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Experts warn of consequences of American universities divesting from Israeli companies

MEMO | June 3, 2024

Israeli economic and legal experts have warned that if the administrations of prestigious American universities meet the demands of the students who demonstrated and set up encampments on campuses in protest against the Israeli war on Gaza, this will have consequences on the Israeli economy, and on the high-tech field, in particular, according to quotes by The Globes newspaper on today, Monday.

Prestigious universities, including Harvard, Johns Hopkins and the University of Minnesota, pledged, during negotiations with the protesting students, to take into account and discuss the students’ demands regarding investments in Israel. A number of universities responded to these demands, although Israeli experts said that implementing this is not easy, according to the newspaper.

Prominent American universities have large investment funds, each containing billions of dollars in employee and retiree funds, in addition to funds accumulated over the years in a manner similar to private capital funds.

Some of this money is invested in shares of foreign companies, and about 20 per cent of it is invested in alternative investments, which include investments in real estate and goods, as well as in private capital funds and venture capital funds, many of which invest in Israel.

Harvard University announced that it does not rule out a discussion on divestment from Israel, “as in the past it divested from fossil fuels and South Africa” according to what some of the university’s leaders wrote in an article published by the New York Times.

Johns Hopkins University said that it will “examine the main questions of the protestors regarding divestment”, while the University of Washington decided to meet with representatives of the protest “on divestment demands”.

Rutgers, Minnesota and Wisconsin universities issued similar decisions, as well Toronto Metropolitan (TMU) and McMaster in Canada. Occidental College in Los Angeles and Brown University, Rhode Island decided to vote on the issue of divesting from Israel.

The newspaper reported that Harvard University invested $200 million directly in Israeli companies in 2020.

Protesting students at the University of Minnesota said that the University invested $2.4 million in Israeli tech companies and the Tel Aviv Stock Exchange.

The newspaper quoted economic expert, Zeev Holtzman, as saying, “since universities not only represent major investment institutions but also aspire to be a moral compass, the decision against Israel would cause severe harm.”

The newspaper believes that the main difficulty that would pose a challenge to divestment is that long-term investments include commitments that cannot be breached. The newspaper mentioned legislation being passed in the US against boycotting Israel.

According to the former Deputy Attorney General of the Israeli government, Roy Schondorf, “Universities that decide to withdraw investments may face sanctions and be considered as violating their duties of loyalty.”

June 4, 2024 - Posted by aletho | Economics, Ethnic Cleansing, Racism, Zionism, Solidarity and Activism, War Crimes | Israel, Palestine, United States, Zionism