Norway scrutinizes sovereign wealth fund over stakes in Israeli defence industry

Norway’s government has directed its $2 trillion sovereign wealth fund — the world’s largest — to reassess its investments in Israeli companies following mounting criticism that it has been financing businesses linked to Israel’s military operations in Gaza.

Finance Minister Jens Stoltenberg announced on August 5 that he had instructed Norges Bank, which manages the oil fund, along with the fund’s independent ethics council, to examine its holdings in Israeli firms due to the deteriorating humanitarian situation in Gaza and the occupied West Bank, as per foreign media reports.

The move comes amid growing domestic pressure on Norway’s centre-left government ahead of tightly contested parliamentary elections set for September 8. Political parties across the spectrum, trade unions, and activists have accused the fund of investing in companies that support Israel’s occupation of Palestinian territories and its ongoing offensive in Gaza.

The latest backlash was triggered by a report published this week in Norwegian daily Aftenposten, which revealed that the oil fund had increased its stake in Bet Shemesh Engines, an Israeli company allegedly involved in maintaining aircraft used in airstrikes on Gaza.

At the end of 2024, the fund held a 2.1% stake in the company worth $15 million—more than four times its value at the end of 2023, just after Hamas’s October 7 attacks on Israel and the ensuing conflict.

Prime Minister Jonas Gahr Støre expressed alarm over the revelations, stating that he was “very concerned” and had asked Stoltenberg to engage directly with Norges Bank and obtain clear explanations. “The war in Gaza is contrary to international law and is causing terrible suffering,” Stoltenberg said. “It is understandable that questions are being raised about the fund’s investments in Bet Shemesh Engines.”

As of the end of 2024, the oil fund had around 0.1% of its total assets invested in Israel—approximately NKr22 billion ($2.1 billion) across 65 Israeli companies. While these investments represent a small fraction of the fund’s portfolio, the political and ethical ramifications have proven significant.

The fund’s CEO, Nicolai Tangen, said on Tuesday that the investment in Bet Shemesh Engines had been made through an external fund manager. He emphasized that the company is not currently on any exclusion lists maintained by the oil fund’s ethics council, the United Nations, or other oversight bodies. “We will now review the new information,” Tangen said. When asked whether he understood the public outrage, he replied: “Of course. I see the same pictures as you — it’s terrible to watch.”

Since 2009, the ethics council has recommended the exclusion of nine Israeli companies from the fund’s portfolio. Two of those recommendations came in 2024, after the council reviewed 20 Israeli companies over alleged links to the occupation of the West Bank and military actions in Gaza.

Despite the growing calls for divestment, officials at the oil fund are said to be grappling with how to respond swiftly to public concern without causing diplomatic complications, particularly with the US and Israel. Some insiders have expressed frustration at what they perceive as the ethics council’s slow pace in issuing recommendations, especially as demonstrators have repeatedly targeted Norges Bank’s Oslo headquarters in protest.

By Tamilla Hasanova