Talk to me, Harvard, what are you feeling?

Israel/Palestine
on 43 Comments

Israeli business site. No motive. (Thanks to Seham)

In another blow to Israeli shares, the Harvard Management Company notified the US Securities and Exchange Commission (SEC) on Friday that it had sold all its holdings in Israeli companies during the second quarter of 2010. No reason for the sale was mentioned. The Harvard Management Company manages Harvard University’s endowment.

43 Responses

  1. Jeffrey Blankfort
    August 15, 2010, 1:34 pm

    Curious, perhaps it has nothing to do with politics but with prudence. If Israel attacks Iran and with each passing month this seems more likely, investments in Israel and in the Israeli economy are likely to go south and fast.

    Unlike in the US, the business community in Israel, outside of the arms industry, does not seem to have the political clout when it comes to foreign policy as its US counterparts.

    • hughsansom
      August 15, 2010, 9:13 pm

      Yup, that’s it. So the good money is betting (1) that it is now financially prudent to proceed as if Israel were going to attack Iran, and (2) when that happens it will be bad for Israel.

    • MRW
      August 16, 2010, 1:04 am

      Jeffrey,

      Harvard replaced the Israel ETF with Turkey ETF:
      Not Only Did Harvard Dump Its Israel ETF, It Opened A New Position In A Turkish ETF
      Read more: link to businessinsider.com

    • DICKERSON3870
      August 16, 2010, 7:15 am

      RE: “perhaps it has nothing to do with politics but with prudence” – Blankfort
      FROM KABOBfest, 08/15/10:

      Harvard Management Company, which manages the university’s endowment, has divested the fund from all investments it had in Israel companies, during the second quarter of this year. The divested stocks include TEVA, a generic drug manufacturer, that has greatly benefited from Israel’s strangulation of several Palestinian pharmaceutical companies, Checkpoint Securities, which provided many of the technologies Israel uses humiliate, screen, and search Palestinians at road blocks, and Cellcom, a wireless communications company that provide communication services to the army, among others.
      College-based divestment campaigns have intensified over the past few years, Harvard University included. And while the university made no statement in favor of divesting from Israel on ethical, human rights grounds, it is not unlike the administration to make such a move quietly and preempt having to answer to to immorality of holding such investment and hypocrisy in retaining them while touting the divestment from Apartheid South Africa as beacon of progressive ethic…

      SOURCE – link to kabobfest.com

  2. Antidote
    August 15, 2010, 1:37 pm

    What’s up at Harvard? This is astonishing, as is the article in the Miami Herald posted here, co-authored by a member of Harvard Law School. And Dershowitz slammed Foxman for his mosque-comments.

    Change we can believe in?

    • Avi
      August 15, 2010, 5:06 pm

      Change we can believe in?

      Mere surmise, sir.

      Zionists in the US are simply trying to maintain their perceived credibility on the Israeli/Palestinian issue among the American masses, the same masses that don’t know much about that region’s politics.

  3. lohdennis
    August 15, 2010, 1:40 pm

    This has been worked on by a group of very organized and smart people for many years (mainly students at Harvard). They told me earlier in the year that it would probably take 2-3 years but I guess they were more successful than they thought. Also, note that the Chief Investment Officer has changed over the last year. The previous one was an Egyptian-American so he would have been accused of bias. Also, Lawrence Summers, who had publicly denied doing any divestment has been gone for 3 years now. See if this holds, though.

  4. Pamela Olson
    August 15, 2010, 1:42 pm

    Haha. It’s the zipless divestment. No one wants to name the reason because they don’t want a backlash. But no one wants Israeli stocks because of the other backlash (either current or soon to be manifest — the writing is on the wall). Hampshire tried to tell me their divestment had nothing to do with Israel’s policies, either. Riiiiight.

  5. annie
    August 15, 2010, 1:45 pm

    they are probably just looking to the future making the wisest investments. this probably isn’t the best time to invest is israeli companies.

  6. Citizen
    August 15, 2010, 1:45 pm

    From Kabbobfest:

    The divested stocks include TEVA, a generic drug manufacturer, that has greatly benefited from Israel’s strangulation of several Palestinian pharmaceutical companies, Checkpoint Securities, which provided many of the technologies Israel uses humiliate, screen, and search Palestinians at road blocks, and Cellcom, a wireless communications company that provide communication services to the army, among others.

    College-based divestment campaigns have intensified over the past few years, Harvard University included. And while the university made no statement in favor of divesting from Israel on ethical, human rights grounds, it is not unlike the administration to make such a move quietly and preempt having to answer to to immorality of holding such investment and hypocrisy in retaining them while touting the divestment from Apartheid South Africa as beacon of progressive ethic.

  7. yourstruly
    August 15, 2010, 2:32 pm

    Are we entering the exponential growth phase of the BDS movement? If so, how much time does the settler-state (not its people) have left? My guess is two years, but, based on how fast apartheid South Africa fell, once the BDS movement against it gained traction, could take even less time.

  8. otto
    August 15, 2010, 3:02 pm

    How long did it take Harvard to pull investments out of South Africa?

    • hughsansom
      August 15, 2010, 9:16 pm

      It didn’t.

      • Citizen
        August 16, 2010, 9:33 am

        Harvard was slow to pull its own investments out of companies doing business in South Africa, insisting that through its proxy votes, it could more effectively fight apartheid than by purging stocks from its portfolio. But after a decade of protests, Harvard did adopt a policy of selective divestment, and by the end of the ‘80s was almost completely out of South Africa.

  9. Richard Witty
    August 15, 2010, 4:00 pm

    Its wonderful if an administration invests based on its internally motivated principles.

    When the investment or divestment decisions are made based on pandering to perceived threat, the decision is a much weaker one.

    At least Hampshire used the opportunity to review its investment principles, rather than just pander to a single issue one way or another.

  10. syvanen
    August 15, 2010, 5:09 pm

    Very interesting. This has to be a business decision. I have little insight into Israeli businesses but have some sense of medical and bio-technologies. Some of the Israeli bio-companies were based plans that didn’t make too much sense and appeared overly hyped. It seemed they were mostly directed towards attracting investors from wealthy Americans with strong emotional ties to Israel. Ideological investing is usually not profitable. With Summers out, given the huge losses his people caused to the Harvard fund, I suspect more prudent managers have taken over.

    • Richard Witty
      August 15, 2010, 6:40 pm

      Syvannen,
      It is VERY RARE for college presidents to have any influence over endowment investment process.

      Especially in large institutions.

      • syvanen
        August 15, 2010, 10:53 pm

        It may be very rare but Summer’s role is described here:

        link to bloomberg.com

        And it was Summers people who ran the fund and he directly approved the disastrous interest rate swaps that lost over a billion dollars.

    • Psychopathic god
      August 15, 2010, 7:06 pm

      there may be some American tragedies to follow on divestment from Israeli businesses.

      Israel has business alliances with — and accepted ‘seed money’ from, several impoverished US cities, notably, Akron, Niles, and Youngstown, Ohio.

  11. Nevada Ned
    August 15, 2010, 7:35 pm

    The people who make investment decisions for Harvard’s enormous endowment have important connections. Do they know something that the rest of us don’t know?
    Jeffrey Blankfort suggests an Israeli attack on Iran. Maybe. But even a prudent manager who thought an attack unlikely might want to avoid the possibility of risk. After all, Harvard lost a lot of money in risky investing in the recent financial meltdown. I strongly suspect that they’re not sneering at risks any more at Harvard.
    Another possibility is that Israel may do something idiotic (again) to make it a renewed target of the growing campaign for human rights for Palestinians. This is not an unlikely possibility, in fact it already happened in the recent attack on the Gaza Freedom Flotilla.

    Humanitarian activists are sending more boats to Gaza this fall, so it could happen again. The Israeli attack on the Mavi Marmara was (of course) a military success, but a political disaster for Israel.
    It’s a no-win situation for the Israeli regime. Attack the boat? Worldwide uproar again Israeli policy. Let the boat land in Gaza and unload? It’s a defeat for the blockade, and encourages more boats.
    Faced with this situation, a prudent manager could decide: we can’t predict what will happen, but we’re unloading our Israeli stocks.

  12. Richard Witty
    August 15, 2010, 8:30 pm

    link to nytimes.com

    In Jerusalem, a Barrier Comes Down

    Hopefully, this won’t be the last.

    The primary question remains. Did this barrier, and the next, come down because of BDS (isolation of Israel), or because of some mutual acceptance between the communities (cool even)?

    • Donald
      August 15, 2010, 9:45 pm

      The first sentence in the NYT link–

      “The Israeli military on Sunday began dismantling a concrete barrier that protected residents of a once-troubled district on the edge of Jerusalem from Palestinian sniper fire.”

      Gilo is a settlement. The NYT never once mentions that. All you can tell from the article is that Palestinian snipers used to shoot into Gilo, so the barrier was put up. The Palestinian Authority apparently prevents that now, so the barrier is coming down.

      The settlement, apparently, is there for good. That’s some wonderful example, Richard.

      • Donald
        August 15, 2010, 9:47 pm

        I’m dumb–the article does mention that Gilo is a settlement. My main point stands–the victory for mutual acceptance that Richard sees here is that an Israeli settlement is now so secure they don’t need a concrete barrier for protection.

      • Richard Witty
        August 16, 2010, 6:12 am

        Do you want the walls to come down?

        You actually want neighborhoods to be at war with each other?

      • Donald
        August 16, 2010, 10:03 am

        “Do you want the walls to come down?

        You actually want neighborhoods to be at war with each other?”

        So you want Israel to steal land and you are happy when Israel is successful in doing this. I don’t favor violence, but you do. You favor successful violence on the part of the Israelis.

      • Richard Witty
        August 16, 2010, 10:18 am

        No, I want a status of contact and reconciliation, so that law can be applied, rather than law mutually ignored.

        I do favor Israel fulfilling its responsibility as a state to protect its citizens, and if that requires violence to accomplish, then violence is part of its responsibility.

        And, I do favor Israel remembering that Palestinians are human beings, and that in all cases the minimum amount of violence required to fulfill its responsibility, be undertaken.

        You still haven’t addressed whether the removal of that section of the wall is a good thing or a bad thing.

        Whether, that is progress to work for, or not?

      • MRW
        August 16, 2010, 12:53 pm

        Witty,

        I do favor Israel fulfilling its responsibility as a state to protect its citizens, and if that requires violence to accomplish, then violence is part of its responsibility.

        And, I do favor Israel remembering that Palestinians are human beings, and that in all cases the minimum amount of violence required to fulfill its responsibility, be undertaken.

        Then you don’t believe in justice. You believe in ongoing occupation and Papa Israel should beat his charge too much, just enough to keep Papa Israel in control.

        Justice is blind (remember the blindfolded lady with the sword?) The law follows from the state’s concept of justice.

      • MRW
        August 16, 2010, 12:54 pm

        Correction: “Papa Israel should NOT beat his charge too much…”

  13. Richard Witty
    August 15, 2010, 8:36 pm

    link to haaretz.com

    Amira Hass / What the Hamas is really afraid of

    “I wish these pictures reached leftists abroad,” my friend said to herself Tuesday as she watched Hamas police use rifle butts and clubs to beat her friends – activists from the Popular Front for the Liberation of Palestine. Although my friend has never been a fan of the Fatah government in the West Bank, she is outraged by the romanticization of Hamas rule by foreign activists.

    Hamas understood the subtext of the PFLP protest all too well. The PFLP is unwilling to see the Hamas regime as a mere victim, either of Israel or the PA. You took power? Take responsibility as well.

    But the shamelessly brutal suppression of the protest shows just how scared the Gaza government is. It has suppressed all activities by Fatah in the Strip, be it public or internal.

    Last week, it prevented a protest by the Democratic Front for the Liberation of Palestine in the al-Maghazi refugee camp, also based on the electricity crisis. It even banned a celebration by the Khan Yunis refugee committee for students who passed their matriculation exams.

    • Shingo
      August 15, 2010, 10:14 pm

      “But the shamelessly brutal suppression of the protest shows just how scared the Gaza government is. It has suppressed all activities by Fatah in the Strip, be it public or internal.”

      Notice how it’s a shameless brutal suppression when Hamas does it ( which is true) but when such actions are taken by Israel against peaceful protests, usually with the addition of shooting, Witty is unavailable for comment.

      FYI Witty, Fatah tried to overthrow Hamas in a coup 3 years ago. Any group would be persona non grata having done so, especially in Israel.

      Witty undoubtedly got very excited over this opportunity to cite a negative article on Hamas, oblivious to the irony that such events are routine in Israel and such “brutal suppression” has been carried out with impunity in Israel under both major political parties.

    • potsherd
      August 15, 2010, 10:44 pm

      WJ wants us to denounce Iran.

      Witty wants us to denounce Hamas.

      Such concern for the mote in the neighbor’s eye.

      • Donald
        August 15, 2010, 11:07 pm

        “WJ wants us to denounce Iran.

        Witty wants us to denounce Hamas.”

        Happy to oblige. Iran has an authoritarian government with a brutal human rights record. Hamas committed atrocities in the civil war instigated by the US and of course was guilty of terrorist attacks on Israeli civilians. Fatah is also guilty of atrocities and Israel’s record is horrific and has been since its founding. The US is guilty of war crimes and won’t even investigate them in any serious way.

        That was easy.

      • Richard Witty
        August 16, 2010, 6:13 am

        You do get that it was Amira Hass that wrote every word posted?

      • eljay
        August 16, 2010, 7:14 am

        It is disappointing to hear that Hamas is stifling dissent. Beating lost confidence back into people is neither just nor democratic. Perhaps it’s time for another election, one whose outcome will be honoured by all parties involved and, perhaps more importantly, by the international community.

        In light of the fact that RW was the person who linked to this article, I found the last paragraph particularly interesting:

        If Hamas felt it still had public support, it wouldn’t need to suppress any activity that it didn’t initiate or finds unflattering.

        Rephrased: “If Israel felt it still had international support, it wouldn’t need to suppress any activity that it didn’t initiate or finds unflattering.”

        Ain’t that the truth.

      • Chaos4700
        August 16, 2010, 9:43 am

        How many motes do you suppose they get in their eyes, bowing down to their golden calf as they do?

        I thought the blog made a decision to not let trolling persist. Why are we letting Witty spam attacks against the Palestinian government on EVERY SINGLE ARTICLE he posts on?

    • sherbrsi
      August 16, 2010, 2:55 am

      You took power? Take responsibility as well.

      That’s a nice suggestion Witty. But like all your other suggestions, is it reserved solely for the Palestinians, or conditionally for the Israelis (if at applies to them at all?)

  14. hughsansom
    August 15, 2010, 9:14 pm

    There’s some irony in the possibility that Israel’s own vicious, violent stupidity and its lust for war may do more to bring about divestment than the best efforts of advocates of Palestinian rights.

  15. mymarkx
    August 16, 2010, 7:23 am

    This is interesting. When the United States is forced by world opinion to stop openly funding a regime guilty of human rights violations, Israel usually steps in and carries our water. The US and Israel have been partners in crime, so the US can’t issue sanctions against Israel. But if world opinion forces the US to stop funding Israel, there’s nobody to step in and be our proxy. So our government is going to resist sanctions.

    Divestment is taking off because Israel is not a stable democracy and they’re too risky for any fund that has already taken hits from risks gone bad.

    But the boycott part of BDS should really take off shortly after the November elections in the US, when the Knesset is likely to vote on a proposed conversion law which would make 85% of American Jews, those who are not Orthodox, “honorary Palestinans,” no longer entitled to the right of return. Among Conservative and Reform Jews, even the fiercest defenders of Israel are horrified at realizing that at the same time that Israel’s actions are arousing global anti-Semitism, the Israeli government could deny non-Orthodox Jews a haven from the consequences.

    Whether or not a reason is given, no sane investment fund would keep money in a country that appears to be committing suicide.

  16. Nevada Ned
    August 16, 2010, 10:36 am

    Mymarkx, can you provide a link about the Knesset bill that would exclude non-Orthodox Jews from being officially Jewish? And what are the chances of passage of the bill?

  17. hophmi
    August 16, 2010, 12:14 pm

    Yeah, nice try, everyone. It has nothing to do with politics.

    link to businessinsider.com

  18. Michael W.
    August 16, 2010, 12:28 pm

    As hophmi said above, the reason it appears Harvard was divesting from Israel is because the Israel stocks were to successful to be on the emerging market index so they moved it a different index. See below:

    Harvard’s John Longbrake addresses the Harvard Management Company’s divesting from Israeli holdings issue:

    From: “Longbrake, John”

    Date: Mon, 16 Aug 2010 11:08:31 -0400

    To: xxxxxxx

    Subject: RE: Harvard Management Company Divesting from Israeli Holdings- Please Explain

    Dear Dr. XXX

    Thank you for taking the time to write.

    The Management Company’s most recent SEC filing details changes in holdings, as is routine, but no 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. We have holdings in developed markets, including Israel, through outside managers in commingled accounts and indexes, which are not reported in the filing in question.

    I hope that this is helpful.

    Sincerely,

    John

  19. lysias
    August 16, 2010, 2:59 pm

    When is Congress going to step in and make it illegal to divest from Israel?

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