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January 05, 2005
To Divest or Not to Divest: Ethical Considerations of Addressing the Israel-Palestine Conflict
    by William Baue

Part one of this two-part article examines across-the-board divestment from companies profiting off Israeli policies that harm Palestinians, and the case against divestment.

Palestinian suicide bombers killing innocent Israeli citizens. Israeli troops bulldozing Palestinian homesteads in disputed West Bank and Gaza Strip territories. Perhaps the strongest ties between Israel and Palestine are the legitimacy of claims of victimization and charges of unethical aggression on both sides. In the absence of political solutions to this Middle Eastern quagmire, many activists have turned to financial mechanisms to advocate for solutions. Divestment, whereby investors cash in their stakes in companies with practices that contradict their values, is the strongest statement available, though some stakeholders believe that shareowner advocacy with companies may prove more effective at effecting change.

The most prominent divestment efforts are student-led campaigns at college campuses throughout the US calling on their administrations to implement across-the-board divestment from companies profiting from Israeli policies that harm Palestinians, for example by bulldozing their homes. In July 2004, the Presbyterian Church USA (PCUSA) became one of the first institutional investors to consider divestment by ratifying the "phased, selective divestment" from such companies. This process starts with shareowner dialogue with companies, escalates to resolution filing if the company is unresponsive, and ultimately ends in divestment if the company stonewalls all engagement on the issue.

At the same time other investors, such as the Episcopal Church, have opted against divestment in favor of shareowner action with companies doing business with the Israeli government. And Jewish organizations such as the Shefa Fund are calling for balanced approaches, criticizing one-sided divestment as ineffective in solving the problems.

The Divest from Israel Campaign encompasses action on campuses throughout the US, including Ivy League schools such as Yale, Princeton, and Harvard as well as large state schools such as the Universities of Massachusetts, Michigan, and Minnesota. Campus activists are a step removed from direct negotiations with companies, so instead of advocating for the more nuanced approach of shareowner action, they must resort to campaigning for administrations to implement the blunt tool of divestment.

"On campuses, the first step is making the decision to divest; [shareowner advocacy] would happen after there is a moral commitment by the administration to divest," said Christopher Cantor, a spokesperson for the University of California Divestment Campaign. "Generally speaking, we do very much support shareholder advocacy dialogue with companies--the campaign at Caterpillar is a good example of this."

In November 2004, Jewish Voice for Peace (JVP) re-filed a shareowner resolution calling on Caterpillar (ticker: CAT) to review whether the sale of its bulldozers to the Israeli army (which uses them to raze Palestinian homes) violates its own Code of Worldwide Business Conduct.

The Shefa Fund, a Jewish community investment and shareowner advocacy nonprofit, favors shareowner dialogue with companies over divestment, which it considers ineffective.

"We believe that ultimately, the divestment movement's one-sidedness will undercut its moral legitimacy," states Rabbi Mordechai Liebling, torah of money director at the Shefa Fund, in a recent position paper entitled Divestment from Israel: Is it an Effective Strategy?. "Just as Israel must be held accountable for its actions, so too must Palestinian and Muslim groups which explicitly or implicitly support suicide bombings against civilians."

The University of California Divestment Campaign maintains that the one-sided approach is predicated on the fact that US corporate and governmental support is one-sided, propping up Israel while ignoring Palestine.

"Palestine has no independent economy to speak of, and [ . . . ] we don't have any investments in companies that sell weapons or weapons technology to the Palestinians, nor do we have investments in companies that have subsidiaries, branches, partners, or sizeable operations in Palestine," states the UC Divestment Campaign website.

Rabbi Liebling also argues that divestment is impractical, a viewpoint he supports by quoting prominent members of the Israeli peace movement.

"We think divestment is not the right way to change the situation," states Yariv Oppenheimer, the head of Peace Now, the largest peace organization in Israel. "If anything, it may have the opposite effect of the one intended."

"Israelis feel the entire world is against them, so the immediate response to such measures is always anger and mistrust," he continues. "They will not convince the Israelis that the occupation is a bad thing."

However, campus activists consider such occupation a severe enough transgression (likening it to Apartheid South Africa) as to preclude the possibility of shareowner dialogue.

"The situation in the occupied territories is apartheid," Mr. Cantor told

Rabbi Liebling deconstructs this analogy in his paper.

"The analogy between South Africa's apartheid regime with Israel has a fundamental flaw: It obscures the moral complexity of the Israeli-Palestinian struggle," writes Rabbi Liebling. "In South Africa there was no moral ambiguity: Clear lines could be drawn, so broad-stroked strategies [such as divestment] could be effective."

"Israeli-Palestinian relations, by contrast, are defined by moral legitimacy and immoral outrages on both sides, resulting in a long, painful cycle of war, occupation, and terrorism," he continues. "Here, more nuanced strategies are required."

Mr. Liebling points out that South African apartheid was predicated on the exploitation of labor and the removal of native populations by non-natives. While he contends that the Israeli situation does not exhibit these same dynamics, the UC Divestment Campaign argues that it does.

"Israel's settlements in the West Bank and Gaza are Jewish-only . . . [t]he only time Palestinians are allowed in them is to either to work on their construction or for other forms of menial labor," the UC Divestment Campaign maintains. "The settlements are built on land illegally expropriated from Palestinians."

"The Palestinians are the native population," it continues, pointing out that in 1890, Palestine was only seven percent Jewish. White South Africans who justified apartheid and Israelis who rationalize the occupation also correspond in that they both "believed their claim to land to be superior to that of the natives, and that co-existence based on equality was not possible," according to the UC Divestment Campaign.

While Israeli divestment campaigns have been characterized as anti-Semitic by some critics, Rabbi Liebling does not share this belief.

"I do not consider the divestment campaigns anti-Semitic--it's not a useful label," he told "We all want the same outcome of peace between Israel and Palestine, it's just a question of how to get there."

Part two of this two-part article examines the Presbyterian Church USA's policy of "phased, selective divestment" and the Episcopal Church's decision not to divest.


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