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Minnesota Won't Dump Pension-Fund Holdings In Israeli Bonds

ST. PAUL, Minn. (AP) — Top Minnesota leaders declined Wednesday to shy from pension-fund investments in Israeli bonds despite persistent and passionate appeals from a group that argues the state is improperly taking sides in the Israeli-Palestinian dispute.

The State Board of Investment — made up of four statewide elected officials — voted 3-1 to allow portfolio managers to continue buying high-yield Israeli bonds after a previous purchase expires later this year. The board and state investment officials have been under pressure from the Minnesota Break the Bonds Campaign to dump the investments.

"This is obviously a very public and a very hypersensitive issue with strong feelings on both sides here and elsewhere," Gov. Mark Dayton said as he presented the resolution, defending it as providing needed guidance to those in charge of Minnesota's $80 billion portfolio. "I don't think it is appropriate for us as a board to duck this decision and foist it onto the professional staff."

Minnesota has been buying Israeli bonds since 1993, a decision Dayton helped steer while state auditor and still considers steady and reliable investments.

State chief investment officer Mansco Perry said the current 10-year bond due to mature this summer has a 2.4 percent yield compared to the 1.5 percent benchmark for treasury bills. Perry didn't disclose the size of the state's holding in those bonds and didn't return follow-up phone calls.

Dayton was joined in support of the measure by Attorney General Lori Swanson and Secretary of State Steve Simon. State Auditor Rebecca Otto was the lone dissenter, expressing reservations about wading into the dispute at all.

"We do not make investments based on international policy. That is not our job. It's not our role," Otto said. "Although there are horrible things happening in the world, SBI is not the place to solve them."

The four board members are all Democrats.

Members of Break the Bonds Campaign, a group of pro-Palestinian activists, frequently pack the board's quarterly meetings and hold signs bearing images of alleged abuses against Palestinians. On Wednesday, they brought in former Democratic Sen. James Abourezk of South Dakota, a founder of the American-Arab Anti-Discrimination Committee.

"I think it's a shame that the great state of Minnesota would invest in funds that help a cause that is similar to colonialism being waged by Israel," Abourzek said.

Steve Hunegs, executive director of the Jewish Community Relations Council of Minnesota and the Dakotas, urged board members to reaffirm the investments.

"Israel has an unblemished record for meeting its bond obligations," he said.

(© Copyright 2015 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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