US pension funds to divest from Israel boycotters
An Israeli border policeman removes a Palestinian flag and a Fatah flag during a protest against what Palestinians say is land confiscations by Israel for Jewish settlements, near the West Bank town of Abu Dis near Jerusalem March 6, 2015©Mohamad Torokman/Reuters
Illinois became the first US state to pass a bill banning the state’s pension funds from investing in companies that boycott Israel
Pension funds across the US could soon be forced to withdraw money from companies perceived to have boycotted Israel if a legislative initiative under way in the state of Illinois gains traction.
Last month, Illinois became the first US state to pass a bill banning the state’s five pension funds from investing in companies that boycott Israel.
The bill is widely considered an attempt to undermine the Boycott, Divestment and Sanctions (BDS) movement, which calls for investors to pull money from companies it believes are complicit in violating Palestinian rights.
Some BDS resolutions and activists advocate a blanket boycott of Israel; others only of companies and institutions linked to Jewish settlements in the West Bank and east Jerusalem, which most of the outside world sees as illegal and an obstacle to peace.
While a growing number of European pension funds have blacklisted several Israeli companies due to their operations in the occupied Palestinian territories, it seems increasingly unlikely that their US counterparts will adopt a similar stance.
Israel’s government has been discussing ways of fighting the challenge from BDS since at least February 2014, when a government meeting was held at which ministers discussed tactics including legal action against institutions that boycott settlements or Israeli companies connected to them.
In addition to the Illinois legislation, some members of the US Congress — where support for Israel is strong — are seeking to append anti-BDS provisions to a free-trade agreement with the EU now under negotiation.
Stephen Tamari, associate professor at the Southern Illinois University Edwardsville, who focuses on the Middle East and Islam, believes other US states will follow Illinois’ lead and prohibit their pension funds from investing in companies deemed to have boycotted Israel.
He says: “I think this is probably the beginning of a wave of these bills. Very few US politicians will do anything that smacks of being anti-Israeli. The boycott movement, even though I do not think it has made a dent economically or politically for Israel, has people scared.”
Mr Tamari doubts whether many companies will be affected by such bills in practice. He says: “I do not know of any company that boycotts Israel. I think it is just a different way of attacking the BDS movement outside the court of public opinion, squelching debate about the boycott movement and making it seem like this is anti-semitism.”
Jeff Houch, senior public service administrator at the State Retirement Systems of Illinois, agrees that other states are likely to introduce similar legislation. “The intent of the sponsors [of the bill] and of the governor of Illinois [is that] this will serve as a model for other states to follow, and I am sure some states will take a look at it,” he says.
Mr Houch is also uncertain, however, about which companies could be affected.
It is just a different way of squelching debate about the boycott movement and making it seem like this is anti-semitism
The bill prohibits state pension funds from investing in companies deemed to be “engaging in actions that are politically motivated and intended to penalise, inflict economic harm on or otherwise limit commercial relations with the state of Israel, or companies based in the state of Israel, or in territories controlled by the state of Israel”.
Danish financial institution Danske Bank is one of the few known examples of a company that has divested from Israeli companies on ethical grounds. Last year, Danske added Bank Hapoalim, Israel’s largest bank, to its exclusion list on the basis that the bank was “involved in activities in conflict with international humanitarian law”.
Danske’s decision followed that of PGGM, the Dutch pension fund, to drop its holdings in five of Israel’s biggest banks due to their financing of Israeli settlements in the occupied Palestinian territories.
An independent board comprising seven individuals — four selected by the Illinois governor and three selected by the state pension funds — will be responsible for putting together a list of companies deemed to have boycotted Israel by April of next year.
The board will then write to those companies and provide them with 90 days notice to reverse their stance or risk losing investment from the state pension funds.
Omar Barghouti, a human-rights activist and co-founder of the BDS movement, appears unconcerned by the legal developments in Illinois, which some academics have dubbed “lawfare”.
“Israel’s legal warfare against the BDS movement reflects its failure to date in hampering the accelerating growth of BDS, especially in the US where its impact counts the most,” he says.