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Norway's wealth fund said last week it divested from

Caterpillar ( CAT )

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US holding talks with Norway about the issue

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Firms, institutions face protests over Israel ties as Gaza

crisis mounts

By Kanishka Singh and Gwladys Fouche

WASHINGTON/OSLO, Sept 3 (Reuters) - President Donald

Trump's administration said on Wednesday it was "very troubled"

by the Norwegian sovereign wealth fund's divestment of U.S.

construction equipment group Caterpillar ( CAT ), and is

engaging with Norway's government on the issue.

Norway's $2 trillion wealth fund, the world's largest, said

last week it had divested from Caterpillar ( CAT ) on ethics grounds

over the use of the company's products by Israeli authorities in

Gaza and the Israeli-occupied West Bank.

The fund's ethics watchdog said that in its assessment,

Caterpillar's ( CAT ) products such as bulldozers were being used by

Israeli authorities "to commit extensive and systematic

violations of international humanitarian law" such as the

"widespread unlawful destruction of Palestinian property".

The watchdog said Caterpillar ( CAT ) has "not implemented any

measures to pre­vent such use". Caterpillar ( CAT ) has not responded to

requests for comment on the move by the fund, which is operated

by Norway's central bank.

"We are very troubled by the Norwegian sovereign wealth

fund's decision, which appears to be based on illegitimate

claims against Caterpillar ( CAT ) and the Israeli government," a U.S.

State Department spokesperson said.

"We are engaging directly with the Norwegian government on

this matter."

Trump ally and Republican U.S. Senator Lindsey Graham has

suggested Washington should impose tariffs and visa revocations

in retaliation.

'NOT A POLITICAL DECISION'

In Norway, Finance Minister Jens Stoltenberg said there was

a division of roles between the finance ministry, the central

bank and the fund's ethics watchdog, which makes recommendations

to divest from companies if they breach its ethical guidelines,

agreed by parliament.

"The government is not involved in assessing individual

companies," Stoltenberg said in an emailed statement to Reuters.

"The decision to exclude companies is an independent

decision made by the Executive Board of Norges Bank, in

accordance with the established framework. It is not a political

decision."

Stoltenberg also said he had been in touch with U.S.

President Trump's economic adviser, Kevin Hassett, on Tuesday.

"We discussed trade and tariffs, economic sanctions against

Russia and support for Ukraine," he said. "The pension fund was

not a topic of discussion."

The fund's operator, Norges Bank Investment Management, a

unit of the central bank, declined to comment and referred

inquiries to the finance ministry.

The foreign ministry did not immediately reply to a request

for comment.

Firms have faced protests over ties with Israel as the

humanitarian crisis in Gaza from Israel's military assault has

mounted, and images of starving Palestinians, including

children, have sparked global outrage.

U.S. ally Israel's post-October 7, 2023, assault on Gaza has

killed tens of thousands of people, internally displaced Gaza's

entire population and prompted accusations of genocide and war

crimes at international courts and from several rights groups.

Israel denies the accusations.

The latest bloodshed in the decades-old Israeli-Palestinian

conflict was triggered in October 2023 when Hamas militants

attacked Israel, killing 1,200 people and taking about 250

hostages, Israeli tallies show.