Is Divestment Legal?

My first commenter (thanks Brandon!) brought up an important point about whether or not divestment activities directed at Israel might be prosecutable under federal anti-boycott law.
Just as background, the Arab League (which boycotted Jewish businesses in what is now Israel starting in the 1920s) created a formal boycott office (created and still located in Damascus) in 1946. This office originally coordinated a primary boycott (the Arab states refusing to do business with Israel). But soon this grew into a secondary boycott (refusing to do business with companies in other countries who do business with Israel) and a tertiary boycott (requiring companies who want business in the Middle East to certify that they do not have clients, suppliers or partners either located in or doing business in the Jewish state).

These secondary and tertiary boycotts (which effectively gave foreign governments veto power over what American businesses could and could not do) eventually made this an issue for the US government which passed anti-boycott legislation in the 1970s. During the Carter administration (believe it or not) the Justice Department hit businesses which formally complied with the Arab boycott office with heavy fines. Threat of further prosecution, associated bad publicity, and the courageous stand of some companies who publically defied and denounced the boycott dramatically diluted it’s effectiveness (as did the Oslo Accords – at least temporarily). While some companies (especially in Europe) still avoid the small Israeli market to assuage the larger Arab one, anti-Israel boycotts has been off the agenda of US companies for many decades.

The question is whether or not divestment constitutes taking part in the illegal Arab League boycott of Israel. Fred Taub at the Web site DivestmentWatch makes a case that it does, but point of fact we don’t know because no one has actually divested, an action required to trigger a lawsuit or US Justice Department investigation. While it’s obviously a good thing that divestment has failed time and time again, if some institution is ever dumb enough to pull the divestment trigger, it would be intriguing to see where a suit or investigation would go. Fred’s research seems to indicate that such a prosecution would require proof that linked divestment proponents to national Middle East boycotters, a relationship divestment groups vehemently deny, but one that has never been thoroughly investigated or researched.

At the very least, this demonstrates one other unsavory aspect of those who are trying to convince, force or trick universities, cities, churches and unions into joining the divestment bandwagon. Because, at the end of the day, it will be those institutions (not divestment activists) that would face prosecution in the event that divestment is judged to fall under American anti-boycott law. At the very least, these groups should alert school and other officials of this risk they might be taking by following the divestment crowd’s advice. But that assumes the divest-niks actually care about the institutions they are trying to manipulate, rather than just using them (and potentially placing them in jeopardy) for their own narrow political ends.

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