No less than 47 prominent Norwegian economists, analysts and professors are calling on Parliament and the government to use Norway’s role as an “economic super power” and dramatically increase aid to Ukraine. The economists have also given top politicians an economic green-light to do so, claiming that spending limits placed on the country’s huge sovereign wealth fund (known as the Oil Fund) are no hindrance.
The economists have all signed a letter published in newspaper Aftenposten on Monday, in which they call for “a major increase” in Norway’s support for Ukraine. First among those signing the economists’ appeal is Knut Kjær, who served as the first leader of the Oil Fund and now is a professor himself. He’s an expert on the rule used to preserve the fund’s assets and withdrawals.
“Our political viewpoints vary, but we stand together on the fundamental democratic values for which the Ukrainian nation is now fighting a desperate battle,” the economists wrote. “Norway must greatly increase support (for Ukraine) for various reasons.”
The economists argue that if Russia’s attacks on Ukraine are not halted, Norway and the rest of Europe will face “an existential threat to freedom and democracy.” As many have said before, they note that Ukraine is not just fighting for itself but in practice for all other democratic countries in Europe including Norway.
“Our country has an exceptional position as a financial super power in Europe,” they wrote. Not only has Norway’s oil wealth built up over especially the past 25 years, the economists note, the war itself sent gas prices skyrocketing in 2022 and 2023. Norwegian gas producers and the state (which still holds a huge ownership stake in the country’s oil and gas industry) took in extraordinary revenues amounting to NOK 1,270 billion (around USD 114 billion), according to the government’s own finance ministry.
That’s an amount that’s already been called “war profits” by many in Europe who have criticized Norway for not sending even more aid to Ukraine than it already has. The Norwegian economists and professors avoided the term, but wrote that most of the NOK 1,270 billion was paid by “our European neighbours. This is money we think must be shared with our brothers and sisters in Ukraine.”
A major increase in financial aid to Ukraine should and can, they argue, come from the Oil Fund where all of Norway’s oil and gas profits have been stashed over the years. The fund is now worth a dizzying NOK 20,109 billion (external link, to the fund’s own website) but Norwegian politicians have long been bound by spending limits on it, in order not to overheat the economy. Through a rule known as the handlingsregelen, no more than 3 percent of the fund’s market value can be used in any given year to pad the state budget.
Prime Minister Jonas Gahr Støre and his new finance minister Jens Stoltenberg, the former NATO chief, have suggested that support for Ukraine would need to come out of the 3 percent allocated to the state budget. Not necessarily, contend the economists who normally defend the 3-percent rule themselves.
“Support for Ukraine on the scale we think is demanded of us would part with the rule as it’s been practiced up to now,” they noted, “but it would not be at odds with the intention of the rule.” On the contrary, claim the economists: “By giving Ukrainia what the country needs” to fend off its invader (Russia), “we would be doing exactly what the rule was meant to do: Contribute towards securing a good life for those coming after us.”
The fund was initially set up to save and preserve Norway’s vast wealth from oil and gas for pensions for future generations. Critics of limits of its use for Ukraine outside Norway have already argued that future generations wouldn’t get much comfort from pensions if their own freedom and democracy is threatened or even lost to Russian aggression. Nor, argue others, would support for Ukraine overheat Norway’s economy, since the money would most likely be spent and invested outside of Norway.
All parties in Parliament are now also calling for a massive increase in financial aid to Ukraine. The Conservatives’ leader and former prime minister Erna Solberg stated during the weekend that both Norway and Europe need to take on much greater economic and military responsibility to end the war in Ukraine. “We must be stronger, better and faster” to provide more support, she said. The economists’ rationale for urging use of the Oil Fund can further prod Støre to do just that.
NewsinEnglish.no/Nina Berglund
