On the 6th of October Norway could write development history by canceling debts on reasons of illegitimacy, but sustained pressure in the coming weeks will be crucial. Civil society from across the World is writing letters to Development Minister Erik Solheim as budget negotiations in Norway continues.

In May this year Norways development minister Mr. Erik Solheim declared that he would love to be the Minister to "drew a line" over Norways claims. Most of these claims derive from the "Shipping Export Credit-campaign" from 1977–1980, a scheme were Norwegian-built ships were exported as development aid in response to a crisis in the ship-building industry. Mr. Solheim stated that the government would have a suggested solution in this year’s budget. Budget negotiations are currently underway in Norway. The budget will be presented on the 6th of October.

In total the debt deriving from the Shipping Export Credit-campaign amounts to about $651,6 million. Of this about $190,7 million have been cancelled through topping up of HIPC. About $460,9 million remain for seven countries – Burma, Sudan, Ecuador, Egypt, Sierra Leone, Peru and Jamaica. The deal, while relatively small, could have far reaching consequences depending on how the debt is cancelled and the reason given for canceling this debt. Civil society has argued that Norway now must do three things:

- Cancel all claims including claims vs countries like Burma or Sudan. A decision should be taken now – even if delivery of the funds is in the future.

- Uphold the principle of not financing debt cancellation over the aid-budget. Responsibility for financing the deal should be with the Ministry of Commerce that financed the scheme in the first place.

- Norway must apologize and acknowledge that the claims are illegitimate.

International expectations and pressure

Civil society from all over the world have been sending letters to Mr. Solheim encouraging him to take a bold stance. A letter from seven former Nobel peace prize winners states:

"It would be important for this decision to include a clear and public acknowledgement of the illegitimacy of the ensuing debts, as has already been established, as well as an indication of the steps the Norwegian government is planning to take towards the restitution of what was unfairly charged and the reparation of damages. Such a step would constitute a valuable act of justice for the peoples and countries affected by the debts contracted against their interests and in contradiction with the Norwegian government’s own standards and tradition. It would also be a very positive signal for other governments in both the North and the South, confirming that it is possible to face old mistakes with truth and justice, and to establish new guidelines for relationships based on transparency and the full respect of human rights."

Acting director of Christian Aid Martin Kyndt writes: "We strongly hope that the government will fulfill its pledges to draw a line across these debts, and to publicly acknowledge their illegitimacy and injustice."

Jubilee USA writes: "We hope the Norwegian government will cancel these claims based on a clear and public acknowledgement of the irresponsibility and illegitimacy of these debts. We feel this would send a very clear and positive message to the global community. We hope that Norway will wish to remain at the forefront of this issue and that shortly other governments will also speak out. We will continue to call for bold action on the part of our own governments and the international financial institutions on this issue and will also monitor any actions undertaken in this area."

Possible outcome

The Norwegian government is keeping its cards hidden, but from discussions and signals it looks like the government could be ready to draw a line across a substantial part of this debt. It will also have to come up with a reason. Without continued pressure this will most likely include elements that could set precedence, but not the word illegitimate or an apology. How it will be financed still remains to be decided.

With sustained and mounting pressure from Norwegian civil society and continued pressure from international civil society – a very good and possibly historic decision could be within reach.

This article was first published in the Debt Watch list serve by Eurodad

Related resource:

Letter to Norwegian Government on illegitimate debt, by Eurodad

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