Last week, the Maryland Break the Bonds Campaign announced success in its efforts to push the Maryland State Retirement and Pension System to divest from Israel bonds, largely due to the nation’s “government carrying out genocide, apartheid, and military occupation,” toward Palestinians, according to Shelley Fudge of Jewish Voice for Peace’s DC Metro chapter.

The Council on American-Islamic Relations and Jewish Voice for Peace said they had achieved a “historic victory,” claiming that the Maryland system had cut more than $62 million in Israel bonds holdings, which they said was about 85% of the system’s investment from a year ago.

In a statement, however, the Board of Trustees of the Maryland State Retirement and Pension System said it “has not adopted any policies concerning investment or divestment in Israel bonds or in any securities associated with Israel.” It added that assets are managed in the interests of its participants, and “investment decisions are to be based on the investment merits of each transaction.”

“The Board’s investment policy requires that System assets be prudently invested in a well-diversified manner to optimize long-term returns, while controlling risk through careful execution of the System’s investment objectives and strategies. In this case, the transactions generated investment gains for the System,” the statement read.

“As with all investments, the relative value proposition in bonds changes over time and Investment Division staff continuously monitor the System’s holdings and available opportunity set to capitalize on dynamic market opportunities in the best interest of the System’s participants,” it continued.

Howard Libit, executive director of the Baltimore Jewish Council, said that the message is clear — this decision is not a political statement.

“Our understanding is that the leadership of the Maryland State Retirement and Pension System makes decisions all the time about how much to invest in Israel bonds, and hundreds of millions of dollars in other assets, based largely on rates of return and risk.

There are also natural cycles to the bonds. As some get redeemed, they may or may not be replaced with the purchase of new bonds, depending on the rate of return at that moment,” Libit said. “We certainly encourage the state to look at purchasing Israel bonds as part of the retirement and pension system’s broad portfolio of assets, and we do not have any indication that there is an intentional effort to divest from Israel bonds for political purposes. To suggest that political purposes are driving a reduction in investment of Israel bonds is simply not true.”

Groups Split Over Pension System’s Israel Bond Shift

Activists in favor of the change are framing it as a meaningful first step in total divestment, while opponents say that it is the latest example of political discrimination committed against Israel.

Stephen M. Flatow, the president of the Religious Zionists of America, said that he thinks the move is a “political assault dressed up in financial language.”
He said that the proof is in the idea that Israel bonds are financially sound, and therefore, divesting is not smart.

“The political angle is very straightforward,” he said. “They are doing it on the basis that investing in Israeli bonds is not good for the people of Maryland, and the fact of the matter is other states have invested heavily because they appreciate the fact that Israeli bonds have paid consistent returns over the years, the prospect of default is nonexistent, and the use of the funds in Israel is basically for infrastructure, not for military purposes.”

Lauren Leffer of Jewish Voice for Peace’s Baltimore chapter disputed that, saying that the loans can absolutely be used by Israel’s military.

Opponents also counter that if the bonds were so well-performing, officials wouldn’t have been open to divesting from them, adding many pension funds and state treasuries are choosing to divest from and not reinvest in them — from the Michigan Retirement System, to the North Carolina State Pension Fund, to Minnesota.

Flatow said that the action taken by other states to divest is more a symptom of the political climate in those states, and not any factually sound analysis of the bonds themselves. He cited Minnesota and Washington as examples of states that are “on the bandwagon.”

“We know what’s going on in Minnesota — widespread fraud created by immigrants and a governor who has not been the most friendly person to Israel. The state of Washington’s actions are also tainted by left-wing politics,” Flatow said. “Their actions are strictly political, have nothing to do with the financial aspects of the bonds, and they’re joining the European crowd of left-wing anti-Israel agitators.”

In a press release, Jewish Voice for Peace cited the fact that, since Oct. 7, 2023, Moody’s, Fitch and S&P have all downgraded Israel’s credit rating as evidence that this decision by the state is far from politically motivated.

Flatow pointed to the strength of the Israeli shekel to argue that investing in Israel bonds is actually an increasingly smart move. On May 26, the same day that Maryland Break the Bonds announced the divestment, Trading Economics released a report that the shekel is trading against the U.S. Dollar at a rate of 2.85, the highest such mark since 1993.

“No one has ever been told you cannot redeem an Israeli bond at maturity, because it’s a solid investment,” Flatow said. “As far as a credit rating is concerned, I’ve got to [tell] you, America’s credit rating isn’t that good either, and … so to say that they are a poor credit risk, I think is really disingenuous.”

Flatow added that the divestment, in the short term, means that many in Maryland relying on the pension fund will lose a source of income for that fund. He argued that it limits the growth potential for the fund and that Maryland employees are hampered by this change.

Opponents of the divestment have emphasized the idea that this move treats Israel unfairly. Leffer said that Maryland divested from South Africa in 1984, Iran in 2008, Sudan in 2008 and Russia in 2022, which proves that officials are not politically motivated. For Flatow, this is a clear signal to the Jewish community of Maryland — one that does not strengthen relations between the state and its Jewish residents. ■

aguckes@midatlanticmedia.com