The other movement to divest from Israel [in this case to save Israel as a Zionist state]

Alex Kane

Jewish Currents  /  March 21, 2023

Experts on anti-BDS laws say the statutes could ensnare companies that pull out of Israel over the planned judicial overhaul.

A new kind of Israeli protest movement has arisen in response to a government plan to weaken the country’s judiciary. In addition to the hundreds of thousands of Israelis marching, rallying, and blocking highways, business leaders have threatened to pull their money out of the country if the overhaul occurs.

Already, at least three Israeli companies have moved their money to bank accounts outside of Israel: fraud management company Riskified, payment platform firm Papaya Global, and venture capital fund Disruptive AI. Other technology executives are warning that they will relocate or move their money out of the country if the judicial overhaul becomes law. Most tech executives and investors have said that they would take these steps for business reasons—in other words, because of concerns that a hamstrung judiciary, and the corruption that might ensue, would make Israel-based firms unattractive to foreign investors.

The companies that are moving funds out of Israel could face blowback not only from the Israeli right, which is pushing the judicial plan, but also from officials enforcing US laws designed to quash support for the Boycott, Divestment, Sanctions (BDS) movement, which targets Israel over its human rights abuses against Palestinians.

Since 2015, 34 states have passed anti-BDS laws to crack down on companies that boycott Israel, either by requiring state contractors to pledge that they do not engage in such boycotts, or by requiring the state to divest from any companies that do. Jewish Currents contacted the offices tasked with enforcing anti-BDS laws in five states and asked them whether companies pulling out of Israel would be placed on their lists of entities barred from state business. Four did not respond to a request for comment, while a fifth, Florida’s State Board of Administration, said they “do not generally provide commentary and speculations on what companies may do in the future in terms of geographic operations.” But experts on anti-BDS laws say the statutes could eventually ensnare companies that pull out of Israel over the planned judicial overhaul, potentially preventing those firms from receiving certain investments or landing state contracts in the US. “They’re limiting economic relations with Israel, which is how the laws define a boycott,” said Brian Hauss, a senior staff attorney with the American Civil Liberties Union, which has filed lawsuits challenging the constitutionality of anti-BDS laws in Arkansas, Kansas, and Arizona. “It’s hard to understand how refusing to do business in Israel because you object to the evisceration of its judiciary is different from a legal point of view than refusing to do business in Israel because you object to its treatment of Palestinians.”

Israeli companies’ reasons for divesting from Israel are different from those of companies like Ben & Jerry’s, which cited Israeli human rights abuses in the occupied West Bank as the impetus for stopping the sale of ice cream in Israeli [Jewish] settlements. Companies such as Papaya Global have said instead that they are concerned about the future of Israeli democracy: “No wealth holder will put money in a state where democracy is crumbling,” co-founder and CEO Eynat Guez argued in a recent interview. This distinction has been emphasized by US-based organizations that have voiced concern over the judicial overhaul but have supported anti-BDS laws. In comments to The Forward, the Anti-Defamation League said protests against the judicial overhaul are “in no way analogous” to the BDS movement because the Palestinian call for boycott and divestment “is rooted in rejecting Jewish people’s right to self-determination and the destruction of the state of Israel”; Marc Stern, chief legal officer at the American Jewish Committee, agreed that the two are “categorically different.”

Lawyers and advocates for Palestinian rights, however, say that anti-BDS laws don’t actually differentiate between types of boycotts and divestment, and that companies divesting from Israel over the judicial overhaul could still be affected by the laws. Many states’ anti-BDS laws define a “boycott” as an action “intended to penalize, inflict economic harm on, or otherwise limit commercial relations” with Israel. “If you’re an Israeli company that is divesting from Israel and terminating business there, I don’t see how you’re not technically in violation of that law, which means you need to be put on a blacklist,” said Lara Friedman, president of the Foundation for Middle East Peace. “There’s very little wiggle room.”

If terminating business with Israel for economic rather than political reasons does turn out to be a way to escape anti-BDS legislation, that too would be concerning, said Hauss. “Requiring companies that pull out of Israel to not comment on any political motivation for doing so is going to undermine the protest movement that is trying to prevent authoritarian backsliding,” he said. “The companies that might wish to show their support for democratic values can’t do it.”

Palestinians and their allies see Israel advocates’ reaction to the companies pulling out of Israel as a measure of their hypocrisy. “It is perfectly reasonable, it seems, to shun Israeli officials, cut off financial ties, and disrupt public spaces when mainstream Jews call for it,” Amjad Iraqi wrote in +972 Magazine. “But when Palestinians living under Israeli oppression demand the same, their calls are to be scrutinized, rejected, even punished.” Friedman added in an interview with Jewish Currents that the discrepancy clarifies the purpose of anti-BDS laws. “The intent here is to quash free speech on Palestine. This is not about protecting Israel from boycott. It’s about crushing activism on Palestine,” she said.

That anti-BDS laws could penalize Israeli companies for involvement in a movement fighting to preserve Israeli institutions also starkly illustrates how such legislation has become a tool that targets activism unrelated to BDS. In 2021, state lawmakers began to use anti-BDS laws as a template to go after boycotts and divestments from other industries favored by the American right, such as the fossil fuel and gun industries. Laws attempting to shield the energy industry from boycotts have been passed in Texas, Oklahoma, Utah, West Virginia, and Kentucky. As a result, West Virginia and Texas have blacklisted numerous banks that officials claim have divested from fossil fuel companies, banning them from doing business with the state. Republican state lawmakers have also introduced bills across the US to protect the mining, agricultural, and lumber industries from boycotts. The newest wave of anti-boycott bills—introduced this year in Iowa, Kansas, Missouri, Nevada, Oklahoma, South Carolina, South Dakota, and Wyoming—seek to ban state contracts with companies that boycott entities for refusing to provide abortion or gender-affirmative care, or for failing to meet workplace diversity standards. “The anti-BDS laws have been a template for attacking other movements,” said Meera Shah, a senior staff attorney at Palestine Legal, which defends the civil liberties of Palestine advocates in the US. “Creating a Palestine exception to the First Amendment opens the door to cracking down on other movements across the board.”

The legality of anti-boycott laws—whether they apply to supporters of BDS or opponents of fossil fuels—remains an unsettled question. Civil liberties advocates say that boycotts are protected political speech under the US Constitution. They point to a 1982 case in which the Supreme Court examined an NAACP boycott of white businesses in Claiborne County, Mississippi, and ruled that an economic boycott was protected speech under the First Amendment.

On February 21st, the US Supreme Court declined to hear a legal challenge to an Arkansas law requiring state contractors to certify that they don’t boycott Israel as a condition for receiving state business. The Supreme Court did not rule on the merits of the challenge; for now, a lower court’s ruling that the Arkansas law is constitutional stands. District courts in Arizona, Georgia, Kansas, and Texas, however, have struck down similar laws as violations of the First Amendment. The Supreme Court’s refusal to take the case, then, leaves the legal landscape muddled. “The Supreme Court not stepping in at this stage is a mistake,” said Julia Bacha, the director of the documentary film Boycott, which chronicles the legal battle against anti-BDS laws. “It signals that it isn’t yet ready to interfere in what’s clearly a threat to the ability of Americans to exercise their right to political boycotts of any kind.”

As a result, Bacha and other advocates say that conservative lawmakers will likely take the Supreme Court’s silence as a license to continue pushing anti-boycott laws targeting not only Palestinian rights, but other progressive causes as well. “It gives them more time to go ahead with their plans of continuing to use the anti-BDS bill as a template to target all kinds of social justice movements,” said Bacha.

Alex Kane is a senior reporter for Jewish Currents