May 8, 2024 - Politics

Why Israel divestment demands are likely to fail in Texas

UT protesters stand in front of the tower.

University of Texas professor Craig Campbell speaks at a demonstration this month calling on the university to divest from Israel. Photo: Brandon Bell/Getty Images

Pro-Palestinian protesters on the University of Texas campus have made a specific request of university officials that's very unlikely to be entertained — divest from weapons manufacturing companies selling arms to the Israeli military.

Why it matters: Apart from whether divestment makes sense as a fiduciary or moral matter, the university's unwillingness to bend on its portfolio is overdetermined by state politics.

  • UT is a public institution overseen by a board of regents appointed by Gov. Greg Abbott and confirmed by state senators.

The big picture: Protests at UT and campuses across the country have sought to use divestment as a tool to put pressure on Israel, whose assault on Hamas has killed tens of thousands of Palestinians, including many civilians.

  • Israel is responding to the Oct. 7 Hamas attack that killed some 1,200 people and during which around 240 were taken hostage.

Dig in: The UT System's investments are handled by the nonprofit University of Texas/Texas A&M Investment Management Company (UTIMCO).

  • The not-for-profit corporation's governing board is dominated by the UT System Board of Regents.

State of play: UTIMCO manages $74.6 billion in assets for the UT and Texas A&M systems. Among the investments are companies that produce weapons and ammunition that go to Israel, per a list compiled by the Quaker organization American Friends Service Committee. They include:

  • Northrop Corp., with UT shares valued at roughly $1.4 million, per UTIMCO's annual audit report.
  • Lockheed Martin Corp., with UT shares valued at almost $1 million.
  • RTX (formerly Raytheon), with UT shares valued at nearly $600,000.
  • General Dynamics Corp, with UT shares valued at about $500,000.

What they're saying: "These companies are not only profiting from the genocide of Palestinians but are directly responsible," according to a "University of Texas at Austin Student Statement of Solidarity with Palestine" that has been signed by dozens of organizations.

The other side: "This will NEVER happen," Abbott wrote on X about the protesters' divestment demand.

  • Abbott's office declined an Axios interview request. A spokesperson for the UT System did not respond to an interview request about UTIMCO.
  • A Washington Post analysis of nationwide university investments in Israel found that UTIMCO had little direct exposure to Israel — save an investment of $4 million to $8 million in a Tel Aviv-based venture capital fund run by TLV Partners.

Between the lines: "Colleges and universities have long been a target of Republican lawmakers due to the perception of liberal biases among faculty, staff, and students," Joshua Blank, research director of the Texas Politics Project at UT, tells Axios.

  • "Given that Republican voters are unlikely to be reacting positively to the protests taking place on college campuses … the governor is likely operating in a safe space among his partisans."

Catch up quick: A 2019 law bars the state's public agencies — including UT — from entering into contracts worth $100,000 or more with companies with 10 or more full-time employees that boycott Israel.

Behind the scenes: When Abbott signed an initial version of the law barring public contractors from boycotting Israel, a major Texas trading partner, he said "anti-Israel policies are anti-Texan policies."

Flashback: In the 1980s, UT officials shrugged off calls by students to divest from companies with holdings in apartheid South Africa.

  • Former UT president William Cunningham told KUT that such a move could have cost the university roughly $30 million.
  • He added that "over time … the corporations that we had invested in had largely begun to pull out … and I think it's a result of what happened at UT Austin and all the other schools around the country."

Zoom out: As of this year, at least 38 states have passed bills and executive orders aimed at discouraging boycotts of Israel, per the American-Israeli Cooperative Enterprise, which describes the boycotts as antisemitic.

What's next: Expect Texas' top policymakers to tighten their embrace of Israel as campus protests continue.

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