Investments in Israel by Norway's sovereign wealth fund have dominated the run-up to the country's 8 September election, sparking a national debate over the management of the world's largest single stock market investor that could determine the next government. The controversy has tightened the race, with polls in August compiled by the website pollofpolls.no predicting that a bloc of four right-wing parties – the Conservatives, Progress, Liberals and Christian Democrats – would win 85 seats, just one more than is needed for a parliamentary majority. In an escalation of pressure on Norway's ruling Labour Party, the Socialist Left party announced this week that it would not support any future Labour government unless the fund divests from all companies involved in what it termed "Israel's illegal war on Gaza". The Labour party has rejected this demand, but it may find such calls harder to refuse after the election. 'Worst crisis' "This is the worst crisis I have ever faced," Nicolai Tangen, the CEO of Norway's sovereign wealth fund, told the Swedish newspaper Dagens Industri on Friday. "This situation is serious because it is about trust in the fund." In an interview last week, Tangen ruled out resigning, saying he had implemented the fund's mandate as approved by parliament. Since 30 June, the fund has divested from 23 Israeli companies following media reports that it had bought a stake in a jet engine company that provides maintenance services for Israeli fighter jets. In the period of the war preceding that move, the fund had divested from only two Israeli companies. According to the fund's data, it held stakes in 38 companies worth 19 billion kroner (about $1.85 billion) as of 14 August, in sectors including banking, technology, consumer goods and industrials. Finance Minister Jens Stoltenberg predicted on 18 August that divestments from Israeli companies would continue. Supporters of divesting from Israel argue that Norway is complicit in violating international law by investing in companies operating in the occupied Palestinian territories. They say the fund's official process for divestment, which follows ethical guidelines set by parliament, takes longer than necessary. Opponents of divestment, however, argue that formal procedures are essential and that targeting a specific country violates the fund's ethical rules. Investing in 9,000 companies The fund, valued at around $2 trillion, invests Norway's oil and gas revenues abroad to avoid overheating the domestic economy. This amounts to the equivalent of $355,000 for every man, woman and child in Norway. Its operations are typically conducted away from the public spotlight, a status it is now finding difficult to maintain. "The fund now invests in approximately 9,000 companies globally," said Mahmoud Farahmand, a lawmaker for the opposition Conservative party and a member of the parliamentary finance committee that oversees the fund. "The more it expands its presence on the international stage, the greater the risks to its reputation." Public confidence, private concern While fund officials publicly state they can navigate the current challenges, minutes from a previously unpublished meeting on 6 December, obtained by Reuters through a freedom of information request, show they are concerned privately. The minutes show that Norges Bank Investment Management (NBIM), the arm of the Norwegian central bank that operates the fund, the Council on Ethics and the finance ministry discussed how to balance ethical investing with avoiding their actions being misinterpreted as hostile acts by a foreign government. The Council noted "the challenge posed by companies with a dominant state owner and the risk of politicising the fund," the minutes said. "For these companies, recommendations will be seen as direct criticism of the authorities, and this applies in Europe as much as in emerging markets." NBIM "pointed out that state-owned companies, especially in authoritarian regimes, could pose a challenge for the fund in the future," according to the minutes. Both the Council on Ethics and NBIM declined to comment. The finance ministry did not respond to a request for comment. Oversight criticism Finance Minister Stoltenberg has faced unusually sharp public criticism from parliament's highest oversight body, the Standing Committee on Scrutiny and Constitutional Affairs, over his responses to its questions. "These are the most arrogant responses I have read in four years on the committee," the committee's chairman, opposition lawmaker Peter Frølich, told state broadcaster NRK. "Instead of answering factual questions, the finance minister gives a lengthy lecture on matters the committee is well aware of." The fund follows ethical guidelines introduced in 2004, which state, among other things, that it cannot invest in companies involved in serious violations of individual rights in situations of war or conflict. "Public support for saving money in this specific way depends on following the ethical guidelines," said former finance minister Kristin Halvorsen. "Support from the public will decline if people do not trust that the money is being managed properly." Conservative Party leader Erna Solberg, who served as prime minister from 2013 to 2021, said maintaining the political neutrality of the fund's investments was a long-term priority. "Making investments without political influence is an important principle for us," she told foreign correspondents on 6 August.
