New York City’s pension system is contemplating a controversial return to investing in Israeli government bonds, potentially reversing a recent divestment policy despite ongoing international condemnation of Israel’s military operations in Gaza. This financial deliberation pits fiduciary responsibilities against ethical considerations in a heated municipal debate.
The Financial Times reported that city officials are evaluating reinvestment options even as Mayor Zohran Mamdani maintains public support for divesting from Israel due to its conduct in Palestinian territories. The discussion highlights the complex intersection of municipal finance and international human rights concerns.
City Comptroller Mark Levine emphasized his fiduciary obligation to pension beneficiaries, noting to the FT that “Israel bonds have performed very well and they continue to be investment grade rated.” Israeli bonds function as direct loans to the state treasury, providing investors with consistent interest payments while funding government operations.
Opponents argue that such investments effectively subsidize Israel’s settlement expansion in occupied territories, displacement of Palestinian communities, and civilian casualties in Gaza. The potential policy reversal has intensified tensions within City Hall since Mamdani took office on January 1 and immediately revoked an executive order that had prohibited city agencies from boycotting or divesting from Israel.
The mayor, a longstanding critic of Israel’s military campaigns, previously stated that New York “should not have a fund that is invested in the violation of international law.” Comptroller Levine, while acknowledging personal ties to Israel through family and cultural connections, maintains that investment decisions should prioritize financial metrics over political considerations.
This reevaluation occurs despite warnings from credit rating agencies like Moody’s that categorize Israeli bonds as “increasingly risky investments.” The debate marks a significant departure from decades of routine pension investments in Israeli debt, a practice that ended in 2023 when the city allowed its $39 million bond holdings to mature without reinvestment.
Former Comptroller Brad Lander, who initiated the divestment, framed the 2023 decision as part of a broader strategy to avoid foreign sovereign debt rather than singling out Israel for special treatment. The current reconsideration revives fundamental questions about whether public pension funds should finance governments accused of violating international law.