Malaysia Pursues Legal Action and Compensation in Norway Defence Deal Row
Escalating Diplomatic Dispute Over Naval Missile System
By Danial Azhar and Rozanna Latiff
Background of the Defence Deal
KUALA LUMPUR, May 14 (Reuters) - Malaysia's defence minister said on Thursday the country planned to claim compensation and was considering legal action in an escalating diplomatic row over Norway's decision to revoke export approvals for a naval strike missile (NSM) system intended for Malaysian combat ships.
Defence Minister Mohamed Khaled Nordin said the government had already paid nearly 95% of the contract value when Norway pulled the approvals in March just days before the missile systems were due to be delivered.
Details of the Contracts
The defence arm of Norwegian group Kongsberg said in 2018 it had agreed a 124 million euros ($145.23 million) contract with the Royal Malaysian Navy to supply NSM missiles for six littoral combat ships (LCS). Mohamed Khaled said on Thursday there was a second deal to supply the system to two other naval vessels.
Malaysia's Compensation and Legal Response
"We are doing the computation right now - we would not only claim the amount that we have paid, but also the damages arising from the breach of contract," he told reporters, according to a recording of his remarks provided by the ministry to Reuters.
The Norwegian Foreign Affairs Ministry did not immediately respond to requests for comment on Thursday.
Norwegian and Kongsberg Statements
It said last week it had decided to revoke certain export licences related to specific technologies that were now subject to stricter controls, while Kongsberg said licensing decisions were handled wholly by Norwegian authorities and that it had complied with all applicable regulations.
Impact on Regional Security and Malaysia's Defence Readiness
Malaysia's Reaction to Norway's Decision
MALAYSIA SAYS REGIONAL SECURITY AT RISK
Norway's decision to cancel the approvals caught Kuala Lumpur by surprise with Prime Minister Anwar Ibrahim saying it was "unilateral and unacceptable".
Anwar conveyed his government's objection in a phone call with Norwegian Prime Minister Jonas Gahr Stoere, according to a statement posted on social media on Thursday.
Consequences for Defence and Regional Balance
The decision would have grave consequences for Malaysia's defence operational readiness and "undoubtedly carry broader ramifications for the regional balance," Anwar said.
"Signed contracts are solemn instruments. They are not confetti to be scattered in so capricious a manner," he said.
"If European defence suppliers reserve the right to renege with impunity, their value as strategic partners flies out the window."
Challenges Facing Malaysia's Littoral Combat Ship Project
Project Delays and Relaunch
Malaysia's LCS project, launched in 2011, was supposed to supply the navy with five of six planned vessels by 2022 at an initial cost of 6 billion ringgit, but the local shipbuilder tasked with building the ships failed to deliver them.
Amid allegations of mismanagement and corruption, the government relaunched the project in 2023 following an official investigation.
Current Status and Future Plans
The delivery of the first vessel, originally scheduled for August this year, has been delayed until December due to late equipment deliveries from manufacturers and ongoing rework issues.
Minister Mohamed Khaled said the LCS programme would continue as planned but without a missile system installed.
Malaysia was also evaluating several alternatives to the NSM system, but the process was complicated as any replacement would have to be compatible with the ships' existing equipment, he added.
Financial Information
($1 = 0.8538 euros)
($1 = 3.9260 ringgit)
Reporting Credits
(Reporting by Rozanna Latiff and Danial Azhar; Additional reporting by Ashley Tang; Editing by David Stanway and Kate Mayberry)
