The Ethics Council's Impossible Job

Can the Oil Fund be invested in countries that actively violate international law? This is the question that compels itself after this week's controversy: that the Oil Fund has invested in Bet Shemesh Engines and other companies contributing to the military effort in Gaza, thus implicating the Oil Fund in violation of international law.

The debate so far has taken the form of a pointing game, but there is enough blame for everyone. The oil fund has made an active choice to invest in Bet Shemesh and increase its holdings in the midst of a war. That the company rose sharply on the stock exchange in the middle of the war was seen as reason for investment, not as a warning lamp about war contributions.

There is also reason to believe that the Ministry of Finance has been asleep for the hour. The fact that the cash reaction from Jens Stoltenberg and the Ministry of Finance comes only this week and not by similar alerts in the past shows that they are primarily motivated by dealing with bad press and not avoiding that the Oil Fund is involved in violations of international law.

Finally, it is difficult to understand what ethical assessments the Ethics Council has made. Bet Shemesh has been on the council's radar, but in the past they have only taken a position on the part of the business that goes into producing engine parts for Israeli combat aircraft. That meant they were within the scope of what the Oil Fund should be doing. They didn't take the position that they maintain the same fighter planes. Svein Richard Brandtzåg seems to think that is outside the box.

The fact that the Ethics Council only took a position on one part of the company's operations is reprehensible. A more fundamental question is what the council believes is the moral essential difference between the two ways of contributing to Israel's warfare.

The way I see it there are two tenable positions we can draw. One is to say that almost all businesses in Israel and many other countries are involved in the violations of international law in Gaza. The farmers in Israel, for example, are completely necessary to the war effort by securing food for Israeli soldiers. Therefore, if the Oil Fund were to avoid involvement in violations of international law, it should avoid investing in all companies that are part of the causal chain leading to violations of international law.

This line would be unsustainable for Norway. Pulling out of all Israeli companies would, in effect, be a boycott of Israel. It would have termed the US at a bad time without leading to any change in Gaza.

The second position is to say that the Oil Fund's investments are never contributory, as finance professor Karin Thorburn at NHH goes to great lengths to defending. Thorbun stresses that the shares the Oil Fund owns do not enable the companies to do what they do. Selling the Oil Fund out of a company requires finding a buyer. But then you are just as far away.

Given this view, it is not dangerous that Norway is a war profiteer. We profit from the war, but it's no worse that we profit from the war than that someone else does. Profiting from injustice is not inherently wrong. The biggest point of appeal against the Oil Fund's investments is that it is doing badly, not that we are actually complicit in violating international law.

But neither is this position tenable. The problem is the concept of causation used. While the actions of the Oil Fund alone cannot change the outcome, investors as a whole are needed to do so. Often we can rightly hold people accountable for things they do together, even if no one makes a difference on their own.

Another problem is that the Oil Fund must have popular legitimacy — and that securing that legitimacy is perhaps the most important function of the Ethics Council.

It is striking that a council ostensibly dealing with ethics does not have a single person with academic qualifications in the field of moral philosophy. But it makes more sense if we understand that the Ethics Council is meant to provide a channel for the moral resentment of the Norwegian people.

It is better for the Ethics Council to deal with people's moral feelings than for politicians to try to manage the Oil Fund in detail or for the Fund to try to balance two considerations; maximizing financial returns and investing in line with the moral beliefs of the Norwegian people.

Whatever one may think of Norway's moral responsibility for our investments abroad, there is no doubt that the Ethics Council and the Oil Fund in this matter have failed in their task of protecting the Oil Fund from undue political pressure at home.

However, criticism must be muted in light of the Ethics Council's impossible task. There is no accepted method for assessing where the limit of involvement goes. The ethics council is also not sized up for the task. They have neither moral philosophical nor sufficient other competence. Today, they only have ten employees to keep up with about 9,000 companies.

It is nevertheless serious that no warning lights went off when the fund is invested in Israeli companies with clear military application that are doing tremendously well in the midst of a war.

Given how demanding the task is, the Ethics Council needs to be strengthened. In earlier times, there was a clearer distinction between the civilian and the military. Modern industry can quickly be converted from civilian to military capacities. It means that the Oil Fund is invested in a number of companies with latent military capacity, which can easily be involved in violations of international law in a war situation.

In the world we live in, we need a body that can make quick decisions based on new information. If not we are doomed to have these conversations every time a new crisis arises.