Gwladys Fouche

Investments in Israel have taken centre stage in Norway’s election campaign, sparking an unusually public debate over how the world’s largest sovereign wealth fund operates.

The row could help sway which political party leads Norway’s next government as the Sept. 8 election race is tight.

Right-wing parties - the Conservatives, Progress Party, Liberals and Christian Democrats - are currently seen winning 85 seats - just one above the number needed to secure a majority in parliament, an average of all polls conducted in August compiled by pollofpolls.no showed.

Turning up the heat on the incumbent Labour party, the left-wing Socialist Left this week said it would only support a future Labour government if it divested from all companies involved in what it called “Israel’s illegal warfare in Gaza”.

Labour rejected the demand, but it may be difficult to reject such calls after the election.

“This is my worst ever crisis,” fund CEO Nicolai Tangen told Swedish daily Dagens Industri on Friday.

“This is a serious situation because it is about trust in the fund.”

In an interview with Reuters last week Tangen ruled out stepping down, saying he had carried out the fund’s mandate, as decided by parliament.

Since June 30, the fund has divested from 23 Israeli companies following media reports it had built a stake in a jet engine company that provides maintenance for Israeli fighter jets.

During the war prior to that the fund had divested from just two Israeli companies.

It held stakes in 38 companies worth 19 billion crowns ($1.85 billion) as of Aug. 14, in sectors including banking, tech, consumer goods, and industrials, according to fund data.

More divestments are expected, Finance Minister Jens Stoltenberg said on Aug. 18.

Advocates of divesting from Israel say Norway is contributing to the violation of international law by investing in companies active in the occupied Palestinian territories.

They also argue the fund’s formal divestment process which follows ethics guidelines set by parliament takes too long, while supporters say it is necessary to be fair.

Opponents of divesting, however, argue that formal process is necessary and that singling out a country might violate its ethical rules.

The fund invests Norway’s oil and gas revenue abroad so as not to overheat the domestic economy. Its $2 trillion size is equivalent to $355,000 for every Norwegian man, woman and child. Its operations, and changes to them, generally keep a low profile, something it is currently struggling to do.

Traditionally, the four biggest parties in parliament try to work to agree changes to the fund via a “supermajority” to avoid changes every time there is a change of government.

“The fund is now invested in close to 9,000 companies globally ... the more visible this fund is out in the world, the higher the risk to its reputation,” said Mahmoud Farahmand, a lawmaker from the opposition Conservatives who sits on the parliamentary finance committee that oversees it.

While fund officials say they can navigate the current public challenges, they worry in private.

Reuters obtained the minutes from a Dec. 6 meeting under a freedom of information request that has not been reported previously.

They show fund operator Norges Bank Investment Management (NBIM), the Council on Ethics and the finance ministry debated how to balance ethical investment while avoiding it being misinterpreted as hostile government action.

The Council noted a “challenge with companies that have a dominating state owner and the risk of politicising the fund,” the minutes showed.—Reuters