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Divestment Fraud By: David Meir-Levi
FrontPageMagazine.com | Wednesday, July 13, 2005


Being a financial services professional, I have a reasonably good idea about how the American stock market works.  Given what I know of the market's historical tendencies and current trends, I can say with confidence that the divestment movement on US campuses and mainline churches must be a sham.

If the pension fund managers of the main line churches that are considering divestment were to sell all the shares of a company targeted for divestment because it does business in Israel, they would be selling some of the most valuable holdings in their portfolios.  A bad move financially.  Moreover, given that the companies that do business in Israel are for the most part multi-national corporations belonging to the elite Fortune 500 or Fortune 100 groups, it is immediately obvious that other investors (individuals and institutions) would rapidly buy up the recently sold stock. Especially if the church pension fund sales depressed the price of the stock, these stocks would be purchased all the more quickly at bargain prices, and the stock would rapidly regain its value.  The end result would be absolutely no negative impact on the multi-national corporations, nor on
Israel.

If I know this, the pension fund managers must know this too.  And one can be sure that the managers told the church leaders who are lobbying for divestment. So why are pro-Arab groups agitating on campuses, and why is the Sabeel institute pressing main line church leaders to divest?  And why are more and more church movements opting for divestment?

The answer is given to us, perhaps inadvertently, by an Arab student at the
University of Michigan
.  One divestment conference organizer, Amer Zahr (a U. Mich. Student activist) explained openly on talk radio the goals of divestment:

"What we want is not actual economic divestment from
Israel. Everyone knows that the US will never pull investments out of Israel like that. Instead, we are looking to shift the dialogue to whether or not to divest from Israel, without extraneous discussion of the basics. We hope that in 10, 20 years the public will just take for granted the premises that Israel
is an apartheid state, and then we can move from there." (1)

This revealing statement is indicative of the divestment movement's long-term goals.  They have nothing to do with peace, dialogue, or education; and nothing to do with the real, factual, nature of the state of
Israel and its society. The divestment campaign is meant to alter the US society's perception of Israel over a long period of time so that later, 20 years from now, the anti-Israel forces can lobby for divestment in an atmosphere in which it is .."taken for granted…that Israel
is an apartheid state.”

In other words, it does not matter whether or not
Israel
is an apartheid state (the facts being 'extraneous discussion of basics').  What matters now is to be active in divestment whether or not it will work, because that's the way to lay the groundwork for getting the big lie accepted (without those pesky discussions of the basics), taken for granted, 20 years from now.

This goal endangers the perceptions of a whole generation of young people who will be the decision makers and policy makers 20 years from now. Amer is a long-term thinker. And he learned his thinking from Goebbels. The process whereby the Presbyterian Church of the USA (PCUSA) will enact the divestment decision recently made by its General Assembly substantiates the above assertion.

1. The Committee on Mission Responsibility Through Investment (MRTI) will correspond with the leadership of multinational corporations that do business in Israel, expressing the concerns of the General Assembly and pursuing a process to identify desirable changes in the company's role in Israel and Palestine.

 

2. MRTI will notify appropriate PC(USA) governing bodies, soliciting their involvement in the process of engagement with corporate leaders.


3. In the course of the dialogue with multinational corporations, MRTI may request the General Assembly Council to authorize the filing or co/filing of shareholder resolutions with subject multinational corporations using appropriate channels for the filing.


4. MRTI, in cooperation with ecumenical partners, will monitor regularly the progress made with subject multinational corporations.

5. When MRTI is persuaded that a particular multinational corporation, after extensive engagement, remains uncooperative or has refused to be in dialog with the churches, MRTI may prepare a recommendation to the General Assembly Council, asking the General Assembly to place the multinational corporation on the divestment/proscription list and urging the Foundation and the Board of Pensions to comply with the action of the General Assembly.

If a targeted corporation is unfortunate, or obdurate (depending how you look at it), enough to fall under the scrutiny of the MRTI, there are general guidelines for ascertaining whether or not this corporation needs to mend its ways.

 

One problem that immediately emerges is that the general guidelines (summarized below) are so broad that nearly any major company doing business in Israel could be at risk.

Guidelines:

1. Multinational corporations that provide products or services to or for use by the Israeli police or military to support and maintain the occupation.


2. Multinational corporations that provide products, services, or technology of particular strategic importance to the support and maintenance of the occupation.


3. Multinational corporations that have established facilities or operations on occupied land.


4. Multinational corporations that provide products or services, including financial services, for the establishment, expansion or maintenance of Israeli settlements.


5. Multinational corporations that provide products and services, including financial services, to Israeli or Palestinian organizations/ groups that support or facilitate violent acts against innocent civilians.

 

6. Multinational corporations that provide products or services, including financial services, that support or facilitate the construction of the Separation Barrier.

So, for example, companies such as Intel or IBM, which have extensive facilities in Israel, could qualify as a target for divestment (2). They:

1.  are a multi-national company;


2.  manufacture computer processors that are in products used by Israeli police or military to support and maintain the "occupation";


3.  produce technology that is of particular strategic importance to support and maintain the "occupation";


4.  manufacture products (processors in computers) that are used in the establishment, expansion and/or maintenance of Israeli settlements;


5.  manufacture products (processors in computers) that are used by Israel, the Palestine Authority, HAMAS, Hezbollah, PLO, etc. in support of violent act against innocent civilians;

 

6.  manufacture products (processors in computers) that are used in the design, routing, construction planning, construction scheduling, and many other ways in support of or facilitating the construction of the Separation Barrier.

This very broad typology creates a rationale that can be used against nearly any multinational company doing business in Israel.  Nearly every international banking company could be targeted; nearly every U.S. defense contractor could be targeted.  The guidelines are so general and broad that almost any company with any mercantile or financial connection with Israel could be targeted.

This unwieldy, scatter-gun approach to defining how and against whom divestment is to be enacted indicates that the moral grounds for divestment (the Church's Mission Responsibility, Social Justice), which the pro-divestment religious leaders claim as the basis for their energetic and enthusiastic drive for divestment, play little or no role in the pronouncements defining the movement's goals and procedures. The whole divestment movement is not really an economic strategy at all, nor is it an issue of social justice, or even a moral issue.  It is really part of a public relations and propaganda war that the Arabs have been waging against
Israel since 1974.  It is another way to demonize Israel, to make Israel
look like a rogue state that is so horrible that it does not have the right to exist.

As Mr. Amer said on
Michigan radio, they just want to get the USA to take for granted that Israel
is an apartheid state…then the forces of moral reprobation can be turned against it with ease.

Why the Arab propagandists at the Sabeel Institute encourage churches to join in the movement is clear.  Having churches of any denomination participate in this effort to de-legitimize
Israel lends great moral sway to the divestment movement and further undermines the image of Israel
as a legitimate member of the family of nations.

But the church leaders are presumably honest, intelligent, fair-minded, unbigoted, humanitarian people who truly seek truth and work for justice in the world.  Why are they so easily duped by the Arab propaganda? (3)

Jury is still out on that one!

Footnotes:


1.) CAMERA: On Campus, Vol. 13, #1: spring 2003
"Directing Campus Discussion: A Case Study", by Rachel Roth, pp. 2ff

2.) For full details of the decision, check out:
http://presbyterianchurch.org/mrti/guidelines.htm
(committee for social
justice, PCUSA website)

The text in full:
Committee on Mission Responsibility Through Investment (MRTI) has adopted and supplies for information the following classification system and process to identify multinational corporations in Israel and Palestine and to implement the General Assembly policy of phased selective divestment. The MRTI Committee will approach this task through engaging in constructive dialogue with the identified multinational corporations using deliberative processes. The deliberative process includes several steps outlined below:


First, the Committee develops a process of classification for addressing issues based on General Assembly policies and statements related to the issue including the 196th General Assembly (1984) policy on principles and criteria for considering divestment and the 216th General Assembly (2004) action on Supporting the Geneva Accord.


Then MRTI through its members and staff collects information and performs research to identify and select multinational corporations with which the Committee should begin a process of progressive engagement. The Committee reviews that list based on its classification process, and begins the process of progressive engagement with the selected multinational corporations.


The process includes meeting or offering to meet with the multinational corporations selected. Initial conversations are held with companies identifying the Church's concerns and encouraging open and honest dialogue about the company's involvement in the area of concern. The Committee attempts to resolve or come to agreement on these issues. This process of engagement can take months or years. The length of the process depends on the nature of the dialogue that ensues. If able to reach agreement that addresses the mutual concerns (both of the Committee and the corporation) then the Committee announces the positive results.

 

If unable to reach mutual agreement the Committee then considers its options including shareholder resolutions. Any shareholder resolution is discussed with corporate officers before filing the resolution in hope of resolving the issue.


If a shareholder resolution is filed the Committee hopes for enough supporting votes to demonstrate that the concern is shared by additional shareholders.


The Committee may engage in a process with the shareholder resolutions over a period of several years to obtain that support or solution to the issue.

 

Only if no positive results consistent with the General Assembly criteria and the MRTI classification process were attained would the Committee consider recommending divestment to the General Assembly.


Policy Background
The General Assembly has repeatedly called for a just peace in the
Middle East conflict between Israel and Palestine. This just peace would include a state of Israel with safe and secure borders based upon the Armistice Line of 1948 (its borders as recently as 1967). It would also include a state of Palestine with safe and secure borders based upon the Gaza Strip, the West Bank and East Jerusalem in a manner that permits geographical integrity and economic viability. The General Assembly has repeatedly condemned violent actions by both Israelis and Palestinians that have threatened a just peace, particularly as those actions have brought injury and death to innocent civilians.


The General Assembly has also identified the continued occupation of Palestinian land by
Israel as the major impediment to the creation of a just peace. The occupation is a violation of the Fourth Geneva Convention, that Israel has signed and ratified, and the human rights of Palestinians. It also involves the establishment of Israeli settlements on Palestinian land so that roughly 8,000 Israelis live in Gaza and over 400,000 on the West Bank. The creation, expansion and maintenance of these settlements are characterized by the appropriation of Palestinian land, extensive use of scarce water resources, destruction of Palestinian agriculture lands and orchards, an extensive network of roads for Israelis only, numerous military check-points limiting Palestinian travel, and other forms of harassment and humiliation.


The General Assembly has also echoed other religious bodies in expressing deep concern about the construction of a Separation Barrier on Palestinian land as it will increase the suffering of Palestinians, make their territory more unviable economically, and render the two-state solution much more difficult to achieve.


Classification Rationale
The following classification system is designed to assist MRTI in focusing its research and engagement on companies that are involved in actions contrary to General Assembly policy related to the Israeli and Palestinian conflict. The 216th General Assembly viewed the engagement on the
Israel and Palestinian conflict to fall within MRTI's long-standing engagement with corporations on human rights concerns around the world. While the General Assembly resolution initiating the process of phased, selective divestment mentioned only multinational corporations operating in Israel, MRTI will also include the concern of violence against both Israelis and Palestinians since violence on both sides prevents a just and lasting peace.


Classification System
MRTI will compile a listing of multinational corporations operating in
Israel and Palestine based on the following criteria:
1. Multinational corporations that provide products or services to or for
use by the Israeli police or military to support and maintain the occupation.
2. Multinational corporations that provide products, services, or technology of particular strategic importance to the support and maintenance of the occupation.
3. Multinational corporations that have established facilities or operations on occupied land.
4. Multinational corporations that provide products or services, including financial services, for the establishment, expansion or maintenance of Israeli settlements.
5. Multinational corporations that provide products and services, including financial services, to Israeli or Palestinian organizations/ groups that support or facilitate violent acts against innocent civilians.
6. Multinational corporations that provide products or services, including financial services that support or facilitate the construction of the Separation Barrier.
Progressive Engagement List


A list of multinational corporations identified for progressive engagement by MRTI will be prepared using the classification system, measured against the following factors:
1. History and nature of involvement in
Israel and Palestine.
2. Magnitude and strategic importance of involvement.
3. Acts of corporate opposition to the occupation, direct contributions to the victims of the occupation, support of a viable economy for an independent Palestinian state, and non-discrimination against Israeli Arabs or Palestinians in employment practices.
Process
1. MRTI will correspond with the leadership of those multinational corporations, expressing the concerns of the General Assembly and pursuing a process to identify desirable changes in the company's role in
Israel and Palestine
.
2. MRTI will notify appropriate PC(USA) governing bodies, soliciting their involvement in the process of engagement with corporate leaders.
3. In the course of the dialog with multinational corporations, MRTI may request the General Assembly Council to authorize the filing or co/filing of shareholder resolutions with subject multinational corporations using appropriate channels for the filing.
4. MRTI, in cooperation with ecumenical partners, will monitor regularly the progress made with subject multinational corporations.
5. When MRTI is persuaded that a particular multinational corporation, after extensive engagement, remains uncooperative or has refused to be in dialog with the churches, MRTI may prepare a recommendation to the General Assembly Council, asking the General Assembly to place the multinational corporation on the divestment/proscription list and urging the Foundation and the Board of Pensions to comply with the action of the General Assembly.
ADOPTED by MRTI on
November 6, 2004

 

(3) For a broader treatment of this topic, cf. my article in FrontPage Magazine of  March 15, 2005.


David Meir-Levi lectures in English, Hebrew, and Spanish and is a contributor to Frontpagemag.com.


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