Norway's $400 billion-plus wealth fund has excluded Israeli company Elbit Systems due to it supplying surveillance equipment for the security fence in the West Bank, the government said on Thursday.
Elbit is a leading Israeli company, which manufactures and integrates advanced, high-performance defense electronic and electro-optic systems for clients worldwide.
"We do not wish to fund companies that so directly contribute to violations of international humanitarian law," Finance Minister Kristin Halvorsen said in a statement.
"The freedom of movement of the people living in the occupied territory has been unacceptably restricted," she said.
Halvorsen said the International Court of Justice has said the fence construction breaches the Fourth Geneva Convention and that "Norwegian authorities act in accordance with this."
Norway says that the surveillance system supplied by Elbit to the Israeli authorities "is one of the main components in the separation barrier and its associated control regime."
"The surveillance system has been specially designed in close collaboration with the buyer and has no other applications. Furthermore Elbit is clearly aware of exactly where and how the system is intended to be used," she said.
The central bank-managed fund follows ethical guidelines issued by the finance ministry, and in the past it has excluded companies that produce nuclear arms or cluster munitions, damage the environment or abuse human rights or worker rights.
"This was a grievous decision, concerning $5.4 million worth of stocks, and we are treating it as such. We also have reason to believe this is part on an election strategy," he added.
The Industry, Trade and Labor Ministry called the decision "regrettable," adding it was unfortunate that political decisions "harm the operations of an important economic tool."
Roni Sofer contributed to this report