Norwegian PM: Norway not a ‘war profiteer’

Norway is growing richer by the minute as the conflict in Ukraine boosts its gas revenues, but it is not a "war profiteer", its prime minister told AFP in an interview.

Pictured is Norwegian PM Jonas Gahr Støre.
Jonas Gahr Støre has said that Norway is not a war profiteer. File photo: Norwegian Prime Minister Jonas Gahr Store is seen in front of a NASAMS surface-to-air missile launcher during a visit at the Kongsberg Defence & Aerospace weapons factory in Kongsberg, Norway. (Photo by Petter BERNTSEN / AFP)

“It’s a notion that I flatly refuse”, Prime Minister Jonas Gahr Støre said after visiting a liquified natural gas plant near Hammerfest in the Arctic, hinting that Norway would soon become one of the world’s biggest donors to Ukraine with an upcoming aid package.

Hinting that Norway would soon become one of the world’s biggest donors to Ukraine with an upcoming aid package, Prime Minister Jonas Gahr Støre dismissed the unflattering “war profiteering” allegation made by those who want Oslo to do more for Ukrainians.

“It’s a notion that I flatly refuse”, Store said Tuesday after visiting a liquified natural gas plant near Hammerfest in the Arctic.

His government is putting the final touches on a “multi-year support package” to be announced in the coming days, designed to help Ukraine and poor countries affected by the knock-on effects of the war, such as soaring grain prices.

The aid will help them “in maintaining their civil infrastructure, hopefully one day rebuilding a free Ukraine and in the meantime also supporting them militarily”, he said. The amount and details will be announced “early in February”, he said.

Støre rejected the notion, put forward by Poland’s prime minister among others, that Oslo was, albeit involuntarily, taking advantage of the war in Ukraine for its own financial gain.

Since last year, the Scandinavian country has redoubled efforts to help compensate the drop in Russian gas supplies to Europe following Moscow’s invasion of Ukraine.

Oslo has boosted gas exports by 8 to 10 percent and is now Europe’s biggest supplier, helping the continent stay warm this winter. With gas prices high, that means Norway’s coffers are overflowing.

This year, the government has forecast its biggest ever budget surplus of 1.12 trillion kroner ($113 billion). That cash will help fuel Norway’s sovereign wealth fund, already the world’s largest, worth more than 13.4 trillion kroner ($1.34 trillion).

“Norway has for 50 years been an explorer, at some risk, and seller of energy resources, oil and gas”, he said. “Norway does not fix those prices”.

The higher gas price, he noted, has also led to soaring electricity bills for Norwegian families and companies, which is “politically a big challenge
for us” in a country that relies heavily on electricity, including for its industry, heating and transportation. 

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High interest rates unlikely to strengthen weak Norwegian krone 

Higher interest rates are unlikely to help boost a weak krone, finance experts have said after Norway’s central bank raised the key policy rate. 

High interest rates unlikely to strengthen weak Norwegian krone 

Lower interest rates have been pointed to as a factor, contributing to the Norwegian krone is at its weakest level against the euro, dollar and pound for several years. 

Essentially, interest rates in Norway are lower than in other countries, which makes the krone less attractive to investors. 

READ ALSO: What is making the Norwegian krone so weak?

On Thursday, Norges Bank raised the key policy rate to three percent, and analysts forecast that the central bank’s interest rate will be between 3.5 and 3.75 percent by the autumn. 

While low-interest rates have contributed to a week krone, the higher interest rates are unlikely to do much to help strengthen Norway’s ailing currency, financial experts have said. 

“I do not believe that Norges Bank, through the interest rate differential, will be able to secure a stronger krone exchange rate over time,” Kjetil Martinsen, the chief economist for Swedbank, told business news publication Finansavisen

Harald Magnus Andreassen, the chief economist at SpareBank 1 Markets, told the same publication that the bank would need to raise its rates much higher to tip interest rates in favour of the krone. 

“If Norges Bank were to save inflation by strengthening the krone exchange rate, they would have to raise interest rates by 150-200 basis points more than they have in the interest rate range now. We are therefore talking about a policy interest rate of over five percent, and it is not certain that it would even help,” he explained. 

He added that the world going green made it harder for the currencies of countries whose economies revolve around the sale of commodities. For example, Norway itself is heavily dependent on oil and gas sales. Historically, as oil prices have risen and fallen, so has the krone.

READ MORE: How long will the Norwegian krone remain weak?