The international economic noose is tightening around Israel. The latest alarm signal comes from Norway’s sovereign wealth fund, the world’s largest with a capital of $1.53 trillion. The institution’s ethics council asked the Norwegian central bank on Thursday to review investments made in Israeli companies involved in the war in Gaza since the October 7 massacres committed by Hamas in southern Israel.
For the moment, no decision has been taken on a possible sale of a portfolio of stakes in 77 Israeli companies, in which the sovereign wealth fund has invested. But pressure from pro-Palestinian NGOs is increasingly being felt. In addition, the opinion given in July by the International Court of Justice could encourage the movement. The highest judicial body of the UN has, in fact, considered that the Israeli occupation of the West Bank and the Arab part of Jerusalem conquered in 1967 was illegal and that the Hebrew state should put an end to it as “quickly as possible”.
Hitting the Israeli economy
This opinion, although not binding, concerns not only states, but also companies. For years the pro-Palestinian movement (BDS, for boycott, divestment and sanctions) has been campaigning to hit the Israeli economy. Until the war in Gaza, these calls had only a minor effect. In recent months, however, the pressure on foreign companies operating in Israel has continued to increase in intensity. Among the best-known companies targeted by this criticism are McDonald’s, Taco Bell, Burger King, Coca-Cola, Starbucks, Estée Lauder…
Officials from some of these groups have admitted that the campaign against their presence in Israel has had a negative impact on their bottom line.
On the French side, Carrefour, which entered into a franchise partnership with the Israeli group Electra Consumer Products and its subsidiary Yenot Bitan in 2022, has a network of more than a hundred supermarkets in Israel. This presence is denounced by several NGOs, the CGT, the Human Rights League in particular, which claim that Carrefour supermarkets have opened their doors in West Bank settlements, which Alexandre Bompard, the CEO, denied by assuring that “we are not present in the occupied territories under the Carrefour brand.”
In the crosshairs of pro-Palestinian organizations
For the moment these pressures have had no effect, the opening of new supermarkets branded Carrefour continues while after a difficult start, profits increased by 38% in the first half compared to the same period last year. BNP Paribas, which participated in a consortium for a loan of 500 million dollars to Elbit, an Israeli arms group, is also in the crosshairs of pro-Palestinian organizations. These have also attacked AXA, but the insurance group has denied having shares in the capital of three Israeli banks.
“We have to admit that the attacks by this whole constellation of organizations linked to the BDS movement are starting to worry us, whereas we tended to underestimate it until now,” admits an official from the Israeli Ministry of Finance.
Israeli debt rating downgraded
Warnings about the impact of the prolonged war in the Gaza Strip and the daily clashes with Iran’s ally Hezbollah on the Lebanese border are also multiplying on the financial front, which could discourage foreign investors. Among those who have sounded the alarm are the three main rating agencies, Fitch Ratings, Moody’s and Standard & Poor’s, which have lowered their ratings on Israeli debt. Financial institutions as influential as JP Morgan, Citibank, Goldman Sachs and Morgan Stanley have also issued warnings about the negative outlook for the Israeli economy in the event of a continuation of the war.
The only rare consolation is that Israeli high-tech, which accounts for half of the country’s exports, although it has been losing momentum in recent months, sometimes manages to save the day. Johnson & Johnson, the American group, has just acquired V.Wave, an Israeli manufacturer of medical devices, for $1.7 billion.
