A Palestinian youth holds part of a missle launched by an Israeli drone which killed a family in the Zeitoun neighborhood of Gaza City, 14 July. Basel Yazouri ActiveStills

The British bank Barclays has come under fire for its holdings in Elbit Systems, Israel’s largest military company and the main supplier of drones used to attack and kill Palestinian civilians in Gaza. The bank is the named owner of $2.9 million worth of shares in Elbit.

More than 1.7 million people have signed a petition calling on Barclays to divest from “projects that finance illegal settlements and the oppressive occupation of the Palestinian people” and campaigners have occupied and protested at bank branches across the UK.

Elbit’s share price rose in July off the back of the extensive use of its technology during Israel’s summer massacre in Gaza, which killed more than 2,100 Palestinians, including some 500 children.

The company advertises its products as “combat proven” and recently reported a backlog in orders worth $6.2 billion.

Through its holdings in Elbit Systems, Barclays is profiting directly from Israel’s deliberate targeting of civilians and civilian infrastructure. Such targeting has been described by Amnesty International and Palestinian human rights organizations as amounting to war crimes.

Barclays market analysts have also talked up Elbit shares, recently rating their stock as “positive.”

Call for action

Elbit Systems supplies Israel with Hermes drones that have been used to deliberately attack and kill Palestinian civilians, including during this summer’s onslaught on Gaza.

According to data from the Al Mezan Center for Human Rights, armed drones killed more than 1,000 Palestinians in Gaza between 2000 and 2010.

Analysis of Palestinian Centre for Human Rights reports by drone researcher Mary Dobbing found that 800 drone strikes took place within a fifty-day period during Israel’s most recent attack on Gaza.

In a joint statement published last month, Palestinian student groups described Barclays as “complicit in the war crimes carried out in Gaza using Elbit’s equipment” and called on UK students to close their accounts with Barclays.

“Since Barclays refuse to end this unethical practice [of] investing and dealing in shares in Elbit despite the fact that their drones kill us, our children, our parents, our brothers, sisters and friends, we ask for students to close their student Barclays account and tell Barclays why,” the statement explains.

Normal practice?

But in a bizarre move, Barclays appears to be denying that holding shares in Elbit amounts to profiting from Israeli militarism.

In a statement published at the height of Israel’s massacre of Gaza, Barclays claimed:

“Barclays holds a very small number of shares in Elbit Systems Ltd on behalf of clients and to hedge exposure against customers facing transactions. Holding shares in companies on behalf of clients, as well as maintaining appropriate hedging strategies, is normal practice for banks, but does not equate to an investment made by Barclays.”

Barclays repeated the main thrust of this defense in a recent email exchange with Corporate Watch, a UK-based research cooperative.

Even if true, holding shares on behalf of others hardly seems like an adequate defense: Barclays is facilitating investment in Elbit and collecting a healthy commission on each trade in Elbit shares.

But it is the reference to “hedging strategies” where Barclays’ claims really start to come unstuck.

In this context, hedging is the practice of buying a number of shares that one is confident will rise in price to offset potential losses that may be incurred by a more risky investment.

In other words, Barclays is investing in Elbit shares to make money from the predicted rise in their price.

“Ducking its commitments”

Ryan Brightwell, a researcher with the Banktrack network of campaign groups tracking the operations and investments of private sector banks, finds no ambiguity:

“A bank has a choice of whether or not to make an investment on behalf of clients,” he explained. “Shareholdings in Elbit for hedging purposes are investments, and could easily be replaced by other shares with a similar risk profile.

“Barclays has a policy commitment to remedy human rights violations it is linked to. But instead it is ducking its commitments and continuing to deal in a company which provides drones that have been used to bomb Gaza,” he said.

Corporate Watch asked Barclays how it squares its trading in Elbit shares with the bank’s claim not to invest in the arms trade.

Barclays spokesperson Will Bowen told Corporate Watch: “We are not ‘investing’ in these companies, i.e. seeking to generate a return. We are simply holding the shares on behalf of clients — this is standard practice. Barclays Stockbrokers offer a range of companies for customers to invest in … It’s not for us to tell customers what they can and can’t invest in.”

When pushed for further detail on the use of Elbit shares for the purposes of hedging, which clearly amounts to a form of investment, Barclays declined to comment.

Out of step

Barclays describes its holdings in Elbit as part of “normal practice.” But Barclays is badly out of step with other major European investors.

The Norwegian state pension fund, leading Danish bank Danske Bank, Dutch pension giant ABP and the Swedish AP pension fund have all divested from Elbit Systems.

Investment experts have told campaigners that Elbit appears on most blacklists prepared by socially responsible investment research companies.

Very few other European banks appear on a list of institutional shareholders invested in Elbit published by Nasdaq.com, suggesting that most European banks believe that the company’s role in Israeli war crimes make it an inappropriate investment.

Financial data provider Orbis states that Barclays also holds 4.25 percent of the total shares in BAE Systems. The huge UK military company has sold to Israel components used in F16 fighter jets and has applied for licenses to export other military equipment to Israel.

The bank is also a named investor in General Dynamics, Raytheon, Meggitt and four other companies that provide military equipment to Israel.

Support for apartheid

When South Africa was under white minority rule, a Barclays subsidiary made loans to the apartheid government and bought up millions of defense bonds.

The campaign against Barclays was one of the most visible forms of solidarity in the UK with the South African struggle against apartheid.

A campaign encouraging students to boycott Barclays meant that the bank ultimately saw its share of the student market drop from 27 percent to around 15 percent.

Encouraged by this popular movement, many local councils, trade unions and charities divested from Barclays.

Modern capitalism

In 1986, Barclays bank announced its withdrawal from South Africa after a decade of high-profile campaigning.

In addition to being remembered as one of the big UK companies that took the longest to end its support for apartheid, Barclays is known today as being one of the clearest examples of everything that is rotten with modern capitalism.

In the past few years alone, Barclays has been exposed as having: avoided more than £500 million ($783 million) in taxes, promoted overseas tax havens, manipulated inter-bank interest rates and defrauded customers.

Just recently, it was involved in rigging currency markets, all while continuing to pay out billions in bonuses to its top executives.

The question now is whether or not Barclays will continue to defend its investment in Elbit and thus add active support for Israeli apartheid to its long list of crimes.

Michael Deas is the coordinator in Europe with the Palestinian Boycott, Divestment and Sanctions National Committee (BNC), the broad coalition of Palestinian organizations that works to support the movement for boycott, divestment and sanctions against Israel.

Tom Anderson is a researcher with Corporate Watch, an independent research cooperative that investigates the social and environmental impacts of corporations and corporate power.