In an important step toward the economic isolation of Israel due to its genocide in Gaza, Norway’s Government Pension Fund Global has decided to divest from yet more Israeli companies.
Norway’s sovereign wealth fund is the world’s largest, with total investments in Israel once estimated at $1.9 billion. The decision to divest was taken gradually but is consistent with the Norwegian government’s growing solidarity with Palestine and rising criticism of Israel.
Taking a leading role along with Spain, Ireland, and Slovenia, Norway has been a vocal European critic of the Israeli genocide and man-made famine in Gaza, actively contributing to the International Court of Justice’s investigation into the genocide, and formally recognizing the state of Palestine in May 2024. This diplomatic and legal stance, coupled with its financial divestment, represents a coherent and escalating effort to hold Israel accountable for the ongoing extermination of Palestinians.
The Israeli economy was already in a state of freefall even before the genocide. The initial collapse was related to the deep political instability in the country, a result of Israeli Prime Minister Benjamin Netanyahu and his extremist government’s attempt to co-opt the judicial system, thus compromising any semblance of “democracy” remaining in that country. This resulted in a significant lowering of investor confidence.
The war and genocide, beginning on October 7, 2023, only accelerated the crisis, pushing an already fragile economy to the brink. According to reports from the Israel Ministry of Finance, foreign direct investments in Israel fell by an estimated 28% in the first half of 2024 compared to the same period in 2023.
Any supposed recovery in foreign investments, however, was deceptive. It was not the outcome of a global rallying to save Israel, but rather a consequence of a torrent of US funds pouring in to help Israel sustain both its economy and the genocide in Gaza, along with its other war fronts.
Israel’s Gross Domestic Product was estimated by the World Bank to be around $540 billion by the end of 2024. The war on Gaza has already taken a considerable bite out of Israel’s entire GDP. Estimates from Israel itself are complex, but all data points to the fact that the Israeli economy is suffering and will continue to suffer in the foreseeable future. Citing reports from the Bank of Israel and the Ministry of Finance, the Israeli business newspaper Calcalist reported in January 2025 that the cost of the Israeli war on Gaza had already reached more than $67.5 billion. That figure represented the costs of the war up to the end of 2024.
Keeping in mind that the ongoing war costs continue to rise exponentially, and with other consequences of the war – including divestments from the Israeli market by Norway and other countries – future projections for the Israeli economy look very grim. The Israeli Central Bureau of Statistics reported that the Israeli economy, already in a constant state of contraction, shrunk by another 3.5% in the period between April and June 2025.
This collapse is projected to continue, even with the unprecedented US financial backing of Tel Aviv. Indeed, without US help, the precarious Israeli economy would be in a much worse state. Though the US has always propped up Israel – with nearly $4 billion in aid annually – the US help for Israel in the last two years was the most generous and critical yet.
Hellbound and Down 