Norwegian fund divests from Israeli defense firm, plans more sell-offs over Gaza war

The Norwegian $2 trillion sovereign wealth fund announced on Tuesday that it would sell its 2% stake in Bet Shemesh Engines, an Israeli defense company that produces jet engines, due to Oslo’s criticism of Israel’s self-defense military operations against Hamas in Gaza. Bet Shemesh Engines is an important supplier of military equipment to the Israeli military, especially the Israel Air Force. 

Norges Bank Investment Management (NBIM), which is the world’s largest wealth fund of its kind, signaled that it would likely proceed with divesting from other Israeli companies. 

"We expect to divest from more companies, NBIM CEO Nicolai Tangen told journalists on Tuesday at a press conference. 

The Norwegian fund revealed already on Monday that it would end all contracts with the external asset manager that manages its investments in Israeli companies. The fund, which previously had investments in 61 Israeli companies recently reportedly sold off its stocks in 11 Israeli companies. With the exception of Bet Shemesh Engines, no other affected Israeli company has at the time of this writing been publicly named. 

The decision comes after the Norwegian government announced last week that it would reassess the fund’s stakes in Israeli defense companies. In addition to its opposition to the Gaza War, Norway is also opposed to what it labels Israeli “occupation” in Judea and Samaria, internationally known as the West Bank. 

Norwegian Prime Minister Jonas Gahr Støre publicly stated his government’s position in a recent interview with Norwegian national broadcaster NRK. 

“We need clarification on this matter because what I’m reading causes me discomfort,” Støre said. 

"We had discussions about their business in the United States, not about the war in Gaza," the wealth fund CEO Tangen argued, revealing that the wealth fund initially rated the Bet Shemesh Engines company as a “medium risk” investment concerning what it labels “ethics concerns.” However, in May, the fund reassessed that the Israeli company had become a “high-risk” stock. 

"We should have been quicker in taking back control of the Israeli investments," Tangen said.

However, the Norwegian wealth fund has also targeted non-military Israeli companies. In May, the fund decided to divest from the Israeli energy company Paz due to its affiliation with Jewish communities in Judea and Samaria, which Norway and other countries claim are illegal under international law. Israel disputes this claim and stresses that the specific territory is disputed rather than occupied. 

“By operating infrastructure for the supply of fuel to the Israeli settlements on the West Bank, Paz is contributing to their perpetuation. The settlements have been established in violation of international law, and their perpetuation constitutes an ongoing violation thereof,” Norway’s Council on Ethics claimed at the time. 

However, Israeli communities in Judea and Samaria have in practice become suburbs of Jerusalem and the largest communities are located close to the Tel Aviv metropolitan area in central Israel. This reality on the ground means that most leading Israeli companies have branches in these Israeli communities that are largely indistinguishable from other Israeli towns. 

The affluent Scandinavian country has strong social democrat roots and has a tradition of supporting what it believes is the underdog in a conflict. Norway has consequently become a vocal critic of Israel, which is frequently portrayed in the hostile Norwegian media as an “aggressive” Goliath while Hamas-controlled Gaza is presented as the underdog David. 

In May 2024, Norway joined Spain and Ireland and unilaterally recognized a “Palestinian state” amid ongoing Hamas aggression against the Jewish state. The Norwegian Foreign Minister Espen Barth Eide defended the decision, arguing that “for more than 30 years, Norway has been one of the strongest advocates for a Palestinian state. Today, when Norway officially recognizes Palestine as a state, is a milestone in the relationship between Norway and Palestine.”

Israel strongly criticized Norway, Spain and Ireland, arguing that the Western nations were in practice rewarding Hamas terrorism, the Oct. 7 massacre against Israelis and undermining prospects for genuine peace.