Israeli Bonds, Explained How a little-known investment vehicle became a major source of funding for Israel and a flashpoint in New York state politics.
Protesters demonstrate against Israel Bonds in Dublin on June 11, 2025.
(Brian Lawless/PA Images via Getty Images) For decades, Israeli bonds have been a key source of capital and foreign exchange for a country unable to woo traditional investors. In its early days, Israeli bonds were bought almost exclusively by Jews in the diaspora, but today the money comes not only from private citizens but also from taxpayers’ money, directed by comptrollers and other financial officials responsible for investing civil servants’ pension funds.
After October 7, sales of Israeli bonds soared, and as the genocide worsened, pro-Palestinian human rights advocates launched campaigns to end taxpayer support for the war. Unlike bonds sold by the Israeli Ministry of Finance, Israeli bonds are retailed by a third party in the United States and are not traded on the public market. For this reason, it is difficult for financial managers to divest from their Israeli bond portfolios, but they may choose not to reinvest the money once the bond matures. After sustained pressure campaigns from pro-Palestinian activists, several jurisdictions in the United States have chosen to do just that, including Louisiana and more than a dozen Ohio counties, according to Jewish Voice for Peace. (Activists also made significant gains in divestment from Israeli sovereign bonds).
It has now become an electoral issue. In New York, State Comptroller Thomas DiNapoli, already elected four times, is now facing the only primary of his career. One of the hot spots in this election has been Israeli bonds. DiNapoli invested hundreds of millions of taxpayer dollars in Israeli bonds during his tenure and maintained a close relationship with the American company that sells the bonds. DiNapoli’s two challengers, Raj Goyle and Drew Warshaw, have criticized DiNapoli for pursuing unethical investments and promised to stop reinvesting in Israeli bonds if elected.
As New York voters head to the polls, The nation publishes this introduction to Israeli bonds, tracing how and why they were created, their relationship with the mob, and how the financial instrument became a way for right-wing controllers to provide their pro-Israel credentials.
Who created Israel Bonds and why? The story of Israel Bonds begins after the establishment of the State of Israel, when the newly formed government desperately needed money. Before 1948, Zionist leaders in Palestine depended largely on donations from American Jewish communities. As Professor Dan Lainer-Vos of the University of Southern California describes in his book: The nerve of a nationAfter Israel’s founding, these donations began to decline, in part because the American Jewish nonprofits that raised the funds began taking a larger cut for themselves. Meanwhile, the economic situation in Israel – including an overvalued currency and state control of key sectors – made it almost impossible for the country’s leaders to attract conventional foreign investors.
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In 1948, UJA President and former Treasury Secretary Henry Morgenthau, who had raised nearly $200 billion to finance World War II by selling U.S. “war bonds,” contacted Prime Minister David Ben-Gurion and proposed creating a similar program. Instead of simply soliciting donations, his idea was to sell bonds to the Jewish diaspora, allowing Israel to access new reserves of capital and foreign currency while reducing its reliance on philanthropy.
Ben-Gurion was initially skeptical of this plan, but by 1950 the economic situation in Israel was dire enough that the prime minister decided to try it. He advocated the creation of a new organization to issue the bonds, the American Financial Development Corporation for Israel (AFDCI, later reconstituted as DCI). Fearing that initial fluctuations in the value of the bonds could impact the Israeli economy and the long-term survival of the bond program, American AFDCI leaders decided to make the bonds non-transferable; in other words, they could not be traded on a public bond market but were (with a few exceptions) paid by AFDCI when they matured. The bonds sold by AFDCI/DCI have always been distinct from sovereign bonds, which are sold by the Israeli Ministry of Finance and can be resold after purchase, subject to changes in valuation on the public market.
Bonds are a form of debt; the seller of the bond agrees to repay the principal to the investor, as well as regular interest. The conditions of the bonds set by Israel Bonds – such as the bonds being non-transferable – meant that traditional investors would not consider them. Yet the investors targeted by AFDCI were largely motivated by their emotional ties to Israel and were therefore willing to accept lower terms and a lower rate of return. Mitu Gulati, a law professor at the University of Virginia who studies sovereign debt, calls this aspect of diaspora bonds “patriotic forgiveness.” “If there is a subset of people willing to lend to you at lower rates in tough times,” he said, “then that’s a way for you to have some form of insurance. Israel has it, and other countries would desperately appreciate it.”
In 1951, the first series of bonds was issued. Since its inception, Israel Bonds has provided $57 billion in Israel, constituting approximately 25 percent of its external debt.
What role did Israel Bonds play in shaping American diasporic identity and diasporic understanding of Israeli history? In 1951, Meyer Steinglass, a playwright and writer living in New York, was hired to serve as national advertising director for Israel Bonds. He was tasked with developing the marketing and messaging plan that would make Israel Bonds successful. Steinglass’s grandson, Torrey Townsend, is a playwright living in Brooklyn. To write his recent theatrical production The Jewish conspiracy, Townsend spent years engaging in archival and historical research to better understand his grandfather’s work.
“A lot of Israel Bonds is a language game, Israel Bonds. The bond, the form of kinship, it’s not a rational relationship. It’s an emotional relationship,” Townsend said. Under Penderglass’ leadership, Israel Bonds became known for urging American Jews to remember their obligations. A 1951 advertisement in Life magazine which declared: “Men died so that these bonds could be born”.
The DCI also sought to link sales to Jewish ritual life. The bonds were marketed on important dates in the Jewish calendar and presented as a gift to mark events in the Jewish life cycle, including B’nei Mitzvot and weddings. As part of the marketing plan, Penderglass also produced an annual report on Israel Hanukkah Bonds Festival at Madison Square Gardenduring which famous choreographers and dancers, as well as other celebrities, performed in front of a packed house.
Townsend saw written materials from the first annual meetings of the Israel Bonds, including pamphlets containing statistics detailing the number of people living in Palestine before the creation of Israel. Top officials knew about the Nakba, but they nevertheless peddled the idea of land for one people for a landless people.
“He’s my grandfather, my direct ancestor,” he said. “They knew the Palestinians were there. They knew the land belonged to them, but they made a choice.”
Israel Bonds took money from anyone, including the mafia. Over the decades, DCI has also sought investments from pensions, credit unions and labor unions. In the 1970s, the Teamsters purchased at least $27 million in Israeli bonds to improve their image; the DCI courted these funds and hosted dinners honoring the Teamsters with known connections to organized crime. At a dinner in June 1975, the Israeli ambassador to the United States introduced future President General Jackie Presser to the exclusive Prime Ministers’ club, reserved for those who had secured major investments in the name of Israel Bonds. When it came to selling bonds, violence was a means to an end. “In this union, the guys at the top can force the locals to buy the bonds,” Steinglass was quoted as saying in That of Steve Brill The Teamsters. “I mean, you know what they say: ‘You can end up under a truck if you don’t obey.'”
Why did Israeli bonds become an important political issue after October 7? As Israel began its military attack on Gaza, the country’s spending exploded, jump almost 30 percent in November 2023 compared to the same month of the previous year. These spending increases would continue. According to data released by the Stockholm International Peace Research Institute, Israeli military spending increased by 65% in 2024, which he called “the largest annual increase since the Six-Day War.” Not only was spending increasing rapidly, but Israel was losing tax revenue, in part because of tax deferrals put in place after the start of the war, which allowed some Israelis to delay filing and paying their taxes.
Israel needed quick cash, especially as interest rates on Israeli sovereign debt skyrocketed from a actuarial yield from 3.871 percent in 2022 to 5.77 percent in 2023.
This is how the DCI exploited its “patriotic discount”. The fact that more people are buying Israeli bonds and trading a lower rate of return that those buying bonds on the sovereign market gave the Israeli government access to cheap money just as its spending and deficit were growing rapidly. A month after the attacks, Israel Bonds announcement he had reached a new fundraising record, ensuring a turnover of more than a billion dollars. By May 2026, Israeli bonds had been sold $7.7 billion.
The economic circumstances of the War reaffirmed Israel’s belief in the importance of Israeli bonds, but they also sparked renewed interest from Palestine advocates and activists, who saw how a little-understood financial instrument could support Israel’s violence by helping the country overcome adverse economic circumstances. In a 2025 Report According to the United Nations special rapporteur on the situation of human rights in the Palestinian territories, Francesca Albanese called Israel Bonds an “enabler” of the country’s settler colonialism and an entity “directly involved in the Israeli occupation and genocide.”
What about the economic argument against Israeli bonds? For activists in New York and elsewhere, the moral case for not reinvesting in Israeli bonds is clear, but it is not the only justification. They also argue that there is an economic argument and that financial officials are violating their fiduciary duty to taxpayers and pension holders by purchasing Israeli bonds as a way to signal their political support for the country. In 2024, Israel’s credit rating was lowered by all three major credit rating agencies, but U.S. financial officials continued to invest hundreds of millions of public dollars in Israeli bonds.
Are gatekeepers or other public officials who advocate for the purchase of Israeli bonds violating the law or their fiduciary responsibilities? Richard Painter, a law professor at the University of Minnesota and former White House ethics lawyer for George W. Bush, said that to fulfill their fiduciary duties, controllers and other financial officials must first make decisions in the best interests of the beneficiary. He also said it’s critical for these officials to “be wary of people who invite you to dinner and sell you bonds, because that creates conflicts of interest,” adding that such incentives are “fairly common” in the bond industry.
For a 2024 surveyjournalists from the International Consortium of Investigative Journalists obtained more than 2,000 pages of public documents to explore the relationships between Israel Bonds and public officials responsible for managing taxpayers’ money. They found that Israel Bonds staff went to great lengths to woo these officials and that in return, those who purchased the bonds gained access to a lavish world of gala dinners and private meetings with top military officials.
Human rights activists are trying to hold accountable financial officials who invest heavily in Israeli bonds. In 2024, the Center for Internationalist Law filed a complaint against Palm Beach County Comptroller Joseph Abruzzo, alleging he violated his fiduciary duty by investing 15 percent of the county’s total foreign funds in Israeli bonds.
What about the argument that the DCI violated US law? From the beginning, Israel Bonds executives understood that their work on behalf of Israel Bonds likely triggered registration requirements under the Foreign Agents Registration Act, which requires individuals or entities engaged in domestic lobbying of foreign governments to register with the Department of Justice. AFDCI/DCI obtained an exemption from FARA by claiming that it was a for-profit corporation acting in its own interest and with no immediate relationship to Israel, even though Israel Bonds has always had close ties to the Israeli government. (With some in the federal government skeptical that DCI could sell their bonds without engaging in political propaganda on behalf of Israel, the FBI order that confidential informants be developed in the Israel Bonds sales network, but the investigation was never concluded). The current chairman and CEO of Israel Bonds is Dani Naveh, a former member of the Israeli cabinet.
The DCI has made great efforts to enable public investment in Israeli bonds, including at the state level. In 2003 and 2004, the DCI successfully lobbied state legislatures in at least four states to allow public pensions to invest in foreign bonds. In 2008, Florida followed suit.
In 2023 and 2024, the human rights organization DAWN wrote to the DOJ requesting that its FARA unit investigate the DCI for failure to comply with the law.
How did Israel Bonds become part of the anti-woke right-wing agenda? After October 7, Republican-led jurisdictions represented the largest state and municipal investors in Israeli bonds. Among the Republican states that have chosen to invest, most have financial officials active in the State Financial Officers Foundation, a right-wing organization that seeks to end the use of publicly funded socially and environmentally responsible investments. Among other initiatives, SFOF drafted a model bill called the Elimination of Energy Discrimination Act, based on anti-boycott, divestment, and sanctions bills and designed to protect the fossil fuel industry from boycotts.
New York is the only significant exception. In April 2024, DiNapoli spoke in an exclusive Zoom meeting, hosted by Israel Bonds for SFOF. On the call were two conservative SFOF players, including Ohio Treasurer Robert Sprague and Texas Comptroller Glenn Hegar. By speaking out during the Israel bond purchase and speaking at SFOF-related events, DiNapoli aligned himself with Republicans who demonize diversity, equity and inclusion initiatives and socially responsible investing, said David Armiak, a research director and investigative reporter at the Center for Media and Democracy who has followed SFOF for years.
The DCI was quick to take advantage of the absorption of Israeli obligations into the anti-woke agenda. The organization has been a corporate sponsor of SFOF since 2021, although the precise amount paid to SFOF is unknown. Israel Bonds also sought other ways to court these officials, including by create a leadership group from government, industry and financial services, made up of many of the same officials.
By maintaining a relationship with SFOF, DCI and other organizations gain access to officials responsible for managing taxpayer dollars, Armiak said. “Sponsoring SFOF for years and then hosting an event for SFOF members is a clear example of pay to play. »
In 2024, the latest year for which data is available, the New York State Common Retirement Fund (NYSCRF), the public sector pension fund, held at least $300 million in Israeli bonds, making it the state with the largest number of assets in the country, according to the Break the Bonds New York State campaign. other sourcesa fact that outraged local activists. The vast majority of these bonds were purchased during DiNapoli’s tenure. (Although New York holds Israeli sovereign bonds, Israeli bonds constitute approximately 90% of its Israeli debt holdings. According to the JVP and DSA chapters leading the Break the Bonds campaign in New York State, at the end of the 2024-2025 fiscal year, the NYSCRF held approximately $332.5 million in Israeli bonds as well as $35 million in sovereign bonds Israelis.) DiNapoli has long had a close relationship with the DCI and regularly appears at the organization’s meetings. fundraising, including DCI brunches in the Hamptons and to Lavish real estate lunches in New Yorkwhere he hailed Israeli bonds as a “pillar of our investment portfolio” and expressed his desire to invest in what he calls the Middle East’s only democracy.
This advocacy work only accelerated after October 7. At a November 2023 fundraiser where DiNapoli was a featured guest, DiNapoli received a standing ovation and was warmly thanked by Israel Bonds President Dani Naveh. In 2024, he makes his sixth trip to Israel since becoming comptroller.
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Asked to comment on DiNapoli’s dealings with the DCI, Professor Painter said it would be inappropriate for financial officials to engage in conduct that would create the impression that they are closely related to bond sellers, including appearing in promotional materials. In February 2024, the New York State Commission on Ethics and Lobbying in Government wrote a letter to DiNapoli, raising concerns that a sponsored trip to Israel – during which the comptroller was scheduled to meet with Israel Bonds staff members – could give the appearance of inappropriate political influence, according to a recent article published by The interception.
Where have divestment campaigns been successful? JVP and other groups have launched campaigns across the country calling for an end to public investment in all Israeli government debt, including Israeli bonds and sovereign bonds. Campaign victories have already been announced in states across the country, including North Carolina and Maryland. A number of U.S. counties and cities have also chosen to divest or not roll over their holdings of Israeli bonds, including more than a dozen counties in Ohio, according to Jewish Voice for Peace Cleveland.
Significant victories were also won abroad. In November 2024, the Norwegian Sovereign Fund announced that it was withdrawing its entire $500 million in Israeli bonds. The following autumn, after increasing internal pressure, the Central Bank of Ireland stopped approving the sale of Israeli bonds to European Union states, forcing Israel Bonds to ask Luxembourg to do so instead.
Activists in New York and beyond continue to push to end investments in Israeli bonds. “This unethical material support for Israeli apartheid, occupation and genocide must end,” said Dani Noble, senior campaigns organizer for Jewish Voice for Peace. “It’s harmful to Palestinians. It’s harmful to Israelis. And it’s harmful to our communities.”
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Aviva Steel Aviva Stahl is an award-winning investigative journalist whose reporting has appeared in The New York Times, The Guardian, BuzzFeed NewsAnd The Nation. Her current work focuses on how politics and power shape access to health care behind bars. She is also a registered nurse.
