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One Group Says PCUSA's Divestment Plan is Illegal

by John H. Adams
The Layman Online
Tuesday, December 7, 2004

[This article could be viewed originally from this link.]

The resolution of the 216th General Assembly to divest the funds of the Presbyterian Church (USA) from corporations doing business with Israel could run afoul of federal law. At least one pro-Israel organization, Boycott Watch, has filed a complaint with the U.S. Department of State.

The Bureau of Industry and Security of the U.S. Department of Commerce lists a number of conditions under which corporations and other organizations may be penalized under the federal tax code for boycotting nations that are friendly to the U.S. and have not been targeted by the U.S. for sanctions.

According to the bureau, "Conduct that may be penalized under the TRA [Tax Reform Act of 1976] and/or prohibited under the EAR [Export Administration Regulations] includes:

The bureau says, "The antiboycott laws were adopted to encourage, and in specified cases, require U.S. firms to refuse to participate in foreign boycotts that the United States does not sanction. They have the effect of preventing U.S. firms from being used to implement foreign policies of other nations which run counter to U.S. policy."

The General Assembly voted in July to call for "phased selective divestment" of Presbyterian holdings in multinational corporations doing business with Israel.

The Mission Responsibility through Investment [MRTI] Committee of the PCUSA has begun the process of determining which corporations might be targeted. One company -- Caterpillar -- has already been singled out in discussions about the divestment strategy.

Israel has purchased Caterpillar equipment for use in clearing the path for the wall that separates Palestinian areas from Israel. The PCUSA owns 37,100 shares of Caterpillar stock, which is valued at roughly $3.4 million -- more than $500,000 higher than when the General Assembly approved its divestment resolution on July 2. MRTI's strategy is to use the threat of divestment to leverage what it considers to be an appropriate political response to the General Assembly's anti-Israel resolution.

Boycott Watch "wrote the church to inform them of the violation and sent a copy of the letter to the US agency enforcing those laws," the organization said.

Boycott Watch has also complained about "a campus-based divest-from-Israel campaign [that] has begun to get universities to halt all investments and educational joint projects with Israel. In November, 2003, Boycott Watch wrote a letter to the Office of Antiboycott Compliance detailing how the divest-from-Israel campaign was indeed created as a boycott in support of the Arab boycott of Israel and that the boycott was intended to spread outside of universities. The Boycott Watch letter also detailed that the originator of the divest-from-Israel campaign was in fact a consultant to Yassir Arafat's Palestinian Authority, which is part of the Arab League, and a signatory to the Arab boycott of Israel, thus proving that the divest-from-Israel campaign is indeed a direct function of the Arab boycott of Israel."

Boycott Watch said, "Senior members of Presbyterian Church compared Israel to South Africa and its former apartheid practices. Boycott Watch informed the church that there is no legitimate comparison of the two. Israel is the only country in the Middle East that has laws specifically protecting every resident from discrimination regardless of the religion practiced or citizenship. In the Arab world, however, Jews are subject to the Dhimi laws, a set of laws that not only allow, but prescribe specific methods of discrimination against Jews. Many Arab Israelis live harmoniously in Israel, and Israel openly welcomes Israeli Arabs who want to live in peace. Israeli Arabs are even represented in the Knesset, Israel's parliament."

The U.S. Chamber of Commerce says, "It is currently a federal criminal offense under U.S. 'antiboycott laws' for any U.S. person to participate in another nation's boycotts or embargoes of third countries. The definition of 'boycott' is expansive and includes such seemingly benign activity as furnishing information about the nationality of past or present business partners to an inquiring government. The penalties imposed for each 'knowing' violation can be a fine of up to $50,000 or five times the value of the exports involved, whichever is greater, and imprisonment of up to five years. Under certain circumstances, the criminal penalties for each 'willful' violation can be a fine of up to $50,000 and imprisonment for up to 10 years."

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