The Divestment Encampments Don’t Make Any Sense

The demand that universities unload any investments having to do with Israel is half-baked and bound to fail.

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In an attempt to pressure universities into divesting from companies tied to the Israeli military—and, in some cases, severing all financial and academic relationships with anything Israeli —student protestors and their allies are establishing encampments and occupying buildings on university campuses at a brisk clip. Mother Jones identified active protests on 13 campuses. With the arrest of more than 100 Columbia University students last week drawing national media attention, expect the number to grow.

By those metrics—number of participants, amount of media attention—the protests are a success.

But the focus on divestment is strategically weak. What’s more, the loose-knit nature of the protest is attracting advocates of anti-Israel violence, undercutting demands for a ceasefire, diverting attention from the Israeli Defense Force’s Gaza campaign, and decreasing the value of all that earned media attention.

In some ways, the encampment strategy is irresistible. University endowments are natural, proximate targets for student activists. Plus, the divestment of yore has been romanticized after the anti-apartheid campaigns of the 1980s were followed by the demise of whites-only rule in South Africa in the 1990s.

The biggest flaw in the divestment strategy was succinctly articulated two years ago in the Harvard Business Review by Tom Johansmeyer: “Selling an asset requires someone to buy it … for you to divest, someone else needs to invest,” he wrote.

That’s why such boycotts generally don’t work. As William MacAskill of the University of Oxford wrote in The New Yorker, “Studies of divestment campaigns in other industries, such as weapons, gambling, pornography, and tobacco, suggest that they have little or no direct impact on share prices. For example, the author of a study on divestment from oil companies in Sudan wrote, ‘Thanks to China and a trio of Asian national oil companies, oil still flows in Sudan.’ The divestment campaign served to benefit certain unethical shareholders while failing to alter the price of the stock.”

Moreover, like other entities with endowments, such as foundations or union pension funds, universities have moved away from investing in specific companies and toward complicated financial vehicles. They’re not necessarily buying shares of McDonald’s or HP, two multinationals attacked by the BDS (boycott, divest, sanction) movement. As Kian Braulik, a Brown University student sympathetic toward divestment strategies, explained for the Boston Review, “Students in the 1970s and 1980s could identify and directly target companies operating in South Africa.” But now, “endowments’ portfolio managers rely on the caprices of finance capital, particularly the performance of hedge funds and private equity firms. The nature of these complex financial institutions makes it impossible to put pressure on the university to disinvest from single companies. An index fund, for instance, is a financial instrument that tracks the market’s performance in given sectors. Buying stock in one means betting on many companies, rather than investing in one.”

So, to divest in every company remotely connected to the Israeli military would require a wholesale overhaul of an endowment’s entire investment strategy and a return to mere stock picking—potentially weakening the endowment’s health and all that flows from it such as student financial aid—without actually depriving those companies of economic resources because the assets in question would be sold to other people or institutions.

The potential value of a divestment strategy is more indirect. Conflict on college campuses attracts media coverage. Most reporters are college graduates who assume great importance in the political happenings among students. Many media consumers lap up such stories, either to feel exuberant about the prospect of youth-led change or to doomscroll about the radicalization of the next generation.

To activists, any media coverage raises the profile of the targeted sin, which can theoretically be leveraged into more potent political action. For example, as university divestments accelerated in the mid-1980s, alongside a wide range of anti-apartheid organizing activity, Congress in 1986 was prompted to pass economic sanctions on South Africa in such overwhelming bipartisan numbers it overrode President Ronald Reagan’s veto.

To generate public pressure on Congress required possessing an indisputable moral high ground that could neutralize craven arguments.

Even the notorious right-wing Republican Senator Jesse Helms conceded, “Nobody is for apartheid.” All he could do, in a failed attempt to filibuster the sanctions bill, was argue, “Who are we to be so pious about the efforts of the South African government to stop the riots, the looting, the shooting, and the mayhem that’s going on over there?” He also tried to fan fears of a country led by then-imprisoned Nelson Mandela and his socialist African National Congress: “South Africa, and consequently, all of Africa [would] fall under the control of the Soviet Union.” Intense media coverage shed light on those flimsy arguments on behalf of indefensible racist oppression.

Still, not even government-imposed sanctions, along with university divestments, had all that much economic impact on South Africa. A 1999 academic study published in the Journal of Business found “no support for the common perception … that the anti-apartheid shareholder and legislative boycotts affected the financial sector adversely.”

Nevertheless, those actions, promoted by a wide swath of governments and institutions, were interpreted ominously by F. W. de Klerk, who became South Africa’s president in 1990. South Africa’s economy wasn’t being hit hard yet, but de Klerk figured it might be in the future. Years later, he reflected, “If we had not changed the manner we did, South Africa would be completely isolated. The majority of people in the world would be intent on overthrowing the government. Our economy would be non-existent—we would not be exporting a single case of wine and South African planes would not be allowed to land anywhere. Internally, we would have the equivalent of civil war.” Sanctions, divestments, and a growing global sense of moral outrage forced de Klerk’s hand.

No doubt today’s student activists wish to replicate such global pressure. And Israel’s gruesome response to October 7 has unwittingly helped that cause. But the conflict between Israelis and Palestinians is far more complicated than South African apartheid and always has been.

Arguing that the Israeli government’s military response to the savage October 7 attack by Hamas on civilians was indiscriminate, resulting in thousands of needless non-combatant deaths and near-famine conditions across Gaza, is simple enough. But without any parallel condemnation of the civilian deaths and hostage-taking by Hamas, such arguments do not promote peaceful settlement but promote one side’s victory in war. More importantly, from the standpoint of the protestors, they’re unlikely to snowball into actions that could damage the Israeli government.

It may be that the video of small groups outside Columbia chanting “burn Tel Aviv to the ground” or one protestor telling Jewish students, “The 7th of October is going to be every day for you,” is not representative of student protestors. But without firm leadership from the activists, setting broadly shared political goals and rejecting violent antisemitic threats, the comments from the worst people will shape the media coverage, raising questions about the ultimate goals of those behind the encampments.

The endgame of the protestors is unclear. Do most want the peaceful coexistence of a two-state solution? The elimination of Israel by any means? We don’t know. The unsettling possibilities sap the potential for a student-led divestment strategy to produce international pressure on a scale emulating what happened four decades ago to South Africa.

European colonists ruled South Africa, whereas Israeli and Palestinian peoples have ancestral claims to disputed lands. Both have been subject to abhorrent violence and bigotry. Media coverage doesn’t simplify the matter. It magnifies the tragic complexity.

Divestment strategies are inherently weak tools. Many universities, such as Columbia, have already divested from fossil fuel companies, tobacco producers, and anything connected to Sudan to almost no effect. They are even weaker when they are deployed to solve problems plagued by moral quandaries.

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