Oslo - Norway's state pension fund has sold its shares in an Israeli company that has designed surveillance equipment used for the controversial West Bank barrier, the government in Oslo said Thursday.

The investment in Elbit Systems constituted 'an unacceptable risk of contributing to serious violations of fundamental ethical norms,' Finance Minister Kristin Halvorsen told reporters.

The government acted on advice from a special ethics panel. The panel cited a 2004 advisory opinion by the International Court of Justice (ICJ), which noted that part of the barrier was built inside the West Bank, rather than on the 1949 armistice line separating the occupied territory from Israel.

Construction of the barrier began in 2002 after a wave of suicide bombings in Israel.

The system made by Elbit was solely designed for the barrier, the finance minister said.

The finance ministry weighed in 'ethical considerations' and did not single out companies according to nationality, she added.

'The same consideration would have been made if it had been a US or Swedish group,' Halvorsen said.

The stake in Elbit was worth some 6 million dollars at the end of 2008.

In a related move, the finance ministry said it would reinstate two companies it had previously excluded over ethical concerns.

Thales SA, a major French defence firm dropped in 2005, was no longer engaged in making cluster munitions, the ministry said.

DRD Gold Limited, which had been excluded in 2007 over concerns that its mining activity in Papua New Guinea caused severe damage to the environment and threatened the health of local residents, was reinstated on the grounds that it was no longer connected to the mine.

The government pension fund Global is managed by the central bank and uses income from Norway's petroleum wealth. It was created to pay for Norway's future health and pension expenditures through investments outside the Norwegian economy.

The fund owns shares in some 7,700 companies worldwide.

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