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Palestine, ethics and the Oil Fund

Parts of the Norwegian Oil Fund is invested in Israeli companies and transnational companies engaged in Israel. As these companies operate in the occupied areas they contribute to the conflict and violation of human rights.

Some of the companies even have security sections, weapon production or directly links to the Israeli military forces. The Ethical Council has several times been advised to divest from such companies. However there seems to be a need of either expanding the ethical guidelines or the interpretation of them, as the response of the Council is that they cannot divest from such companies as long as they partly contribute to the common good.

Widespread criticism of the social, political and ecological impact of investments strategies has led most banks, funds and multinational companies to develop ethical guidelines to avert public criticism and pressure. Far too often these guidelines serve as mere fig leaves behind which unethical practices continue unabated. Unfortunately, the Norwegian Pension Fund seems to be no exception. While the Fund’s ethical guidelines provide a vague mention of positive investment requirements, the operative part of the guidelines focuses on divestment criteria. The Ethical Council, tasked to ensure that investments respect the guidelines, only has the mandate to suggest the divestment from companies that are involved in serious violations of fundamental humanitarian, environmental, and ethical norms.

In this article, we want to focus on the implications of the Fund’s investments in Israel for both the ethical guidelines of the Fund as well as for the fundamental rights of the Palestinian people. The investments currently held by the Fund serve both to strengthen and legitimize relations with the Israeli state, which is built on a colonialism and apartheid. The investments thus reinforce and profit from this system at the expense of the Palestinian people and contribute to violations of fundamental humanitarian and ethic norms.

Inadequate ethical guidelines

The reasons why the Ethical Council has not stepped in so far are twofold. Firstly, the divestment guidelines of the Fund are not adequate. While the Ethical Council has seen to it that the fund excludes arms companies, such as BAE and Boeing, for their role in manufacturing missiles, it has no clause directly instructing the Council to take into account firms simply on the grounds that they are involved in the perpetuation of state-sponsored racism or occupation. This causes the Council to ignore companies that maintain, are built on and benefit from Israeli systems of oppression yet do not directly material in the form of missiles, guns or tanks. In order to tackle this problem, not just in Palestine but in countries where peoples face systematic oppression, the ethical guidelines have to be reconsidered so that they effectively support the achievement of the rights of peoples struggling in the global south. In the case of Palestine, the unified call for Boycott, Divestment and Sanctions (BDS) serves as a base that would allow the Fund to support the struggle of the Palestinian people by putting economic pressure on Israel and to effectively work towards implementation of ethic and humanitarian norms around the globe.

This brings to the second point; namely the willingness of the Council to stand up for Palestinian rights and affect real change. Even with the narrow tenets that currently exist; the Council has the mandate to exclude Israeli companies directly involved, for example, in the founding and maintenance of West Bank settlements. Yet, it is clearly unwilling to use these guidelines. The Council’s previous considerations regarding Israel illustrate the worthlessness of ethical guidelines, and as such their modification, if they are not to be followed.

Business in occupied territory

The establishment of the State of Israel sixty years ago was a settler-colonial project that systematically and violently uprooted more than 750 thousand Palestinians from their lands and homes and destroyed hundreds of Palestinian villages. Today, the state of Israel continues to deny Palestinian refugees their UN-sanctioned right to return to their homes and receive compensation, simply because they are “non-Jews.” It still illegally occupies Palestinian and other Arab lands and is engaged in ongoing colonization in violation of numerous UN resolutions. Israel has been allowed to get away with these practices, thanks to the immunity granted to it by US and European economic, diplomatic, political, and academic support.

Firms operating within the Israeli economy are necessarily linked to institutions responsible for the ongoing dispossession and denial of Palestinian rights. For example, a network of mutual support and involvement, including the sharing of personnel, technology and the like has developed between private firms, official government and military institutions, and Israeli universities. Military officers and engineers with years of experience from past wars as well as the ongoing occupation have provided them with opportunities to conduct experiments in repression and control on a massive scale, including the isolation and siege of Gaza; the creation of the Wall in the West Bank; and the maintenance of settlements. This translates into commercial profit in a variety of sectors.

The Homeland Security sector, which has been on the rise since 11 September 2001, is a key example of this phenomenon. Homeland Security involves not only arms manufactures, but also telecommunications, surveillance, and computer technology firms. All of these types of corporations benefit from the perpetuation of occupation and apartheid, perfecting their methods on the Palestinians, continually developing more effective techniques and systems that not only facilitate the colonization of the West Bank, but that also have a healthy market value abroad. An estimated 600 Israeli companies are involved in the security sector, with an annual turnover of $4 billion, a quarter of this from exports. (1)

Norwegian investments in a conflict torn area

Investments held in Israeli companies by the Norwegian Pension Fund, in particular Orbotech Ltd., Check Point Software Technologies, and Emblaze Ltd., are all heavily involved in the industry described above. For many years, Orbotech kept ties with the military, although it has since branched out considerably. The company has recently spent millions to acquire the US-based Photon Dynamics, a company that deals with digital imaging systems for defense and surveillance as well as non-military uses. This acquisition is likely to significantly expand Orbotech’s involvement in the homeland security sector.

Founder of the company Shlomo Barak also currently serves as chairman of the board of directors of B.G. Negev Technologies & Applications Ltd, a company that is tied to Ben-Gurion University of the Negev and that promotes new technologies developed at the university. B.G. Negev has agreements with leading Israeli weapon system producers Rafael and Elbit, as well as with Mekorot, the national water company that controls annexed water sources in the West Bank for use in the settlements.

Another company that is similarly involved in the defense industry is the telecommunications company Emblaze Ltd. Emblaze has an entire division, Visual Defence Ltd., that is designated for providing military and homeland security.(2) The Former Chief of the General Staff of the Israeli Defense Force (IDF), Amnon Lipkin-Shahak, serves on the Visual Defense board of directors, which works extensively with both the US Homeland Security and the Israeli military.

Check Point software is the third company that is located within the military – technology relationship. Check Point founder and CEO Gil Shwed was a member of Unit 8200, a key IDF intelligence unit that focuses on an electronic espionage program. Unit 8200 is one of the most important links between technology and military and according to Foreign Policy, “It is also the most important driver behind the success of Israel’s high-tech business sector. Veterans of the unit have spun off some 50 tech start-ups worth billions of dollars in the past decade.” (3) Another member of the current Check Point board of directors, Dorit Dor, also gained much of her experience in the military, where her service earned her the Israeli Defense Prize in 1993. Dor was in charge of overseeing various R&D projects within the Israeli army and now holds the same job within Check Point.(4)

Transnational companies in occupied Palestine

In addition to Israeli firms, a number of internationals also operate within the Israeli economy. Not only do these firms create an image of Israel as a legitimate place to do business, but also some have found a niche directly aiding the colonization project. For example, the French multinational Veolia is facing mounting international pressure and a court case because of its involvement in the building of a settler tramway in the eastern part of Jerusalem. Veolia’s investment in the project is an act entirely contradictory to international law and the rights of the Palestinians. As an integral piece of settlement infrastructure built on occupied Palestinian land, the rail project is tantamount to a war crime and forms a serious breach of international law, including the Geneva Convention.

The almost inevitable involvement in violations of international law and Palestinian rights by companies operating within the Israeli economy is not accidental but instead a product of the Israeli state, which is built upon ongoing subjugation and dispossession of the native population. The ongoing nature of this project requires the mobilization of resources that extends far beyond basic military hardware and into construction, agricultural and technological sectors, to name a few. Through its investments in companies such as Orbotech, Check Point and Emblaze the Norwegian Oil Fund is benefiting from the current regime and the mechanisms used to support it. However, because of the current structure of the ethical guidelines, only Veolia might risk exclusion for its direct violations of international law.

Expanding the guidelines

The current structure of the ethical guidelines ensures that the Fund will not be a constructive actor in support of Palestinian rights. Possible divestment from some of the most flagrant perpetrators of human rights violations in the West Bank and Gaza does not address the system that led to these crimes in the first place. It is key that the Fund expands the text or interpretation of the criteria to ensure that, instead of tackling human rights abuses after the fact, it takes a proactive approach and aims to tackle the root of the problem. The Fund’s guidelines as they are fixed and interpreted today realistically do little more than preserving the status quo. Ethical guidelines have to include criteria that allow divestment from companies that benefit from, perpetuate and support regimes of serious violations of human rights.

A blueprint for such guidelines has been given with the Palestinian unified call for Boycott, Divestments and Sanctions (BDS) against Israel, issued on 9 July 2005 by 170 Palestinian civil society organizations. The aim of this campaign is to put economic pressure on Israel and to isolate it from the international community until it agrees to end its occupation and colonization of all Arab lands and dismantle the Wall, recognize the fundamental rights of the Palestinian citizens of Israel, and recognize the right of return of Palestinian refugees. In this way, the BDS movement takes a holistic approach to resisting occupation by targeting the systems and institutions that make it possible, rather than their resultant crimes. This strategy played an important role in the downfall of the apartheid regime in South Africa, and the BDS Campaign operates with the same goal in mind. As far as the Fund is concerned, support for the BDS campaign would involve divestment from both Israeli companies and government bonds, as well as from international companies that aid the occupation or that have extensive holdings in the Israeli economy.

The failure of the Ethical Council

Any talk of expanding the textual scope of the guidelines is of little use in light of the Fund’s past actions. The Ethical Council, responsible for ensuring that the current guidelines are implemented, have so far acted as apologists for companies operating in Palestine in flagrant breach of the basic ethical tenets. Two cases involving Caterpillar and the Israeli Electric Corporation (IEC) have already been brought before the Ethical Council and seemed to be straightforward divestment initiatives.

Caterpillar has long been the target of international BDS campaigns for its ongoing sales of the D9 Bulldozer to Israel. The bulldozer, which is outfitted with special armored plating by state-owned Israel Military Industries, has been used to destroy thousands of dunums of Palestinian agricultural land, uproot olive groves and demolish thousands of Palestinian homes. Caterpillar has been condemned by civil society groups, human rights organizations, and the UN Special Reporter on the right to food in 2004 for its complicity in these crimes by continuing to sell the D9 to Israel. In 2006, the Synod of the Church of England divested $2.2 million from the company, and additional divestment movements are ongoing in other churches, most notably in the US Presbyterian Church.

In January of 2006, the Council of Norwegian Churches requested that the Council on Ethics recommended divestment as a proper strategy for dealing with Caterpillar’s ongoing sales of the D9 to Israel. The Council refused this request, replying that since Caterpillar products are also used for “legitimate means, it is problematic to hold the company responsible” and that divestments would only be employed in case of “a strong element of contribution [to violations] from Caterpillar.”

Similar excuses were provided in response to requests for divestment from the IEC, which is the national Israeli electricity provider, and which also supplies electricity to almost all of the West Bank and 60% of Gaza. On the West Bank, the IEC facilitates the state project of settlement building and expansion, as it connects large settlements and nascent “outpost” settlements to the national grid. In February 2008, the IEC also cooperated with the Israeli army and cut power to Gaza as part of the collective punishment carried out against the population.

The Ethical Council was confronted twice, first by the Council of Norwegian Churches in regards to the settlement issue, and second by the Norwegian People’s Aid for the company’s role in the siege on Gaza. The Ethical Council refused to consider divestment on the grounds that “maintaining of such infrastructure (in the West Bank) also will be for the benefit of all parties in the area” and that in Gaza “the reduction of [the] power supply […] is not ongoing.”

These rulings reveal some troubling double standards. Perhaps the most galling is the Council’s defense of the IEC, first for its part in the siege of Gaza and second for its role in settlement building. The implications of the Council’s response to the latter complaint, namely that the IEC’s role in the construction of settlements is excusable as long as it benefits the Palestinians and second that Palestinians, by calling for the boycott of Israeli companies, are not acting in their own best interests is reminiscent of the view of the European colonial administrators.

These responses of the Ethical Council serve as vital illustrations of the worthlessness of ethical guidelines when the party responsible for seeing that they are implemented acts as an apologist for powerful interests. In this sense the Ethical Council is not unique; the refusal to support the Palestinian people, even when doing so means undermining international law and basic humanitarian principles, is a general policy among western powers. As such, the first step in administering the fund ethically is to ensure that the Ethical Council is bound to work in the interest of the victims and not as the advocate of the companies perpetrating violations of human rights and international law.

While this article does not intend to explore the quite necessary question of radically alternative forms of investment, we hope it has highlighted that even within the current structure of investment based on shareholding in global companies, there is an urgent need for the Norwegian Oil Fund to ensure that its Ethical Council actually considers itself as tasked to uphold the rights and interests of the affected people. Further, its guidelines and/or their interpretation have to be understood as a tool to address global wrongs instead of perpetuating them with a “clean conscience”.