May 16--For years, groups critical of Israel's policies in the West Bank and Gaza have pressed universities and pension funds to divest themselves of stocks from companies deemed guilty of "profiting off of the illegal occupation of Palestinian lands." The Boycott, Divestment and Sanctions campaign, initiated by Palestinians, has had some successes in Europe and has gained attention on many American college campuses.
But now there is a bill in the General Assembly to turn the tables by requiring the state's pension system to shun companies that refuse to do business with Israel. The boycotters may be boycotted.
Oddly, they don't like this tactic when it is used against them. Donald Wagner and Ghada Hashem Talhami, writing in the Sun-Times, complain that the measure would "force state retirement systems to expend resources investigating, blacklisting, and withdrawing funds from companies that boycott Israel in protest of its occupation and denial of rights for Palestinians." But they seem to have no concern about state retirement systems expending resources to withdraw funds from companies that don't boycott Israel.
"How ironic that they are seeking to boycott a boycott movement," they say. But it's at least equally paradoxical for supporters of a boycott to decry a counter-boycott.
Rep. Sara Feigenholtz, D-Chicago, defended the proposed change: "We, as a state, are making an affirmative statement that if you're going to boycott Israel, an ally of the United States, a democracy in the Middle East, then we are going to divest from you." Gov. Bruce Rauner has endorsed the bill, which would make Illinois the only state in the country with this policy. The Senate passed it without dissent, and the House is expected to approve it.
For our part, we think both sides in this battle are mistaken. U.S policy toward Israel is properly the purview of the federal government, which has to consider a variety of complexities and competing concerns in its policies toward Israel and the Palestinians. Public pension investment boards have no particular expertise in the subject and no pressing obligation to weigh in.
What they do have is a duty to manage assets in the most financially prudent way. Refusing to buy or keep shares in companies that otherwise would be attractive investments means sacrificing returns, a loss that falls on retirees or taxpayers.
That option should be reserved for the most extreme cases. We were sympathetic when the state, in 2006, decided to divest itself from firms doing business in Sudan because of the government's use of terrorism and genocide against its own people. The state pension system divests from companies that do business with Iran or Sudan.
But this does not rise to that level.
The mistake would be regrettable enough if the state's pension funds were flush. They are not. Illinois has the most woeful pension system of any state, with a gap of more than $100 billion between assets and obligations. The last thing legislators need to force pension managers to worry about is applying exceptional standards of ethical hygiene to companies that are operating within the bounds of law and U.S. government policy.
So the state pension system should not refuse to invest in companies that do business in Israel or the occupied territories, and it should not refuse to invest in companies that refuse to do business there. Illinois pension managers should focus on trying to figure out which companies are likely to provide the best return -- a difficult enough task on its own.
The future of the West Bank and Gaza and their Arab inhabitants is something that can be settled only by negotiations between Palestinian representatives and the Israeli government. They may or not be able to settle their differences, but the process can manage without help from the General Assembly.
