Harvard sells off its investments in Israel

Harvard University sold all its shares in Israeli companies during the second quarter of 2010, the investment group which manages the university’s substantial endowment has reported to US Securities and Exchange Commission (SEC).

The university, which has the largest endowment of any school in the world, sold its $41.5 million holdings in a number of prominent Israeli companies, including $30.5 million of stock in Teva Pharmaceutical Industries Ltd, $3.6 million in Check Point Software Technologies (an IT security firm), $1.8 million in Partner Communications Ltd., $1.67 in NICE Systems Ltd. and $1.1. million in Cellcom Israel Ltd.

The Harvard Management Company, which manages the university’s $26 billion endowment, reported the divestment to the SEC on Friday but has not announced a reason for the sale.

The move was lauded by advocates of the international campaign for boycotts, divestment and sanctions (BDS) against Israel to push the country to withdraw from all territories occupied in the 1967 War and abide by international law.

“We welcome Harvard’s decision, and encourage all academic institutions in the US 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.”

Industry analysts, however, say the move was economic, not political.

“This is pure economics and I don’t think it was because of the Arab boycott,” Dr. Gil Feiler, founder of Info-Prod Research (Middle East) Ltd and director of the Middle East Business and Economic Research Institute at Interdisciplinary Center Herzliya told The Media Line. “They didn’t eliminate their investments in Israeli stocks,” he claimed. “They still have tens of millions of dollars invested, and if you are going to boycott Israel you sell all your stocks.”

Shirley Adler, Investor Relations Coordinator at Cellcom, Israel’s leading mobile communications firm, told The Media Line that the company had no official indication from Harvard as to the reasoning behind the decision.

Yaacov Heen, Cellcom’s Chief Financial Officer, said the divestment is in response to Israel’s recent reclassification as a developed economy.

“It’s more technical than strategic or an issue against Israel,” he told The Media Line. “I have asked my international relations people to check it and we believe it’s because Israel was reclassified as a MSCI developed country in May 2010.”

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.

“There are some funds which invest only in emerging markets,” continued Heen, the Cellcom CFO. “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.”

“We have seen a real change in the volume of trade since they reclassified us,” he said. “In the longterm this is good news for us because there is now more money that can be invested in Israel, but in the short-term it means we need to work to find new investors.”

“The problem is that Israel is very small compared to other developed countries so we have to compete on a much higher level,” Heen added. “When we traded against emerging countries it was very easy to compete for investors.”

A number of major institutions, including U.S. universities and state pension funds in Europe have signed onto the BDS movement and divested from Israel. There is an active campaign to convince administrators at Harvard, the oldest U.S. institution of higher learning, to divest from Israel.

LINK: http://www.harvardpsc.com/bds-news/

“Harvard University’s decision to sell all Israel holdings is indicative that investors are getting wary of investing in Israel,” said Awwad, coordinator of the Palestinian BDS campaign.  “While the Harvard Management Company did not give a reason for its decision, it is indicative of the indirect, ripple effects that the global BDS movement is having: it is becoming unprofitable to invest in Israel.”

But Dr. Feiler, an expert in Israeli trade with Middle Eastern nations, argued the BDS movement, which he referred to as an ‘Arab’ boycott, is losing steam.

“The Arab boycott of Israel has no bite anymore, not economically and not in terms of perception,” he said. “They cannot even call a quorum in their meetings.”

“Israel is a huge market, buying much more than the Arab countries. The Israeli stock exchange is much bigger than a few Arab stock exchanges put together, and the Israeli GDP per capita is larger than even Saudi Arabia.”