Israel rejects harsh response to Norway boycott

Mr Lieberman reportedly chose not to strongly condemn Norway so as not to damage Israel’s relationship with the country, especially since relations with Sweden have recently soured.

The Norwegian state pension fund has ethical guidelines which prohibit any investment in companies considered inhumane

The Norwegian state pension fund yesterday announced it was divesting from Elbit, one of Israel's leading companies, for ethical reasons.

Elbit, an optics and electronics manufacturer, provides a surveillance system for the wall in the West Bank. In 2004 the International Court of Justice ruled that the wall was illegal.

Kristin Halvorsen, the Norwegian finance minister, said: “We do not wish to fund companies that so directly contribute to violations of international humanitarian law.”

The Israeli ambassador to Norway was told of the decision during a meeting at the foreign ministry in Oslo. The state pension fund sold its shares in Elbit before an official announcement was made.

Norway's government pension fund, one of the world’s biggest investors, is worth $333 billion (£203.8 billion). The fund contains revenues from Norway’s prosperous oil industry, for use by future generations.

The fund has ethical guidelines which prohibit any investment in companies considered inhumane, such as arms manufacturers, those involved in human rights violations or responsible for environmental damage. Currently, the fund has investments in 40 Israeli companies.