The divestment drive that could shake Israel’s economic foundations
Activists from Jewish Voice for Peace hold a rally for divestment from Israel Bonds in Philadelphia
Aharon Porath writes in +972 on 30 June 2026:
In late May, the European Union announced a slew of new sanctions on Israeli settler organizations as well as individuals known for violently attacking Palestinians in the occupied West Bank. This was swiftly followed by six European governments, including Britain and France, imposing additional sanctions targeting “networks of financing and support for settler attacks.” France further announced that it was banning Israeli Finance Minister Bezalel Smotrich from entering its borders due to his promotion of settlements and annexation.
In an interview with the Israeli outlet Globes, EU Ambassador to Israel Michael Mann emphasized that these were not sanctions against the State of Israel, but rather “against specific individuals and organizations that we believe have violated human rights under the law.” Even as European governments are expected to discuss further sanctions in the coming weeks, Mann’s comments suggest that the EU is still careful to draw a clear distinction between the settlements and Israel.
While these sanctions made headlines on nearly every Israeli news channel, another form of economic pressure is mounting under the radar: the selling of Israeli government bonds. At best, instances of divestment receive a brief mention on the inside pages of the financial press. Yet while its scope remains limited, the scaling up of this campaign has the potential to significantly harm the Israeli economy.
Unbeholden to the protracted political processes that characterize government decisions, bond divestment can be undertaken by an array of different autonomous actors including pension funds, private investors, local and regional government bodies, and private and public investment funds — often in direct response to grassroots pressure. And crucially, unlike the EU’s sanctions, it does not distinguish between the State of Israel and the settlements.
In May, the UK’s largest public pension fund relented to pressure from campaigners to sell Israeli government bonds worth approximately $29.2 million. “We were horrified to discover that our retirement funds are financing genocide, apartheid, occupation, imprisonment, and torture,” one of the protest leaders told Middle East Eye.
A few days later, a similar campaign in Maryland announced that it had succeeded in getting the state pension fund to divest $73.7 million worth of holdings in Israeli bonds. The fund’s management denied that the decision was made in response to the protest, but even if this was an investment decision rather than a direct achievement of the pro-Palestine campaigners, such cases threaten to shake Israel’s economic foundations.