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8 Jan, 2014 11:33

Dutch pension giant divests millions from Israeli banks involved in settlement construction

Dutch pension giant divests millions from Israeli banks involved in settlement construction

The largest Dutch pension fund company, PGGM, has reportedly chosen to withdraw all its investments from the five largest Israeli banks, whose branches are involved in financing construction in the settlements in the West Bank.

Over the past few months the Dutch pension giant has informed some of Israel's top banks, such as Bank Hapoalim, Bank Leumi, Bank Mizrahi-Tefahot, the First International Bank of Israel and Israel Discount Bank, that their ties with the settlements, and/or companies involved in construction there, were an obstacle from the standpoint of international law, a source told Haaretz.

PGGM's stance is based on an International Court of Justice ruling, which in 2004 concluded that the barrier being built around the West Bank was illegal and should be pulled down, with the "security wall" violating the rights of Palestinians.

The Israeli law doesn’t allow local banks to stop providing their services to parties connected to the settlements, however. Even if it did, as things stand now it would be highly impractical. With the situation unlikely to improve in the near future, the Dutch giant said it had decided to divest from the banks. According to the Israeli daily, this decision took effect on January 1.

PGGM manages over 140 billion euros in pension assets on behalf of five pension funds representing some 2.6 million people and is one of the leading such companies in the world. Last year the company said it takes a new step in "responsible investment". According to PGGM's advanced policy, "the aspects of people, the environment and society are all included in investment decisions, and dialogue is sought with companies on corporate social responsibility."

"PGGM does not invest its clients’ funds in companies that produce or deal in controversial weapons. Nor are funds invested in companies that violate human rights or labor rights and who are unwilling to discuss making improvements," the Dutch pension fund provider stated on the company's website.

Therefore, investing in the Israeli banks' involved in financing construction in the settlements in the West Bank would go against the Dutch company's fastidious policy.

Last year PGGM stopped investing in the world’s largest retailer, the American supermarket group Walmart. PGGM has repeatedly spoken against the policy pursued by Walmart in the US, which restricts employees’ opportunities to organize themselves into trade unions. Walmart, however, was "not prepared to take PGGM’s concerns about the company’s tense labor relations in its domestic market into consideration." In the long run, PGGM added Walmart to its exclusion list.

It's not the first time a Dutch company has pulled out of Israel. In December, the Netherland's largest drinking water supplier, Vitens, decided to cut ties with Israel's national water corporation, Mekorot, also citing alleged violations of international law. An Amnesty International 2009 report claimed that Israel was denying the West Bank and Gaza access to adequate water supplies through a "discriminatory" control that enables its own people to consume four times as much as the Palestinians; Israel argued the shortages are caused by Palestinians stealing water. Vitens, which is part owned by the Dutch state, signed the co-operation deal with Mekorot only two months ago. The company had a near-monopoly on water supplies in Israel and the Palestinian territories, including Israeli settlements on the West Bank.

Vitens came to the conclusion that the provision of water in the Palestinian territories became too politicized. The company's spokesman said the firm had decided to cut ties because it "preferred to remain neutral". The decision was announced during Prime Minister Mark Rutte's official visit to Israel. Foreign Ministry spokesman called the decision "absurd", pointing out that the Palestinians will cooperate with Mekorot, while the Dutch firm has refused.

"It is more than strange that this Dutch company should boycott an Israeli peer that works with the World Bank on a very important regional cooperation project, which includes the Jordanians and Palestinians,"
Yigal Palmor said. "This only shows that by caving in to boycott pressures, one makes absurd decisions that result in a topsy-turvy situation."

Israeli officials believe that the recent series of boycotts is part of a new policy adopted by the Dutch government, which allegedly recommends local businesses to avoid commerce with the controversial settlements.