Divestment Won’t Benefit the Cause, or UCSD

Dear Editor,

The divestment resolution that the A.S. Council has discussed in meetings for the past two weeks called for the University of California to liquidate its holdings of “any United States companies materially supporting or profiting from occupation and human rights violations.” It specifically mentioned Israel’s activities in the West Bank and Gaza. The resolution made no specific mention of firms that deal with the dozens of countries whose human rights records are, by many accounts, far worse than those of Israel — including many of Israel’s sworn past and present enemies.

Divestment resolutions wind up in the courts all the time. Such resolutions are often challenged, and sometimes struck down, on the grounds that conducting foreign policy is not the business of a state government’s investment fund, or that the state’s money is for purposes other than a political statement by a particular group seeking to impose its views on a diverse community and administration. A possible outcome of enacting the proposed resolution would be to force the UC system into a costly legal battle at a time of severe financial strain.

The divestment resolution represented nothing more than a costly, one-sided demonstration that is practically guaranteed not to bring about any worthwhile result. Furthermore, the proposed divestment resolution is counterproductive even to the goals of the bill’s vocal backers, Students for Justice in Palestine.

No one should lose sight of the reality that the proposed UC divestment is not likely to change the behavior of any firm, government or other entity. All we would accomplish by selling off those equity holdings is a forfeit of our shareholder influence, and a transfer of it — possibly at a deflated price. In other words, the UC system would lose any ability to influence the management of the firms in question, while at the same time, it would create a quick profit opportunity for some other party that is not caught up in our political debate.

The main argument set forth by South Africa divestment proponents in the 1980s was that, through a broad-based divestment campaign, Western financiers could drain the capital resources of firms that conducted business in South Africa. Those firms would in turn pressure the South African government into ending apartheid so the capital sanctions could be removed.

Unless the UC divestment were somehow augmented with more serious capital market sanctions from Washington (which won’t happen, as our foreign policymakers have a different attitude toward the Middle East conflict than the extremists behind this resolution), the financing abilities and business prospects of the firms in question won’t be affected.

The SJP-backed resolution specifically targets firms that conduct business with Israel in relation to its self-defense. Selling our already issued GE stock, for example, is most unlikely to compel GE to ask the Israeli government to halt their businesses.

The divestment resolution was an attempt at appropriation of university funds by a vocal subset of students intent on making a symbolic statement on a divisive, emotionally charged issue. That is not an appropriate use of a public university’s resources — or its good name.

—Michael Furchtgott

PhD student, economics

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