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The Dangerous Liaisons of French Banks with the Israeli Occupation

The Dangerous Liaisons of French Banks with the Israeli Occupation§

Executive Summary

While the year 2017 marks the 50th anniversary of the Israeli occupation in the Occupied Palestinian Territories, the Israeli government’s colonization project in the West Bank and East Jerusalem has accelerated dramatically.

The very existence of Israeli settlements is illegal under international law. It is accompanied by numerous restrictions imposed on the Palestinian population, restrictions that violate their most fundamental rights and deprive them of the conditions that make a decent life possible.

The UN(1), the European Union(2) and the French government(3) have affirmed on numerous occasions and, most recently, in the major resolution of the UN Security Council of 23 December 2016: the Israeli settlements in the Occupied Palestinian Territories are not part of Israel as defined by the 1967 frontiers and are illegal under international law.

These settlements, “which do not cease to undermine a two state solution and to impose on the ground the reality of one state”(5), remain a major obstacle to any resolution of the conflict. The same Security Council resolution also requires [par. 5] that all states, ‘in their relevant dealings’, make a distinction between the territory of the state of Israel and the territories occupied since 1967.

The Israeli banking system constitutes an essential tool of the colonization project, and Israeli businesses contribute to the maintenance and development of the settlements. In this context, the principal French financial institutions, in continuing to support Israeli banks and businesses involved in the settlements, contribute indirectly to the maintenance and development of this illegal situation with respect to international law.

Five major French financial groups – BNP Paribas, Crédit Agricole, Société Générale, [the state-owned] Banque Populaire Caisse d’Epargne, AXA – manage financial holdings or hold shares in Israeli banks or businesses involved in financing settlements in the Occupied Palestinian Territories and which furnish services vital to the maintenance and development of the settlements – such as housing or factory construction, the provision of telecommunications connections or of surveillance equipment.

Added to that financial involvement, the four largest French banks – in this instance BNP Paribas, Société Générale, LCL (subsidiary of Crédit Agricole) and Natixis (investment bank subsidiary of BPCE) – have granted loans to the total of €288 million for the period 2004-2020 to the state enterprise Israel Electric Corporation (IEC) for a project for two gas-fired power plants(6), while IEC is providing electricity to the illegal settlements in the Occupied West Bank.

The French government is responsible at three levels:

1) Obligations under international law (the UN’s ‘protect, respect and remedy’ framework of its Guiding Principles, to not recognize as legitimate a situation created by a grave violation of international law, nor to aid or assist in the maintenance of this situation, and to cooperate to dismantle such situations).(7)

2) An obligation to protect against human rights violations by third parties, including businesses and banks.(8)

3) A particular obligation, as 20 per cent shareholder in Alstom [2004-06, 2014-], to apply rigorous controls when a business is state-owned or state-controlled, even when the state is a minority shareholder.(9) Alstom is the contractor for one of the two gas-fired power plants [partly financed by French banks], as noted above. [Siemens is the contractor for the other plant.]

The signatory organizations of this report have exhorted the French banks and insurance companies to conform to international principles in ceasing all financing of the Israeli colonization project. Numerous financial institutions, public and private, European and American, and pension funds(10) have already taken this step and have disengaged from Israeli entities which support the settlements, in contrast to the French financial institutions targeted in this report. To this day, no French bank has committed itself to cease financing entities which contribute to the development of settlements on Palestinian territory, despite unmistakable infringements on human rights, and in spite of undertakings with respect to human rights of the banks mentioned in this report and their adhesion to one or more directives on a voluntary basis.

The risks of new financing linked notably to the extension of the East Jerusalem light rail by Alstom(11), 20 per cent owned by the state itself, reinforces the urgency of strong commitments. It is not too late to act: the French banks must make commitments in conformity with international law and announce publicly the end of all financial support to entities that facilitate the maintenance and development of the illegal settlements in the Occupied Palestinian Territories.

The signatory organizations request:

To the French banks to:

* withdraw all financing, direct or indirect, from banks and Israeli businesses involved in the development of the settlements;

* commit themselves publicly to no longer finance such entities;

* develop a credible policy aiming to exclude from their operations all businesses involved with the settlements.

To the French state to:

* respect its international obligations, notably those resulting from violations of the imperatives of international law by Israel and those pertaining to the UN’s ‘protect, respect and remedy’ human rights framework.

* pursue all means to prevent any participation or investment of French businesses which contribute to Israeli colonization(12);

* implement the UN’s Guiding Principles with respect to businesses and human rights and to ensure that the corporations under its jurisdiction, including banks, do not prejudice the full realization of fundamental rights in France and abroad;

* supervise respect for the law relative to the duty of vigilance of parent and contracting companies.

* support, at the UN, the process for the elaboration of an international treaty on human rights and transnational corporations and other businesses.

Notes.

(1) Resolution adopted by the General Assembly on 11 December 2013: 68/82. Israeli settlements in the Occupied Palestinian Territory, including East Jerusalem, and the occupied Syrian Golan.

(2) Council of the European Union, Council Conclusions on the Middle East Peace Process, 18 January 2016.

(3) France Diplomatie, Israël/Territoires Palestiniens, Securité, 2 December 2016.

(4) UN Security Council, Resolution 2334, 23 December 2016.

(5) See Resolution 2334 preamble.

(6) Global Trade Review, Germans Back Israel Electric [Corporation], 23 February 2004.

(7) The document here cites Trading Away Peace: How Europe helps sustain illegal Israeli settlements, October 2012.

(8) According to the Guiding Principles 11 to 24 of the United Nations. Moreover, note Principle no.7: “Because the risk of gross human rights abuses is heightened in conflict-affected areas, States should help ensure that business enterprises operating in those contexts are not involved with such abuses, including by:(a) Engaging at the earliest stage possible with business enterprises to help them identify, prevent and mitigate the human rights-related risks of their activities and business relationships; [etc.]”.

(9) The Guiding Principles of the UN, and notably Principle no.4, regarding state-owned enterprises: “States should take additional steps to protect against human rights abuses by business enterprises that are owned or controlled by the State, or that receive substantial support and services from State agencies such as export credit agencies and official investment insurance or guarantee agencies, including, where appropriate, by requiring human rights due diligence. … Moreover, the closer a business enterprise is to the State, or the more it relies on statutory authority or taxpayer support, the stronger the State’s policy rationale becomes for ensuring that the enterprise respects human rights.” The UN’s ‘Working Group on the issue of human rights and transnational corporations and other business enterprises’ had its mandate extended in June 2014. The Working Group has equally highlighted the responsibility of states to take additional measures to guard against infringement on human rights by state-owned or state-controlled businesses.

(10) This is notably the case for the Norwegian government pension funds (2010), the Netherlands’ PGGM pension fund (2013), the Luxembourg FDC pension funds (2014), the Danish Danske Bank (2014) and German Deutsche Bank (2014) and the pension funds of the US Methodist Church (2016).

(11) Pertinent information became publicly available in June 2016, indicating that a commercial agreement had been signed between the Israeli government and the Israeli consortium Citypass and Alstom to extend the Jerusalem light rail network. Alstom and the French government have been contacted and advised by one of our organizations in June and September 2016, and have not denied the existence of this agreement. One might reasonably infer that this contract, of the order of €350 million, will require bank finance. [Resistance against French corporate involvement in this project has a long history.]

(12) In complementing the advice of the French Foreign Affairs Ministry, as per fn. (3).

§ From Le Liaison Dangereuses de Banques Françaises avec La Colonisation Israélienne, March 2017. The report was compiled under the auspices of the following NGOs: Al-Haq, AFPS, CCFD -Terre Solidaire, CGT, FIDH, Fair Finance France, LDH, and Union Syndicale Solidaires.

Translated by Evan Jones.

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