Reuters Company News Calif gov says Calpers won't dump Israeli holdings
By Gina Keating
LOS ANGELES, July 5 (Reuters) - California Gov. Gray Davis assured Israeli officials on Friday that he would not yield to any political pressure to divest the state's pension fund of its Israeli holdings. ADVERTISEMENT
Speaking on the day after an Egyptian gunman fatally shot two Israelis at the El Al ticket counter at Los Angeles International Airport, Davis pledged the state's ongoing economic support for Israel.
Davis, a Democrat who is running for reelection in November, made the statement at a meeting with Jewish leaders at the Jewish Federation of Los Angeles following a telephone conference with Israeli Prime Minister Ariel Sharon.
"To those critics in California that would have us divest our pension ... as long as the people of California want me to be governor, we will be doing business with Israel," Davis told Jewish leaders as well as reporters.
Arab leaders in California have criticized administrators of the California Public Employees Retirement System, or Calpers, for continuing to invest in Israel despite the country's escalating violence with Palestinians and the giant pension fund's own rules about socially responsible investing.
"Arab groups have asked (Calpers) to withdraw their investments because they say Israel isn't working towards peace," said Davis' spokesman Steve Maviglio.
With $149.3 billion in assets, Calpers is the largest public pension fund in the United States and No. 3 worldwide.
The fund is independently run and the governor has no direct say in its investment policy although he appoints two of its 12 board members.
Calpers holds $143.5 million in Israeli government bonds, according to Calpers data. The fund also had $8.9 million in equity investment in Israel, a spokesman said.
'STAND BEHIND ISRAEL'
In February, Calpers withdrew its equity from four Asian emerging countries -- Indonesia, Malaysia, the Philippines and Thailand -- based, in part, on the countries' political risk and market volatility.
The Philippines was later reinstated as an investable economy after Calpers said it had not given Manila credit for having timely settlement of stock transactions.
In 2001, California exported $812 million worth of goods to Israel, making it the state's 21st largest trading partner, according to state statistics.
Davis promised that Californians "do stand behind Israel and do cherish similar values and ... we do understand that they are our strongest ally in a troubled region."
The governor said he drafted a letter to the Board of Regents of the University of California System asking regents "to take steps against violence and hate-driven rhetoric on those campuses."
Violence erupted on two California college campuses last month when pro-Israel and pro-Palestinian demonstrators clashed, Maviglio said.
Davis and Sharon also discussed the shooting deaths Thursday of two Israeli natives at the Tom Bradley International Terminal at Los Angeles International Airport.
A security guard employed by Israeli airline El Al fatally shot the Egyptian gunman.
Although U.S. law enforcement officials on Friday classified the shooting rampage as an isolated incident, the Israeli government viewed it as a terrorist attack.
"I want to reiterate that local law enforcement and the FBI believe it is an isolated incident but they haven't ruled anything out," Davis said. "I told him once the investigation is completed that if additional security measures are required that we will inform him."
The governor reiterated a formal U.S. policy outlined by President George W. Bush last week urging Palestinians to remove Palestinian Leadership Council President Yasser Arafat.
"I hope Palestinians will choose new leadership that will focus on improving the lives of Palestinians ... not destroying the lives of Israelis," Davis said.