The Cable

Harvard not divesting from Israel

Harvard University sold off some of its investments in Israel but is not divesting itself from the Jewish state and the portfolio changes were not politically motivated, according to the university’s spokesman. Reports that Harvard sold off all of its holdings in Israel sparked immediate outrage across the Internet Monday morning, based on the news ...

Harvard University sold off some of its investments in Israel but is not divesting itself from the Jewish state and the portfolio changes were not politically motivated, according to the university’s spokesman.

Reports that Harvard sold off all of its holdings in Israel sparked immediate outrage across the Internet Monday morning, based on the news that the Harvard Management Company’s most recent SEC filing revealed that it had sold stocks amounting to $39 million in Israeli companies such as Teva Pharmaceutical Industries Ltd., NICE Systems Ltd., Check Point Software Technologies Ltd., Cellcom Israel Ltd., and Partner Communications Ltd.

But Harvard spokesman John Longbrake tells The Cable that the filing shows only a change in holdings, not a change in policy.

"The University has not divested from Israel. Israel was moved from the MSCI, our benchmark in emerging markets, to the EAFE index in May due to its successful growth. Our emerging markets holdings were rebalanced accordingly," he said.

Harvard still is invested in Israel, Longbrake said, but he declined to go into specifics. He said the filing in question only represents a small portion of Harvard’s overall portfolio, which is about $26 billion.

In other words, Israel’s growth and development resulted in a status change whereby the stocks could no longer be considered "emerging market" holdings, requiring Harvard to rebalance its emerging market portfolio.

"There are some funds which invest only in emerging markets," Yaacov Heen, the Cellcom CFO, told The Media Line. "So Harvard had to sell our stock because Israel is no longer classified as an emerging market and they no longer have the ability to hold this stock within the emerging markets fund."

From The Media Line:

Formerly the Morgan Stanley Capital International, MSCI World, is an international index of 1,500 stocks from a couple dozen ‘developed’ countries and is often used as a benchmark by global stock funds. In May, MSCI upgraded Israel from an ‘emerging’ economy to a ‘developed’ economy.

But it’s also true that several of the stocks Harvard sold were doing poorly. Harvard’s three biggest remaining holdings are all in emerging markets, Israel’s Globe business news site reports. They own $295 million in a fund composed of Chinese equities, another $295 million in a fund focused on emerging marks, and $181 million in a Brazilian stock fund.

Harvard’s explanation didn’t stop the group organizing the Arab boycott of Israel, the Boycott, Divestment, and Sanctions (BDS) for Palestine movement, from claiming a victory.

"We welcome Harvard’s decision, and encourage all academic institutions in the U.S. and elsewhere to follow its lead, to invest in socially responsible investments, and divest from Israeli war crimes," Hind Awwad, Coordinator of the BDS National Committee in Palestine told The Media Line. "After Israel’s war of aggression on Gaza in 2008/2009, and its recent attack on the Freedom Flotilla, the Global BDS campaign has gained great momentum."

The BDS campaign — targeting Israeli consumer, academic, cultural, and sports organizations — started in 2005 and had its first conference in Ramallah in 2007. The Anti-Defamation League has pointed out that, in February 2009, a similar claim by BDS that Hampshire College had divested its Israeli holdings was also disputed by the college.

"Despite the best efforts of activists, and some gains among church groups, the divestment campaign in the U.S. has been largely unsuccessful," the ADL said. "To date, it has failed to bring its primary targeted institutions to divest from Israel or from U.S. companies doing business with Israel."

 Twitter: @joshrogin

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