Norway cancels illegitimate debt and takes co-responsibility for failed development policy

A historic victory for the debt movement

Oct 2, 2006
by Kjetil Abildsnes

Norway's Minister of International Development Erik Solheim announced today that Norway is unilaterally and without conditions cancelling US$80 million in illegitimate debts owed by 5 countries: Egypt, Ecuador, Peru, Jamaica and Sierra Leone.

"Norway now cancelling illegitimate debt and admitting co-responsibility for a failed development initiative is simply historic", says Kjetil G. Abildsnes, Chair of Jubilee Norway. "Solheim shows political courage that won't go unnoticed", he said.

Norway will then have settled an ugly chapter in Norwegian aid history – the Ship Export Campaign (1976-80). This unfortunate episode in Norway's aid history had the effect of cranking up debts in 21 countries.

"This is clearly a case of illegitimate debt. Norway broke its own rules by not assessing the development needs of the countries we were exporting our ships to", says Abildsnes.

"But Solheim is now cancelling all of this debt. This is a historic victory for us", says Abildsnes. "It's the end of an embarrassing story for Norway. We applaud Solheim for this bold step".

Burma and Sudan who also have loans to Norway after the Ship Export Campaign will not receive any cancellation until the situation in the two countries change. We expect these countries to also get their debts cancelled when there is a change in their situation.

The reason given by Norway for this unprecedented unilateral cancellation is a failed development policy lacking proper needs assessment and a proper risk analysis.

"This campaign represented a development policy failure. As a creditor country Norway has a shared responsibility for the debts that followed. In cancelling these claims Norway takes the responsibility for allowing these five countries to terminate their remaining repayments on these debts", said Minister of International Development, Erik Solheim today. "Cancelling these debts will have consequences for how we think about responsible lending in the future", he continues.

The debt movement has long said that debt incurred by dictators, for failed projects, or where money have disappeared in corruption is illegitimate and not the responsibility of the people. By cancelling these claims Norway is taking another step towards defining the concept of illegitimate debt.

"That Norway takes co-responsibility in this way is unique in the world. Norway has now become the first country which by action confirms lender responsibility by cancelling illegitimate debt", says Abildsnes.

Norway has now broken the unspoken rule of creditor solidarity. Creditors have until now banded together to insist that poor countries repay their debts and have refused to admit that they share some responsibility for having extended loans irresponsibly, often for geopolitical strategic purposes. This has been at the expense of poor countries. Norway is setting an example and creates a precedent that other countries surely must follow. Norway is now in a position to demand action from other countries and international institutions on this issue.

"By cancelling these debts we want to give rise to an international debate on lender responsibility", says Solheim.

"The debt crisis is not over. We will make sure that Norway continues to push for a just international monetary system where debts are legitimate and responsible lending the norm, not the exception", says Abildsnes

Kjetil Abildsnes, SLUG (Norwegian Jubilee Campaign)

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