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European financial firms face pressure to cut ties with Israel amid Gaza conflict

Pro-Palestinian protesters gather at the Barclay Center in Brooklyn, May 11, 2024. (Photo: Syndi Pilar/ SOPA Images via Reuters)

Some large European financial companies, such as the British bank Barclays and German insurer Allianz have reportedly been pressured to reduce their business interactions with Israeli companies, according to a Reuters analysis.

Following the Hamas Oct. 7 massacre and the ongoing war in Gaza, anti-Israel activists in Europe and elsewhere have stepped up their efforts to boycott Israeli businesses and institutions. 

Furthermore, war creates uncertainty and risks that investors seek to avoid. This uncertainty has been reflected in recent credit downgrades of Israel by leading credit rating institutes Fitch and S&P Global. 

“We see an increasing likelihood that Israel’s conflict with Hezbollah, given the recent escalation of fighting, becomes more protracted and intensifies, posing security risks for Israel," S&P Global stated

UN Trade and Development data reveals that direct investments into the Israeli economy dropped by 29% in 2023 due to business uncertainty amid war and political pressure. The direct investments in Israel reportedly fell to the lowest level since 2016.

The Italian multinational banking group reportedly placed the Jewish state on its “forbidden” list since the Hamas attack on Oct. 7 of last year. 

Furthermore, the French insurer AXA and the Norwegian asset manager Storebrand have reduced their Israeli exposure by selling shares in some Israeli businesses since the Oct. 7 terror attack. 

Martin Rohner, executive director at the Global Alliance for Banking on Values, says it is currently unclear whether this development is temporary or represents a longer-term shift. 

“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,” Rohner stated.

“Investing in the production and trade of weapons is fundamentally opposed to the principles of sustainable development,” he added. 

While Israeli leaders are concerned, there appears to be cautious optimism in Jerusalem. Israeli Finance Minister Bezalel Smotrich told media representatives last week that investors keep coming to the country. 

“I sit with foreign investors and they believe in our economy,” Smotrich stated. 

David Kinley, professor and chair of human rights law at Sydney Law School, argued that this development reflects the growing demand for more transparency concerning business ties with countries at war. 

“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,” Kinley said. 

Richar Portes, professor of economics at London Business School, said that “it should be down to the governments to take a clear line” concerning international political issues. “To put the burden on the private firms, where does this end?” he added. 

However, despite many challenges, the Israeli economy appears to remain resilient. Earlier this year, a Start-Up Nation Central report revealed that Israeli tech companies had succeeded in attracting some $3.1 billion in funding since the Oct. 7 attack. 

In February, some 60% of multinational companies in Israel expressed optimism about the Israeli tech sector, according to an Ernst & Young report. 

At the time, Prof. Yossi Matias, CEO of the Google Research and Development Center in Israel, expressed optimism that was shared by many in the tech industry. 

“Looking ahead to 2024, despite the challenging period, part of our essential role, is to be optimistic as some of us impact what will happen in the future, and I allow myself to be optimistic despite the difficulties and despite what we are going through and experience,” Matias assessed. 

Read more: ANTI ISRAEL

The All Israel News Staff is a team of journalists in Israel.

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