Illinois’s newest law fights divestment with divestment

Governor signs landmark bill prohibiting state pension funds from investing in companies that boycott Israel

Rebecca Shimoni Stoil is the Times of Israel's Washington correspondent.

Governor Bruce Rauner signs landmark anti-BDS legislation for the state of Illinois on July 23, 2015. (Bob Kusel)
Governor Bruce Rauner signs landmark anti-BDS legislation for the state of Illinois on July 23, 2015. (Bob Kusel)

WASHINGTON — Fighting divestment with divestment, Illinois Governor Bruce Rauner signed into law landmark legislation Thursday making Illinois the first state to divest its public pension funds from companies that participate in the Boycott, Divestment and Sanctions (BDS) movement targeting Israel.

Surrounded by legislators, Jewish community leaders and the Consul General of Israel to the Midwest, Rauner signed the law which proponents tout as “the first state-based measure to take specific concrete action against boycotts of Israel.”

The legislation was modeled after past measures relating to Iran and Sudan. It now requires state pension systems to terminate direct investment in companies that boycott Israel and issue warnings to fund managers when such companies are held indirectly inside larger portfolios.

The statute offers a broad definition for “boycotting Israel” as “engaging in actions that are politically motivated and are intended to penalize, inflict economic harm on, or otherwise limit commercial relations with the State of Israel or companies based in the State of Israel or in territories controlled by the State of Israel.” The last clause, like recent legislation in the US Congress, is likely to include those entities who engage in boycotts of products manufactured or companies headquartered in the West Bank.

“We need to stand up to anti-Semitism whenever and wherever we see it,” Rauner said when he signed the bill into law. “This historic legislation is an important first step in the fight against boycotts of Israel and I hope other states move quickly to follow our lead.”

The anti-BDS measure, SB 1761, was initiated by Gov. Rauner and sponsored by lawmakers Sen. Ira Silverstein (D-Chicago) and Rep. Sara Feigenholtz (D-Chicago). It passed 49-0 in the Senate and 102-0 in the House in voting which concluded in May.

Earlier attempts at legislating against BDS beyond declarative resolutions proved unsuccessful at the state levels. Bills in Congress, as well as in Maryland and New York, foundered against critiques that they limited academic freedom and individuals’ right to free speech.

Earlier in the spring, Tennessee and Indiana adopted resolutions, though not laws, opposing BDS – but the resolutions contained no “teeth” beyond declaring opposition to the practice.

Last month, President Barack Obama signed into law carefully crafted legislation designed to discourage European boycotts of Israel, tying it to negotiations over a historic trade deal with the European Union. The legislation, which came as part of a must-sign trade deal package, discourages BDS actions by marking efforts to combat anti-Israel activity as one of the principal objectives for US envoys in the talks with Europe on the Transatlantic Trade and Investment Partnership.

After that legislation was signed into law, the State Department complained that its inclusion of “territories controlled by Israel” ran counter to longstanding US policy on West Bank settlements – but it is not clear what recourse Foggy Bottom can take against the law.

The original sponsor of the federal anti-BDS legislation, Rep. Peter Roskam, congratulated his home state of Illinois for the enactment of the pension divestment law.

“This is a great day for the State of Illinois and the ongoing battle against the insidious BDS campaign. Once again, Democrats and Republicans have joined together to stand up against those who seek to delegitimize and isolate our ally Israel,” Roskam wrote in a statement. “The momentum is now on our side. More and more states are taking bold action to condemn and outlaw economic warfare against Israel, and historic legislation taking action against the European BDS movement was passed at the federal level earlier this year.”

The Illinois legislation was met by strong bipartisan support throughout the legislative process, and supporters say that it now serves as a model for similar measures in some 20 other states.

The bill received strong backing from a number of organizations, including the Chicago’s Jewish federation the Jewish United Fund, and the New York-based American Jewish Committee.

“This is an exciting and important day for us,” JUF President Steven Nasatir said at the bill’s signing. “The effort to delegitimize the Jewish state is evil. What we have done today in our state is inspirational.”

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