Investments in the Israel Electric Corporation

The Ministry of Finance has concluded, based on the recommendations of the Council on Ethics, that it would be unfounded to exclude the Israel Electric Corporation (IEC) from the investment universe of the Government Pension Fund – Global (GPFG).

It was some time ago alleged that the Israel Electric Corporation (IEC), an Israeli electrical power supply company, had initiated a practise of suspending power supplies to the Gaza area, as a political measure to harm the Palestinian population there. The Ministry of Finance requested, against the background of these allegations, the Council on Ethics to investigate the matter in more detail and to examine whether it might be appropriate to exclude the company from the investment universe of the Government Pension Fund – Global.

The Council on Ethics has rendered its views on the matter in a letter of 18 April 2008 to the Ministry of Finance. The Council on Ethics has based its assessment on information from, inter alia, Norwegian People's Aid, Israel's ambassador to Norway, Palestinian energy authorities and the UN Office for the Coordination of Humanitarian Affairs (OCHA).

For a brief period in February 2008, the IEC reduced, according to the information gathered by the Council on Ethics, the supply of electric power to Gaza by 5% on one of the ten lines that supply Gaza with electricity from Israel. This represented a 0.5% reduction in the overall amount of electric power transmitted by Israel to Gaza. It is not disputed that living conditions for the population of Gaza are very difficult, and that the reduction in electricity supply comes in addition to other restrictions on transport of goods and border crossings for the population. The Council has concluded that the power supply restriction was discontinued after a brief period of time, and that normal power supply was thereafter reinstated. This assessment is based on, inter alia, information from Palestinian energy authorities.

The Council on Ethics concludes that the present situation – in which it has been established that alleged plans for the escalation of power outages have not been carried out – does not warrant a recommendation to exclude the IEC from the investment universe of the GPFG. However, the Council states that: ”If future reductions in the electric power supply to Gaza are introduced by the IEC, and result in unacceptable humanitarian conditions for the civilian population, the Council on Ethics may re-examine the Fund's investment in the IEC.”

Read the assessment of the Council on Ethics here.