Israel is still attracting foreign funds despite a global boycottby Fiona Rotherham
Last year, overall foreign investments in Israeli assets hit a record high of US$285 billion.
Foreign money continues to pour into Israel – the latest report by IVC Research Center shows US$2.8 billion was invested in Israel in the first half of this year, despite the reported slowdown in high-tech capital raising and venture-capital investments in the US. The 361 deals in the first half were 35% above the US$2.1 billion raised in 327 deals in the first six months of 2015.
Last year, overall foreign investments in Israeli assets hit a record high of US$285 billion. This is nearly three times the figure for 2005 when a group of Palestinians started the global Boycott, Divestment and Sanctions (BDS) movement to increase economic and political pressure on Israel to end its occupation of the West Bank and Golan Heights and for full equality for Arab-Palestinian citizens in Israel.
There has been a mixed reaction internationally to the BDS movement. On the business front, several of Europe’s largest institutional investors, including the Government Pension Fund of Norway and Dutch pension scheme PGGM, have blacklisted some Israeli companies over concerns about human rights violations.
In 2012, the New Zealand Superannuation Fund excluded three Israeli companies from its portfolio because of their involvement in the construction of Israeli settlements and the West Bank separation barrier, which it said was illegal under international law. In making any exclusion decisions, it said it drew a distinction between a company being directly and materially involved in an activity rather than just being a supplier of materials or services in the normal course of business.
Last month, the Palestine Solidarity Network criticised the NZ Super Fund for not also excluding Israeli banks from its investment portfolio, saying instead it had increased its investment in them, based on its annual equity listings.
The Super Fund says this is “potentially misleading”, even though the value of these share investments rose to $23.4 million in 2015, up from nearly $6.7 million five years ago. These investments are held passively, it says, and changes in value reflect such factors as exchange rate differences, the overall fund size growing, and changes in the market capitalisation of the company or in the composition of the index they’re in.
The Super Fund and ACC can’t invest in companies that make cluster bombs and mines because of international conventions on government investment, although there has been a recent furore in New Zealand over some default KiwiSaver providers doing so.
Last year, the UK’s second-largest trade union, Unison, launched a campaign encouraging members to lobby pension funds to divest from companies supporting the Israeli occupation of Palestine.
The Conservative UK Government responded by outlining new rules designed to stop politically motivated divestment campaigns against UK defence firms and against Israel. Senior pension officials and local councillors have protested that the new rules will block them from withdrawing investment in companies on ethical grounds around issues such as human rights and the arms trade.
The new rules, which also say local pension schemes shouldn’t follow policies that run counter to UK foreign policy, are to be brought in under the Government’s planned overhaul of the Local Government Pension Scheme.
It follows similar legislation in the US state of Illinois last year that forced the five state-funded pension schemes to identify all companies that boycott Israel and divest their direct and indirect holdings in them.
Fiona Rotherham travelled to Israel with assistance from Spark NZ and the Trans-Tasman Business Circle Michael Nathan Fellowship.
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