Politics & Law

Monetary Morality
Students often push the University to ditch “immoral” investments. Results have varied.

By Jack Brook '19 / September–October 2021

August 19th, 2021

Divestment illustration by Fernando Cobelo

Illustration: Fernando Cobelo

On the border of the Gaza Strip in 2017, Drashti Brahmbhatt ’19 watched Palestinians passing through a tense checkpoint monitored by young Israeli soldiers with powerful guns and fingers on the trigger. Brahmbhatt, observing the checkpoint as part of a winter semester course on Israel and Palestine, wondered what it would be like if her own father had to commute to work this way.

“I could imagine my dad in that situation and that really scared me,” she recalls.

Back on campus, Brahmbhatt joined student groups advocating for Palestinian human rights in Gaza and the West Bank. By February 2019, Brahmbhatt and a coalition of students under the banner of Brown Divest began pushing for a campus-wide referendum against University investment in companies they claimed were complicit in human rights abuses. Along with collecting hundreds of signatures for a petition and presenting its case to the Undergraduate Student Council, Brown Divest engaged in a robust campaign to raise awareness and discuss the divisive issue with the student body.

“A lot of people forgot that divestment is a tool at our disposal to engage in international politics,” Brahmbhatt says. “We wanted to show that the Palestinian human rights abuses are connected to human rights abuses around the world.”

She points, for example, to Raytheon, which produces missiles responsible for more than a thousand Palestinian civilian deaths. (Brown’s investment holdings are not public, so any investment in Raytheon is conjecture.)

About a quarter of the total student body voted in favor of divestment in late March 2019. President Christina Paxson responded with a letter opposing divestment, saying “the endowment is not to be used to assert views on contested social and political issues.”

Even so, in December 2019, Brown’s Advisory Committee on Corporate Responsibility in Investment Policies (ACCRIP) recommended the University divest from companies complicit in Palestinian human rights abuses. Composed of faculty, staff, students, and alumni, ACCRIP examined issues of “social harm” connected with companies the University was invested in.

“For me, and I think for many people, we recognize that something like home demolitions and forced evictions, the killing of children, the excessive use of force and unjustified arrests, unfair trials, and indications of torture constitute significant social harm,” says Professor of Medical Science Chi-Ming Hai, former chair of ACCRIP, which has since morphed into ACURM, the Advisory Committee on University Resources Management.

Hai said in this case divestment was a matter of moral principle rather than something that would have much impact on University endowment returns. He also stressed that divestment was not meant to condemn Israel as a country, but rather the treatment of Palestinians under occupation.

Nothing new

This was far from the first time Brown students have pushed the University to wield divestment in confronting human rights issues. Matt Carroll ’86 had not thought of himself as an activist before coming to Brown, but the movement on campus to divest from South Africa’s apartheid state inspired him to engage with the issue.

As student body president in 1985-86, Carroll had the responsibility of responding to a student referendum urging divestment. “I learned that there are times when you need to step forward and disagree publicly and openly when there are important issues of justice at stake,” Carroll says. The University agreed to divest from certain
companies involved in South Africa within a year.

Students were not satisfied with what many viewed as a partial divestment and four students began a protest fast in Manning Chapel, stopping only after the University eventually disenrolled them. That April, students constructed a shanty on the Main Green to symbolize the poverty and oppression produced by apartheid. The next year, dozens of students disrupted a University corporation meeting, leading then–Dean of Student Life John Robinson to ask them to write down their names for him if they wanted to take responsibility for their actions, according to an account by the Harvard Crimson. The 20 students who did were put on probation.

sustainable investing

By October of his freshman year, Scott Warren ’09 was meeting with then-President Ruth J. Simmons to make the case for divesting from Sudan, given the ongoing genocide against ethnic tribes in the Darfur region.

Simmons was receptive, and by February 2006 the Corporation had agreed to vote on the issue. Warren recalls it was a frigid Saturday morning and 50 students were beginning a rally on the Faunce steps with a bullhorn when the Chancellor came out to thank them, explaining the University had agreed to divest. Brown was one of the first of many universities to do so.

Brown also divested from tobacco companies in 2003 and agreed in 2011 not to make new investments in HEI Hotels and Resorts following serious labor violations.

In 2012, a student movement called Divest Coal got ACCRIP to support divestment from 15 coal companies, but in 2013 the University declined to withdraw those investments, with President Paxson arguing that Brown’s investment in coal companies was small and that divestment would “convey only a nebulous statement—that coal is harmful” without pushing for better solutions.

Nathan Bishop ’13, one of Divest Coal’s organizers, believes that argument actually strengthened the reasons for getting the University’s investments out of coal—divesting wouldn’t harm the endowment and would still send a strong moral message. He’s still proud of the campaign. “The Board had to sit with that decision [not to divest], knowing that its actions were directly against the will of the student body,” he says. “Divestment represented the general will of the student body. It was clear. And that was an accomplishment.”

There’s a moral value in students pushing for an institution to invest money ethically, says Professor Alex Poterack, who teaches an environmental economics course. But practically speaking, divestment is not necessarily an effective strategy for making a meaningful economic impact on fossil fuels, he notes—the efficient markets hypothesis means that in the long run stocks will always trade at their fair value.

“If some people say ‘Oh these oil stocks, I don’t want to own them,’ that will drive the price down,” Poterack explains. “But that will make them a comparatively better return and so other people will say ‘Oh wait I do want to own this’ and that will bid the price back up.”

As renewable energy becomes more profitable for investors, Poterack says, fossil fuels become less attractive. In fact, Brown decided in 2018 to ditch fossil-fuel investments, which Paxson announced in March 2020, describing climate change as “an existential global threat” and adding that divestment is now the sensible economic decision: “As the world shifts to sustainable energy sources, investments in fossil fuels carry too much long-term financial risk. We do not plan to make new investments in fossil fuel companies unless and until they make significant progress in converting themselves into providers of sustainable energy.”

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It was a tough call after reading the Jan.-Mar. 2022 BAM whether to respond to the inane article on CRT or the hopelessly misinformed letter on divestment. I’ve chosen the latter.

After a litany of climate change observations, Ms. Trowbridge concludes that, “Divestment supporters understand market economics…” Nothing could be more off the mark. Forget social investment restrictions which have nothing but feel-good value and maximize Fund income. The best message is sent through educational opportunities, not some misguided punishment of companies that happen to produce or use hydrocarbons. They could care less.

—Brian Barbata ’67 Kailua, HI

In the 1960-61 academic year, a Brown literary publication included a broadsheet-sized debate: pro-Israeli policies one one side, pro-Palestinian on the other. As a freshman, I was impressed and tended to agree with the one side, until I turned it over and read the other side. Perplexed at this cognitive dissonance, I began to appreciate ambiguity.

—Ronald Wilson ’64 Staten Island, N.Y.

I was disappointed in the opening discussion of the divestment resolution concerning Israel. The focus was one sided. Why didn’t the author include the point of view of Brown Students for Israel who feel that divestment from Israel is counterproductive?

—Elaine Kahn Zoldan ’74 Wesley Hills, N.Y.

It’s difficult to take seriously Fred Clough’s letter in BAM’s November-December ’21 issue about Brown’s investment/divestment policy, since he doesn’t seem to take seriously the threat of climate change (in response to “Monetary Morality,” The Big Issue, Sept.-Oct. ’21). This is especially strange considering the wildfires ravaging his own state of California. Furthermore, to call Brown students “screaming children” is, in itself, childish and uncalled for. With apparent pride, Mr. Clough belongs to a group of investment managers who continue to advocate for the profligate fossil fuel industry regardless of its disturbing history. It’s not easy to ignore the Exxon Valdez and BP Deepwater Horizon oil spills poisoning our oceans and wildlife; coal mine disasters ranging from the Appalachian states as far west as Montana, Idaho, Utah and Colorado, taking many hundreds of lives; the numerous CSX coal train derailments, and the caustic pollution of mountaintop removal debris flowing into downstream waters and towns; aggressive fracking for shale gas with chemicals that poison drinking water and the seismic disturbances in areas not prone to earthquakes—to name a few of the various catastrophes. On top of this is the overall atmospheric contamination to which they contribute. The U.S. ranks second among the top ten countries emitting CO2 pollution into our planet's air, and fourth in methane emissions.

Divestment supporters understand market economics and the risks these energy giants pose, and they are smart enough to see the effects through a lens that encompasses the entire planet. Such action is an effective means of protesting environmental and social injustices, as happened in the movement to divest from entities indifferent to South African apartheid. They realize that what matters is acting now to invest in renewable resources, not waiting for the giants to play catch-up. The automobile industry has caught onto this, but check out the rising prices of gasoline at the pump and home fuel oil and gas. Meanwhile, renewable energy sources are swiftly becoming less expensive. Money spent now to support renewable energy will not only pay off at this critical time, but it will also save in the long run against the giants whose aim is primarily to maximize profits and line their pockets.

I applaud the University and its students for taking a stand.

—Martha Dwight Trowbridge ’57 New York City

The ultimate aim of BDS is to delegitimize Israel as a Jewish state.

—Ken Cohen ’71

It’s obvious that foolish naive anti-Semitic Brown University students are being fed a steady diet of lies about the Middle East. Jewish lives matter. I will never donate to this anti Semitic caldron of propaganda.

Perhaps the people who support boycotting the Jewish state would care to boycott Israeli anti nausea medicine if they ever undergo chemotherapy. I call these radicals out for what they are: Jew haters.

Nice to know that Brown is not a hospitable place for Jewish or Christian pro Israel students who believe that Israel is a unique democracy in the Middle East, unlike the paradise known as Syria. I’m sure that these lazy lefty students and brainwashed professors are unaware that Israel is the only country in the region with a gay pride parade but hey—don’t let the facts get in the way. How nice of Brown to publish this vile one sided piece of propaganda against Israel during the Jewish new year. If anyone has any doubts about the rampant Jew hating on campus all they need to know is that Brown chose to publish this tripe during the holiest period of the year.

I recall the subtle anti-Semitism at Brown from decades ago. Now it is full blown with a distorted view of the Middle East which demonizes Jews and lionizes Hamas. Israeli children—Jewish and Arab–had seconds to run to bomb shelters to avoid being killed by Hamas/Palestinian rockets. Perhaps the young lady who presented her distorted view would like to know what it is like to live in fear of rocket fire and suicide bombers. She might actually learn something. As a member of the Jewish faith I cannot recommend Brown as it is inhospitable to Jewish students.

—Alice Lemos ’81 PhD

The comments on Israel are offensive. The goal of BDS is to destroy Israel. The duty of Israel is to protect its people from stabbings, car rammings, bus and café bombings, riots, arson balloons, and kidnapping and murder by way of terror tunnels and thousands and thousands of indiscriminately fired missiles (which are placed near or in civilian housing and schools). There is only one Jewish nation. There are 56 Islamic nations and 159 Christian majority nations. Jordan is a Palestinian Arab majority country. What is the Jewish population of Jordan? Zero. By the way, the Arabs (from what is now Saudi Arabia) conquered the region in the 7th century. There already existed an indigenous Jewish population in Israel.

—Sandra Davis ’76 MD Boca Raton, Fla.

Given the one-sided political indoctrination that Brown students have long received on Israel/Palestinian issues, especially from the Middle East Studies faculty, it was hardly surprising that in the Spring of 2019 nearly 30% of the student body signed the sophomoric petition cited in “Monetary Morality” in the September/October issue of the BAM. It wasn’t surprising that 100 or so faculty also signed the petition - pathetic, but not surprising. Nor were the standard complaints about Israel’s conduct expressed by Drashti Brahmbhatt ’19 or Chi-Ming Hai, professor of medical science, in the same article at all surprising. They parrot the approved narrative of academia - facts or thoughtful analyses of a decades-long, complex conflict are irrelevant. Was Professor Hai’s sense of “moral principle” offended by Brown’s decision to grant a leave to Professor Beshara Doumani, the holder of the Darwish chair at Brown and a supporter of an academic boycott of Israel, to assume the presidency of Birzeit University in Israel’s West Bank, an institution that has produced and glorified Palestinian terrorists? Birzeit chose long ago, for example, to honor Kamal Nasser, one of the key planners of the 1972 murder of Israeli Olympic athletes, by naming a large multi-purpose room Kamal Nasser Hall; Birzeit honors Nasser annually on its “Land Day.” Hamas is a major presence at Birzeit. Hamas-supporting students routinely prevail in student council elections and otherwise make their presence and influence felt. In his opening statement to the Birzeit community, Doumani espoused bedrock principles of the Hamas charter. Underscoring the Brown/Birzeit connection, Brown has appointed three visiting fellows in Palestinian Studies for the 2021-22 academic year, one from Birzeit, all of whom endorse the same views as Hamas, Birzeit, Birzeit’s Hamas-supporting students and Doumani on “the occupation” and the supposed “right of return” and likely much else. “Occupation” and “right of return” are important and complex issues as any rational academic would acknowledge, but not Hamas or its enablers at Brown. Incredibly, while running Birzeit Doumani will retain his endowed chair; when his Birzeit presidency ends, he is to return to Brown presumably, somehow, as a credible professor on the Middle East Studies faculty. It is stunning, standing alone, that a Brown professor who supports an academic boycott holds an endowed chair. But for Brown to have given that professor leave to run Birzeit, not even arguably a normal university no matter the courses they offer, allow him to retain his endowed chair while doing so and then to allow him to return to the faculty after his Birzeit presidency ends is beyond comprehension. Does this shameful arrangement run afoul of any “moral principle” held by Ms. Brahmbhatt, Professor Hai or any Brown student, faculty member or administrator? Not likely. When it comes to matters of “moral principle” concerning Israel and the Palestinians, at Brown it’s a one-way street overseen by a praetorian guard of propagandists for the Palestinian position.

—Willis Goldsmith ’69 Indian River Shores, Fla.

Maybe the “activists” would change their mind if they had a few missiles or incendiary balloons lobbed into their homes and schools or if they had been forced to leave their centuries old homes in Muslim countries with nothing but the shirts on their backs. They might also educate themselves completely in the history of “Palestine” and perhaps read the charters of the PLO and Hamas. The Palestinians concept of peace is the absence of Jews and occupying the entirety of the land. They have been offered peace multiple times and rejected it. Additionally, the acrimony of the Palestinian Arabs towards the Jews predates the creation of the modern state of Israel. Again, read the history, not the newspaper. One must give them credit for great P.R. as they have suckered the world into believing their false narrative.

—Ken Lury ’75 Williamsburg, Va.

After expulsion from our native land by the Romans 2,000 years ago and millennia of persecution by Christians and Muslims, Jews were able to re-establish sovereignty, surviving multiple wars of attempted annihilation by surrounding Arab countries. The Palestinians have consistently rejected offers, dating back to 1947, to live in peace alongside Israel. Instead, they have chosen to reject the right of Israel to exist over achieving their own sovereignty. Israel is a multi-racial, multi-ethnic democracy with minority Arab citizens currently serving in the ruling governing coalition. Hamas is a terrorist organization that rules Gaza. The Hamas charter calls for the destruction of Israel and the murder of every Jew on earth. The only Jews living in the Gaza strip are a few hostages held in Hamas prisons. Israel periodically has to fight wars against Hamas and kill Palestinians used as human shields around Hamas's missile launching sites because Hamas prioritizes killing Jews and destroying Israel over helping its own people. Israel has checkpoints to ensure terrorists from Gaza do not infiltrate the country along with Gaza residents who have legitimate reasons to be in Israel. The student groups calling for Palestinian rights should be ashamed of their hypocrisy. If they truly cared about Palestinian rights, they would be protesting against the tyranny and corruption of Hamas and the Palestinian authority. Brown Alumni Magazine should be ashamed of comparing the Israeli situation to South African apartheid. No matter how these boycotts are framed, they are meant to delegitimize Israel.

—Farrel I. Klein ’77 Providence

Your article recounts, with seeming approval, student initiatives to disinvest in Israel because of alleged “human rights violations.” The facts of the matter bespeak another story. Israel is faced with everyday threats from the north by Hezbollah, from the south by Hamas, from the east by Iranian based militias, and not the least, by elements within the Palestinian population. Israel’s adversaries are bent on the destruction of the Jewish state, and have been designated by the United States and other democratic nations as “terrorist.” There is another side to human rights, and that is the human right of Israelis to live in peace and security. During the summer of 2020 Israel became the target of more than 4,000 rockets, and to this day, is the object of petroleum filled balloons sent from Gaza by “civilians” (the very area cited by Brown students for “human rights” abuses). The balloons have ignited thousands of acres of farmland and brought misery to the residents of communities along the Gaza border. Israel lives in a dangerous neighborhood and does have a right to defend itself—even if that entails measures against Arab civilians, who have often carried out attacks on Israelis. If anything, the article might have addressed the complexity of human rights, rather than seeming to endorse the condemnation of the only democratic, pro-Western nation in the Middle East. This is a serious, multi-layered conflict that should not be dealt with by launching threats of disinvestment. Politicizing human rights plays into the hands of Hamas, the Boycott, Divestment and Sanctions (BDS) movement, and Islamists, who are trying to “South Africanize” the conflict by drawing invidious parallels between Israel and human right abusers. Given today’s prejudicial climate on campuses, I do hope that President Paxson continues to stay clear of taking sides on this issue. Brown deserves better than louche showmanship operating under the guise of human rights.

—Hank Savitch ’65 AM Delray Beach, Fla.

Don’t you just love it when the screaming children succeed in hijacking the University’s fiduciary obligation to maximize the return on its endowment? Not surprising, I suppose, as there are no adults left in University Hall or on the Brown Corporation. But I’m not complaining. As a professional investor for 45 years, I am happy to take full advantage when these experts on nothing—but moral authorities on everything—succeed in badgering the University into submission. So go ahead, Brown. Divest away. Create temporary price dislocations in stocks that accomplish nothing and send no meaningful message to anyone. You’ll undoubtedly feel good about reaffirming your moral purity, which I guess is the whole point. Meanwhile, we professionals who actually know a little bit about how capitalism works will buy, let’s say, the fossil fuel stocks that you foolishly sell BEFORE they make sizable investments in renewable energy and will gladly take our profits selling them back to you after they pass your “smell test” and long after the big money has already been made. The loser in all this? The University of course, which might have put to good use the tens of millions of dollars it frittered away to placate the screamers.

—Fred Clough ’76 Belvedere Tiburon, Calif.

It is ironic that the checkpoint observation described by Drashti Brahmbhatt contributed to her participating in the BDS movement. Israel withdrew unilaterally from Gaza in 2005, dismantling 21 Jewish towns and villages, evicting 8,000 Jewish residents, and shutting down industries that employed hundreds of Palestinian workers. Two years later, when Hamas ousted the Fatah party of Palestinian Authority President Mahmoud Abbas, Israel effectively revoked thousands of work permits when it joined Egypt in imposing a crippling blockade on Gaza to prevent the Islamist terror group from importing weaponry for use against the Jewish state. The blockade, along with three wars between Hamas and Israel, devastated the economy in Gaza, where unemployment rose to over 50 percent. In 2017, Israel quietly provided some relief as part of an unofficial, Egyptian-brokered truce with Hamas, in exchange for reduced rocket fire from the territory and the scaling back of weekly protests along the border. It allowed Qatar to deliver millions of dollars in cash to allow Hamas to pay its civil servants and allowed the United Nations to step up aid efforts. The checkpoint observed by Ms. Brahmbhatt was for a program which provided some 5,000 so-called merchant permits and awarded them to Palestinians from Gaza to work in Israel. One worker, interviewed at the time by the AP, said the added income allowed him to add a new floor to his building and buy a taxi for one of his children.

Hamas is dedicated to destroying Israel, and allowing several thousand young men from Gaza into Israeli territory drew criticism—especially at a time when then Prime Minister Benjamin Netanyahu was under fire from political rivals for his failure to halt frequent rocket attacks from Gaza. Nevertheless, improving lives in Gaza was and continues to be an Israeli interest. Ms. Brahmbhatt is 100 percent correct that “divestment is a tool at our disposal to engage in international politics.” It is a tool that should be used judiciously. How will it impact Palestinians’ daily lives? Will it incentivize Hamas and Israel to make peace, or will it merely encourage hardliners to dig in their heels? The fragility of the government coalition in Israel, which for the first time in its history includes an independent Arab party, makes this latter question even more consequential

—Phillip Jacobs ’79 Spring Valley, N.Y.

Brown students and professors who embrace the Boycott, Divestment and Sanctions (BDS) movement claim its objective is to end Israel’s occupation of the West Bank. And that objective finds a sympathetic ear with many in the U.S., including American Jews, like me. After all, Israel already gives its two million Arab citizens within Israel proper equal protection under its laws. Further, withdrawing from the West Bank territory would create the territory for a Palestinian state and is the basis of a negotiated two state solution under which the fate of Palestinian refugees would have to be addressed. At first glance, it’s hard to argue with those goals. However, it’s not that simple. The ultimate goal of the BDS movement is the elimination of Israel as a Jewish state. Full equality for Arab citizens of Israel would require overturning or amending Israeli laws that grant Jews citizenship and define Israel as the nation-state of the Jewish people. Granting a right of return to the Palestinians classified as refugees—the original refugees and their millions of descendants—would spell the end of a Jewish majority. BDS advocates call Israeli laws that provide asylum for Jewish refugees from persecution in their former homes (many from Arab states) racist. Effectively, this means that Jews cannot have their own country. The ultimate aim of the BDS movement is to delegitimize Israel as a Jewish state.

—Ken Cohen ’71 Kittery, Me.