Norway’s Central Bank: Gov't Should Start divesting from Russia

Norway’s central bank said the government should allow its massive sovereign wealth fund to sell stakes in its Russian portfolio when possible, ending a freeze that has been in place since 2022 preventing divestments.

The Norwegian finance ministry ordered the suspension of all transactions in Russian assets held by the fund, which is managed by the central bank, shortly after Moscow launched its full-scale invasion of Ukraine in February 2022, saying at the time that the ultimate goal was to divest.

The $1.8 trillion Norwegian sovereign wealth fund is the world’s largest, owning 1.5% of the shares of listed companies globally.

The fund remains effectively barred from divesting Russian assets because it is not allowed to sell them to counterpart funds sanctioned by the United States or the European Union.

While this means that a general exit plan cannot be drawn up, the fund should now be allowed to sell its assets in Russia if opportunities arise, the central bank said in a letter to the finance ministry dated Aug. 25 and published on Wednesday.

“Sanctions against Russia and countermeasures by the Russian authorities have further escalated in 2024,” the bank said in the letter, adding that “opportunities to sell Russian bonds are currently very limited.”

Moscow views sanctions by the United States and the European Union as a form of economic warfare and says calls to divest Russian assets are hostile acts by unfriendly states.

Russian Central Bank Deputy Governor Philippe Gabonia told Reuters that any decision to sell assets in Russia requires Moscow’s permission, which is only granted “for compelling reasons.”

The Norwegian fund’s holdings in Russia were estimated at around $3 billion at the end of 2021, but the value has fallen sharply to about $135.71 million after the value of Russian assets worldwide has been devalued since the start of the war in Ukraine.