Consumer Boycotts Can Inflict More Pain on Israel-Backing Companies than Divestiture

A Financial Times story, in combination with a new post by Barnand economics professor Rajiv Sethi on student demands at Columbia regarding its investments in Israel-supporting companies, illustrate why investor boycotts, as in divestiture programs, seldom accomplish much directly. The exception to that general premise is when investor action calls attention to serious problems with the company that are not well reflected in the sale price, such as bad governance or, as with fossil fuel players, questionable future prospects (adverse regulatory environment, high prospect of stranded assets). Another exception is when dissident investors gain control of enough votes to pose a threat to the board and management (an activist group with 10% to 15% and a legitimate beef has the potential to get enough allies when it comes time to vote board resolutions and board members so as to force change).

Mind you, all of the above does not say that these campaigns don’t have PR value, as in forcing boards of universities, public pension funds, and endowments, to ‘splain why they are backing a genocidal regime. They help move the Overton window.

By contrast, consumer brands spend a lot of money on brand image, and many also maintain a large network of retail outlets that depend on having sufficient sales to be viable. So in some cases, as the Financial Times indicates today, buyer withdrawal can have meaningful effects. Admittedly, the case examples from the Financial Times are from Muslim countries, but they might be generalizable to areas with lots of students (outlets near campuses) and/or parts of the US with comparatively high Muslim populations.

Another example to watch regarding consumer boycotts is whether any air carriers who use Boeing equipment are seeing any meaningful traffic loss from the recent “If it’s Boeing, I ain’t going” flier preference. The big reason it probably won’t, at least in the US, is that airline consolidation has produced a few ginormous carriers, with Southwest an all-Boeing operation, while Delta and United fly both Boeing and Airbus planes. It’s not clear that consumers can shun Boeing, given that carriers sometimes change equipment at the last minute, unless they are willing to cancel their trip in that event. But the desire still bears monitoring.

Back to the investment side. Amar Bhide described the general problem of shareholder powerlessness in a Harvard Business Review classic, Efficient Markets, Deficient Governance. The germane sections of his 1994 article:

Shouldn’t the managers and stockholders of U.S. companies love the rules under which they operate? In theory, market liquidity makes it easy for investors to diversify their risks and thus reduces the costs of capital for companies. But there’s a catch: U.S. rules that protect investors don’t just sustain market liquidity, they also drive a wedge between shareholders and managers. Instead of yielding long-term shareholders who concentrate their holdings in a few companies, where they provide informed oversight and counsel, the laws promote diffused, arm’s-length stockholding.

Pension and mutual fund rules that require extensive diversification of holdings make close relationships with a few managers unlikely. ERISA further discourages pension managers from sitting on boards; if the investment goes bad, Labor Department regulators may make them prove they had adequate expertise about the company’s operations. Concerned about overly cozy relationships between unscrupulous fiduciaries and company managers, the regulators have effectively barred all but the most distant relationships…

Thus the rules make large investors resolute outsiders. In a free-for-all market, the same institutions would likely demand access to confidential information before they even considered investing.

Disclosure requirements also encourage arm’s length stockholding….

Market liquidity itself weakens incentives to play an inside role. All companies with more than one shareholder face what economists call a free-rider problem. The oversight and counsel of any one shareholder benefits all others, with the result that all may shirk their responsibilities. This issue is particularly relevant when a company faces a crisis. In illiquid markets, the shareholders cannot run away easily and are forced to pull together to solve any problem that arises. But a liquid market allows investors to sell out quickly…. In economist Albert Hirschman’s terms, investors prefer a cheap “exit” to an expensive “voice.”

Barnard professor of economics Rajiv Sethi looks at a current case study, the student campaign demanding Columbia divest holdings in companies that are Israel-backers. From his post The Question of Divestment:

The student protestors who have camped out on Columbia’s West Lawn for the past couple of weeks have repeatedly maintained that “that they will not move until they achieve divestment.” The divestment they seek—as spelled out in a proposal submitted to Columbia’s Advisory Committee on Socially Responsible Investing in December 2023—is from companies judged to be “complicit in Israeli apartheid, illegal occupation, and genocide.” These companies include Alphabet (formerly Google), Amazon, and Microsoft, with a combined market capitalization of more than seven trillion dollars.

The committee rejected the proposal in February, which I imagine was a driving force behind the establishment of the encampment.

I have thought quite a bit about the divestment question over the past few years, especially after being appointed in 2015 to a Presidential Task Force charged with examining “the issues surrounding divestment from fossil fuels.” Our deliberations considered the effects of divestment on the growth of the endowment and on the incentives faced by targeted companies. We argued that the effects would be minor on both counts, reasoning in the latter case as follows:

Divestment involves a transfer of ownership in the secondary market for securities. Since every sale also involves a purchase, the demand for such securities from other individuals and institutions will determine the extent to which divestment will have an impact on the share price of the affected firms. To a first approximation, the anticipated future earnings of firms determine the price of shares in the secondary market. If divestment does not affect earnings, its impact on the share price will be negligible. That is, even a small decline in price relative to anticipated earnings would make the shares attractive to buyers looking for value, and their demand to buy would prevent significant declines. If the affected companies do not experience any change in the cost of raising capital, then the extent of fossil fuel extraction and sale will also be largely unaffected.

As Adam Tooze has pointed out, Columbia’s portfolio has a very small share of direct investment in the specific companies targeted by the protestors. But even if this were not the case, divestment from publicly traded companies would have negligible impacts on their earnings, share prices, and costs of capital. This is especially the case with behemoths such as Alphabet, Amazon, and Microsoft, which have a combined market valuation exceeding a quarter of our annual Gross Domestic Product.

Divestment is therefore a largely symbolic gesture that does not directly create strong incentives for companies to change business practices. This is very different from product boycotts, which can be extremely potent. However, if the publicity surrounding divestment can bring attention to an issue and lead to changes in behavior, it can start to have incentive effects.

A new story in the Financial Times confirms Sethi’s aside, that consumer boycotts can have a real impact. The pink paper describes how customers in Malaysia and Indonesia are rejecting American food and drinks chains to a degree that it has stopped a planned private equity sale of a portfolio company holding stakes in some big names operating there. From the Financial Times:

General Atlantic and CVC have paused multimillion-dollar stake sales in companies operating US fast food brands in Indonesia and Malaysia as protests and boycott campaigns over the Israel-Hamas war disrupt business.

Consumers in Muslim-majority Indonesia and Malaysia have shunned US brands since the start of Israel’s assault on Gaza in October.

The brands, including Starbucks, KFC and Pizza Hut, are being targeted over Washington’s support for Israel, even though they have emphasised their neutrality on the conflict. The companies operating the brands under a franchise model have also stressed that the fast food businesses are domestically owned.

General Atlantic paused the sale of its 20 per cent stake in Starbucks operator Map Boga Adiperkasa in December, according to two people familiar with the situation. The stake in Map Boga Adiperkasa, which has a market capitalisation of $285mn and is one of Indonesia’s largest fast food franchise operators, is valued at about $54mn….

CVC Capital Partners, one of Europe’s biggest private equity firms, has also halted the sale of its 21 per cent stake in Malaysia’s QSR Brands, the country operator of KFC and Pizza Hut, due to the boycotts, according to two other people with knowledge of the decision.

One of the people said the sale was paused due to several factors, including not getting the desired valuation. Malaysia’s QSR is privately held and does not reveal financials. The stake was valued at more than RM1.2bn ($252mn) last year, according to local media reports.

The freeze on the stake sales by the global private equity groups underscores the severity of the boycotts in a region home to 250mn of the world’s Muslims.

“People are shifting from food and beverage brands to beauty brands. The boycott is much more substantial now as opposed to symbolic,” said Nirgunan Tiruchelvam, head of consumer and internet at Aletheia Capital, an advisory group focused on the Asia-Pacific region.

The Financial Times indicates that Muslim buyers are rejecting American brands because they are American. Mere professed neutrality on Israel does not cut it. And notice the Financial Times bleating that presumed locally owned franchisees are being hurt, presumably unfairly. Aside from the fact that some of the franchise owners may not at all be local, (sure there aren’t some Singaporean or Chinese in the mix), that excuse is a misdirection about how franchise economics works. The franchisor may indeed takes a not-large-seeing revenue skim, say 5% to 10%, and perhaps a profit share too. Some franchisors guarantee dependence by taking their cut through the sale of key inputs. Coca Cola requires its bottlers to buy its super secret syrup from them.

But those franchisor fees and payments are close to pure profit. And that mean the South-East Asian protestors are denting the parent, even if not as much as if they were targeting wholly-owner operations.

I am not quite as negative about divestment as Sethi is, since it forces influential people to justify why they don’t sell the targeted holdings. The counter-argument include that in very liquid markets, where these positions are only a small portion of the total portfolio, the investment team is seriously saying they can’t find reasonable substitutes? In other words, virtue here has effectively no cost to Columbia unless it staff choses to bungle the trades, so why not engage in some cheap image-bolstering?

Of course, that debate would also put the spotlight on the fact that the issue is not real world impact of divestiture or the lack thereof, but that the Israel backers will brook no criticism of the Zionist state and by extension, its fellow travelers.

Divestiture fans will argue that the South Africa divestiture movement proved to be effective. I am not close enough to the fine points of that campaign to think it was the divestiture movement per se, versus related boycotts (consumer/customer action!) and governments finally getting on board to pressure South Africa. I’ve told the tale of my Communist college roommates being very involved in the South Africa divestiture movement; one typed for the ANC over her summers.

I met them in 1976, and they’d clearly been active in the South Africa cause for a while.

The negotiations to end apartheid in South Africa didn’t start until 1990 and took nearly four years.

Now admittedly the spectacle of the slaughter is solidifying world opinion against Israel. That can and should accelerate the timetable for Israel’s position bcoming untenable. Israel is relying on no one being willing to take military action against the Zionist state, save the plucky Houthis, and that everyone will just forget about the bloodbath once Israel has killed or otherwise ethnically cleansed the Gazans. We and others have discussed the ongoing damage to the Israel economy, not just from the Houthis but also the corroding impact to the country of the many types of cost of the war. That is likely to create the biggest pressure on Israel’s leadership. But with most of the country seeing this fight as existential, and many even apocalyptic, even a bona fide depression taking hold may not move many minds.

In other words, while all measures to increase pressure on Israel are positive, none by itself looks likely to have much impact. And the clock is ticking for Palestinians in Israel.

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  1. JohnA

    In the case of South Africa, the sports boycott had a strong impact.

    However, in the case of Israel, western politicians are extremely reluctant to ban Israeli athletes from various sports events. Or even the Eurovision song contest. In sharp contrast, Russia has long since been banned from competing in international sports, and the Eurovision. yet more blatant hypocricy.

    Israel is nothing like as sports mad as the white South Africans were and are, but it would signal a conscious move towards making the country an international pariah state.

      1. JohnA

        When SA was banned from sports, a lot of white South African cricketers moved to England and Australia and played for the national teams there. Incidentally prior to the ban, SA only ever played international – so-called test matches – against ‘white’ nations, such as England, Australia and New Zealand. None against West Indies etc.

    1. Kalen

      I am afraid that if Israelis sportsmen are not banned something like 1972 Munich Olympics could happen again in Paris as participation of country that is about to convicted of genocide by ICJ and whose government is about to be indicted for war crimes by ICC is nothing but pure provocation.

  2. Emma

    If divesting was not a big deal, why are the university administrators, politicians, and cops freaking out about it? The Overton window pushing is one aspect, as are the push to cut research and academic ties with Israel, but I think divestiture (especially of bonds and specific investment vehicles, as opposed to undifferentiated equities) can hurt Israel and its supporters quite a bit. A lot of Israeli weapons and surveillance research is evidently laundered through their collaboration with major universities, so divestiture can really isolate Israeli research centers and limit their marketability.

    The other piece is that where boycotting is largely an individual choice, divesting and sanctioning are necessarily collective actions. You need a group of people within the organization to work towards that goal over months and years, against highly unsympathetic school bureaucracies. That sort of people power might also empower other power balance changes within schools and organizations. Administrators hate that.

    1. vao

      I think you pinpoint an element that might indeed make a genuine difference in the divesting approach.

      The impact of getting rid of shares from large corporations in the USA (or the EU) may only be an infinitesimal one — and hence will not compell those firms to change anything in their economic ties with Israel.

      Israeli companies, however, do not have a comparably broad capital base, and therefore are probably much more sensitive to a divesting campaign. Specifically targeting them may well prove to be an effective measure against Israel, although it will have no impact on policies at home (i.e. USA, EU).

      1. Yves Smith Post author

        Please read the post. The divestiture campaign is against big companies seen as being too Israel friendly, and not Israeli companies.

        I can’t imagine any US endowment would hold a stake in a company in Israel. CalPERS is way way bigger than most and I can guarantee does not.

        Most have pretty small foreign equity allocations. Performance is measured against an index. Israel market is too small to be included in major indexes against which performance is measured. So that’s one disincentive. Another is currency risk. Many international managers required currency risk to be hedged, which given how small Israel is, I doubt can be done (as no well traded futures and forwards, making building a hedge very costly). Third is the companies are probably too damned small. Most endowment type investors are limited to 5% at the very most of traded shares. Even 5% would be too small to be worth the brain damage.

        1. Emma

          The Columbia students divesture demands include cutting all academic ties, which currently includes at least one dual degree program and a ‘research center’. If this also includes stopping collaboration with Raytheon, Amazon, Google, etc., this can quickly be a substantial headache for big companies that have long outsourced their R&D to academia.

          And the symbolic meaning of each divesture is more important than the actual dollars at stake. Every divesture strengthens the argument for others to follow. While the colleges collectively have no more than a few hundred billion, it would be a big deal if pension funds and mutual funds start dumping certain bonds. USAID can guarantee Israeli government bonds, but they definitely can’t do that for corporate bonds of targeted companies.

          Sethi is just looking at the direct dollars at stake, rather than look at how BDS worked in the South Africa context, where it looked impossibly weak and small until it wasn’t. And the whole point of BDS is not to do one but to practice all three.

          1. Yves Smith Post author

            Did you miss my repeated mention of the Overton Window? Please do not straw man the post.

            My comment above was addressing divesting stocks in Israeli companies. The Columbia students did not ask for that, almost certainly because Columbia has none. I explained why this is likely to be typical.

            The one way universities and endowments MIGHT have some exposure to Israeli companies is via venture capital funds. Not only would that exposure likely be itty bitty but more important, impossible to force divestiture. Investors like Columbia are passive, specifically limited partners, and cannot force the sale of a position in a VC fund.

            1. Emma

              I was pointing out that there’s more to divestment, both at the primary level and second order effects, than what Sethi choose to focus on.

              While you mentioned the shift of the Overton Window as an effect, I am highlighting it as the primary effect of the divestment efforts at universities. I listened to an interview by the successful divestment campaigners at Pitzer College and city of Hayward. They all admit that the dollar value was minimal but they wanted to shift the conversation and also create a template for other divestment campaigners to follow.

            2. Revenant

              LPs cannot force the sale of an asset but depending on the LPA terns, they may have a veto or a step-out right on morally equivocal new investments (defence, pornography etc) and, since the SMO :-), the veto may be drafted more broadly to enable LP virtue signalling ad hoc.

              Also, more pertinently, an LP with divestiture policy will never re-up in future funds. An anti-Israel policy would kill the flow of venture dollars to Israel after the active investment periods of the current funds close.

              More broadly, the divestiture lobbying is analogous to the same woke students’ previous demands their institutions disgorge the fruits of slavery. That is a divine irony and what makes this campaign so deadly: it threatens to show up the hypocrisy, degeneracy and unsustainability of the PMC Latest Thing mentality and force an appraisal of real moral goodness and humanity. Hence the PMC cannot let this genie out of the bottle. It may be too late however.

              The protestors need to claim Israel runs forced reeducation and labour centres for Palestinians (it probably does!) and tie their plight to the Uighurs and China, China, China!…

              1. Yves Smith Post author

                No, that is not correct. I have read MANY MANY LPAs. They contain no terms remotely like the ones you indicate. I can ask someone who is in the business of finding GP cheating and therefore has access to current LPAs, and I am highly confident he will concur. So it does not even go as far as you suggest.

                Plus many investors have most favored nation clauses, so any good terms given to one investor go to them, which would put the GP in an impossible position with many investors able to pull triggers.

                Decisions about deals are given to an advisory committed which the GP packs with friendlies like funds of funds who will always side with the GP.

              2. Yves Smith Post author

                My contact got back to me. He said the terms you suggested are not in the LPAs but side letters. He also thinks they are more used for virtue-signaling/talking points than acted upon, since the portfolio companies in a fund are pretty much never public information, much the whether any LPs actually executed any step-back provisions.

                1. Revenant

                  OK, they aren’t always in the LPA, they are in the side letters (maybe more commonly in the US: side letters get a degree of what USians call side-eye in Europe because LPs dislike the conflict of interest in a fiduciary having multiple bilateral variations on its obligations and some LPs have non-negotiable redlines they want in the LPA) but thank you for confirming they are there.

                  I am more familiar with VC than private equity. I suspect they are more prevalent in venture capital because VC funds tend to invest in technologies applied to markets without qualms about the market whereas a private equity fund is unlikely to invest in defence or porn or tobacco as sectors unless well signalled in the memorandum and there would be discussion with the LP committed if a such a deal was off-piste but in contemplation. A lot of public sector LPs in Europe will have such prohibitions. Indeed, two VC coinvestors have mandatory positive policies on sustainability that portfolio companies must adopt or face divestment! VC is also full of family office money pushing the principals’ shibboleths and refusing certain deals is par for the course.

                  I agree they are largely presentational, negotiated to keep up the pretence but rarely enforced. The LP advisory committee does have real teeth on these points though when it cares to use them. Family office LPs with a bee in their bonnet, public sector LPs etc.

                  1. Yves Smith Post author

                    PE invests a lot in not-virtuous sectors, starting with fossil fuels and related plays, guns, and even the National Enquirer.

                    And LP advisory committees absolutely do not have teeth in PE. As I said, the GP stacks the members so they will never vote against the GP on anything that counts.

    2. Uncle Doug

      “If divesting was not a big deal, why are the university administrators, politicians, and cops freaking out about it?”

      It’s not a big deal, per Sethi, in terms of its effect on the value of investor funds or costs for target companies. The freakout is due tho the fact that the administrators and politicians are terrified of the Israel lobby — for very good reasons.

      1. Emma

        This is something I’m trying to tease out. Why did the college administrator and politicos come down so hard on peaceful student protestors, rather than just slow walk the effort and let it die down? Even given what happened to Harvard and UPENN presidents, expelling students outside of established procedures and letting SWAT teams in to brutalize students and faculty seems unlikely to lead to good outcomes for the administrators.

        I am afraid that there’s something darker and deeper afoot. Like this is still a quiet before the real storm to come. The OWS shutdowns were coordinated after 2 months, but these administrators called in the cops after less than 24 hours. As Craig Murray mentioned, these sorts of actions typically require days or weeks to coordinate. So coming down so hard on peaceful protestors who are very much part of the school community is…it feels really dark.

        1. Uncle Doug

          It is really dark.

          I know that it may seem simplistic to say that they’re just terrified of the lobby, but fear of the Israel lobby — understandable fear — is without doubt the single most powerful motivator for the administrators and politicians engaging in this thuggish, over-the-top response to peaceful protest in long-established American tradition.

          The lobby willingly, effectively and fairly routinely ruins careers and makes outcasts of those it sees as threatening US unconditional support for Israel.

  3. Es s Ce Tera

    If BDS is not a big deal, won’t have much impact, why is Israel freaking out about it?

    The international BDS movement against South Africa had a massive economic impact on South Africa and obviously worked but SA was a different economy, had a different mix of exports which could be targeted – agricultural, minerals and metals, whereas top Israel exports are diamonds, integrated circuits, refined petroleum, medical instruments and potassic fertilizers. None of these are easily reached or impacted by consumers alone. However, while not really an export, Israel is a large recipient of donations and funding for R&D, and much of that probably comes from academia.

    At this point funding medical research by an Israeli company would be similar to funding research by Josef Mengele?

    My understanding of BDS is that it’s targeting specific companies which contribute to Israeli apartheid in specific ways, e.g. Motorola components are used in surveillance equipment across the occupied territories, therefore Motorola is on the list. I think a common way for universities to contribute is via UJA and JNF charties which directly funds settlements and settlement expansion.

    But also consider the brouhaha around the U of Toronto IHRP program incident where a major Jewish donor exercised undue influence and thwarted the hiring of a Faculty of Law director because she once wrote a (rather tame) paper about the Human Rights of Palestine. It’s clear universities need to reconsider the influence of pro-Israeli donors and BDS attempts to target this as well by making Israel a hot button issue.

    I think this is the real reason pro-Israeli supporters are freaking out about BDS – it’s the heat, the attention, the any kind of pressure at all, the using of any levers at all, the controversy, the debate, the spotlight. They know this works.

    Also, universities will probably need to rename a few buildings. Munk Center for International Studies was already ethically problematic as Munk derived his wealth from Canadian mining companies, famous for murdering indigenous peoples who protest their operations.

    1. Ashburn

      As a past contributor to the BDS movement I expected to see a massive effort on its part to raise awareness and funds after the start of Israel’s extermination campaign in Gaza. Yet, to date, I have not received even a single email from BDS asking for more donations, nor seen any real effort on its part to raise awareness of its mission among the general public. One would think that just as the ACLU boosted its membership after Trump’s election, and DSA boosted its membership after Sanders’ campaigns, BDS would be promoting itself across the Internet. Yet, I have seen no such effort on its part. This has been a complete mystery to me.

      1. Es s Ce Tera

        Your problem might be that BDS is a movement, not a non-profit or specific organization.

    2. Yves Smith Post author

      I don’t see it that way at all.

      Israel is taking an absolutist position regarding the criticism of the nation. Allowing BDS to be discussed creates a forum for all sorts of negative information to be aired (as in the narrative behind “Why you should support BDS”). Israel wants to shut the entire conversation down.

      And the first letter is B, boycott. The boycott part will be way more effective than divestment could ever be, as we explained.

  4. chris#5

    I think BDS provides one way for the broader public to protest, and so move the (media) Overton window. However I am interested in whether sanctions played a major role in bringing down apartheid in South Africa? A (SA born) friend once remarked to me that the fall of the Berlin Wall in 1989 meant the USA no longer needed a bulwark against communism – and that was it. This is consistent with FW de Klerk’s claim that sanctions didn’t hurt white South Africans much.

  5. Aurelien

    I’d be careful about making comparisons between Israel and South Africa.
    In the case of SA, they had an impact on certain parts of the population, especially the urban middle class, but they had little or no effect on the persistence of the regime and the end of apartheid.

    This was because those most affected by sanctions and boycotts were the English-speakers, often middle class and quite well educated, often working in the private sector. These people were not supporters of the National Party, for the most part, and would have been happy to see reforms, even if not full racial equality. The business community was frustrated with apartheid because it obstructed the creation of a black middle class of consumers, and discreetly helped the ANC in the 1980s. Don’t forget that the origins of the NP were in Afrikaner resentment about the more recent English-speaking immigrants, better educated and more politically liberal, who had pretty much taken over the running of the country from the Afrikaners by the start of the twentieth century. The first thing the National Party did on taking office in 1948 was to ethnically cleanse English speakers from positions of responsibility in government, the public sector the police and the Army, and they dominated the running of the country, as well as the various state-owned enterprises, until the end of apartheid.

    So sanctions disproportionately targeted those who were least sympathetic to apartheid anyway, and indeed quite a few of the more liberal whites gave up and emigrated. The exception here was the sports boycotts, which did affect the sports-mad Afrikaners. But there, don’t forget that the official discourse of the NP (which in my experience they largely believed) was that all this was part of an international communist conspiracy to weaken and overthrow the last democracy and Christian state in Africa, to allow a Russo-Cuban invasion through Angola, with the ultimate objective of seizing the Simon’s Town naval base for the Red Navy. So sports boycotts, like the rest of it, were all part of what we would now call a Colour Revolution strategy, and the more boycotts and sanctions there were, the closer the Colour Revolution was to succeeding. Of course the fall of the Berlin Wall kicked the support from under this whole edifice, and did more than anything else (except the violence within the country) to make negotiations possible. Outside actors had little or no influence in the end.

    Paradoxically, the main effect of sanctions was to move White opinion as a whole further to the Right (as much as that was possible) and English-speakers, feeling threatened and misunderstood by the rest of the world, started voting for the NP in large numbers for the first time. Had it not been for the end of the Cold War, things might have turned out rather differently.

    Although there are eerie parallels between Zionism and apartheid, I don’t think the situations of the two countries can be compared, although I sincerely doubt if sanctions will have any effect other than to persuade the more moderate Jews to leave the country. Where they might work, is if they are directed against US companies, to get them to put pressure on Washington to put pressure on etc. But that strikes me as a long shot: sanctions have pretty much an unrelieved history of failure.

    1. Yves Smith Post author

      This while interesting is not at all relevant to the narrow point I made: how long it took the BDS movement to become a big part of the effort to unite international opinion against South Africa. It took basically forever.

      Nothing in your remark addresses that or the additional issue I mentioned, which is that the damage to the Israel economy, which looks to be serious and worsening, will probably do more to create fissures than any BDS campaign on the time frame needed to save Palestinian lives.

      1. Aurelien

        I didn’t want to write an entire essay, but I hoped the point was clear enough. The BDS efforts did damage the SA economy, but they did not provoke political fissures: rather the reverse, because the interests that suffered the most were not those with the power to change the system. I think Israel would be similar. In fact, sanctions seldom provoke political change in anything except the worst sense. Serbia is an another good example, where sanctions encouraged a lot of moderates to leave the country strengthened the nationalists, and handed control over the country to organised crime. But people didn’t blame Milosevic, they blamed the West, quite understandably.

  6. Es s Ce Tera

    Just had a further thought……

    1) If BDS is successful universities would need to be ethical in their financial considerations.
    2) Universities receive donations from wealthy donors.
    3) Wealthy donors have dark skeletons in the closet, wealth usually proceeds from crime, legacies the wealthy are trying to cleanse with “benevolent” donations or by seeming to do good for communities.
    C) BDS would be a major financial setback for universities and criminals trying to expunge their past, launder their image.

    1. Emma

      Universities should never receive conditional gifts and really all gifts over $10,000 should be anonymous. ‘Donors’ are by and large parasites who dangle big checks in front of overcompensated administrators to force those institutions to do their bidding and silence the voices of actual stakeholders such as the faculty, student body, non-faculty workers, surrounding community, and most alumni.

      The top 100 universities/LAC in the US all have enough endowment to afford free tuition for all their students and pay livable wages to all faculty/grad students. Instead the money is spent on paying for a thick layer of administrators and building gleaming glass buildings with no pedagogical benefits.

      1. Yves Smith Post author


        Many gifts are given precisely for the naming opportunities: an endowed chair, a building, or even an entire school, like the Stephen M. Ross School of Business at the University of Michigan (Ross was once a client of mine).

        1. Emma

          It seems to me that a college president’s first priority should always be for the overall well-being of the college community. Seeking maximum asset accumulation that does not benefit pedagogy or express the will of the overall college community is a sickness.

          Allowing naming rights on college buildings to let rich old men laundering their reputation constitute a parasitic activity. If the buildings are named at all, they should be based on the individual’s contribution to humanity or to the college community, not because they did enough evil in life to be able to write really big checks.

          1. Kalen

            Ashamed to die before I win small victory for humanity. That kind of non monetary value of real success colleges should instill in students. Instead they teach them that power and money have great redeeming value so make your money however you can as in old age you’ll afford to buy indulgences for eternal life. (naming rights).

        2. gk

          To keep the Israel theme, you could mention the Sackler Faculty of Medicine at Tel-Aviv University (they only took down the name very recently). Last year, Israel had the number 1 consumption per capita of opoids in the world….

    2. Yves Smith Post author

      No, that isn’t the issue either.

      University endowments are fiduciaries. They are required to maximize returns, which explicitly translates into not sacrifice returns for broader social concerns. That is why the ESG fad (environment, social, governance) investment has petered out. Too hard to square with return priorities. Recall CalPERS sacrificed over $2 bilion in return by divesting from tobacco stocks at the worst time.

      The one part of ESG that pays off is governance, pressuring companies to run a tight ship.

      1. David in Friday Harbor

        Wilshire reported in 2018 that tobacco divestment cost CalPERS something closer to $3.6 billion. And it did exactly bupkis to the tobacco companies, who were looking for shares to buy back anyway! I think that banning smoking in public places beginning in the early 1980’s did far more to move the Overton Window on tobacco consumption than CalPERS silly late-to-the-dance 2000’s divestment hari-kiri.

        I’m in Yves’ age cohort and was in a UC campus administration building during an anti-apartheid divestment occupation in 1976. I noticed that the organizers had no intention of being arrested themselves and tried to talk my friends out of being arrested for them.

        A decade later as a young prosecutor I was able to witness how the Overton Window had shifted when a state college campus administration tried to get me to prosecute student occupiers — I pointed-out that all of the administrators not only publicly supported divestment themselves, but had brought the occupiers meals and escorted them to and from bathroom breaks. Consent is a defense to trespassing!

        However, it’s important to focus our discussion on whose behavior the occupations are attempting to change. It is the U.S. government and U.S. institutions who are enabling the Nut ‘n Yahoo fascists in Israel with massive shipments of the 2000-pound bombs being dropped on innocent civilians and vetos of nearly unanimous UN resolutions condemning the genocide. This is why the reaction of the establishment has been so vicious.

        There’s a reason that the “B” comes first in BDS. Boycotts are far more effective than divestment or sanctions. But I applaud the student movement for forcing a discussion that is long overdue.

  7. ISL

    I would add to BDS and protests and military resistance as morally imperative, that the ICJ (and ICC if it does what is being reported) could cause Israeli elites to fear medical treatment overseas (its a long flight to the US with a medical condition). US weapons will replace those Europe withdraws.

    That said, I expect the issue will be decided militarily (Hezbollah has said as much) with much bloodshed as the economic destruction speaks to Israeli long term survival, whereas Palestianian genocide is short term.

    1. Belle

      I wouldn’t be so optimistic. When the ICC investigated Georgia’s war on South Ossetia, they never charged any Georgians- only Russians and South Ossetians. They have indicted Russians in Ukraine’s war on the Donbass, but not Ukrainians or foreign fighters for Kiev. They have not looked into the Iraq War.
      OTOH, if the Houthis continue targeting shipping, Israel will face a massive economic impact, and if Hezbollah gets involved, expect an Israeli defeat- or a Samson Option, which would make Israel a pariah even more…

  8. Susan the other

    Israel is the scapegoat. The target should be our own MIC but they are impervious to public displeasure because they don’t rely on making a profit – they rely on their ability to control resources which enable them to feed their own machine and other companies to make their profits. Oil, to be specific. Or natgas. The genocide in Ukraine is just as egregious as Gaza. There will always be another enterprise to replace any existing one that gets boycotted. It’s an enormous overstatement to say there are a few points of failure that are vulnerable enough to bring this system down. The best divestment is a massive investment in clean energy. But catch 22 – we need lotsa oil to make the switch. The best thing we can do is humanitize our wars of desperation by protecting possible victims in advance. Hamas and all of Gaza could have been protected from this genocide. And Ukraine could have been avoided altogether.

    1. Piotr Berman

      Israel is “emperor’s dog” with a license to bite anyone. Impunity of the dog reflects the power of the owner. Biden is not exactly an emperor, his dog was removed from White House after 22 bites, but “the ruling collective” of USA has the imperial capacity. Not exactly a scapegoat.

  9. NYT_Memes

    Naive reader here (I suspect, at least regarding Israel-friendly corporations). I don’t track corporate connections myself, so I need help with boycott ideas. I was hoping this article or the comments would provide a list of companies to boycott, or a link to a website that would help. All US corporations seems too broad. Maybe I am asking too much.

    1. chris#5

      There is the “No Thanks” app, available for Android and Apple.
      “According to No Thanks, the app was developed by Ahmed Bashbash, who lives in Hungary and describes himself as a Palestinian from Gaza.  Bashbash told DW News that he lost his brother “in this massacre” – and that his sister died in 2020 because she was deprived of medical support. “I made it [the app] on behalf of my brother and my sister who I lost because of this brutal occupation, and my goal is to try to prevent what happened to me to happen to another Palestinian,” he told the German broadcaster.”

      1. JCC

        I use the “No Thanks” application on my android phone. It works well and it’s fast. One of the nice things about it is that scanning barcodes isn’t necessary, there is a list of all the products it covers and the reasons behind the listing, usually linking to the company itself that supplies the product with statements by that company.

        Even if it is something you don’t want to use in public, the list is handy.

        And one of the fun things to do is go to the Google App Store and read all the “1 Star” comments accusing the app of making background calls and stealing all your data, or that it is a proven virus, and of course plenty of insults towards all those that choose to download and use the application, not to mention insulting Google for allowing the application in their store.

        They are so transparently bogus that it’s kinda fun to read them.

  10. Rajiv Sethi

    Yves, on the South Africa case, I heard from a reliable source many years ago that what had the largest impact was the sports boycott, which shut cricket and rugby teams out of international competition.

  11. Telee

    What brands should be subjected to boycotts? How does the fact that many US states have laws directed at BDS affect ability to boycott selected companies? I’ve read that McDonalds, Burger King, and Pizza Hut provide free meals to Israeli soldiers.

  12. Piotr Berman

    “If BDS is not a big deal, won’t have much impact, why is Israel freaking out about it?”

    The issue is legitimization of anti-Semitism. With numerous updates and modified practices, anti-Semitism is giving the wrong answer to the following question:

    Is Israel the most admirable state in the World?

    And with a wrong answer, it is hard to justify numerous steps like prompt gift of 28 billion dollars when Israel is in a self-inflicted danger. As Israel depends on those supportive actions, a decline in affirmation of its adorability is an “existential threat”, survival would requite accommodation with internal opponents, the neighbors etc., undermining the ideal of being a place where “a Jew can be more Jewish than anywhere else” (quote from a highly regarded Israeli writer).

    1. Emma

      You’re the antisemite equating Jews with the hateful genocidal ideology of Zionism. If you want to talk about the Zionist state of Israel feeling threatened that people will learn about it’s true history, say that. Don’t lump all the Jews in with Zionism when many are risking their futures to fight it.

  13. SocalJimObjects

    Americans going without Starbucks: “How can we think of ways of helping the Palestinians when every one of us haven’t had our daily dose of Grande sized Latte???”

    Color me skeptical.

  14. Tommy S

    Again, Yves and all at NC, cover a subject I was wondering about recently. I always poo poo ed that ‘divest from fossil fuel’. as if it was even worth the time as a tactic. This reinforces that opinion, but I also agree with the ‘importance’ on this issue. And so it works on this ‘issue’ for me. It shows the world and the suffering in Gaza, that we care, and at least population wise, ‘we are many they are few’. ..and I think we all know what types of insurgency we really should be working on….but… for now…this is an emergency.

  15. B Popolo

    Behind all these companies and institutions and the institutions of governance, are people.

    The way to answer Zionist silencing and blackballing of critics and the normalization of this increasingly genocidal supremacism within our US institutions is to turn the tables on them, again, very personally.

    The need is to answer one Stalinist purge with another. This is why the Zionists (which, again, is an ethno-supremacism) are freaking out.

    1. B Popolo

      Meanwhile, Israeli carrots are piling up at the local grocery store in my perfectly reprehensible upper middle class community.

  16. Sean Clinton

    Applying black box analysis can help spotlight where the criminal genocidal apartheid regime is most vulnerable.
    It’s The Economy Stupid.
    How much does it cost to sustain the criminal Zionist project each year?
    Where does that money come from? (It’s not Uncle Sam)
    Which of the revenue stream that fund the regime are most critical and moist vulnerable?
    The economy maintains the western living standards the settler colonists demand and without which politicians would not get re-elected.
    Israel is a net importer of goods with a goods trade deficit of $34 bn in 2022 which is sure to balloon due to the economic impact of the genocide. Israel’s credit ratings have already been downgraded and are likely to fall further increasing cost of borrowing and reducing living standards.
    Diamonds are Israel’s No.1 net export and a major source of the foreign currency needed to purchase the imported foreign goods. Diamond revenue is estimated to generate $1bn/yr in funding for the Israeli military.
    A handful of public companies are key to the success of the Israeli diamond industry chief among them being De Beers and Tifany’s owned by Anglo American And LMMH respectively.
    Luxury brands that took decades and cost $millions to establish can be ruined in an instant by association with Israel bloody brand image..and they know it.
    The diamond industry is where the BDS movement need to focus. Take the protests to Tiffany’s and other leading jewellers who sell Israeli diamond claiming they’re “conflict free”.
    Google Israeli blood diamonds for more info. My latest – <a href="http://Applying black box analysis can help spotlight where the criminal genocidal apartheid regime is most vulnerable.
    It’s The Economy Stupid.
    How much does it cost to sustain the criminal Zionist project each year?
    Where does that money come from? (It's not Uncle Sam)
    Which of the revenue stream that fund the regime are most critical and moist vulnerable?
    The economy maintains the western living standards the settler colonists demand and without which politicians would not get re-elected.
    Israel is a net importer of goods with a goods trade deficit of $34 bn in 2022 which is sure to balloon due to the economic impact of the genocide. Israel’s credit ratings have already been downgraded and are likely to fall further increasing cost of borrowing and reducing living standards.
    Diamonds are Israel’s No.1 net export and a major source of the foreign currency needed to purchase the imported foreign goods. Diamond revenue is estimated to generate $1bn/yr in funding for the Israeli military.
    A handful of public companies are key to the success of the Israeli diamond industry chief among them being De Beers and Tifany’s owned by Anglo American And LMMH respectively.
    Luxury brands that took decades and cost $millions to establish can be ruined in an instant by association with Israel bloody brand image..and they know it.
    The diamond industry is where the BDS movement need to focus. Take the protests to Tiffany’s and other leading jewellers who sell Israeli diamond claiming they’re “conflict free”.
    Google Israeli blood diamonds for more infor. My latest –

    1. B Popolo

      You seem to be caught in an endless loop here. This is not an “it’s the economy, stupid” type situation.

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