Norway panel urges wealth fund to ease ethics limits after Gaza row

A Norwegian government-appointed committee recommended on Thursday that the country's sovereign wealth fund ease ethical investment restrictions, including a ban on companies that produce nuclear weapons, and steer clear of diplomatic disputes such as the war in Gaza. The report was submitted to Norway's Ministry of Finance.

The committee, led by former central bank governor Svein Gjedrem, said the fund—the world's largest sovereign wealth fund, with assets of nearly $2.3 trillion—should be allowed to invest in nuclear weapons producers. It also recommended a broader overhaul that would give the fund's manager, Norway's central bank, more discretion in handling ethical risks.

The review was prompted in part by controversy over the fund's decision last year to divest from U.S. construction giant Caterpillar. The fund cited Caterpillar's alleged involvement in rights violations linked to Israel's military campaign in Gaza and the occupied West Bank. Washington has since pressured Oslo over the move.

The committee said decisions about “another state's conduct” should not be made by the fund but should be left to Norway's ordinary diplomatic channels. It argued that the Gaza war was part of the reason the committee was appointed.

The unanimous recommendations also called for reviewing the fund's exclusion of companies involved in nuclear weapons production. Citing Norway's reliance on NATO's nuclear deterrent and a worsening security environment, the report said investments should be allowed in companies based in the United States, United Kingdom and France that produce nuclear weapons.

The proposals would also reshape the role of the fund's independent ethics watchdog, allowing some assessments of potential investments to remain confidential.

The report has already provoked a backlash in Norway, with opposition politicians criticising the potential changes. Analysts said weakening ethical considerations could have a wide impact.

“If the Norwegian sovereign wealth fund – often considered a global gold standard – changes its posture towards nuclear weapons, it will open Pandora's box for many global investors to follow suit,” Lawrence Loh, director of the Centre for Governance and Sustainability at the National University of Singapore Business School, told Al Jazeera.

The committee framed the change as necessary to protect Norway's national security, citing the country's dependence on its allies' nuclear umbrella. It said the global security situation has changed, Norway is building up its defences, and NATO's nuclear umbrella has become more important. The companies that would be reincluded produce weapons Norway needs for its own defence, the report argued.

Gareth Evans, former Australian foreign minister, told Al Jazeera the report was “an encouraging initiative” in a world that has become “alarmingly complacent” about the risks of nuclear war, with major arms control agreements dead, dying or on life support and the longstanding taboo against threat or use eroding.

Amid U.S. President Donald Trump's shake-up of NATO, European countries are increasingly looking to join France's nuclear deterrent umbrella. Trump said on Thursday that Washington is holding talks with Russia and China aimed at denuclearising the countries with the biggest stockpiles of nuclear weapons.

Loh warned that shifting the Norwegian fund's investment conditions could encourage others to invest in nuclear companies in scenarios different from Norway's condition that the companies be based in allied, nuclear-armed NATO countries.

Source: Al Jazeera.