Will 'war profiteer' Norway come to Ukraine's financial rescue?

Western nations have frozen billions in Russian assets over Moscow's 2022 invasion of Ukraine, including approximately 210 billion euros ($243 billion) held in Europe.

Ukraine's European allies have been using interest from those funds to support Kyiv, but are keen to go further by tapping the funds themselves -- a proposal some warn carries huge risks, including spooking other foreign nations into pulling their money from the European Union.

That is where Norway comes in.

"It is absolutely essential for Europe's security that Russia does not win its illegal war of aggression," the head of Norway's small opposition Liberal Party, Guri Melby, told AFP.

"Norway has the financial means to guarantee a loan that would enable Ukraine to better defend itself against Russia, and I think we should do it," she said.

- Backing for mega-loan -

The plan goes like this.

At a time when many EU member states have strained public finances, the European Commission plans to use part of the frozen Russian assets to give Ukraine a 140-billion-euro loan, interest free, to finance its budgetary and military support over the next two years.

But Belgium, home to the international deposit organisation Euroclear, which holds the bulk of the frozen assets, has demanded strict guarantees from other EU countries in order to share the risks in the event, for example, that Russia were to regain possession of its assets.

Some heavily indebted countries, such as France, would have a hard time agreeing to such a demand.

Arguing that Norway, Western Europe's biggest oil and gas producer, made an extra 109 billion euros from soaring gas prices after Russia's invasion, two Norwegian economists have suggested their country should step up even though it is not an EU member.

"By hoarding these profits, Norway's government turned the country into a war profiteer," the duo, Havard Halland and Knut Anton Mork, wrote in an op-ed last month.

Thanks to its AAA credit rating -- the highest awarded by rating agencies -- and its sovereign wealth fund, the world's biggest, valued at around $2.1 trillion, Norway "could singlehandedly take on the contingent liability associated with fresh Ukrainian debt, and without a dent to its credit rating", they said.

The idea resonated with some European political leaders.

"That would be great," said Danish Prime Minister Mette Frederiksen during an EU summit in Copenhagen last month.

Norway's government, which has already earmarked civil and military aid of more than 275 billion kroner ($27.4 billion) to Kyiv over the 2023-2030 period, is proceeding cautiously.

"We are closely monitoring the situation and continuing our dialogue with the European Union," said finance ministry state secretary Ellen Reitan.

- 'Moral obligation' -

According to AFP's sources, Norway is in talks with Brussels but has no current plans to provide a single-handed safety net to Kyiv.

Norway's Greens Party is considering making the issue one of its demands in upcoming budget negotiations with the government, which needs the Greens' support, among others, to pass its 2026 budget bill.

"Norway is the only country in Europe that has so much money set aside and can allocate such a sum without needing to take on debt or raise taxes," Greens leader Arild Hermstad told AFP.

"And besides, we have made so much money as a result of this war that it is simply a moral obligation."

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