Norway's sovereign wealth fund is considering withdrawing from Israel investments

"The State Pension Fund Abroad brings with it two primary obligations: to generate a good return for future generations and at the same time to avoid investing in companies that contribute to grossly unethical relationships." The passage from the ethical guidelines of the Norwegian state fund describes a tension between the pursuit of profit and Morality that every financial manager knows.

But the fund that manages the profits from Norway's oil wealth is no ordinary investor. It is the largest sovereign investment fund in the world and reports to the UK government. Where politics comes into play, moral principles become more explosive. And now the investment fund is planning an ethical reassessment that could pose a serious threat to Israel's economy.

According to documents that WELT AM SONNTAG was able to see, the sovereign wealth fund is considering withdrawing investments from Israeli banks if they contribute to the construction of settlements in the occupied Palestinian territories through their lending. When asked, the Israeli Foreign Ministry said: "This is a matter of concern which we are treating with all seriousness."

According to the findings of this newspaper, the ethics council of the state fund checks whether the Israeli banks in which the fund holds shares grant loans for the construction of settlements. Where this is the case, the Council intends to recommend a withdrawal. "We are looking at the role of Israeli financial institutions that finance new settlements in the occupied territories," says Cecilie Hellestveit from Oslo, a member of the Ethics Council, WELT AM SONNTAG.

The doctor of law is considered an expert on the Middle East conflict and works at the Norwegian Academy for International Law. The review is only about a few banks that are active in this segment. "If an institute were to operate a branch in the West Bank, for example, that would not be a problem from the Council's point of view," says the lawyer. "Our guidelines are always about direct support for an illegal act, in this case the financing of the expansion of settlements, which is illegal under international law."

In fact, the legal status of settlement construction is internationally disputed. The Geneva Convention prohibits states from bringing parts of their own population into occupied territories of another state. Jerusalem argues, however, that no state existed in the Palestinian West Bank at the time of the occupation and that Israel's treaties with the Palestinian leadership provide for a negotiated solution to the settlements, not a ban. In addition, Jewish citizens settled voluntarily and on legally acquired land.

Regardless of the legal assessment, a Norwegian withdrawal could have far-reaching consequences. Israeli banks are prohibited from refusing loan requests for political reasons. So you have little chance of categorically ruling out lending for settlement construction. So potentially all Israeli financial institutions could be affected sooner or later. This could have dramatic consequences for Israel's banking world. Because the Norwegian state fund is one of the largest European investors in Israel with more than 500 million dollars.

And other international investors could follow the example of the renowned sovereign wealth fund. If the Norwegians withdraw, Israel's banks and thus the economy will have a problem. And the international boycott movement against Israel, which is closely intertwined with militant Palestinian groups, should rejoice.

Norway is particularly understanding of the Palestinian perspective on the conflict. Especially on the political left, which currently leads the government with Prime Minister Jonas Gahr Støre. According to a survey by the Norwegian Center for Holocaust and Minority Studies last year, 23 percent of Norwegians “mostly” or “particularly” agree with the Palestinian position in the conflict, compared to just 9 percent with Israel. 33 percent of respondents even agreed with the statement: "Israel treats the Palestinians as the Jews were treated during the Second World War".

"This attitude also includes a trivialization of the Holocaust and is therefore viewed as anti-Semitic by many Jews for good reason," says anti-Semitism researcher Vibeke Moe, who led the study. "This view seems to be somewhat more widespread in Norway than in other European countries. It has been repeated in the media for decades, for example in cartoons." Although Norwegians with anti-Israeli attitudes often have anti-Semitic opinions, this view of the Middle East conflict is said to be more likely to be traced back to a view that is particularly critical of Israel.

In fact, the demands of the Norwegian trade union umbrella organization LO correspond to those of the anti-Israel boycott movement BDS, which the German Bundestag classified as anti-Semitic in 2019. For example, last year unionists demanded that the sovereign wealth fund "exclude all trade and investment with companies that conduct or contribute to business activities in the occupied territories."

The foreclosure process against Israel's banks fits this claim. Ethics Council member Hellestveit admits that there is a strong pro-Palestinian current in Norway. “But the Ethics Council will not be pressured or pushed in any direction. We just stick to our guidelines at all times,” she says. "And, of course, we have no anti-Israel policies and no political agenda."

The final decision on investing in Israel rests with the Central Bank, which reports to the Ministry of Finance. There, a request from WELT AM SONNTAG went unanswered.