Above photo: The destroyed annex of the St. Porphyrius Greek Orthodox Church, the oldest church still in use in Gaza, hit by an Israeli strike on Oct. 20. Dawood Nemer / AFP via Getty Images.
Israel relies on foreign bond sales to finance its growing budget deficit resulting from war spending.
State and local governments in the US are investing large amounts in Israel bonds, effectively helping to fund Israel’s ongoing genocide in Gaza.
The Financial Times (FT) reports that Israel Bonds, the official underwriter for the debt, has sold more than $3 billion of bonds since the war began on 7 October, three times the previous annual average.
Local governments in the US, including Florida, Indiana, and Ohio, have been significant buyers.
FT reports that Florida’s Palm Beach County holds $700 million of its $4.6 billion overall portfolio in Israel bonds.
“I’m ecstatic that we have these bonds in our portfolio,” Joseph Abruzzo, the overseer of the county’s investments, told FT. He cited “the great returns, the safety, and the benefit to the taxpayers of Palm Beach County” of debt that is crucial in financing a long-term war on Gaza that is nearing its ninth month and has killed over 14,000 children.
Money raised through the bonds has helped Israel finance the military spending that has caused its budget deficit to reach 7 percent of GDP.
Amid the horrific images being broadcast of the Israeli bombing of Gaza, Abruzzo told the FT he has received, “without exaggeration, full-room applauses and standing ovations” at community meetings for buying the bonds.
A country board-imposed cap on his investments was also recently lifted, allowing him to hold 15 percent of the portfolio in Israel bonds. In May, the state treasurer of Ohio added $30 million to their holding of more than $260 million of the Israeli debt.
Caps on a single investment are designed to limit the risk to the overall portfolio in case the bond issuer cannot make interest payments or return the investor’s funds at maturity for unforeseen reasons.
Because Israel bonds are difficult to sell and designed to be held to maturity, questions arise about whether they are appropriate investments for state and local governments investing taxpayer funds.
However, in recent years, special laws have been passed to allow local and state governments to add Israel bonds to their portfolios alongside US treasuries and other US government-issued debt. These US-issued bonds are viewed as safer and easier to sell if needed. No bonds from other foreign countries are allowed.
Pro-Palestine activists, including from Jewish Voice for Peace, have launched street protests against Israel bonds, saying they help fund genocide in Gaza.
“The reality is that it’s horrifying that our states, our counties, our other community institutions are investing directly with no restrictions and no conditions to ensure human rights are upheld,” said Dani Noble, a campaign organizer at Jewish Voice for Peace. “Israel bonds directly provide unrestricted and unaccountable financial support,” she added.
Activists in Palm Beach announced they would bring a lawsuit over the county’s Israel bond holdings.
“I think we are going to see much more intense pressure on divestment,” Marlowe said. “I have gotten a lot more questions in recent weeks about how local government investment pools work, because there are a lot of people who are preparing pressure campaigns. I fully expect that there is going to be litigation over this.”
Universities whose endowments invest in Israeli settlements in the occupied West Bank and companies that provide weapons to the Israeli army have also become targets of activist divestment campaigns.