Students teach a lesson on ‘ethical divestment’

Students are the intelligentsia of the future, and one reason they are punching above their weight is the serious financial edge to their protests.
Express Illustration
Express IllustrationSourav Roy

The imagery for the Gaza war has shifted from the heart-rending but monotonous miles of bombed rubble of Palestinian towns to protesting students in Columbia and other US universities. In a sense the Palestine conflict has come home to roost. Thousands of pro-Palestine students across a 100 or more universities are demanding the Biden administration withdraw its support for what they call Israel’s ‘genocidal war’.

Compared to the massive Israeli war machine, a couple of thousand students protesting with flags and posters seems to be a drop in the ocean. But in the war for people’s minds, young folk raising ethical questions against a one-sided war, is making a huge impact.

In a tenuous sort of way the ‘Justice for Palestine’ movement connects with the resistance to US’ Vietnam war. Images of the New York police breaking up encampments and arresting hundreds of students in the University of South California (UCLA); and the occupation of the central academic building, the Hamilton Hall, in Columbia University, have all the elements of the 1968 anti-war movement that tore through western capitals.

Financial protests

Students are the intelligentsia of the future, and one reason they are punching above their weight is the serious financial edge to their protests. Their central demand is universities ‘divest’ their holdings in companies accused of being complicit in the occupation of Palestinian territory or participating on the Israeli side in violation of international law.

Normally ‘divestment’ is used when pulling out investments for financial gain, or to reduce monetary risk; in this case the ‘divestment’ is demanded on ethical and humanitarian grounds.

Protestors at Columbia in recent days have named some of the biggest US arms manufacturers and military vendors – Lockheed Martin, Boeing, General Electric, Caterpillar. The New York University (NYU) Alumni for Palestine website calls on NYU to “terminate all vendor contracts with companies playing active roles in the military occupation in Palestine…”

Electronic giant Cisco has also been singled out as it has a contract with the Israel government to develop co-working hubs and integrate remote regions to the country’s high-tech industry. These are being set up in the occupied West Bank and Syria’s Golan Heights, and are viewed as illegal by the international community.

While the military vendors like Lockheed Martin or Caterpillar, whose bulldozers are seen pummeling Palestinian homes, are on the immediate firing line, Big Tech has been under attack too. Students have demanded divestment from Google, which provides cloud computing services to Israeli troops.

Complex holdings

But the complicated working of the university endowments and investments make it very difficult to dismantle financial practices that are deeply entrenched. Time magazine estimates, quoting sources, that about 100 U.S. colleges have received gifts or contracts from Israel totaling $375 million over the past two decades.

Endowments, money raised for sustaining university operations and future educational expansion, are raised from rich alumni and corporate groups. Many of the donors are Jewish-owned businesses, who have threatened to back out if the universities take a ‘soft’ line to the pro-Palestine protestors.

The funds sitting in these endowments are humungous. Columbia University’s endowment is sitting on $13.6 billion, Yale has $40.7 billion while Harvard’s corpus has $50 billion. These funds are ploughed into profit-earning investments and are a powerful arm of these educational institutions.

Though some of the universities factor in environmental or ethical issues when making investments, most route their funds through fund managers, who put them in agnostic securities like index funds. They are neutral about ethics, as long as they can earn good returns. Divestment therefore is practically a difficult step as it not easy to trace the funds trail.

As a policy, most of the universities hit by student universities have taken a calculated decision to reject these demands. A couple of days ago Columbia University’s President Nemat ‘Minouche’ Shafik said that the school will “not divest from Israel” sparking the occupation of an academic building by protestors. The University of California and Yale University have also resisted calls for divestment.

It is only Brown University that seems to have bucked the trend and has agreed to hear out a divestment proposal later in May from the ‘Brown Divest Coalition’ in exchange for keeping the peace and dismantling a pro-Palestinian encampment on campus.

Even if the student pressure rejigged investment policy and some of the universities are forced to divest from Israel-linked businesses, it is unlikely that it would have any major impact on these US-based companies or on the economy of Israel. But the political impact of this divestment demand, even if it does not materialize, has been embarrassing for Israel and for the Biden administration. As it is Turkey has stopped all trade with Israel, which is hurting the latter.

Historically, divestment movements have sent a powerful message. The growing protest against South Africa’s apartheid rule in the 1980s was aided by Columbia University withdrawing its investments from companies operating in the country, and by 1988, 155 universities and colleges had followed suit. Again, since 2011, around 140 US colleges have divested from companies producing or supporting fossil fuels.

Currently, despite the heavy-handed police action on US campuses, the student protests are only growing in support for a ceasefire in Gaza. If anyone is making ‘America great again’, it is these students.

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