Norwatch: The Government Knew about the Yara Transaction

The Ministry of Trade and Industry knew about the transaction but did not try to stop the import of phosphate from Western Sahara. Norway may have broken international law.

Published 09 February 2009

(First published in Norwegian 27 August 2008)
By Erik Hagen
See story on Norwatch homepages here. 

A full 4 weeks before the Yara ship arrived in Norway, and 2 weeks before the ship loaded the phosphate on board in occupied Western Sahara, the political leaders of the Ministry of Trade and Industry (NHD) realised that Yara would be breaking Norwegian ethical guidelines.

“An extremely serious breach of fundamental ethical norms.” That is what the involvement in Western Sahara was called by the Ministry of Finance in 2005. The breach was so serious that the Norwegian Government Pension Fund - Global threw out its shares in an American petroleum company that participated in the plunder.

A series of Norwegian political parties, including the three parties in the present government, have demanded an immediate stop in Norwegian trade with Moroccan interests in Western Sahara.

In the Yara case, however, the government has turned a blind eye. And this despite the fact that the NHD knew about the import already several weeks before the ethics breach occurred. The case was taken up for hearing by the top political leaders in the NHD, but they never protested.

Good News
On 1 July this year Yara contacted the NHD and the Ministry of Foreign Affairs. Yara requested a meeting to report that the company had decided to buy a “test shipment” of phosphate from Western Sahara.

Two days later, on 3 July, Yara's public relations officer, Bente Slaatten, met with State Secretary Øyvind Slåke and Director General Mette Wikborg in NHD's Ownership Department at the Ministry of Trade and Industry. 

At the meeting Yara presented the background for why it this once would violate the Norwegian advice with regard to trade with the area. 

Yara nevertheless presented this breach of the ethical guidelines as happy news. Although it came to report that it would violate the guidelines, the main message was still that it would never import phosphate in the future. 

“The company wished to report that it had decided to buy a phosphate cargo originating in Western Sahara to be able to carry out testing,” State Secretary Slåke wrote in an e-mail to Norwatch. “It simultaneously informed us that it would not start importing phosphate from the mentioned areas so long as the UN and the Norwegian authorities advised against import from Western Sahara,” Slåke wrote.

“How could the NHD permit this import?”, Norwatch asked.

“The Ministry has not given Yara any kind of permission. Yara is a stock exchange-listed company, and the business evaluations are made by the company’s administration and board. We have, nevertheless, noted that Yara emphasised that the company would not start import of phosphate originating in Western Sahara,” Slåke answered.

“The government's general attitude to the companies' social responsibility is clearly expressed in the Norwegian state\'s ownership report. It is the companies' board and leaders who are responsible for ensuring that the companies attend to our expectations within important crossing considerations, such as ethics, environment, and anti-corruption work,” Slåke continued.

On 8 July the NHD sent a letter to Yara's leaders and board, as a follow-up to the meeting they had had. The letter does not mention that the NHD protested with regard to the trade. 

The NHD has only noted that Yara will not import in the future. It has not protested at all with regard to the upcoming phosphate delivery.

“The Ministry notes the information and the fact that Yara International will not start importing phosphate originating in Western Sahara so long as Norwegian authorities advise against such import. With regard to concrete advice, the Ministry of Trade and Industry will refer to the Ministry of Foreign Affairs and expects that Yara International contacts and follows the advice of the Ministry of Foreign Affairs with regard to questions about understanding this advice,” says the letter, to which Norwatch has obtained part access. 

Yara also had meetings with the Ministry of Foreign Affairs, but according to Yara, the company was not strongly advised by the Ministry of Foreign Affairs either. Yara called on the Ministry and said that it was well aware of Norwegian policy in Western Sahara and pointed out that it intended to follow the advice. In addition, it informed about the exception from the rule that it would make. 

Barely 2 weeks later, on 21 July, 'African Wildcat' anchored in the port of El Aaiun in occupied Western Sahara. In the meanwhile the ship had been waiting outside the port town of Safi in Morocco. 

Nine days later, on 30 July, the bulk ship reached Yara's port facilities on Herøya. At that point the NHD had known about Yara's intentions for 4 whole weeks, and the company decidedly largest shareholder had still not protested. 

The NHD owns 36.98% of the shares in the fertiliser company. In comparison, the Bank of Norway is obliged to practise active ownership with regard to foreign companies that violate the ethical guidelines, even when the Government Pension Fund - Global has only a tiny shareholding.

“Will Not Import”
“I can confirm that we have imported one phosphate cargo. We are not about to start importing phosphate originating from Western Sahara. This is a single shipment, which is to be used to test our new plant at Porsgrunn,” Bente Slaatten, Yara's public relations officer, told Norwatch.

She said further that Yara is now investing several hundred million Norwegian kroner (tens of millions of euros) in their plants at Porsgrunn and Glomfjord to obtain greater flexibility in connection with what kind of phosphate they can handle. Today Yara's plants are adapted to the import of Russian phosphate, but now that Russia is turning off the taps for export of its own phosphate, Yara will have to think anew.

"We have had a project in which we tested various types of phosphate. In that project we chose to include this type, with a view to that some time in the future the Western Sahara conflict will be resolved, and that the UN and Norwegian authorities will no longer advise against it. Now that we are investing large sums in the new plant, we must ensure that we get it right," Slaatten told Norwatch. 

“We shall not start trade in phosphate from Western Sahara so long as the UN and Norwegian authorities advise against it,” Slaatten emphasised.

“Has Yara consulted the people of Western Sahara or their representatives with regard to what they think about this trade?”, Norwatch queried.

“No. We are not starting import. This was a test, and we are not going to import,” Slaatten answered. 

The NHD stated that it does not know what kind of contact Yara may have had with Western Sahara's population before the order.

Possibly Contrary to International Law
That Yara has imported a shipload of phosphate from Western Sahara without listening to the people's representatives may have resulted in a violation of international law.

“If the phosphate trade occurs without the Sahrawi people supporting the industry, then it is contrary to international law. That is clear,” Hans Corell, former UN under-secretary general of legal affairs, told Norwatch in an earlier interview.

In 2002 Hans Corell carried out an analysis for the UN's Security Council on the legality of exploring for petroleum in occupied Western Sahara. Corell is therefore considered one of the world's most competent lawyers on this topic. In August 2008 he was an invited guest at the Norwegian Parliament's conference pertaining to maritime law. 

His analysis of Western Sahara is also often used as a judicial reference with regard to other trade and industrial activity in the country. 

“During the process of the Security Council evaluation in 2002 it emerged that the people of Western Sahara and their representatives did not support the petroleum exploration at all. And that is why we concluded that the exploration and the resource exploitation would be contrary to international law if they continued to be contrary to the local population's wishes,” Corell told Norwatch.

“In the question of phosphate, it is a matter of exploitation of resources, so such trade would be contrary to international law if the population is opposed to it,” Corell said about the trade in phosphate from Western Sahara. 

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