At the center of the debate is Norway’s sovereign wealth fund, one of the world’s largest, which is igniting a fiery debate. This surprising hashtag-related controversy takes place while the country is preparing for parliamentary elections. As of June 30, 2025, the fund had over $2.2 billion invested in 61 Israeli companies. However, recent geopolitical tensions and ethical concerns have led to significant divestments, raising questions about the fund’s future direction and the implications for Norway’s political landscape.
The fund has recently come under fire after media reports exposed its stake in a jet engine manufacturer. Headquartered Maintenance, that is, of Israeli fighter jets. This revelation prompted Norway to divest from at least 11 companies, signaling a shift in investment strategy amid escalating concerns regarding human rights violations linked to the ongoing Gaza conflict. On August 25th, 2025, the fund took its most impactful action yet. For instance, it recently divested from Caterpillar in protest of the use of the company’s bulldozers by Israeli authorities against civilians in Gaza and the West Bank.
The fund has taken a principled stand to divest from these specific companies. This decision matches the ethical guidelines established in 2004 by then Conservative Finance Minister Per-Kristian Foss. Additionally, these guidelines reiterate unequivocally that investments should never result in breaches of international law. Our present-day political leaders couldn’t be more supportive of this bedrock principle.
Ethical Guidelines and Investment Strategy
Norway’s sovereign wealth fund, with assets exceeding $2 trillion, has been a cornerstone of the country’s economic policy since its inception in the early 1990s. Norway established the fund as a way to save the surplus revenue from North Sea oil sales. As a result, the country is able to invest unrestrained in international markets. For one, it mostly invests in global stock markets. This involves directly holding stakes in some 9,000 different companies, and consequently owning an average of 1.5 percent of every listed share globally.
Specifically, the ethical guidelines that dictate where and how this fund can invest its enormous sums. Former Prime Minister Erna Solberg made it very clear that there is no way to bring long-term investment into the political arena. She concluded, “It has really helped us to have this principle. These are welcome words, for they indicate Norway’s very real commitment to shield its investment strategies from the vagaries of political winds. This core principle is under increasing attack as oversight increases.
Recent actions in the past few months have alarmed many stakeholders. They are becoming more concerned about investments related to Israel as the crisis unfolds in Gaza. Labour Party leader Jonas Gahr Støre expressed this sentiment directly: “Norwegian funds should not be invested in companies that contribute to violations of international law and the horrific war we see in Gaza.” His remarks reflect an urgent need to focus on ethical implications within the framework of foreign policy.
Increased Investments and Domestic Backlash
Norway’s sovereign wealth fund attracted worldwide attention when it decided to divest from a number of multinational companies due to ethical considerations. Simultaneously, it increased its public investment in Israeli companies—such as Bet Shemesh Engines. From 2023 to 2024, the fund’s ownership in the jet engine components maker surged by more than $1 billion. It increased over four times, reaching a record $15.2 million. This irony of divestment while simultaneously pouring in new dollars has already raised eyebrows from across the political spectrum.
The domestic backlash against the fund’s investments has increased as the parliamentary elections draw near. Critics say these ongoing investments in companies tied to Israel directly challenge Norway’s professed ethical intentions. This added scrutiny has been further exacerbated by international reactions, especially by U.S. officials. As such, earlier this month, Republican Senator Lindsey Graham joined calls for Washington to do something more serious against Norway. Locally, he advocates for tariffs and visa revocation in response to the fund’s latest divestments.
As you may have seen, the U.S. State Department recently protested Norway’s decision to divest from Caterpillar. They are deeply concerned that this short-sighted decision will damage U.S.-Norwegian relations for years to come. The uproar over these decisions points to an important dilemma for Norway. It now has to not only ethically navigate investment but its international diplomatic relationships.
Political Implications Ahead of Elections
The increasing pressure on Norway’s sovereign wealth fund is likely to dominate parliamentary elections this autumn. Political parties know just how in touch public sentiment is with the demand for ethical investments. The Labour Party and other left-leaning factions are likely to leverage these issues to appeal to voters who prioritize human rights considerations in foreign policy.
As the political landscape continues to shift, it is more important than ever that Norway’s government delicately wades into these contentious waters. Keeping the integrity of the current sovereign wealth fund intact is a big hurdle. Simultaneously, we need to continue stressing the ethical implications of its investments in Israel.
