Norway Faces Pressure To Tap Its $1.8 Trillion Sovereign Wealth Fund To Boost Aid To Ukraine

Norway's Prime Minister Jonas Gahr Store with Ukraine's President Volodymyr Zelenskyy at a NATO Summit in July 2024.

AP Photo/Susan Walsh

• Calls are growing for Norway to tap into its sovereign wealth fund to boost funding for Ukraine.
• The calls come amid souring relations between the US and Ukraine, raising pressure on Europe to step up.
• Norway has spent less on Ukraine aid than its neighbors. Its SWF is worth $1.8 trillion.

Norway is facing growing pressure to tap into its massive sovereign wealth fund to boost aid for Ukraine as concerns grow over continued US support for Ukraine's war efforts.

Norway, a founding member of NATO, has a $1.8 trillion sovereign wealth fund, the largest in the world, fueled by oil and gas revenues, as well as investments in stocks, bonds, real estate, and renewable energy.

The country caps its annual use at 3% to finance Norway's welfare state and budget. However, amid growing tensions between Washington and Kyiv, Norwegian politicians and economists are pushing to tap the fund to increase support for Ukraine.

"Norway is one of the few countries that has large money easily accessible, and we must therefore double our support to Ukraine immediately," Guri Melby, the leader of Norway's Liberal party, said in a Facebook post Saturday.

Arild Hermstad, the country's Green Party leader, said that "Norway has a record-high oil fund that we must now actively use to secure peace and democracy in Europe and Ukraine."

Norway lags behind its Nordic neighbors

Norway has spent less on aid to Ukraine than its Scandinavian neighbors, allocating just 0.75% of its GDP, compared to Sweden's 0.91%, Finland's 0.98%, and Denmark's 2.17%, according to the Kiel Institute for World Economy Ukraine Support Tracker.

Norway's Prime Minister Jonas Gahr Støre said in an X post on Thursday that parliament had agreed to double the country's financial pledge to Ukraine this year, to about $8.1 billion.

The Prime Minister's Office didn't reply to a request for comment from Business Insider.

But when it comes to the sovereign wealth fund, Norway's finance minister, Jens Stoltenberg, a former NATO Secretary General, warned last month that breaking the 3% cap would be risky and should only be used in times of crisis.

Meanwhile, in an op-ed published last weekend, 47 Norwegian economists, analysts, and professors urged the country to use the fund to help Ukraine.

"Russia's attack, if not stopped, poses an existential threat to freedom and democracy, not only in Ukraine but throughout Europe, including Norway," they wrote.

Breaking the 3% cap

Knut Anton Mork, a professor emeritus of economics at the Norwegian University of Science and Technology, told BI it wouldn't be the first time Norway had broken the 3% cap.

It exceeded it by 1.2 percentage points in 2020, during the COVID-19 pandemic, and by 0.1 percentage points during the 2008 financial crisis, when it was already set at 4%.

Even so, Mork said "disregarding the 3% rule would be somewhat unusual, and more so the larger the gift."

He predicted that the government would likely stay "within the 3% rule, or maybe slightly above" it.

Einar Lie, a professor of economic history at the University of Oslo, who along with Mork signed the op-ed, said breaking the 3% cap to aid a foreign country has never been considered before, but he argued that helping Ukraine to "survive and deter further aggression is vital" for long-term security.

"It is definitely more likely to happen as a part of a broad concerted action among European countries and, hopefully, the US," he added.

European concern over US support

Calls for Norway to step up its spending for Ukraine come amid uncertainty over Washington's commitment to the war-torn country.

Last Friday, during Ukrainian President Volodymyr Zelenskyy's visit to the White House, President Donald Trump accused Zelenskyy of "disrespecting" the US.

Days later, Trump said he was pausing all military aid to Ukraine. One military expert told BI that if US aid does not restart, then Ukrainians could hold out for perhaps two to four months.

The situation has raised concerns about how Europe could step in to further help Ukraine's defense.

At emergency talks in London on Saturday, European Commission President Ursula von der Leyen said a "massive surge" in defense spending among European allies was in the works.

And on Tuesday, the European Union unveiled a plan to boost member states' defense spending amid what von der Leyen referred to as an "era of rearmament."

The ReArm Europe plan could unlock about $840 billion in funds.