Israel’s government has remained notably silent over Norway’s decision on August 11 to partially divest investments in several Israeli companies, triggered by ethical concerns over the war in Gaza.
Norway’s $2 trillion (€1.71 trillion) sovereign wealth fund said it would withdraw investments from 11 firms linked to Israel and terminate contracts with asset managers operating in the country. The fund launched an urgent review after media reports that it had invested in a firm that makes parts for Israeli military fighter jets.
While Israel’s media labeled Norway’s move “deeply troubling” and “politically motivated,” some analysts think Israeli officials are deliberately keeping a low profile for fear of emboldening the Boycott, Divestment and Sanctions (BDS) movement, which has campaigned against Israel for the past two decades.
Several symbolic wins for BDS boycott movement
From its founding in 2005, BDS has achieved a series of symbolic and material wins by pressuring institutions, corporations and governments to cut ties with Israeli entities involved in the occupation of the Palestinian Territories.
Israel and the US regularly accuse the Palestinian-led movement of antisemitism. The Bundestag, Germany’s lower house of parliament, even passed a resolution on BDS, first in 2019 and reaffirming in 2024, calling the movement “antisemitic” and banning it from receiving public funds.
BDS gained new momentum after Israeli forces launched a military operation in Gaza following the October 7, 2023, attacks led by the Palestinian militant group Hamas. The movement led to significant divestments from AXA and Scotiabank, prompting the exits of Samsung Next, the South Korean tech giant’s venture fund, and 7-Eleven from Israel.
A BDS-organized consumer backlash also hit McDonald’s and Pret, while several cities and universities in the United States also passed resolutions to cut ties with Israeli-linked firms, driven by BDS campaigns.
Although Norway’s divestment alone is expected to have a limited economic impact on Israel, economist Benjamin Bental from Israel’s University of Haifa warned that it could set a dangerous precedent.
“[Norway is sending] a signal about the activities of Israeli firms that it doesn’t like, which others may follow,” Bental told DW. “Once the dam is broken, if it becomes a flood, it will be of very significant importance.”
Norway reviews other Israeli holdings
Norway’s sovereign wealth fund, the world’s largest, held shares in 65 Israeli companies at the end of 2024, valued at around $1.95 billion (€1.67 billion). It still holds stakes in nearly 50 Israeli firms.
The fund, an arm of Norway’s central bank, said it is actively reviewing these holdings to ensure compliance with international law. It now plans to manage all Israeli projects in-house and limit future investments to companies in Israel’s equity benchmark index.
The BDS Movement hailed Norway’s decision as a “major ethical victory.” The LO trade union, one of Norway’s most influential labor organizations, has lobbied the government to take firmer action. The union’s members recently voted in favor of a full economic boycott of Israel.
Norway’s announcement follows a steady trickle of divestments across Europe. In April last year, Ireland’s ISIF strategic investment fund divested from six Israeli firms. Several councils in the United Kingdom have also passed motions requiring their pension funds to exit their Israeli investments.
Many of the decisions were linked to Israel’s settler scheme in the Occupied West Bankand East Jerusalem, which the United Nations and European Union consider illegal under international law. Israel recently announced the most significant expansion of settlements in the occupied West Bank in decades, with Israeli Defence Minister Israel Katz saying the move “prevents the establishment of a Palestinian state.”
BDS ‘nothing’ compared to Trump’s tariff on Israel
Dany Bahar, senior fellow at the Centre for Global Development, a Washington D.C.-based think tank, believes the impact of boycotts and divestments on Israel’s growth and ability to fight the war remains modest.
“[The BDS boycotts and divestments] haven’t happened at a scale that could make a dent in the Israeli economy,” Bahar told DW. “They are nothing compared to the tariff that Trump put on Israel,” which he said was the “worst boycott” Israel has ever received.
In April, US President Donald Trump declared that Israeli goods entering the US would be subject to a 17% tariff, despite Israel eliminating all tariffs on US imports. The figure was later reduced to 15%.
Referring to Norway’s asset sale, Bahar argued that the broader investment landscape in Israel remains resilient and that market forces would likely override the decision.
“Somebody else is going to buy these investments because they are good companies. Israel has a lot to export to the world in terms of knowledge and products. Investors know that,” he said.
Despite trepidation among some investors due to geopolitical tensions and BDS campaigns, foreign investments in Israel have rebounded significantly from a slump in 2023. In 2024, the scope of net investments by nonresidents was about $27 billion compared to only $8 billion in 2023, according to the Bank of Israel.
Israel faces growing threat of sanctions
This resilience underscores Israel’s robust economic fundamentals and deep ties to global markets. Yet, mounting international pressure — highlighted by Norway’s recent decision — signals a growing push to hold Israel accountable for its actions in Gaza and the West Bank through targeted sanctions.
In his final year in office, former US President Joe Biden imposed sanctions on 19 Israeli settlers and eight entities for West Bank violence, which Trump reversed in January. Over 30 states, including Texas and Florida, have anti-BDS laws, barring state agencies from working with entities boycotting Israel.
The UK, France and Canada have placed curbs on Israeli settlers accused of violence, including travel bans and freezing assets. The EU has also blacklisted far-right Israeli groups involved in attacks on Palestinians. Washington, meanwhile, has blocked property and financial access for individuals linked to the unrest.
Nine other countries, including South Africa, Bolivia, and Malaysia, have gone further, imposing full economic sanctions against Israel. These steps include banning arms sales and stopping shipments of fuel that could be used by the military.
Germany, traditionally one of Israel’s closest allies, announced this month a halt to all military exports that could be used in Gaza “until further notice,” citing the worsening humanitarian crisis.
Could sanctions force Israel’s hand?
The EU is also considering whether to curb Israel’s access to the €95 billion ($111 billion) Horizon Europe research fund, blaming human rights violations in Gaza. The plan is currently stalled by a lack of consensus, with France, Spain, Ireland and Slovenia urging Brussels to do more, while Germany, Italy and Hungary oppose sanctions.
Bental warned that EU sanctions “would have serious effects on the ability of Israeli firms to function.” Nearly a third of Israel’s exports go to the EU, which he said contributes roughly 1% of Israel’s GDP.
Bahar echoed the concern, but pointed to Israel’s deep-rooted role in global innovation and trade as a reason why any further pressure from the international community may be limited in scope.
“Whatever you think of Israel and the war, the country is very skilled in terms of engineers and developers. The economy is so embedded in the global economy that it’s not that easy to decouple from Israel,” he told DW.
Edited by: Ashutosh Pandey
