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On Friday 3 May, the newspaper Klassekampen told that “The oil fundThe Norwegian state investment fund that invests the income from the oil industry abroad to secure and manage the national wealth. has made billions from the Gaza war”.
On the paper’s front page it was written in bold letters that “The state earned 7.3 billion from the arms boom after the Gaza war”. It was also said that three companies have risen 50 per cent in value since 7 October last year.
This is misleading.
The reason for the increase in value can be attributed to a small extent to the Gaza war, and to a very large extent to Russia’s attack on Ukraine, the tense security political situation in Europe, and increased defense budgets in the NATO countries.
It is extra important that the media report properly on such an inflamed issue as the Gaza war. False or misleading narratives can contribute to polarization and extremism.
In an article in the same newspaper on 6 May, it appears that the above-mentioned front page and article were decisive for the leader of Rød Ungdom branding Jonas Gahr Støre and Oljefond manager Nicolai Tangen as terrorists.
Instead of nuanced the picture, the newspaper stated in an editorial and a news article on Tuesday 7 May that “The oil fund has earned over seven billion kroner from three companies that supply Israel with weapons.”
In the first article, it was shown three companies in which the Oil Fund has invested: General Dynamics, RTX and Rheinmetall AG.
However, it is not correct that the Oljefondet has “earned” NOK 7.3 billion as long as the shares are retained – profit only occurs when a sale is made.
Share prices are in reality bets on the companies’ future earnings. Along the way, there will naturally be rate fluctuations that can be explained to varying degrees.
Gun stocks are no exception.
This can be seen most clearly with the two first-mentioned companies. Both shares have so-called fluctuated To vary or change frequently and unpredictably.significantly in recent years:
- General Dynamics: In the spring of 2021, Russia mobilized large forces on the border with Ukraine.
During this period, the share price rose from 150 to 180 dollars. From Russia’s full-scale attack until Christmas 2022, the stock rose further to $250, but later fell back somewhat.
On 6 October 2023, it was at approx. 220 dollars, and made a 10 percent dip the following trading day. In the last six months, the new rose by 20 per cent, and at the time of writing is traded for just under 290 dollars. - RTX: In the new year 2021, the share price was 70 dollars. Through large parts of 2022 and the first half of 2023, it was at almost 100 dollars. On October 6, 2023, the stock had fallen back to around $70.
The next trading day, it rose by almost 8 percent. RTX is now traded at the same levels as a year ago: around 100 dollars.
The reason for the development must be interpreted and cannot be read as a kind of income statement.
What can be determined in any case is that Hamas’s attack on Israel on 7 October triggered immediate value increases of almost 10 percent. It becomes a kind of philosophical question whether this should be attributed to Israel or Hamas.
There have been good times on the stock exchanges, and naturally arms manufacturers have shown good development.
For example, Norske Kongsberg Gruppen has had a value increase of over 80 per cent since October last year – almost all of which came in 2024.
In 2023, the two American companies had a combined turnover of 116 billion dollars.
Considering that they a) have a number of customers, including the US military and NATO countries, b) that the US has granted significantly larger arms deliveries to Ukraine than Israel, and c) that the war in Ukraine is expected to be protracted, it does not seem credible that the increase in share prices in the last six months can largely be attributed to Israel.
Also read: Amrit Kaur lies flat: – It was wrong
Since 2022, Ukraine has received weapons worth well over NOK 1,000 billion. Most of it has been taken from the donor countries’ existing military material.
Now these weapons must be replaced, the stocks replenished, at the same time that Ukraine constantly needs new weapons.
In parallel, Russia’s attack on Ukraine has triggered a security policy crisis in Europe and a marked increase in European defense budgets.
In sum, this has led to a massive increase in the demand for weapons.
For example, Norway has had to inject two billion kroner to increase the production capacity of the Norwegian defense industry. The need will probably continue to be high for many years to come.
Overall, the market’s expectations for these deliveries probably exceed many times the expectations for Western arms deliveries to Israel.
How decisive the war in Ukraine actually has been can be read most easily at the German defense manufacturer Rheinmetall.
In a few weeks from February 2022, the share price rose from 95 to around 200 euros. On 6 October 2023, it stood at 233 euros, and rose a further 7 percent the following trading day.
Around New Year, the rate had increased to 300, while it is now traded for approx. 540 euros – more than a fivefold increase in just over two years.
The development is consistent with the fact that late last autumn the US Congress began to waver on the issue of arms support for Ukraine, that Trump may be re-elected as US president, and that Russia has switched to a war economy.
European countries have therefore concluded that their own weapons production must be increased drastically – both for their own use and for Ukraine.
In Rheinmetall’s annual report for 2023, it appears that weapons production accounted for 25 percent of the group’s total turnover of 7.2 billion euros.
They expect high demand going forward, including a record turnover growth of around 3 billion euros in 2024. The main reason is explained by increased deliveries to the German armed forces, Germany’s close allies and Ukraine.
The class action stated that Rheinmetall has received an order for “10,000 rounds of 120 mm precision tank ammunition for Israel”, but nothing about the company’s other orders.
The Israeli order is probably equivalent to around 100 million euros, which will be considered a sausage in slaughter time compared to the company’s order backlog from other countries.
Should the newspaper on death and life choose a tabloid headline, it should rather have read that “The Oil Fund has earned billions from the Ukraine war”.
It would also perhaps have helped RU leader Amrit Kaur to understand that she should not have branded Jonas Gahr Støre and Nicolai Tangen as terrorists.
Regardless of Kaur’s unacceptable outcome, the media bear an independent responsibility to offer correct information about the Gaza war.
It remains to be seen whether the newspaper will tell in equally large letters on the front page that they misinformed their readers.
