The Trillion-Dollar Vassal

How Trump 2.0, Israel’s Gaza war, and Norway's two-trillion-dollar sovereign wealth fund converged in a firestorm of finance, geopolitics, and genocide.

Jens Stoltenberg in a meeting with Donald Trump in 2017 (Official White House Photo by Shealah Craighead)

Earlier this year, Norway’s $2.1 trillion Oil Fund—the world’s largest sovereign wealth fund—was the subject of a heated public debate over its links to Israel’s war in Gaza. In June, a group of Norwegian academics, the Historians for Palestine, revealed that the fund owned shares worth nearly $30 million in the Israeli company Bet Shemesh Engines, which reportedly maintained engine parts used by Israeli jets conducting airstrikes on Gaza. Beginning in 2023, the fund had increased its investment stake in the Israeli company in tandem with Israel’s mounting attacks on Gaza and rising Palestinian civilian deaths. The academics delivered their findings to the Norwegian Ministry of Finance in June. The Labour government, it seems, did nothing with them.

Instead, as in many countries, the political establishment—and Norway as a whole—went into shutdown mode as summer wore on. July is typically a slow season in Norway, the so-called “cucumber time” (agurktid), when most serious journalism and affairs of state are put on hold—even with a looming national election only a few months away in September.

By early August, as the country’s media and political establishment roused itself from its slumber and began gearing up for five weeks of election campaigning, the liberal-conservative newspaper Aftenposten broke the Bet Shemesh story to a wider audience (though without crediting the Historians for Palestine). The result was a firestorm of commentary and, understandably, fierce attacks on the Labour government, primarily from the smaller left-wing parties on its flank, the Green Party, and civil-society groups.

Sensing a real electoral vulnerability, Finance Minister Jens Stoltenberg—a seasoned former prime minister, decade-long secretary general of NATO, and now responsible for the $2.1 trillion fund—sprang into action. Promising a complete review of the fund’s links to Israel’s war economy, Stoltenberg held a series of “crisis meetings” with Norges Bank Investment Management (NBIM), the fund’s manager. Stoltenberg presented himself as a sober helmsman amid a growing political storm: Norway would take its ethical and legal obligations seriously, and the Norwegian people’s “pensions”—or oil earnings—would not be used to profit from the genocide in Gaza.

By late August—with just two weeks to go until the national election—the Oil Fund announced it was divesting from five Israeli banks as well as Caterpillar, a U.S. bulldozer manufacturer whose products were reportedly being used in Israeli demolitions in Gaza and the West Bank. “There is no doubt,” the Oil Fund’s semi-independent ethics council wrote, “that Caterpillar’s products are being used to commit extensive and systematic violations of international humanitarian law.” The five Israeli banks, meanwhile, were excluded for financing construction activities that “contribute to the maintenance of Israeli settlements” in occupied Palestinian territories.

All told, Labour’s moves were bold, in alignment with Norway’s global reputation as a defender of human rights. The divestments from the six companies, totaling around $3 billion in value, were made “due to an unacceptable risk that the companies contribute to serious violations of the rights of individuals in situations of war and conflict,” Norway’s central bank wrote in announcing the divestment.

From Labour’s perspective, this was a domestic success story: The electoral vulnerability had been plugged, and crisis had been averted. The September election saw Labour claim more than a quarter of the vote, allowing it to cling to power against a rebellious left and an increasingly popular right-wing Progress Party, which came in second. Labour wasn’t about to yield power to the right over the fund’s financial entanglements with Israel’s Gaza war and occupation.

Trump 2.0 and Labour’s About-Face

But on the other side of the Atlantic, Norway’s ethics decision was proving more contentious. Senior U.S. Republican leaders lashed out at the oil-rich nation’s divestments. Less than a day after the Caterpillar decision, Senator Lindsey Graham tweeted angrily:

To Norway’s sovereign wealth fund – which is the largest in the world: Your decision to punish Caterpillar, an American company, because Israel uses their product is beyond offensive. Your BS decision will not go unanswered.

Other Republican senators followed suit. Senate Republican leader John Thune called the Norwegian embassy in Washington, D.C. to express his discontent. Similarly, Senator Dave McCormick of Pennsylvania wrote to Norway’s Washington ambassador to voice his “extreme concern,” framed menacingly in terms of Norway’s security relationship with the United States: The fund was divesting from companies that “produce weapons that are critical to the security of the United States and Norway.” Meanwhile, Trump’s State Department said it was “very troubled by the Norwegian sovereign wealth fund’s decision” and was “engaging directly with the Norwegian government on this matter.”

In effect, Norway—a small country of 5.6 million people, about the same size as Minnesota—was being pressured by Trump’s allies to drop its ethics stance. Trump had already pressured Finance Minister Stoltenberg over the Nobel Peace Prize, going so far as to call Stoltenberg to say that he “wanted the Nobel Prize.” Forging ahead might risk Norway’s security relationship with the United States under Trump 2.0.

And this is where the Oil Fund story turns—abruptly.

By early November, in a shock parliamentary decision, the Labour Party made a hard pivot to the right, joining forces with some of its toughest (supposed) electoral adversaries—the right-wing Progress Party, Conservative Party, and Christian Democratic Party—as well as a former coalition partner, the agrarian-ethnonationalist Centre Party, to revoke the exclusionary powers of the Oil Fund’s ethics council. “The world has changed since the ethical guidelines were first adopted,” Finance Minister Stoltenberg said. “The rules need to be reviewed.”

Given the Trump administration’s pressure campaign, the sudden about-face was hardly surprising.

Stoltenberg and the Labour government were happy to pose as ethical stewards of a two-trillion-dollar financial fortune up until the September election. The exclusionary measures they passed, while partial and piecemeal, were real attempts to respond to human-rights pressures from progressives and civil society.

But facing mounting pressure from the Trump administration and its allies, Stoltenberg in particular reverted to his technocratic, security-driven instincts. Trained as an economist, one of Stoltenberg’s political hallmarks had long been to lecture Norwegian reporters on economic trade-offs and the importance of pragmatic decision-making, often with flip chart and marker in hand. And after ten years at NATO’s helm, four of which coincided with Trump’s volatile first term, Stoltenberg not only understood but helped facilitate Trump’s security agenda—including the five-percent spending target.

For more than twenty years, the Norwegian Oil Fund’s five-person ethics council had been empowered to recommend exclusions from the fund’s sprawling investment portfolio—in effect, a power to blacklist “unethical” companies—often with headline-grabbing results. In 2006, the world’s largest retailer, Wal-Mart, was excluded from the fund for its “serious and systematic violations of human rights.” (The exclusion was revoked in 2019.) Tobacco companies like Philip Morris and British American Tobacco were banished in 2010. Nine defense companies including BAE Systems were dropped in 2018 for producing nuclear-weapons components.

No longer.

Instead, the Labour government pushed to put ethics on hold, pending a “new ethical framework.” Stoltenberg claimed the move was necessary: to ensure revenue maximization and avoid the risk of “lower returns,” to avoid divestment from major—primarily U.S.—tech companies, and to allow for investments in large defense companies formerly excluded from the fund. As Stoltenberg said to Bloomberg:

The Caterpillar decision combined with the announcement by the ethics council that they have initiated work on the tech companies: if you combine those two things, we assessed that there is a risk that the current guidelines will lead us to a situation where Norway could potentially divest from some of the world’s largest companies.

But pausing the fund’s ethics was clearly also an act of Trump-driven appeasement, even if it meant alienating Labour’s left-wing partners, and even if it meant blatantly contradicting itself: only months earlier, Labour’s messaging had portrayed the xenophobic, neoliberal Progress Party as its key opponent—now the two parties had teamed up to roll back the fund’s decades-long “responsible investment” practices.

Such is the price of vassalage.

Flexing Trillion-Dollar Muscles

Thanks to its huge oil and gas reserves in the North Sea and a decades-long policy of saving up tax revenues from the lucrative oil trade, Norway now has the world’s largest sovereign wealth fund. It has turned Norway into a global financial player—a rentier capitalist on the world stage—controlling around 1.5 percent of the world’s shares, spread across 8,500 companies.

And it is disproportionately invested in the U.S. economy, following a strategic shift in 2020. Its investments were touted in Prime Minister Jonas Gahr Støre and Stoltenberg’s Oval Office meeting with Trump in April. As Stoltenberg said then, “Half the fund, close to 1 trillion dollars, are invested in [the] United States…This is an expression of trust in the United States.”

But what is undoubtedly a form of hard financial power is also, for a small country like Norway, a source of vulnerability—especially when prevailing ideological headwinds turn. Whatever leverage Norway possesses exists against the backdrop of a certain largesse or goodwill from the world’s reigning superpower. Making matters worse, the Trump administration is a bit like Sauron’s eye: Any attention is inherently dangerous. Even when lavishing praise, Trump the protectionist racketeer is always near at hand. As soon as Norway’s fund deviated slightly from U.S. interests, as these were construed by the Trump administration, the backlash was predictably furious. This is what it means to be a subordinate nation in the age of MAGA.

This is not to diminish Norway’s responsibility for its investment decisions. What happened in Norway has a clear domestic side. Labour faced a real electoral crisis over Gaza, mainly from the left, and was forced to move to exclude Israeli companies. But once it had “won” the September election—marginally—and the Trump orbit expressed its dissatisfaction with Norway’s ethical exclusions, the Labour government, with Stoltenberg in a lead role, fell back on its most conservative, securitized instincts, cut a deal with the right, and quashed the Oil Fund’s ethical rules.

A combination of a technocratic, nationalistic understanding of Norway’s place within global financial capitalism—aiming to maximize revenue in order to boost domestic spending (on welfare, on infrastructure, and so on), regardless of wider, global ramifications—with a geopolitically motivated desire to appease Trump’s America, has proven overpowering for Norway’s commitment to “ethical capitalism”—however shallow that notion necessarily is. What we are witnessing is the coming together of technocratic nationalism with Trump-world pressure.

So should small countries with two-trillion-dollar fortunes just roll over? Hardly. While Norway will not, for the time being, live up to its ethical obligations to the same degree as in decades past, there remains a robust progressive and civil-society response to Labour’s latest move. Both of Norway’s left-wing parties vocally opposed it. As the Socialist Left Party leader Kirsti Bergstø said, “Our goal is to ensure that the Oil Fund is not invested in genocide, occupation, and serious war crimes. In that situation, the Labour Party and Stoltenberg are choosing to relax the ethical framework—it’s a betrayal.” Similarly, the Red Party’s leader Marie Sneve Martinussen described Labour’s decision as “shocking,” in light of ”two years of genocide and a series of revelations of direct links between the Oil Fund and Israel’s war machine.”

While Labour may be able to ignore such voices in the short term, it surely cannot afford to do so in the long run. The right-wing Progress Party’s leader Sylvi Listhaug—a kind of Norwegian version of Trump, Meloni, or Farage—showed in the most recent election that she was within a hair’s breadth of securing a viable coalition. If Labour wants to avoid a Trumpified Norwegian government in four years’ time, it needs to prove that its politics are a real, credible, and progressive alternative to the right-wing populism that is spreading across the globe. If that means upsetting the Trump White House, then so be it.

Perhaps it is time, after all, to flex those trillion-dollar muscles a little. Even subordinates might find they possess unexpected powers.