The advocacy group Democracy for the Arab World Now (Dawn) has warned New York State lawmakers and officials that it is prepared to mount a legal challenge to prevent the purchase of Israel bonds.
“Our city and state public officials should ensure that there are no further investments in Israel Bonds because such investments breach their international legal obligations not to aid and abet Israeli crimes and their fiduciary duties to taxpayers,” Sarah Leah Whitson, Dawn’s executive director, said in a statement shared with Middle East Eye on Friday.
“For too long, our public officials have prioritized politically expedient support for Israel, using taxpayer money to finance Israel’s brutal war machine, ignoring the clear financial, ethical and legal harms to our citizens,” she added.
Both New York State and New York City have purchased Israel bonds. The New York State Common Retirement Fund is one of the top US investors in Israeli debt, with over $352m invested as of March 2024, Dawn said. Palm Beach County, Florida, is the largest holder.
Israel Bonds is affiliated with Israel’s finance ministry and sells them inside the US to both retail and institutional investors.
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The starting price for non-tradable, retail Israel bonds is as low as $36. Ten-year, dollar-denominated Israel bonds, which require a minimum investment of $25,000 and are geared toward institutional investors like pension funds, have a current yield of around 5.2 percent.
The issue of Israel bonds has garnered new attention because of a potential showdown over their place in New York City’s portfolio.
The city divested its holdings of Israeli bonds in 2024, but its comptroller, Mark Levine, said in January he plans to restart purchases.
Mayor Zohran Mamdani has publicly backed divestment from Israel over its conduct in Israel’s war on Gaza.
Dawn said it sent a letter to New York Governor Kathy Hochul, State attorney general Letitia James, and Mamdani, along with the city and state’s respective comptrollers, demanding they stop any new purchases, roll-overs, or subscriptions for Israel Bonds.
Dawn wants the city and state to “publish a policy prohibiting further purchases of Israeli state securities until Israel ends its unlawful occupation, apartheid rule and ongoing genocide”, adding that it is “prepared to support litigation in appropriate forums” if its demands are not met.
Israeli government bonds function as direct loans to the state, providing steady interest payments to investors while channelling cash straight into government coffers.
Critics argue that such financing underwrites Israel’s system of apartheid, the expansion of illegal settlements, the forced displacement of Palestinians and the killing of civilians in Gaza and the occupied West Bank.
“Investments in Israeli state securities, including Israel Bonds, effectively allocate public funds to sustain criminal acts,” Alex Smith, a Dawn legal advisor, said in the statement shared with MEE.
“New York officials continuing to make such investments in the face of overwhelming evidence of the war crimes and crimes against humanity they support may face personal civil and criminal liability for aiding and abetting those crimes,” Smith added.
Israeli Prime Minister Benjamin Netanyahu has an outstanding arrest warrant with the International Criminal Court. The United Nations said in September 2025 that Israel’s war on Gaza was a genocide. To date, over 71,500 Palestinians have been killed in the enclave.
Israel has also been condemned by the UN for its illegal occupation of the West Bank and East Jerusalem.
Growing opposition
Dawn appeared to lay out the basis for a potential legal challenge in its statement, arguing that investments in Israel bonds are not economically sound and could subject state and city taxpayers to “reputational harm”.
“Continued investment in instruments that present quantifiable legal, financial, and reputational exposure (such as Israel Bonds) raises a credible risk of breach of fiduciary duty and attendant litigation liability,” Dawn said.
Dawn also said that “International and domestic” laws stipulate that “contributions to internationally wrongful acts may trigger secondary liability, even where the assisting party does not directly participate in military operations… Israel Bonds investments therefore pose not only fiduciary and ethical risks, but also substantial legal exposure under US aiding-and-abetting law”.
Mamdani is not the only US politician to raise the issue.
On the other side of the political aisle, James Fishback, a former hedge fund manager running in the Republican primary for Florida governor, recently argued in an interview with podcast host Tucker Carlson that the financial return on Israel bonds does not justify their geopolitical risk.
Mamdani ran a campaign focused extensively on New York City’s cost-of-living crisis, but also vocally condemned Israeli atrocities in Gaza and the occupied West Bank.
One of his first acts after taking office on 1 January was to revoke an executive order issued by his predecessor, Eric Adams, that had barred city agencies from boycotting or divesting from Israel.
The city’s new comptroller, Mark Levine, has acknowledged personal ties to Israel but claims that they are financially sound. However, Moody’s credit agency said that Israeli bonds are becoming an “increasingly risky investment”.
MEE contacted the New York City mayor’s office and the office of the comptroller for comment on this article, but did not receive a reply by the time of publication.