Norway has launched a formal review of its $2 trillion sovereign wealth fund’s investments in Israeli companies, amid growing political and public pressure over its alleged links to firms aiding Israel’s military operations in Gaza.
The move, announced Tuesday by Finance Minister Jens Stoltenberg, tasks Norges Bank and the fund’s Ethics Council with re-examining the portfolio’s holdings due to the worsening humanitarian situation in Gaza and the occupied West Bank.
The Government Pension Fund Global (GPFG) — often referred to as the Norwegian oil fund — is the world’s largest sovereign wealth fund and is known for its ethical investment standards. However, it has faced increasing scrutiny from political parties, trade unions, and human rights groups who claim the fund has indirectly supported Israel’s occupation and military offensive through investments in certain companies.
Focus on Bet Shemesh Engines
The immediate controversy centers on the fund’s investment in Bet Shemesh Engines, an Israeli aerospace company allegedly linked to the maintenance of military aircraft used in airstrikes on Gaza. According to Norwegian newspaper Aftenposten, the oil fund increased its stake in the company significantly over the past two years, reaching a value of $15 million by the end of 2024 — more than four times its value in 2023.
Prime Minister Jonas Gahr Støre expressed deep concern over the reports, stating that he had requested Stoltenberg to obtain clear answers from Norges Bank. “The war in Gaza is contrary to international law and is causing terrible suffering, so it is understandable that questions are being raised,” Stoltenberg added.
Political Pressure Ahead of Elections
The timing of the review comes just weeks before Norway’s parliamentary elections on September 8, with the government under fire from opposition parties for not taking stronger action. The centre-left coalition is facing a tight race, and the oil fund’s controversial holdings have become a flashpoint in national debates.
The fund currently has 0.1% of its total assets — about NKr22 billion ($2.1 billion) — invested in 65 Israeli companies, including Bet Shemesh.
Ethics Council Under Scrutiny
The oil fund’s independent Ethics Council, which advises on exclusions based on ethical concerns, has recommended blacklisting nine Israeli companies since 2009. In 2024 alone, it investigated 20 Israeli firms over potential links to the occupation and the war in Gaza, resulting in two new exclusion recommendations.
However, Nicolai Tangen, CEO of the oil fund, said Bet Shemesh was not on any exclusion list — neither by the Ethics Council, the United Nations, nor other bodies. He emphasized that the investment was made through an external manager and pledged to examine the new revelations.
“I see the same pictures as you — it’s terrible to watch,” Tangen said when asked if he understood the public outcry.
Sources within the fund suggest there is frustration over the slow pace of ethical reviews, especially as protests continue outside Norges Bank headquarters in Oslo. At the same time, officials are wary of escalating tensions with Israel or triggering diplomatic fallout with the United States if they move too aggressively to divest.
Balancing Ethics and Diplomacy
The review highlights the difficult position Norway’s oil fund occupies — balancing its commitment to ethical investment standards with the complex geopolitical risks of withdrawing from companies involved in controversial regions. As global attention remains focused on Gaza, the fund’s next steps will be closely watched both at home and internationally.
