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LEONORA LaPETERState officials say the bonds make fiscal sense, but it means putting public funds at the center of a polarizing conflict.
ST. PETERSBURG - Some 300 people gathered at the Renaissance Vinoy Resort last March as Attorney General Charlie Crist, Mayor Rick Baker and business leaders toasted Jimmy Aviram as businessman of the year.
Between the kind words and the cauliflower and sun-dried tomato crusted salmon, an Israeli Embassy official stepped to the podium and talked about terrorism and suicide bombings against Israel.
An Israel bond sales representative encouraged guests to fill out cards at their plates to purchase $1-million in bonds, an investment in the country that would also net a financial return. Bank reps were on hand to provide financing.
For more than 50 years, the Development Corporation for Israel has pitched that country's bonds at thousands of dinners like these, drawing millions upon billions of U.S. dollars for roads, rail lines, airports, shipping, immigrant absorption and desalinization plants in Israel.
Florida is one of the biggest investors in the bonds. The state pension fund owns some $108-million of them, and the state treasury has $25-million invested. Gov. Jeb Bush personally owns $13,000 of them.
Critics question whether states that represent hundreds of thousands of state and local government workers should be investing public money in a country at the center of one of the world's most polarizing military conflicts.
What if you don't agree with Israel's actions in its conflict with the Palestinians?
The Israel bonds company says the money goes for infrastructure only; not a shekel goes to the military or for the armed conflict. It is written so in Israeli law.
As the Aviram dinner shows, the company's hard-sell pitch produces results. After the videos of family and friends in Israel and the presentation of a framed Israel independence plaque to Aviram, the dinner's net rolled in.
At least three people bought $1-million each. Other guests pledged a combined $2-million. And state Chief Financial Officer Tom Gallagher, a last-minute no-show, sent word that the state would commit $5-million.
Total take for the evening: $10-million.
The Development Corporation for Israel began operating in 1951, three years after Israel became a state. The country's first prime minister, David Ben-Gurion, with a fledgling economy on his hands, met with Jewish leaders and devised an international bond program. Not only individuals, but also states and cities, banks and labor unions could invest in Israel's future.
That first year, it sold $52.6-million.
Today, the Development Corporation for Israel sells $1.5-billion a year, most of it in the United States. The corporation is owned by a New York nonprofit company called American Society for Resettlement and Rehabilitation in Israel. It has 21 American offices, each staffed with representatives who ply mostly Jewish residents with dinners honoring their friends and getting them to buy the bonds.
The bonds pay a higher return than U.S. Treasury bonds, but bond experts say most people purchase them primarily to support Israel. Many Jews say they feel good about signing a check over to the state of Israel that is not charity, but a bona fide loan to a country that needs their help.
The company sends all but its expenses - about 2.5 percent of its total take - to Israel. It has three Florida offices, including one in Largo. It's run by Sheryl Weitman, a former audiologist who started as a volunteer and became one of the corporation's registered sellers.
The pitch is simple, hammered home by as many as half a dozen people during a single dinner: Israel has never defaulted on its bonds. It has paid everyone back with interest. The money helps Israel, a country that has flourished in research, technology and industry.
"We generally do try to explain clearly why Israel needs the money," said Raphael Rothstein, a national director and spokesman for Israel bonds headquarters in New York. "It's not like we're selling time-shares and we tie people up all afternoon. We don't do that. But it is a pitch."
A dinner this month at the Tampa International Airport Marriott honoring four families from four Jewish synagogues began with videotaped appearances by the rabbis of all four synagogues; each extolled the virtues of Israel bonds.
Yoram Ettinger, in his seventh stop on a nine-city tour for Israel bonds, told the crowd of 200 that investing in Israel bonds was another form of advancing American interests. A consultant and expert on Middle Eastern affairs from Israel, Ettinger gave as an example the Israeli-designed unmanned aerial vehicle that the United States is using in Iraq.
Weitman described the seven types of bonds available. The bonds pay interest of 2.91 to 5.80 percent, depending on whether the interest is paid twice annually or at the end of 10 years.
She explained that guests of considerable financial means could borrow up to $1-million from at least two local banks, lend it to Israel and simply pay the difference between the bank's interest rate and Israel bonds' interest rate, about a percentage point. This option comes at a loss for the individual, so it's more of a donation to Israel.
Weitman moved among the 21 tables, trying to catch the eyes of her guests, who had paid $75 each to attend, as they filled out their commitment cards.
Several people at the dinner said they're used to the hard sell.
"You know what the entire evening is about," said Dr. Mel Tockman, a cancer research physician at the H. Lee Moffitt Cancer Center and Research Institute in Tampa. "It is both a social event with the intent of helping to support Israel. You are going to get a pitch to buy a bond."
Four days later, Weitman produced a report of how much she sold at the dinner. The total was $1.1-million, adding to the $17-million her Largo office has sold this year.
On Jan. 23, Israeli Finance Minister Benjamin Netanyahu will attend the company's annual kickoff dinner in Boca Raton. Last year's event generated sales of $120-million.
Twenty-four states now own Israel bonds. In the last year, the Development Corporation for Israel persuaded four states to change laws banning the purchase of foreign bonds and sold those states - Louisiana, New Jersey, New Mexico and Indiana - a combined $40-million in bonds.
Florida was among the first states to get into Israel bonds - back in 1988 - and the state is a leading purchaser, said Rothstein, the corporation spokesman.
The state changed its law to allow the retirement system - which now covers 850,000 employees from state workers and schoolteachers to police officers and some city employees - to invest in foreign securities, namely Israel bonds.
Individuals who buy the bonds must pay taxes on the interest, but states do not.
The bonds are not without critics, among them the U.S. Campaign to End the Israeli Occupation, which wants the U.S. government and U.S. companies to cease financial support for Israel.
"Israel bonds are a financial instrument that is issued by the government of Israel, the proceeds of which help fund Israel's general budget," said Josh Ruebner, a Jewish man who is grass roots advocacy coordinator for the organization.
"So the sale of Israel bonds in the U.S. helps Israel come up with the funds to build illegal settlements on Palestinian land and to protect its military occupation of these areas."
What of the Development Corporation for Israel's assertion that the money never goes to the military? Ruebner said it doesn't matter.
"We know that the expenditures Israel makes in the Palestinian occupied territories comes from its general budget, and the proceeds of Israel bonds go to the Israel budget," he said. "It may not be a direct dollar-for-dollar type relationship, but certainly it indirectly provides Israel with the funds it needs to pursue these policies."
Stephen Zunes, a professor of politics at the University of San Francisco who researches U.S.-Israeli relations, said Israel should face added scrutiny due to its large bond campaign in the United States.
"One should make a distinction between what somebody might decide to do, an individual investing money, and getting the state to invest other people's money," Zunes added.
In recent years, the Florida state treasury, a $19-billion fund that is essentially the bank for state agencies, has invested in Israel bonds. The treasury bought $15-million of them in 2001, $5-million in 2002 and $5-million this year. It plans to buy more later this year or early next year, said Gallagher, the state's chief financial officer.
The Israel bonds carry a higher return than U.S. Treasury bonds or corporate bonds, Gallagher said.
The $15-million in Israel bonds the state bought in 2001, for example, provided a return of 6.1 percent at a time when U.S. Treasury bonds returned 4.58 percent; corporate bonds returned 5.7 percent.
Jonathan Schiffer, the lead Israel analyst for the investment rating company Moody's, said Israel's rating is several steps below that of U.S. Treasury bonds, but it is high considering it's in the Middle East. Other countries with the same rating include China, Kuwait, Poland and the United Arab Emirates.
Schiffer said most people who buy the loans have ties to Israel, so they accept a smaller return than other countries with the same rating.
"It gets loans cheaper than it should because it taps a market of people sympathetic to Israel," Schiffer said.
Mark Yaffe, a numismatist from Tampa who has invested enough money in Israel bonds for his two kids' college educations, said it provides his family with an important connection to Israel.
"It's a good investment, but I do it more for my affinity to Israel," Yaffe said. "I could leave the money in my own business and get a better rate of return. You're doing a good deed but also being reimbursed for helping out."
Gallagher said Florida's decision to buy the bonds is made by a team of 23 outside money managers and ultimately approved by him.
"Our investment company doesn't sit down and say, "What if they use this for war?' That doesn't even enter our thinking," he said. "My obligation is to get the best return we can ... and it's a good return for us."
Times researcher Caryn Baird contributed to this report. Leonora LaPeter can be reached at 727 893-8640 or lapeter@sptimes.com