Some European Firms Retreat from Israel-Linked Finance amid War Pressure

 An Israeli national flag flies over a city highway during rush hour, amid the ongoing conflict in Gaza between Israel and Hamas, in Tel Aviv, Israel, November 4, 2024. (Reuters)
An Israeli national flag flies over a city highway during rush hour, amid the ongoing conflict in Gaza between Israel and Hamas, in Tel Aviv, Israel, November 4, 2024. (Reuters)
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Some European Firms Retreat from Israel-Linked Finance amid War Pressure

 An Israeli national flag flies over a city highway during rush hour, amid the ongoing conflict in Gaza between Israel and Hamas, in Tel Aviv, Israel, November 4, 2024. (Reuters)
An Israeli national flag flies over a city highway during rush hour, amid the ongoing conflict in Gaza between Israel and Hamas, in Tel Aviv, Israel, November 4, 2024. (Reuters)

Several of Europe's biggest financial firms have cut back their links to Israeli companies or those with ties to the country, a Reuters analysis of filings shows, as pressure mounts from activists and governments to end the war in Gaza.

While banks and insurers are often vocal about their environmental and governance aims, they are less forthcoming about disclosing their potential exposure to war.

UniCredit put Israel on a "forbidden" list as the conflict escalated in October last year, said a source familiar with the matter, confirming a study by Dutch NGO PAX.

While in line with the Italian bank's defense-sector policy of not directly financing arms exports to any country involved in conflict, it goes beyond Italy's guidelines on arms exports to Israel.

UniCredit declined to comment on its move and the Israeli finance ministry also declined to comment.

Meanwhile, Norwegian asset manager Storebrand and French insurer AXA have sold shares of some Israeli firms, including banks.

Although corporate filings offer only a glimpse into such exposures, they show companies have been readjusting.

"We don't know whether this represents the beginning of a shift in the industry, one that recognizes the power banks have in choosing where to allocate capital, and where not," said Martin Rohner, executive director at the Global Alliance for Banking on Values, which focuses on sustainable financing.

"Investing in the production and trade of weapons is fundamentally opposed to the principles of sustainable development," Rohner added.

Israeli Finance Minister Bezalel Smotrich told a press briefing last week that although there are challenges to Israel's economy, firms are still raising money. "I sit with foreign investors and they believe in our economy," he said.

Reuters has reported that Israel's investor base has narrowed since it entered Gaza last year in response to attacks by Hamas, and it is feeling the effects of rising borrowing costs.

The potential wider effects can be seen in the approach taken by Storebrand, which a filing showed divested a holding worth about $24 million in Palantir, citing the risk of violations of international humanitarian law and human rights.

US group Palantir, which provides technology to Israel's military, did not respond to a request for comment.

Storebrand's annual investment review said that, as of the end of 2023, it had excluded 24 firms, including Israeli companies, across its portfolios in relation to the occupation of Palestinian territories.

The International Court of Justice, the United Nations' highest court, ruled in January of plausible risk of irreparable harm to Palestinian rights to be protected from genocide.

The same court said in July that Israel's occupation of Palestinian territories including the settlements is illegal.

Israel has rejected the rulings, which combined with growing pressure from activists and governments, are nevertheless having an impact on investment decisions.

AXA, one of Europe's largest insurers, British bank Barclays and German insurer Allianz have increasingly been targeted by campaigners.

"Increasing demand for greater transparency and scrutiny can only mean that financial institutions will intensify and broaden their self-assessment of their commercial associations with arms-related businesses or states," said David Kinley, professor and chair of human rights law at the Sydney law school.

The Ireland Strategic Investment Fund (ISIF) has exited six Israeli companies, selling holdings which amounted to about 3 million euros ($3.26 million), including some of Israel's largest banks, a spokesperson told Reuters.

Earlier this year, the 15-billion-euro Irish fund said that the risk profile of such investments were no longer within its investment parameters.

And Norway's $1.8 trillion wealth fund, the world's biggest, may divest shares of companies that aid Israel's operations in the occupied Palestinian territories which violate its ethics standards for businesses.

WAR EXPOSURE

Investments in Israeli banks are also under scrutiny.

The UN included them in 2020 in a list of companies with ties to settlements in the occupied Palestinian territories as part of its mission to review the implications on Palestinian rights.

A study by research firm Profundo, commissioned by corporate watchdog Ekō, shows that AXA sold almost all of its holdings in Israeli banks stocks earlier this year, retaining only a marginal stake in Bank Leumi.

Reuters verified the data with LSEG. A representative for Bank Leumi did not respond to a request for comment.

A spokesperson for AXA declined to comment on whether AXA had cut its holdings, adding that it is not invested in the banks targeted by activists. The UN list is among the criteria AXA takes into account for investment decisions, they added.

'A CLEAR LINE'

Foreign direct investment into Israel fell by 29% in 2023 to its lowest since 2016, UN Trade and Development data shows.

While UNCTAD 2024 figures are not available, credit ratings agencies have flagged the war's unpredictable impact on investment in Israel as a concern.

Although the US remains Israel's biggest military and financial backer, Spain, Ireland and Norway have recognized a Palestinian state, French President Emmanuel Macron has called for an arms export halt and Britain has suspended some licenses.

When it comes to international politics, "it should be down to the governments to take a clear line," said Richard Portes, professor of economics at London Business School, adding: "To put the burden on the private firms, where does this end?"

In an example of how activists are targeting companies directly, Barclays came under pressure from a campaign in Britain, prompting it to withdraw sponsorship from summer music festivals, while the Financial Times reported in August that it considered pulling out of an Israeli government bond sale.

Barclays said in a statement that it remained "fully committed" to its role as a primary dealer and that such activities fluctuated each quarter. The bank fell out of the top five dealers of Israeli bonds in the second and third quarters, after ranking third in 2023.



West Bank Refugee Camp Gets Foretaste of UNRWA's Demise

UN workers clean up after the Israeli raid - AFP
UN workers clean up after the Israeli raid - AFP
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West Bank Refugee Camp Gets Foretaste of UNRWA's Demise

UN workers clean up after the Israeli raid - AFP
UN workers clean up after the Israeli raid - AFP

Residents of Nur Shams camp in the occupied West Bank are fearful for their future after an Israeli raid this week damaged the UN agency for Palestinian refugees office there.

The 13,000 inhabitants of the camp near the northern city of Tulkarem depend heavily on the United Nations Relief and Works Agency for Palestine Refugees.

UNRWA notably runs two schools, a clinic and sanitation services in Nur Shams.

Stunned refugees watched as workers cleared rubble from around the office, which was almost totally destroyed in an "anti-terrorist" operation on Thursday.

"For us, it's UNRWA or nothing," Shafiq Ahmad Jad, who runs a phone shop in the camp, told AFP.

"For the refugees... they look to UNRWA as their mother," said Hanadi Jabr Abu Taqa, an agency official in charge of the northern West Bank.

"So imagine if they lost their mother."

UNRWA chief Philippe Lazzarini blamed the destruction on Israeli forces, saying they had "severely damaged" the office.

But the military firmly denied the accusations, telling AFP that the damage was "likely" caused by explosives planted by "terrorists".

The office will have to be relocated, "a significant investment" according to Roland Friedrich, the agency's head in the West Bank.

"The psychological impact, of course, is devastating," he added after speaking to residents on Saturday.

- 'Attack on right of return' -

From his phone shop whose facade was torn off, Jad watched as excavators removed rubble and technicians repaired communications cabling.

He said he believed the chaos was linked to the Israeli parliament's adoption late last month of a law banning "UNRWA's activities on Israeli territory".

Were the agency to disappear even from the Palestinian territories like Tulkarem, he said the streets would fill with even more rubbish and sick people would go without care.

"To want to eliminate it is to want to eliminate the Palestinian question," Jad said.

Fellow camp resident Mohammed Said Amar, in his 70s, said Israel was attacking UNRWA "for political ends, to abolish the right of return".

He was referring to the principle that Palestinians who fled the land or were expelled when Israel was created in 1948 have the right to return, as do their descendants.

He insisted that Palestinian armed groups did not use the UNRWA premises, which locals consider "sacred".

If the army destroyed the building, as he believed, this meant it always wanted to target it.

Nihaya al-Jundi fumed that daily life was paralysed after every raid and that impassable roads left residents isolated.

Nur Shams needs international organizations like UNRWA to rebuild, said Jundi, whose center for the disabled was damaged and where the wheelchair ramp collapsed.

The camp, established in the early 1950s, was long a fairly quiet, tight-knit community.

But in recent years, armed movements have taken root there against a backdrop of violence between Palestinians and Israelis, economic insecurity and no political horizons.

- 'They worry' -

Two days after the Israeli operation, the internet was still not repaired and some main roads remained an obstacle course.

UNRWA's operations have resumed, however.

"The first thing we do is that we make sure that we announce that the schools are open," said the agency's Jabr Abu Taqa.

"We know how important it is for us to bring the children to what they consider a safe haven," she added.

As she strolled through the camp, many anxious residents approached her.

One young man pointed to a ransacked barber's shop and asked: "What did he do to deserve this, the barber? He no longer has work, money. What will he do?"

Mustafa Shibah, 70, worried about his grandchildren. He turned his radio's volume all the way up during the raids -- but the little ones were not fooled.

"My granddaughter wakes up (from the raids) and bursts into tears," he said.

"They worry, they have trouble getting to school because of the (damaged) road."

For him, the threats to UNRWA are just the latest example of the suffering of Nur Shams residents who feel abandoned by Palestinians elsewhere.

"Why is it only us that have to pay while they dance in Ramallah and have a good life in Hebron?" he asked.

He said Israel "feels they can do anything" with no one to stop them.