EU invests billions in companies linked to Israeli settlements

Europe's five largest pension funds have invested €7.5 billion ($8bn) in companies with business links to illegal Israeli settlements in the occupied West Bank, according to a report released on Tuesday by Danish investigative news team DanWatch.

The report, part of a larger investigation by Danwatch entitled Business on Occupied Territory, found that, in violation of EU guidelines, the Government Pension Fund of Norway (SPU), Dutch pension funds ABP and PFZW, the Danish government pension fund ATP, and Swedish pension fund Alectra all had significant investments in 36 publicly-traded companies under scrutiny for their business links with Israeli settlements.

Danwatch obtained stock portfolios of the five largest European pension funds and screened them for investments in companies previously identified as problematic.

The companies listed by Danwatch include US manufacturer Caterpillar, whose construction machinery has been used to demolish Palestinian homes, construct the separation wall, and build settlement-related infrastructure. It was a Caterpillar D9 bulldozer that was used to run over Rachel Corrie.

Of the five EU government pension funds, SPU, a Norwegian fund which derives its capital from surplus wealth from the country's oil profits, is by far the largest investor

Other companies include Cemex, a Mexican cement company which owns and operates three factories in the West Bank and which supply materials for settlement construction, and PayPal, which has come under scrutiny for offering its services to Israeli settlers, while denying the same access for Palestinian users in the occupied West Bank and Gaza Strip.

Of the five EU government pension funds, SPU, a Norwegian fund which derives its capital from surplus wealth from the country's oil profits, is by far the largest investor, contributing €5.2 billion of the total invested in the 36 companies listed by Danwatch.

This includes €135 million invested in Caterpillar, €286 million in HeidelbergCement, a multinational which owns an Israeli cement firm operating factories and quarries in the West Bank, and €1.5 billion in Siemens, which has installed traffic systems for settler-only roads in the West Bank.

SPU has also invested €233 million in five Israeli banks which contribute to settlement construction. Danwatch asked SPU to comment about each of its specific investments, but received no response.

In 2014, the Dutch pension fund PFZW (formerly PGGM) decided to divest from those same banks - Bank Hapoalim, Bank Leumi, First International Bank of Israel, Israel Discount Bank and Mizrahi Tefahot Bank - due to their financing of settlements, deemed illegal under international law, in occupied Palestinian territory.

"Given the day-to-day reality and domestic legal framework they operate in, the banks have limited to no possibilities to end their involvement in the financing of settlements in the occupied Palestinian territories," PFZW said in a statement at the time.

Undermining official EU policy

Business activities in settlements, and investment in such companies, are not illegal under international law, but, according to the United Nations, investors must carry out due diligence to ensure that such activities do not contribute to "negative effects on human rights", Danwatch's report says.

Such advisories are rooted in the international consensus that all settlements on occupied Palestinian land are illegal under international law

To this effect, as of December 2016, 18 EU member states have issued advisories warning companies of the "legal, financial, and reputational" consequences of business dealings with Israeli settlements, according to the European Council on Foreign Relations (ECFR).

Such advisories are rooted in the international consensus that all settlements on occupied Palestinian land are illegal under international law, and, as such, are not recognised as being under Israeli sovereignty, leading to potential title disputes to land and resources purchased or invested in.

Advisories issued by Belgium and Denmark also warn of the potential violations of human rights and humanitarian law, referring to the UN's Guiding Principles on Business and Human Rights and the OECD's Guidelines for Multinational Enterprises.

"When European investors finance, fund or facilitate the settlement enterprise and illegal actions in the occupied Palestinian territories, they are contributing to the undermining of the two-state solution and therefore the undermining of the EU's own foreign policy objectives," Hugh Lovatt, a policy fellow for ECFR, told Danwatch.

In recent months, Israel has faced increased pressure over its settlement policy, considered one of the major obstacles to implementing a two-state solution to the conflict.

In December, the United States abstained from UN Security Council Resolution 2334, which reiterated the demand for an end to all settlement activity, allowing the resolution to pass. In a speech days later, outgoing US Secretary of State John Kerry issued a scathing condemnation of Israeli settlements, labelling them a "flagrant violation" of international law which jeopardise the peace process.

Emboldened by the new Trump administration, Israel has approved the construction of some 6,000 new settler homes in the occupied West Bank and Jerusalem in 2017.


Charlie Hoyle is a Middle East-focused journalist specialising in Palestinian affairs. Follow him on Twitter: @CharlieCHoyle