Why the Divest Movement Would Hurt More Than Israel
July 28, 2016
The self-styled Boycott, Divestment and Sanctions (BDS) movement has been seeking to discredit and reverse Israeli policies with respect to the Palestinian Territories since 2005. BDS promotes an international boycott of Israeli products, divestment from Israeli companies, and exclusion of artists and academics from the Jewish state, among other things, writes NCPA Research Associate Danielle Zaychik and Senior Fellow David Grantham. Though the political aims of BDS are contrary to nearly 40 years of U.S. policy, the movement has gained traction in the United States, primarily in academic circles, and among religious and labor organizations. Divesting from Israel, however, would not only likely have negative economic repercussions for Americans and Israelis, but for Palestinians as well. Indeed, the entire divest movement has the potential to devastate the very people it purports to defend.
The Financial Cost of Divestment and Boycott. Punitive economic campaigns have reemerged as the weapon of choice for activists seeking to change the behavior of a given public corporation or the policies of a certain government. For instance, socially responsible investing (SRI) ‒‒ the practice of choosing stocks, bonds or mutual funds based on political, religious or social values ‒‒ remains a popular approach for political activists pushing divestment. State pension funds are a popular target for SRI and divestment activists. Despite their fiduciary duty to maximize the return for investors, some funds have made decisions based on political motivations or outside pressure. Investors in those funds have suffered the consequences.
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