Malaysia Seeks Over $250 Million From Norway After Defence Deal Cancellation
Malaysia's Compensation Demand Following Cancelled Defence Export Approvals
KUALA LUMPUR, May 19 (Reuters) - Malaysia's defence minister on Tuesday said a notice has been sent to Norway seeking compensation of more than 1 billion ringgit ($251.76 million), after Oslo abruptly cancelled export approvals for a naval strike missile system intended for Malaysian combat ships.
Norway has said certain export licenses of specific defence technology to Malaysia were revoked due to a shift in in Oslo's export control regulations. The decision caught Malaysia off guard and sparked a diplomatic row, with its Prime Minister Anwar Ibrahim calling the move "unilateral and unacceptable".
Financial and Contractual Implications
Compensation for Direct and Indirect Costs
• Defence Minister Mohamad Khaled Nordin said the government would seek compensation for both direct and indirect costs, adding that Malaysia had already paid around 126 million euros ($146.66 million), or 95% of the contract value, for the missile systems.
Additional Damages and Operational Impact
• Malaysia would also seek additional damages to cover the cost of dismantling and replacing equipment on ships built to accommodate the Norwegian-made missiles, as well as for re-training personnel, he told reporters.
Diplomatic and International Relations Concerns
Trust Issues with Defence Partners
• Mohamed Khaled said Norway's decision raised questions over the trustworthiness of international defence partners, particularly those from Western or NATO countries.
Broader Implications for International Relations
• "What has happened to us was not just a defence procurement issue. It reflects a larger problem, namely, the erosion of trust among countries in international relations," he said.
Response from Norway and Defence Industry
• The Norwegian ministry of foreign affairs did not immediately reply to a request for comment on the Malaysian compensation request.
• The defence arm of Norwegian group Kongsberg said in 2018 it had agreed a 124 million euro contract with the Royal Malaysian Navy to supply NSM missiles for six littoral combat ships. Mohamed Khaled said last week there was also a second deal to supply the system to two other naval vessels.
Exchange Rate Information
($1 = 3.9720 ringgit)
($1 = 0.8591 euros)
(Reporting by Rozanna Latiff; Additional reporting by Gwladys Fouche in Oslo; Editing by Martin Petty)
