The Norwegian government's instruction to sovereign wealth fund to review its investments in Israel principally reflects huge public pressure in the Scandinavian country about what is happening in Gaza and the fact that Israel's image has become so toxic that it is easy to stir up public uproar.
The fund's stake in Beit Shemesh Engines has been well-known for two years, as had its holdings in a number of other Israeli companies. The fund’s ethics committee and management have defended them, saying that the ethical standards of the fund's investments did not require their liquidation. But then allegations published in a Norwegian newspaper by a group called "Historians for Palestine" about the Israeli company’s possible involvement in deals with the Israeli Air Force were enough to create public furor that is now at the top of the Norwegian agenda. The framing of the company’s business activities, according to which it "profits" from the war in Gaza, as do Norwegian citizens who invest in it, was too much for the public in the country in the current situation.
This is not the first clash between the Norwegian sovereign wealth fund and Israel. But in this instance it seems that public pressure has overwhelmed the government. The fund has previously stopped investing in companies that are "active in the territories," whether in construction, infrastructure, even telephony (Bezeq) and more recently in energy and fuel supply (Paz). Slowly, Israeli companies have been removed from the fund's investments - which manages $1.9 trillion - for various ethical reasons. Delek, for example, was even thrown out of the portfolio following a gas and oil agreement by NewMed in western Morocco, an area over which control is disputed.
When the war in Gaza broke out after the terrorist attacks on October 7, 2023, and Norwegian public opinion subsequently turned sharply against Israel, the fund announced a review of all its investments. In the end, it made do with divesting from a few companies, including US companies. The demand that had been raised in the past - to remove all Israeli financial institutions from the investment list - was not met. The country's largest labor union published a public letter calling on the government to sell all its investments, but the fund did not give in. The opposition demanded similar steps, but the government did not relent. The media, supported by pro-Palestinian activists, published public letters and petitions, but the fund stood steadfastly behind its original position. Minister of Finance Jens Stoltenberg, former NATO director general, clarified that the ethical criteria do not require a boycott of every Israeli company, even though this was the dominant public sentiment.
The pressure has reached a peak
But in the current situation, with harrowing images of the humanitarian crisis in Gaza and the growing death toll, has bought the pressure to a new peak. The "Aftenposten" newspaper published the results of an "investigation," finding that Beit Shemesh Engines provides services to the Israeli Air Force. That was sufficient. The connection to the air force that is bombing Gaza had its effect. The fact that the fund has even slightly increased its holdings in the company, which manufactures parts for jet engines, also caused a stir, even though this is public information. Stoltenberg suddenly said that this was an issue of concern, and Prime Minister Jonas Gahr Stoere called on the fund to review all its investments in Israel.
Suddenly, the investment in 65 Israeli companies, worth $2.2 billion, according to the latest reports, is in doubt.
The fund's director, Nicolai Tangen, has stressed in the past 48 hours that the connection between Beit Shemesh Engines and the war in Gaza is still unclear, and that "there are no red flags regarding its activities." In response to the claims of "Historians for Palestine" on the involvement of other companies in Israeli control of the territories, the director of the fund's ethics committee said earlier this week, "A large part of the accusations fall outside what is considered prohibited by the guidelines."
"Aftenposten" wrote that if this is the case, "the guidelines need to be changed." Now, the Norwegian media are asking who knew what, and when. Reports that the fund's directors have 'cold-shouldered' pro-Palestinian activists are making headlines.
Israel's image in Norway has never been worse. Norway could also be procuring weapons from Israel, as Beit Shemesh Engines produces parts for the F-35 that Oslo is buying from the US. Even so the Norwegians want nothing to do with the war. And the government has no choice but to give in to the pressure. "I see the same pictures as everyone else - it's terrible to see," Tangen said at a press conference in Oslo, before promising to consider the "new information" that has been published.
Published by Globes, Israel business news - en.globes.co.il - on August 6, 2025.
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