Norway elections: Why investments in Israel are shaping the vote

Norway is voting on Monday to elect its next parliament in what is expected to be a close race between a centre-left bloc led by the incumbent Labour Party and a centre-right bloc dominated by the populist Progress Party and Conservatives.

Among the issues that could decide the vote are inequality and taxation, as well as growing controversy surrounding Norway’s sovereign wealth fund, which is facing scrutiny domestically and internationally over its investment in companies tied to Israel, amid the war on Gaza.

Until recently, maintaining the status of the $2 trillion investment vehicle as “non-political” was a key tenet of the country’s sovereign wealth fund – the world’s biggest – which was set up in the early 1990s to manage the surplus revenue from North Sea oil sales.

The question now is how the controversy will play out at the ballot box, and whether threats of US retaliation will translate into concrete action.

Norway has a system of proportional representation whereby 169 politicians are elected to the national legislature – known as the Storting – for four years. Of these, 150 are allocated to 19 regional districts according to population, with seats distributed proportionally among parties.

To balance local representation with national outcomes, 19 additional seats are awarded to parties whose countrywide vote isn’t fully reflected in district results. However, to qualify for these seats, a party must secure at least 4 percent of the nationwide vote.

Looking ahead to September 8, polls show that nine parties are expected to win seats. On the left, Labour, the Socialists, the Greens, Centre and the Reds; and on the right, the Conservatives, Progress, the Christian Democrats and the Liberals.

If the centre-left wins, Labour’s Jonas Gahr Stoere is expected to remain in office. Stoere is looking to extend his rule after assuming power in 2021, following eight years of Conservative-led governments.

Meanwhile, a centre-right win would open the door for either Progress Party leader Sylvi Listhaug or Conservative Party head Erna Solberg (who served as prime minister from 2013 to 2021) to head the next government.

While Labour favours broadly stable taxes, some of its allies seek stiffer rates for the wealthy to finance tax cuts for low-income families and expanded public services. Progress and the Conservatives both advocate large tax cuts.

According to the Norwegian Directorate of Elections, early voting started on July 1, and continued until September 5.

Election day is September 8, but some municipalities began allowing voters to cast their ballot on September 7.

Voting ends on September 8 at 19:00 GMT, when the first exit polls are expected. Results could become clear later in the evening, though the final outcome may not be known until the following day.

No single party is expected to win an outright majority, and the exact combination of parties in the cabinet will likely depend on post-election negotiations.

Centre-left parties – Labour, the Socialist Left, the Communists, the Centre Party and the Greens – are currently expected to win 87 seats, according to an average of polls conducted by pollofpolls.no earlier this week.

If the polls are right and these parties join hands after the election, continued minority rule under Labour is the likeliest suggested outcome.

Norway’s $2 trillion wealth fund, built on vast oil reserves, allows the government to spend more freely than fellow European countries.

Indeed, the fund represents the single largest institutional investor globally. It invests mainly in stock markets, holding stakes in about 9,000 companies and owning roughly 1.5 percent of all listed shares worldwide. It also invests in real estate and renewable energy infrastructure.

However, a debate over the fund’s investments in Israel took centre stage at the beginning of the campaign.

The Socialist Left said it would only support a future Labour government if it divested from all companies involved in what it called “Israel’s illegal warfare in Gaza”. Labour rejected the demand, but it may be difficult to rebuff such calls if the election result is tight.

As of June 30, 2025, the sovereign fund was invested in 61 companies in Israel, with its total investment valued at $2.2bn, according to the fund. They represented 0.1 percent of its total global investments.

Since then, the fund has divested from at least 11 companies following media reports that it owned a stake in a jet engine company that provides maintenance for Israeli fighter jets. Prior to that, the fund had divested from just two Israeli companies.

More divestments are expected in the future, Finance Minister Jens Stoltenberg – who was also the former NATO chief – said on August 18. Advocates of divesting say Norway is contributing to the violation of international law by profiting from Israel’s war on Gaza.

The fund follows ethical guidelines introduced in 2004 under Conservative Finance Minister Per-Kristian Foss. The rules stipulate, among other things, that the fund cannot invest in companies involved in human rights abuses or conflict situations.

Conservative party leader Erna Solberg has said keeping the fund’s investments politically impartial was a long-standing priority. “Having this principle that investments are done without political influence has been important for us,” she said on August 6.

At about the same time, Norwegian newspaper Aftenposten found that Norway’s sovereign wealth fund had increased its investments in Israeli jet engine parts manufacturer Bet Shemesh Engines more than fourfold between 2023 and 2024 to $15.2m.

In response, Labour’s Stoere told NRK (Norway’s state broadcaster) that the findings were “disturbing”. He said: “Norwegian funds should not be invested in companies that contribute to violations of international law and the horrific war we see in Gaza.”

Elsewhere, a US State Department spokesman said on Wednesday that Washington was “very troubled” by the fund’s recent divestment from US construction firm Caterpillar, adding that it was directly engaging with the Norwegian government on the issue.

On August 25, Norway’s wealth fund divested from Caterpillar on ethics grounds over the use of the company’s products, bulldozers in particular, by Israeli authorities in Gaza and the Israeli-occupied West Bank.

Republican Senator Lindsey Graham, an ally of US President Donald Trump, has suggested that Washington should impose tariffs and visa revocations on Norway in response. He blasted the Norwegian government’s review of Israel-linked investments decision on social media, calling it “beyond offensive” and outright “BS”.

Inequality tops voters’ list of concerns, according to an August 7-13 survey by Response Analyse for the Aftenposten daily, replacing defence and national security, which slipped to sixth place since a similar poll in April.

The cost of living has been central to the election campaign, with food price inflation having climbed nearly 6 percent over the past year. The economy, jobs and taxes are also high priorities for voters, the survey showed.

Polls also indicate that voters are becoming increasingly concerned about geopolitics, having grown more sceptical of the US under Trump.

Norwegians have recently seen Denmark fall foul of the US over Greenland, which Trump says he wants to take over, and fear they may face similar headwinds.