In January 2014, Dutch pension fund PGGM announced that it would divest from five Israeli banks on the basis that these banks were involved in financing illegal settlement activities in the Israeli-occupied West Bank.
Since this announcement by PGGM, Dutch pension fund ABP has been under pressure to also divest from the financing of illegal settlement activities.
So far, ABP has resisted pressure from nearly one thousand pension holders to divest, continuing to not only violate Dutch and international laws, but also taking a major economic risk.
The position of ABP is especially surprising in light of a number of recent and well-publicized decisions by other Dutch companies and investors to withdraw from their business activities in the occupied Palestinian territories.
There are, of course, numerous additional moral and political arguments that could be raised to object to ABP’s involvement in settlement construction. But this is not our point here.
In 2013, the Dutch engineering concern Royal Hasköning withdrew from projects in occupied East Jerusalem. Also in 2013, the Dutch water company Vitens announced its withdrawal from several collaborative projects in the occupied West Bank.
PGGM followed shortly thereafter, announcing their reasons for divesting in five Israeli banks, namely “their involvement in financing Israeli settlements in the occupied Palestinian territories. This was a concern, as the settlements in these occupied territories are considered illegal under international humanitarian law.”
It is notable that, in all three cases, the companies pointed to international law as justification for their decision to suspend their business activities, which were clearly also perceived as an economic risk. The Dutch ASN bank had earlier set a precedent by divesting from Veolia corporation on the grounds that the activities of that company violated United Nations Security Council resolutions.
Investments violate laws
ABP has acknowledged in a letter to us that its investment in Israeli banks and companies doing business in the occupied territories “is politically a very sensitive issue.” However, they do not acknowledge that these business activities are illegal.
To the contrary, ABP claims: “we have recently considered the facts again and concluded that these banks are not acting in violation of international laws and regulations and that there are no court rulings that could lead to exclusion.”
This is an ill-informed position. In fact, ABP’s investments in Israeli banks, the multinational security and imprisonment firm G4S and other companies are in violation of several different laws.
First, ABP’s investments enable violations of international law to continue. In its 2004 advisory opinion, the International Court of Justice confirmed key existing obligations in international law, including that the Israeli settlements breach international law; the Geneva Conventions (international humanitarian law) are fully binding on Israel, and must govern all Israeli actions in the occupied Palestinian territories; and that Israel’s occupation practices violate not only the Geneva Conventions, but also international human rights law.
Most importantly, the court concluded that states must not only refuse to directly contribute to these violations, but must “consider further actions” to try and bring about an end to this illegal situation. Politicians, social advocates and prominent legal commentators such as John Dugard and John Reynolds have described it as a situation of apartheid.
Second, ABP’s investments violate Dutch criminal law. In 2013, the Dutch public prosecutor referred explicitly to the advisory opinion, noting that: “The International Court of Justice found that the construction of the settlements and the barrier on the Israeli-occupied West Bank, constitute a violation of these rules of international law,” which was further confirmed by the United Nations General Assembly.
Accordingly, the Dutch prosecutor confirmed that: “involvement in these violations of International Humanitarian Law is a crime according to Dutch law pursuant to Article 5 of the International Crimes Act.”
In our opinion, ABP should feel especially compelled to respect international law due to the fact that it manages the pensions of all public officials in the Netherlands, at the local, provincial and national level.
ABP has acknowledged its obligations to individual pension holders to invest in a sustainable and socially responsible manner. However, as a consequence of investing in the illegal activities of Israeli banks, G4S, Veolia and other companies complicit in Israel’s violations of international law, ABP is taking a major economic risk.
More specifically, the economic consequences of investing in an illegal situation directly contributes to a situation of social and political instability, which could ultimately result in confiscation of assets and/or forced divestment as the result of an eventual political settlement, or as the outcome of a global boycott.
We recall a similar situation in South Africa. In 1986, companies such as Hewlett-Packard, Barclays Bank and General Motors were forced to suspend their activities and withdraw their investments in South Africa.
These actions followed a citizen-led campaign to boycott banks and corporations’ complicity with the South African apartheid regime and numerous violations of human rights in that country.
Convinced of this growing economic risk, an increasing number of Dutch investors, such as PGGM and ASN Bank as well as Danske Bank, the government pension fund of Norway and others have withdrawn their investments that relate to Israel’s business activities in the occupied Palestinian territories.
The Dutch Association of Investors for Sustainable Development (VBDO), in a recent report, has noted that many pension funds and investors “fail to adequately apply guidelines on international law and human rights” with respect to investments linked to the occupied Palestinian territories (“Dutch Institutional Investors and Investments related to the Occupation of the Palestinian Territories,” February 2014 [PDF]).
ABP’s investments in Israeli banks, G4S and other companies involved in settlement construction in the West Bank, or related activities, are not only illegal (incurring possible criminal charges) but also very risky investments. Especially in the current economic climate, investors should not be taking such business risks.
The authors are, respectively, senior lecturer in law, human rights and development, professor of international law and development and professor of pluralist development economics. All are based at the International Institute of Social Studies of Erasmus University (EUR).