By Asaf Elia-Shalev
PALM BEACH, Fla. (JTA) — Joseph Abruzzo, who is not Jewish, can’t seem to get enough Israel Bonds.
The government official representing Palm Beach County, Fla. has invested $700 million of local taxpayer money in bonds that are helping the Israeli government finance its war against Hamas since Oct. 7.
At 15% of the county’s investment portfolio, Abruzzo has reached the maximum he is legally allowed to buy, per county policy.
The total represents about a quarter of all Israel Bonds sold since the war began, making Palm Beach County, which has a large Jewish population, the single biggest holder of Israel Bonds in the world.
“I am proud to stand with what I consider our greatest ally in the entire world — Israel,” Abruzzo said in an interview. “With that said, these are incredibly safe investments. They’re making an incredible return for county taxpayers and it made perfect sense for us from a fiduciary standpoint.”
Abruzzo echoes the reasoning of the growing number of state and local governments across the US that have invested in the bonds in recent months.
The Israel Bonds organization, an arm of the Israeli government, announced earlier this month that it has sold more than $3 billion in bonds since Oct. 7, nearly three times its normal annual total, as the country navigates economic turmoil from the war.
The buyers include individuals and financial institutions, but most of the sum, $1.7 billion, was purchased on behalf of taxpayers by government investment officers like Abruzzo.
At a time when anti-Israel protesters on college campuses are calling for their schools to divest from Israel, the Bonds represent a massive swath of Israel investments.
Experts say the trend of public spending on Israel Bonds is notable because state and local governments can’t take the same risks as ordinary investors. Governments have to be more careful because the money they are investing was collected from taxpayers and it must eventually be available to be spent on public needs, explained Daniel Bergstresser, a Brandeis University professor specializing in municipal finance.
“So investing these funds in safe assets is a very high priority,” Bergstresser said. “The bills must be paid.”
“There are very few sovereign entities that are triple-A rated and can be considered truly risk free the way that US Treasury bonds can,” said Justin Marlowe, director of the University of Chicago Harris School of Public Policy’s Center for Municipal Finance.
Not all states allow local cities and counties to invest abroad. Florida passed a law to permit local Israel Bond investments in 2008.
In total, 35 state and local governments invested in the Bonds after Oct. 7, including Florida, New York, Alabama, Arizona, Ohio, Illinois, Texas, Oklahoma, Georgia, Nevada, Louisiana, South Carolina, Pennsylvania and Indiana as well as the Florida counties of Broward, Palm Beach and Miami-Dade, the cities of Miami Beach and Boca Raton, and Franklin County, Ohio.
The trend cuts across party lines.
“This is a bipartisan effort. I’m a Republican, but we’ve got a great Treasurer in Franklin County’s Cheryl Brooks Sullivan and she’s a Democrat,” said Ohio state treasurer Robert Sprague in a recent virtual meeting of government investors convened by Israel Bonds, according to the Bond Buyer.
People living in Jewish households make up about 15-20% of Palm Beach County, according to Brandeis University demographic studies in 2018.
Abruzzo, a Democrat, began investing in Israel Bonds long before the current war. During his first year in office in Palm Beach, he convinced the Board of County Commissioners to double how much he was allowed to invest in Israel Bonds from 5% to 10% of the county’s portfolio. But at the time, there were only so many Bonds on the market and he couldn’t reach anywhere near the cap.
As Israel went to war and saw its economy contract, the government decided to offer more bonds.
“Fast forward to Oct. 7 and a day or two after that horrific event, I was able to speak with [local Israel Bonds representative] Mark Ruben and we purchased $25 million in Bonds,” Abruzzo said.
“We got very good rates and were excited about it. We then did the largest single-day purchase, which was $135 million.”
But even that wasn’t enough.
In March, he asked the county board to increase the cap again. In making his case, he pointed out that the county is set to earn $83 million in interest on the Bonds, part of what official data shows is dramatically higher performance for the county’s financial portfolio since he took office in 2021.
The board voted unanimously to increase his cap to 15%, which comes out to about $700 million of the $4.7 billion in county coffers.
Bergstresser, of Brandeis University, said he believes the investment strategy is unusual to the point of being possibly unwise.
“Such a large allocation to one foreign issuer is arguably inconsistent with standard advice about portfolio diversification, particularly when avoiding severe losses is as high of a priority as it is in this situation,” Bergstresser said.
Abruzzo is up for reelection in November, but with less than two months until the filing deadline, no one else has declared their candidacy.
Abruzzo said political calculations are not behind his Israel Bonds investments.
“Every decision was dollars and cents, and financial safety,” he said. “This has nothing to do about an election or personal motives. It was not done for political gain.”
But he did weigh in on a political debate roiling the US and deepening divides within his party over Israel’s war with Hamas in Gaza.
“A lot has been said about Israel, especially in the far-left circles of my party, but if what happened in Israel on Oct. 7 happened here in America, the country that was harboring the terrorists would look like the moon’s surface,” Abruzzo said.
In total, Israel’s borrowing, including Israel Bonds and other financial vehicles, doubled in 2023 to $43 billion. Meanwhile, billions in charitable donations have also flowed in to support Israeli civilians and soldiers.
Despite Israel’s credit downgrades, Israel Bonds president and CEO Dani Naveh said prospective buyers have not expressed such concerns to him. He said they should rest assured that Israel has never defaulted on its Bonds, despite past military crises and regardless of who was in power.
“The state has always kept its obligation, paying its debts completely on time,” Nave said in an interview. “It’s also important to mention that if you take a look at previous security crises, the Israeli economy’s resilience was very strong and I’m optimistic that it will be the case this time as well.”
