Norway’s sovereign wealth fund — the world’s largest, worth nearly $2 trillion — proudly wears its politics on its sleeve. It openly details many “ethical exclusions” of firms in which it will not invest for one reason or another, from human rights abuses to excessive carbon emissions. This week, it has divested from five Israeli banks and the world’s largest manufacturer of construction equipment, Caterpillar, as its machines are used by Israel in its war in Gaza.

The fund’s rationale is that “the companies contribute to serious violations of the rights of individuals in situations of war and conflict.” The banks are known for funding settlements in the Israeli-occupied West Bank. Caterpillar has long been criticised for selling equipment used in Israel’s settlement efforts — a role epitomised by the IDF-operated Caterpillar bulldozer that killed US activist Rachel Corrie while she was protesting the demolition of homes in Gaza in 2003.

However, the move is largely performative. Divestments by Norway’s wealth fund do not typically have a significant market impact. In fact, research has consistently shown that firms excluded by the fund on average outperform the market. This is nothing more than a symbolic victory for the BDS movement.

The movement has gained public prominence like never before, and is becoming a hallmark of campus protest and public activism. But its ability to impact the Israeli economy or deter the Israeli government has proven entirely absent. Prime Minister Benjamin Netanyahu’s government depends on support from religious Zionist settlers who publicly declare their intent to seize Gaza, not global investors.

Nearly two years into Israel’s war in Gaza, its stock market remains one of the best performers in the world — up 65% since the Hamas attack on 7 October 2023. It continued to rise even during the Trump-dubbed “Twelve-Day War” with Iran this June.

That is because BDS has failed to gain support from Washington. Ostensibly centrist Democratic senators have found rare common ground with Donald Trump in opposing the movement. This is not only thanks to longstanding donations from pro-Israel lobby groups, but also because of political alignments in swing states historically. Symbolic sanctions on individual settlers imposed by the Biden administration were lifted on Trump’s first day in office.

Some US cities and states have reduced investments in Israel, but others have doubled down. Yet the reality is that BDS — and any sanctions programme — can only really succeed if it has Washington’s full heft behind it. Everything else is second fiddle, including the UK’s sanctioning of Israeli ministers from the settler movement, or Norway’s action this week.

America, of course, does have the power to use sanctions and economic leverage to pressure allies and states with whose economies it is deeply integrated. Such moves do not deter tyrants such as Vladimir Putin or Kim Jong Un. Conversely, the threat of US sanctions did prod South Korea into abandoning its nuclear programme in the Seventies, and more recently Trump has made a global show of how tariff and sanctions threats can bring allies around to accepting clearly unfavourable trade deals.

With Trump in the White House and the Democrats riven by division, financial pressure on Israel in the form of BDS is an activist pipe dream. As Israel’s retaliation for Hamas’s attack tips over into the expulsion of Palestinians from Gaza, advocates of disincentivising Tel Aviv have no choice but to look elsewhere if they are to have any hope of success.