Indiana lawmakers want to pull retirement money from companies that boycott Israel

A bill awaiting Gov. Mike Pence's signature would require the Indiana Public Retirement System (INPRS) to identify and divest from companies that are boycotting Israel. House Bill1378, which passed unanimously in the House and 47-3 in the Senate, is targeting businesses that are engaged in the boycott, divestment and sanctions, or BDS, campaign.
 
BDS is an international movement aimed at ending Israel's occupation of Palestinian territories, in part by penalizing the nation's economy. The campaign targets institutions that do business in or are perceived to profit from Israeli settlements.
 
Companies, financial institutions and religious organizations around the world have divested from Israel in recent years as part of BDS. The United Methodist Church's pension board in January, for instance, decided to remove its investments from banks that have branches in Israeli settlements.
 
The Indiana bill would require the state to divest an estimated $50 million in retirement money, according to INPRS. That would be a small fraction of the state's $3.1 billion retirement portfolio.
 
The bill, authored by House Speaker Brian Bosma, R-Indianapolis, recognizes Israel as "the only democracy in the Middle East" and the "strongest ally of the United States in the Middle East."
 
"It is time to ... put our money where our mouth is," Bosma said Feb. 25 in testimony to the Senate Commerce & Technology Committee. "I don't find the BDS movement to be an appropriate one. I think it is exactly the opposite of how we should be handling differences."
 
Bosma could not be reached for further comment.
 
Pence spokeswoman Kara Brooks said the governor will "give this bill careful consideration."
 
“Governor Pence has long believed Israel to be our most cherished ally and, as such, he is grateful to Speaker Bosma for his leadership on legislation to tangibly affirm Indiana’s support of the state of Israel," Brooks said.
 
Supporters of the BDS campaign say it is a nonviolent way for people to protest Israel's settlements in territories that were seized in the 1967 war.
 
Erin Polley, a program coordinator for the American Friends Service Committee's Indiana Peacebuilding Program, said Indiana lawmakers misunderstand BDS. Bosma's bill "punishes the businesses that refuse to do business in land that has been illegally occupied," Polley said.
 
Polley said she's not aware of any major BDS initiatives in Indiana.
 
"As far as I know, there are no Indiana universities or colleges that have passed divestment resolutions (in accordance with BDS)," Polley said. "To me, it seems like a pre-emptive thing to scare companies and universities into not passing these types of resolutions."
 
Critics, though, argue that BDS is a Palestinian-led effort meant to destroy Israel. They say Indiana and its institutions should not support BDS, even inadvertently.
 
"The reason for this bill is we want to ensure none of our tax dollars, none of our pension dollars, are going to support organizations that are attempting to undermine Israel," said David Sklar, the director of government affairs for the Indianapolis Jewish Community Relations Council.
 
Sklar called BDS a divisive movement that won't mend relations between Israelis and Palestinians.
 
"The Arab-Israeli conflict is a very complicated issue that needs to be settled by the parties involved. It needs to be settled by Israelis and Palestinians," Sklar said. "(BDS) spreads lack of civility and isolation of both parties here in the United States, and it limits the ability for there to be constructive dialogue for what is happening in the Middle East."
 
If Pence signs HB 1378, INPRS would be required to compile a list of companies that have engaged in BDS by January. After creating the list, Indiana would give those companies 90 days to end their boycott against Israel. If they don't, the bill calls for Indiana to divest 100 percent of its money from those companies within 15 months.
 
Several states, including South Carolina and Illinois, have passed laws aimed at divesting from BDS supporters. Indiana has passed similar laws in the past prohibiting investments in Sudan, because of human rights violations, and Iran and Syria, because they are classified as state sponsors of terror.
 
In those instances, the state hired New York-based consultant MSCI Inc. to identify investments that were prohibited under the new laws. MSCI will perform similar work if Pence signs HB 1378. An INPRS spokeswoman could not immediately say how much money Indiana would pay MSCI.
 
The state does not yet have a list of companies it would have to divest from. Tony Green, the senior counsel for INPRS, on Feb. 25 told the Senate Commerce & Technology Committee that the process is "very complex." Green could not say how HB 1378 would affect the performance of Indiana's retirement investments.
 
"It depends on what type of market those investments are in and what that market is doing to determine if there are gains or losses," he said.