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The ethics committee of the Norway Fund reviews Israeli bank stakes in West Bank settlement loans

The ethics watchdog of Norway's $1.9 trillion fund is reviewing the practice by Israeli banks to underwrite Israeli settlers' commitments to build houses in the occupied West Bank. This review could lead up $500 million in divestments.

The Council on Ethics (a public body established by the Ministry of Finance) has decided to not object to the Fund’s investments in platforms like Airbnb, which offer rentals in Jewish settlements.

The Norwegian parliament has set ethical guidelines for the companies in the portfolios of the largest wealth fund in the world.

Svein Brandtzaeg, the Council's head in an interview on May 22 said that the Council was looking at how Israeli banks provide guarantees to protect Israeli settlers money if a company building their homes in the West Bank were to fail.

He said that other practices were also being examined, "but so far this is what we have seen". "This is what has been well documented." He refused to give a time estimate for the review.

Brandtzaeg didn't name the banks, but at the end 2024 the fund will own shares worth about 5 billion crowns (500 million dollars) in five of the largest Israeli lenders. This is an increase of 62% over the past 12 months.

Hapoalim Bank Leumi Israel Discount Bank Mizrahi Tefahot Bank First International Bank of Israel and Bank Leumi did not respond to requests for comments.

They have been listed in the list of companies that are linked to settlements within the occupied Palestinian Territories, compiled by the U.N. mission that assesses the implications on Palestinian rights.

Investors have become increasingly concerned in recent years about a 19-month Israeli offensive that has resulted in the deaths of more than 50,000 Palestinians, and the destruction of the Gaza Strip as a response to an attack launched by Hamas militants which killed over 1,200 Israelis.

In the West Bank and East Jerusalem, 2.7 millions Palestinians live alongside 700 000 Israeli settlers.

Some Israeli companies serve both Israelis as well as Palestinians.

Last year, the top court of the United Nations ruled that Israeli settlements on land seized in 1967 are illegal. Israel called this ruling "fundamentally incorrect", citing historical or biblical ties with the land.

Accommodation Rentals in West Bank Settlements

The Council on Ethics will begin a new assessment of investments related to the West Bank & Gaza in mid-2024.

The report examined 65 companies and recommended that only the petrol station chain Paz, as well as the telecoms company Bezeq be divested. This resulted in shares being sold.

The Council also examined some multinationals' activities in the West Bank to determine if they met its guidelines.

Airbnb, Booking.com and Expedia were among the platforms that made the U.N.'s list, and accounted for approximately $3 billion of Fund investments.

In a joint interview, Eli Ane Lund said that the Council would not recommend the creation of watchlists or divesting from these.

She said that "the company's activities must have some sort of influence on (ethical violations)." "It is not enough to just have a connection. It must have some sort of influence on the (ethical) violation.

The Council makes recommendations to the central banks, who are not required to follow these but usually do.

The decision to sell investments is made public after the sale is completed, in order to avoid alarming the markets.

Pro-Palestinian activists say that the Council's recommendation for divestments is too high. They also claim that the Norwegian Government should instruct the fund in order to divest from Israel, just like it did with Russia three days after the invasion of Ukraine by Moscow.

Most lawmakers, however, support the Council approach and will formally endorse on Wednesday a decision by a parliamentary committee to not order a boycott. Reporting by Gwladys Fauch in Oslo, Stefania Spezati in London, and Steven Scheer from Jerusalem; editing by Kevin Liffey

(source: Reuters)