The Norwegian legislature voted this week to place the ethics council of Norges, the country’s sovereign wealth fund, on hold, according to Norwegian media, a move that could delay or signal a change in course for expected anti-Israel moves and other ESG policies by Norges.

The recent Norwegian elections had been expected to usher in further anti-Israel boycott moves by Norges, the world’s largest sovereign wealth fund, with left-wing parties making such actions key demands as they joined the governing coalition.

Norges attracted attention and criticism from U.S. lawmakers in recent months for divesting from U.S. equipment firm Caterpillar over the company’s business with the Israeli military, and has also divested from several Israeli companies.

But Oslo’s ruling Labour party partnered with conservative parties to pass the legislation placing Norges’ ethics council — which advises on divestment from certain companies — on hold until new ethics guidelines are instituted.

Anti-Israel activists and left-wing lawmakers aligned with the council protested against the move, according to local media reports, and condemned the decision, demanding that Norway implement guidelines to prevent investment in “genocide, occupation and serious war crimes.”

A source familiar with the situation said that the ultimate outcome of the situation, and its implications for both American and Israeli companies, remains unclear. But the source added that the move came amid concerted pressure on the Norwegian government from U.S. officials including Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer.

Sen. Dave McCormick (R-PA) and Sen. Lindsey Graham (R-SC) had also urged the administration to retaliate against Norway and Norges over their divestment from Caterpillar, and the State Department said it was engaging with Norway about the move.

The policy change could also impact investments in other areas such as defense and energy companies.

Sen. Dave McCormick (R-PA) wrote to top trade officials in the Trump administration urging them to take action to respond to the decision by the Norges Bank Investment Fund, Norway’s sovereign wealth fund, to divest from U.S. equipment firm Caterpillar because of the Israeli military’s use of its products in the West Bank and Gaza.

“As the Trump Administration continues to take bold action to rebalance global trade, I urge you to also address the disturbing politicization of sovereign wealth fund investment decisions against American companies,” McCormick said in a letter, sent Thursday, to Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer.

He called on the administration to take Norges’ moves against American companies into account in ongoing trade negotiations with Norway, calling the effort a “form of economic warfare directed by a foreign government against the U.S. economy.”

He said that “all options should be on the table to address this issue,” including tariffs, “restrictions on Norges’ access to U.S. financial markets, and visa sanctions” on those involved in moves against American companies.

McCormick served from 2020-2022 as CEO of Bridgewater Associates, which manages portions of Norges’ portfolio. Bridgewater CIO Greg Jensen addressed Norges’ 2024 investment conference.

Sen. Lindsey Graham (R-SC) called publicly for similar retaliatory action last week.

McCormick said he’d confronted Norway’s prime minister about the Caterpillar decision during a visit to the country last month, and said the prime minister had told him the decision “merely followed Norges’ ethical guidelines and was not political.”

“I respectfully disagree. While I recognize the value of Norges’ investments of nearly $1 trillion of U.S. assets, I have significant concerns that these decisions are entirely political and are driven by an agenda that has consistently targeted American companies and is explicitly anti-Israel,” McCormick continued.

McCormick emphasized that Caterpillar is a frequent target of the Boycott, Divestment and Sanctions movement targeting Israel, and noted that Norges has also previously divested from U.S. fossil fuel and defense companies — in some cases including companies that Norway itself purchases weapons systems from.

The Pennsylvania senator called on the administration to “look more broadly at instances of sovereign wealth funds adopting restrictive, unfair trade policies against U.S. companies as a result of political pressure” in other cases as well.

McCormick separately wrote to Norway’s ambassador to the United States, stating that he “remain[s] extremely concerned” by Norges’ moves against American companies, adding that he “brought this issue up directly with Prime Minister [Jonas Gahr] Støre and was unsatisfied with his response.”

The Commerce Department did not respond to a request for comment on whether it plans to address Norges’ divestment from Caterpillar.

Richard Goldberg, a senior advisor at the Foundation for Defense of Democracies and former Trump administration official, said that Norges’ decisions have a significant impact on global investment trends.

“Norges is such a large player … It moves capital markets with its decisions,” Goldberg explained. “It causes other sovereign wealth funds, pension funds to follow. It causes institutional investors to follow. It really does set trends in investment and an inversion of capital can have impacts.”

He said that Norges’ investment decisions in relation to Israel are a major political issue in Norway’s upcoming elections, and some of the left-wing parties who could become part of the next governing coalition are demanding divestment from a “laundry list” of other American companies over their relations to Israel.

Goldberg also argued that the “danger of weaponized sovereign wealth funds” both in terms of BDS efforts and other anti-American moves is an ongoing and growing issue, and that the administration should insist that sovereign wealth funds be covered in U.S. trade deals with foreign countries. 

“This is a long standing attack on U.S. interests, attack on American energy companies, an attack on American defense companies and now an attack on any company that does business with the State of Israel — all of this to the detriment of our national economic security, all of it politicized by the Norwegians by a state-run, state-controlled entity” Goldberg said.

If the U.S. fails to respond, he continued, “we’re literally allowing supposed democratic allies for whom we provide a blanket of freedom the ability to conduct economic warfare against America and American interests.”

The State Department is in discussions with the Norwegian government over the decision by Norges Bank Investment Management, the country’s sovereign wealth fund, to sell its stake in U.S. machinery firm Caterpillar, citing concerns about the Israeli military’s use of the company’s bulldozers to destroy Palestinian property in the West Bank and Gaza.

“We are very troubled by the Norwegian sovereign wealth fund’s decision, which appears to be based on illegitimate claims against Caterpillar and the Israeli government,” a State Department spokesperson told Jewish Insider. “We are engaging directly with the Norwegian government on this matter.”

Sen. Lindsey Graham (R-SC), a close ally of the White House, recently floated the idea of retaliatory tariffs or visa restrictions in response to the move.

Sen. Lindsey Graham (R-SC) on Thursday floated the possibility of punitive tariffs and visa restrictions in response to Norges Bank Investment Management’s — the Norwegian sovereign wealth fund — decision to sell its stake in the American machinery company Caterpillar in response to the Israeli military’s use of its products.

“To those who run Norway’s sovereign wealth fund: if you cannot do business with Caterpillar because Israel uses their products, maybe it’s time you’re made aware that doing business or visiting America is a privilege, not a right,” Graham said on X.

Caterpillar is a frequent target of Boycott, Divestment and Sanctions campaigns.

“Maybe it’s time to put tariffs on countries who refuse to do business with great American companies. Or maybe we shouldn’t give visas to individuals who run organizations that attempt to punish American companies for geopolitical differences,” the South Carolina senator continued. “I would urge you to reconsider your shortsighted decision.”

He had said a day prior that the decision by the Norwegian fund — the largest in the world — is “beyond offensive’ and “will not go unanswered.”

Norway’s sovereign wealth fund said on Monday that it was divesting from 11 Israeli companies and had terminated its contracts with external fund managers in Israel over concerns regarding the humanitarian crisis in Gaza and the West Bank.

“These measures were taken in response to extraordinary circumstances,” Nicolai Tangen, CEO of Norges Bank Investment Management, which manages the Norwegian Sovereign Wealth Fund, said in a statement. “The situation in Gaza is a serious humanitarian crisis. We are invested in companies that operate in a country at war, and conditions in the West Bank and Gaza have recently worsened. In response, we will further strengthen our due diligence.”

The decision follows a review initiated last week by Norway’s finance minister amid media reports that the fund had in recent years increased its holdings in an Israeli jet engine company that provides services to the Israeli military. 

The new announcement comes amid heightened tensions between Israel and Norway in the wake of Hamas’ Oct. 7, 2023, attacks and the ensuing war in Gaza. In what was largely interpreted as a symbolic rebuke of Israel last year, for instance, Norway said it would recognize a Palestinian state. In response, Israel revoked the accreditation of eight Norwegian diplomats in Tel Aviv who had served in Norway’s representative office in the Palestinian Authority.

Yonatan Freeman, an expert on international relations at the Hebrew University of Jerusalem, said that there is “clear public pressure on the Norwegian government,” whose ruling Labour Party is up for reelection next month, “to respond to the Israeli war in Gaza,” and the wealth fund’s latest move “seems to be, in part, a symbolic gesture to that end.”

“Symbolic, because Israeli companies have long contributed to the fund’s performance and to Norway’s economy more broadly — through tech innovation, cybersecurity and medical devices,” Freeman told Jewish Insider on Monday. “Israel also imports Norwegian goods, such as salmon, which make up a significant portion of its fish market.”

Last year, the fund also said that it had divested from Israeli telecommunications firm Bezeq after a state ethics watchdog had raised objections to the company’s servicing of Israeli settlements in the West Bank.

In an interview with a Norwegian broadcaster last week, Tangen said the fund has a mandate to invest in Israel but ultimately defers to the ethics council that oversees the bank’s holdings, according to The Wall Street Journal. “Being invested in Israel is a political question, it is not a decision we make in the oil fund,” Tangen said. “We must have a very clear division of roles here, and we carry out the mandate that we have.”

The bank, the world’s largest sovereign wealth fund, held investments in 61 Israeli companies at the end of June, according to its announcement on Monday.  

“A truly consequential move would have been a full divestment from Israeli firms and a severing of trade ties, which undeniably could hurt Israel’s financial capacity to wage war,” Freeman told JI. “But Norway knows that would come at a steep cost — economically and diplomatically.”

Tangen has worked to build relationships with American business leaders he has hosted on his podcast in recent years, including Michael Dell of Dell Technologies, Jonathan Gray of Blackstone, Paul Singer of Elliott Management and Ruth Porat of Alphabet — many of whom have prominently engaged in philanthropic efforts to support Israel following the Oct. 7 attacks.

The bank has also hosted several other pro-Israel U.S. business executives at its annual investment conference in Oslo, including Marc Rowan of Apollo Global Management and David Solomon of Goldman Sachs.

Representatives for Dell, Gray and other executives who have been courted by Tangen did not respond to requests for comment on Monday.

Even as the fund did not announce a wholesale divestment from Israeli holdings, its decision drew scrutiny from the Anti-Defamation League, whose CEO, Jonathan Greenblatt, characterized the divestment strategy as perpetuating double standards in a statement to JI on Tuesday.  

“Hamas is celebrating this divestment in the tunnels of Gaza,” Greenblatt said. “Demonizing the Middle East’s only democracy while practically giving a free pass to authoritarian regimes isn’t ethical investing — it’s capitulating to forces that seek to isolate Israel.”    

Israeli companies face the “highest exclusion rate” — 32% — in the fund’s equity portfolio, which includes 63 countries and 8,659 holdings, according to a new analysis by JLens, a Jewish investor network affiliated with the ADL. Ari Hoffnung, managing director of JLens, called the disparity “outrageous,” arguing in a statement to JI that “Norway’s ‘ethical guidelines’ aren’t about ethics — they’re about singling out the Jewish state.”

Some experts speculated that the fund’s decision could draw backlash from the Trump administration and Congress as well.

Emmanuel Noval, a lecturer on international relations at Tel Aviv University, said the decision “might backfire” and could “face legal issues in the U.S.,” as congressional lawmakers have ramped up efforts targeting anti-Israel boycott and divestment campaigns.

Rich Goldberg, a senior advisor at the Foundation for Defense of Democracies who recently wrapped up a stint as a senior counselor to the White House’s new National Energy Dominance Council, criticized the wealth fund’s investing practices, which he said deserved broader scrutiny amid ongoing trade talks with the United States.

“It’s important to recognize that Norges isn’t just attacking Israel, it’s been attacking America for years through its ESG investment and divestment strategy,” Goldberg told JI on Monday, referring to environmental, social and governance reporting. “Israel is typically the canary in the coal mine.”

“I’d urge our trade negotiators to take a hard look at all of Norges’ anti-American practices and make demands for fundamental change a condition of any trade deal with Norway,” he added.

The White House did not respond to a request for comment on Monday.