In a move that simultaneously provided a clear indication of alliance with Israel and a stinging rebuke to the boycott, divestment and sanctions (BDS) movement, the Pennsylvania Treasury recently purchased $7.5 million in Israel Bonds on June 1. The transaction brings the state’s current total investment in the instrument up to $30 million.
The state treasury has long shown a “very strong, steady support of Israel,” said Hank Butler, executive director of the Pennsylvania Jewish Coalition. “This is one more indication of how supportive they are.”
The investment came from a review of the commonwealth’s investment portfolio. Israel Bonds happened to be one of the options that fit the agency’s criteria of offering both an above-market yield and a high level of security, meaning it is a low-risk investment, said interim State Treasurer Christopher Craig.
Historically, Pennsylvania has had an investment in Israel Bonds, and it is one that has continuously given back in a positive way, Craig added. He was acting treasurer at the time of the investment.
The total investment from the state in Israel Bonds once reached $60 million, but the treasury’s position has declined through the years. Craig said it was a good bond offering to continue investing in now because the department was looking to re-solidify its investment portfolio and Israel Bonds “provided a good yield.”
With many recent headlines about the BDS movement, this investment came at an interesting time, but Craig suggests it was less of a political statement than it was “a prudent investment on behalf of the commonwealth.”
He acknowledged, however, that it does provide an added benefit of making a “strong public statement” that the commonwealth believes in the Jewish state.
“We like the idea that Pennsylvania dollars are invested in the sovereign infrastructure and benefit in the State of Israel,” he said. “It’s a strong statement of confidence in the future of the State of Israel by the commonwealth of Pennsylvania.”
It’s also simply a “dependable investment,” said Harold Marcus, executive director of Israel Bonds of the Pennsylvania region.
Since Israel first began issuing bonds in 1951, it has never missed a payment on principal or interest, Marcus said, explaining why this investment is a “prudent one.” The Pennsylvania Treasury Department has been investing in Israel Bonds for 25 years, he added.
The funds from Israel Bonds go directly to the country’s Ministry of Finance, which is responsible for implementing Israel’s economic policy.
“It clearly shows that” the decision-makers in Harrisburg “believe in Israel’s economy, in what Israel does with funds,” Marcus said. “It’s significant in that, in the face of the BDS movement, it shows that Israel still has quite a realm of investors who aren’t listening to the BDS movement.”
Craig said he would place Pennsylvania at “mid-pack” in terms of its bond purchases in comparison to other states. Marcus added that the portfolios for Ohio and New York, for example, feature heavier weighting of the security.
Sales this year are running 10 percent ahead of last year in Pennsylvania, Marcus said.
A main reason for that, he explained, is Israel’s stability, which is something both government entities and individuals who invest in Israel Bonds value in an increasingly volatile global investment climate.
In 2014, the Pennsylvania region — including Delaware, New Jersey from Trenton south, and the western end of West Virginia — sold more than $65.5 million in Israel Bonds.
They are on track to “equal or surpass that amount” this year, he said.
The significance of this particular purchase is that it is the investment of additional funds instead of simply a reinvestment of matured bonds, Marcus said.
Marcus said the timing for this investment is a way of showing support for Israel despite opposition and makes a public statement for that support.
“It’s significant because the best reaction to the action of the BDS movement is investment in Israel,” he said.
Marissa Stern is a reporter for the Jewish Exponent. She can be reached at firstname.lastname@example.org.