a baseline, the post is assigned a COLA %. Oslo is tied with Tokyo at an 80% COLA rate. The cost is a percentage of usable income and adjusted for family size. Ultimately it is just enough money to cover the more expensive costs in Oslo if we are really careful.

Another big help is our ability to order from the Air Force commissary in Ramstein Germany and buy American goods at mostly American prices. It is a fully self-funded program and is a huge benefit for the military and State Department personnel overseas.

Last, real estate is really expensive. We were talking to a Norwegian/American couple at thanksgiving that was thrilled to be moving into a small fixer upper near where we live. The wife said that their small little detached home cost $1 million. She also said the 1800 SF duplex we are in would cost about $2 million. Yes that is dollars not kroner. The State Department leases the home for us and pays the cost of the lease and utilities. It would be an otherwise impossible thing to afford staying in Oslo. Additionally until we own a home back in the states we are able to save the money we would otherwise spend on a mortgage.

It’s No Life or Death Struggle

Apart from the painfully short days right now, Norway is a wonderful place to live and if I had the right job with the right pay I might consider staying. I am grateful to be here with the financial protections that being a diplomat provides. More importantly I am grateful that as an outside observer I don’t have to witness the Norwegians in a life and death struggle that our diplomats in so many other parts of the world are so close to.