Why is Human Rights Watch urging engagement with Israel’s banks?

Human Rights Watch has concluded in a new report that there is nothing in Israeli law that forces Israel’s banks to provide many financial services that aid the theft of Palestinian land for Jewish settlements.

While welcoming the report, human rights defenders are criticizing its recommendation that international investors “engage” with Israeli banks, rather than simply divesting.

Ali Abunimah, Electronic Intifada, 13 Sep:

Omar Barghouti, a founder of the boycott, divestment and sanctions (BDS) campaign for Palestinian rights, praised the Human Rights Watch analysis as “truly remarkable,” but called this recommendation “really problematic.”

All five big Israeli banks – Bank Hapoalim, Bank Leumi, Mizrahi Tefahot Bank, First International Bank of Israel and Israel Discount Bank – are heavily involved in settlements.

By providing services to settlements, Israeli banks “violate their international law responsibilities to avoid contributing to human rights and other abuses, including unlawful land seizures, discrimination against Palestinians and de facto annexation of the West Bank by Israel,” Human Rights Watch said in a statement. “Without these banking activities, settlement maintenance and expansion would be more difficult.”

Human Rights Watch emphasizes that Israel’s colonization is a war crime that entails serious violations of human rights.

Given such concerns, the United Methodist Church in the US and the Dutch pension fund PGGM have already divested from Israeli banks.

But major European financial institutions – even some that have divested from other firms complicit in the occupation – have yet to do so.

Dozens of organizations, political parties and trade unions recently urged French insurance giant AXA to dump its investments in Israeli banks.

Willful participants 

“In Human Rights Watch’s view, the context of human rights abuse to which settlement business activity contributes is so pervasive and severe that businesses cannot fulfill their human rights responsibilities if they continue carrying out activities inside or for the benefit of settlements, including financing, providing services to, or otherwise supporting settlements or settlement-related activities and infrastructure,” the report states.

It debunks claims made by Israeli banks that they are required under Israel’s “anti-discrimination” laws to provide such services.

But Human Rights Watch concedes that Israeli law does require the banks to maintain accounts “for settlement entities and residents of settlements” – a fact that has prompted criticism of the report’s recommendations.

“After proving that Israeli banks are deeply complicit – out of their own volition – in Israel’s war crimes and serious human rights violations in the occupied Palestinian territory, Human Rights Watch should have called for or at least suggested ending all financial transactions and investments in these banks, not ‘engaging’ them without a deadline,” BDS co-founder Omar Barghouti told The Electronic Intifada.

The recommendation smacks of the discredited “constructive engagement” policy towards apartheid South Africa that President Ronald Reagan and other opponents of sanctions on that racist regime promoted in the 1980s.

But Sari Bashi, Human Rights Watch’s advocacy director in Jerusalem, denies that the open-ended call to “engage” with the banks could provide an excuse for delays.

“On the contrary,” she told The Electronic Intifada, “we offer investors information that we think will help them reach a decision.”

How to be “settlement-free” 

“As a general matter, around the globe, Human Rights Watch is neutral on the issue of divestment and related forms of shareholder activism,” Bashi stated. “However, we believe that investors have the responsibility to assess and ensure that their investments do not contribute or support violations of human rights or international humanitarian law.”

She said that institutional investors should “ensure that their business relationships are free from settlement-related products or investments,” and if the banks failed to respond adequately, the institutional investors should take whatever action they see fit.

But Barghouti counters that the recommendation to engage “gives the patently false and misleading impression that investors can verify that their funding is not contributing to or assisting settlement activity while Israeli banks continue to do business in and with settlements.”

Given the fungibility of financial investments – which means that money invested in one place will free up money to be used somewhere else – there are only two ways investors can really verify that their investments are truly “settlement-free,” according to Barghouti: either the investors withdraw all their investments from the complicit banks, or the banks cease their complicity by completely ending their operations and business in and with the settlements regime.

According to Barghouti, Israeli banks’ involvement in serious violations of human rights are moreover not limited to their role in the settlements. For example, Israeli banks provide services to and promote manufacturers of weapons used against Palestinians and Lebanese.

Yet by focusing solely on the settlements, Barghouti said the report “gives another false impression that Israeli banks may meet their obligations under international law if they end all their business in and with settlements. This is obviously not true.”

“Misleading” 

John Veron, of Article 1 Collective, a group that promotes the use of international law to hold human rights violators accountable, told The Electronic Intifada that the report is “a valuable contribution to the discussion on Israeli banks’ complicity in violations of human rights.”

But Veron also considers Human Rights Watch’s recommendations that investors engage with the Israeli banks troubling.

“They wrongfully suggest these investors are able to meet their human rights responsibilities through engaging with Israeli banks based on Israeli domestic law,” Veron added. “This ignores the fact that it is international law and international human rights law which should be guiding institutional investors in their engagement with Israeli banks.”

Under the definition used by the UN High Commissioner for Human Rights, Israeli settlements are not just brick-and-mortar buildings, but “encompass all physical and non-physical structures and processes that constitute, enable and support the establishment, expansion and maintenance of Israeli residential communities” in the occupied West Bank, including East Jerusalem.

The same reasoning would apply to the Israeli-occupied Golan Heights of Syria.

According to Veron, the inclusion of “physical and non-physical structures and processes” in the definition of settlements makes it clear that the provision of financial services is “to be understood as an integral part of the Israeli settlements, and thus an integral part of the war crime” of settlements.

Veron added: “Based on Human Rights Watch’s report, institutional investors can come to only one conclusion: to meet their human rights responsibilities under the UN Guiding Principles on Business and Human Rights, institutional investors have to divest from Israeli banks.”

Despite the criticisms, Barghouti said the Human Rights Watch report provides “an irrefutable argument that Israeli banks are voluntarily, not legally obligated to be, involved in grave violations of international law.”

“This should convince more institutional investors in Israeli banks to follow the principled and courageous example of the United Methodist Church and the massive Dutch pension fund PGGM by ending all investment in Israeli banks,” Barghouti added. “They are a pillar of Israel’s regime of occupation, settler-colonialism and apartheid.”

Photo: Mahfouz Abu Turk/APA images

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