Norway is re-evaluating its approach to supporting Ukraine, with discussions about tapping into its €1.7 trillion sovereign wealth fund to dramatically increase aid as signs emerge of diminishing U.S. military backing. The country, which has so far committed €3.35 billion to Ukraine, is facing mounting pressure to step up its contributions, particularly from its Nordic neighbors Denmark and Sweden, which have pledged €5.41 billion and €8.05 billion, respectively.
The Norwegian sovereign wealth fund, the world’s largest, holds substantial resources, including an estimated €109 billion in profits linked to the surge in gas prices during 2022 and 2023. Critics, including Swedish and Danish media outlets, have sharply criticized Norway’s current level of support for Ukraine, labeling it “pathetic” in comparison to its Nordic counterparts. With the international situation growing more precarious, there is increasing support within Norway for ramping up the country’s financial contributions.
Liberal Party leader Guri Melby emphasized the importance of Norway leveraging its financial resources, stating that the nation must “multiply our support for Ukraine immediately.” Former Conservative Prime Minister Erna Solberg echoed this sentiment, calling for a swift and substantial increase in funding, noting that the Norwegian Parliament is likely to back such a move. Similarly, the Socialist Left Party and the Liberal Party have called for an emergency parliamentary session to discuss the matter further.
Rising Calls for Defense Spending Increase
Several political leaders are advocating for a significant boost in Norway’s defense spending. Sylvi Listhaug, leader of the conservative Progress Party, suggested that Norway should aim to allocate 3% of its GDP to defense by 2030, up from the current 2%. The Greens, though polling at only 2.7%, have proposed a pledge of €85.5 billion to support Ukraine.
Despite these calls for increased military spending, Norway has already committed significant funds to Ukraine. The government has pledged NOK 167 billion (€14.7 billion) in support to Ukraine through 2030, with NOK 35 billion already allocated for 2025. A spokesperson for Norway’s Foreign Ministry indicated that the long-term nature of these commitments is appreciated by both Ukraine and NATO allies.
Prime Minister Jonas Gahr Støre, who is set to attend a European leaders’ summit in London, stated that the government is preparing a proposal to further increase Norway’s support for Ukraine, signaling the growing urgency of the situation.
Scrutiny of Norway’s Budgetary Rule
Norway’s longstanding budgetary rule, which limits spending from its sovereign wealth fund to 4% annually (now reduced to 3%), is being questioned as calls grow for more active use of the fund to support European defense and Ukraine. The rule was introduced in 2001 under Prime Minister Jens Stoltenberg’s government, with broad political consensus. Stoltenberg, now Norway’s finance minister, has warned against breaking the budgetary rule, arguing that it could set a dangerous precedent.
However, some political figures, including former Prime Minister Solberg, are pushing for a relaxation of the rule. She and other high-ranking members of her party argue that Norway must use more of its “oil money” to bolster the country’s defense capabilities, particularly as Europe faces growing instability.
One proposal gaining traction is to convert €300 billion of the sovereign fund’s €450 billion in liquid bonds into European defense bonds, ensuring that the funds are exclusively used for defense purposes. This proposal reflects a broader shift toward more proactive spending in the face of escalating security concerns.
Potential for Increased Support
Even without altering the budget rule, Norway has the financial capacity to increase its aid significantly. According to Sveinung Rotevatn, deputy chair of the Liberal Party and head of financial policy, a proposal is currently under consideration to increase support for Ukraine by 100 billion Norwegian kroner this year. This increase would raise Norway’s aid from €3 billion to €11.5 billion for 2025.
As pressure builds for Norway to contribute more to the defense of Ukraine and Europe, the government is under increasing scrutiny. Minister of Foreign Affairs Espen Barth Eide underscored the importance of shifting Europe’s approach to supporting Ukraine, emphasizing that all policies must prioritize a functioning international order and a free, independent Europe.
With Europe at a critical juncture, the discussion around Norway’s sovereign wealth fund and its potential role in supporting Ukraine’s defense efforts is set to continue, as the country grapples with how best to balance its financial resources with its political and humanitarian commitments.
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