Is Norway Selfish Profiteering on the Ukraine War?

0
429
Is Norway Selfish Profiteering on the Ukraine War?

Norway is a tiny Scandinavian country with a population of 5.5 million and its oil and gas wealth is expected to climb to new heights this year because of Russia’s more than a year-long onslaught in Ukraine. Is Norway selfish profiteering on the Ukraine war?

The price of natural gas is soaring due to the EU allies’ cut on Russian energy export and Norway is earning more than $170 billion above pre-war estimates from the Norwegian Ministry of Finance. This has ignited an impassioned debate about international justice, with many questioning whether it is fair for Norway to rake in record oil and gas revenues at the expense of others’ misfortune.

Is Norway Selfish Profiteering on the Ukraine War? Article continues below the image.

By clicking the image, you can learn more about Norway’s gigantic Sovereign Wealth Fund 2022-2023.

Is Norway Selfish Profiteering on the Ukraine War?
Click image.

Norwegian representative for opposition party the Green, Rasmus Hansson, argues that consumption in Norway needs to be reduced and economic welfare should be brought back to the level it was in the 1980s. “The war in Ukraine isn’t a fair reason to demand higher gas prices,” he claims.

Is Norway Selfish Profiteering on the Ukraine War?
Norwegian representative for opposition party the Green Rasmus Hansson. Photo: Wikipedia.

An article in The Economist last year stated that ““Norway is profiting embarrassingly from war in Europe” and suggested “It should think of ways to help the EU through the crisis.”

Is Norway Selfish Profiteering on the Ukraine War?
Lars-Henrik Paarup Michelsen, director of the Norwegian Climate Foundation think tank. Photo: Sparebanken Vest

In a telephone conversation with CNBC, Lars-Henrik Paarup Michelsen, director of the Norwegian Climate Foundation think tank, said, “Most European countries are getting poorer because of the war. Norway is getting richer — much richer.”

Norway’s sovereign wealth fund, which manages the country’s petroleum earnings, has a current value of around €1.5 trillion, or around €275,000 per citizen.

After the WWII, Norway went from being mainly a rural society, to having an urban majority. In 1969, one of the world’s largest oil fields was discovered in the North Sea. The so-called “oil fund” was established “to ensure responsible and long-term management of revenue from Norway’s oil and gas resources, so that this wealth benefits both current and future generations.”

And now, as many European countries are struggling to cope with the region’s worst energy crisis in decades, Norway — already extremely rich — is getting richer still. That flood of money is turning into both a domestic and a foreign political problem.

The oil fund itself has declared that it will vote against directors in companies that aren’t doing enough to address the risk of climate change. NBIM is now very focused on excluding companies it believes are mismanaging climate risk and thus has a long list of exclusions, particularly of coal companies.

Is Norway Selfish Profiteering on the Ukraine War?
Norway’s Prime Minister Jonas Gahr Støre

Prominent economists, lawmakers and even titans of Norway’s energy industry have called on Prime Minister Jonas Gahr Støre’s government to set an example to the world by pumping at least some of its fossil fuel revenues into a new international solidarity fund.

Is Norway Selfish Profiteering on the Ukraine War?
Norway’s Deputy Foreign Minister Eivind Vad Petersson. Photo: Østlandssamarbeidet.

“This situation is certainly not of our making and not to our liking,” Norway’s Deputy Foreign Minister Eivind Vad Petersson said in an interview. He argued that it is critically important for Europe’s energy security that Norway keeps gas production high.

The Nordic state’s center-left government, made up of the Social Democrats and Center Party, argues Norway shouldn’t be blamed for market forces beyond its control.

Is Norway Selfish Profiteering on the Ukraine War? Article continues below the image.

In 2020, we published an article on responsible investing in Norway. By clicking the image below, you can read the article.

Is Norway Selfish Profiteering on the Ukraine War?
Click image.

Vidar Helgesen, Executive Director of the Nobel Foundation, said in a statement: “The climate crisis is crying out for leadership. Much of the work can be done by private investment and innovation. But to trigger green investments on a large enough scale, political innovation is also needed. No country is better placed to do something about this than Norway.”

Is Norway Selfish Profiteering on the Ukraine War?
Vidar Helgesen, Executive Director of the Nobel Foundation. Photo: Sustainable Innovation Forum.

“These excess profits, as we may call it, are a direct result of the war,” said Ingrid Fiskaa, foreign affairs spokesperson for Norway’s Socialist Left, whose support is critical for Prime Minister Jonas Gahr Støre’s minority government.

Is Norway Selfish Profiteering on the Ukraine War?
Ingrid Fiskaa, foreign affairs spokesperson for Norway’s Socialist Left. Photo: SV

Fiskaa highlighted that legislation in Norway limits the use of oil revenues in the domestic economy to avoid high inflation — and that, she argues, strengthens the case for investing in international solidarity.

According to the OECD, guarantees are the most effective instruments for mobilizing private capital, and Norway could effectively leverage and mobilize private capital. Estimates from the Blended Finance Taskforce argues that with a subsidy of $1 billion (concessionary capital) and a guarantee exposure of $13 billion (a contingent liability financed by guarantee premiums), Norway could realistically be able to mobilize $30 billion of private investments.

Norway’s aid budget has, however,  hovered near 1% of its gross national income for more than a decade, making it one of the world’s most generous donors. But last year, Støre’s government proposed to cut the proportion of GNI it spends on foreign aid to 0.75%, for which it was sharply criticized.

Is Norway Selfish Profiteering on the Ukraine War?
EUCommission President Ursula Von der Leyen. Photo: EU Parliament.

When Commission President Ursula Von der Leyen says she is discussing a “task force” with Norway to look at “how are we able to lower, in a reasonable manner, the price of gas”, Norwegian Prime Minister Jonas Gahr Støre continues to say that he will not back a price cap on gas exports.

Does Norway have a moral responsibility to commit revenues from oil and gas to the global green guarantee initiative? My humble opinion is that part of the enormous earnings should be addressed in that direction. Norway should be leading the way, so that other countries, especially those also profiting from increased oil and gas prices, such as Australia, Canada, the UAE, the U.S., etc. make similar contributions based on their capacity and legal ability to do so.

Is Norway Selfish Profiteering on the Ukraine War? Written by Tor Kjolberg

Previous articleSetting the Scandinavian table with minimalist table accessories
Next articleNo Roads as Safe as Sweden’s
Avatar photo
Journalist, PR and marketing consultant Tor Kjolberg has several degrees in marketing management. He started out as a marketing manager in Scandinavian companies and his last engagement before going solo was as director in one of Norway’s largest corporations. Tor realized early on that writing engaging stories was more efficient and far cheaper than paying for ads. He wrote hundreds of articles on products and services offered by the companies he worked for. Thus, he was attuned to the fact that storytelling was his passion.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.