Sanctions would likely require a law change, but there’s another path the government could consider if it chooses to take a tougher line.

The decision by Israel’s parliament to designate the United Nations’ Palestinian relief agency UNRWA a “terrorist organisation” has been condemned by many governments, with claims it will create a “catastrophe in what is already an unmitigated disaster”.

This came three months after the International Court of Justice’s landmark advisory opinion in July declaring Israel’s presence in the Occupied Palestinian Territory unlawful. All states now have a legal obligation to ensure they are not assisting Israel to continue its unlawful occupation.

But with the reelection of Donald Trump as US president, how the international community will respond to breaches of international law becomes even less clear.

New Zealand has criticised the United Nations Security Council for its failure to resolve the crisis, and has backed calls in the UN General Assembly for humanitarian ceasefires in Gaza.

But some, including the Green Party, have called for the government to take tougher measures against Israel, including divestment and sanctions. If the government were to consider such a path, then, what would its options be?

The Russian invasion of Ukraine provides the most obvious precedent. The Russia Sanctions Act (the first law of its kind in New Zealand) was passed in 2022, covering travel, trade and assets associated with the Russian and Belarusian governments. Stronger action against Israel would likely require something similar.

Divestment, on the other hand, could happen without any law changes. The guardians of the Superannuation Fund, for example, could review their portfolio and decide to divest, and technically would not need to consult the finance minister.

NZ’s Israel investments

New Zealand has investments in Israeli companies and government bonds. The latest portfolio disclosure from the Super Fund (which is a crown entity) shows investments in five Israeli software and IT companies totalling NZ$29,510,559.

The Super Fund also has $5,996,326 invested in “Israeli sovereign bonds”, according to an Official Information Act response I received from finance minister Nicola Willis.

These investments arguably breach section 61(d) of the Superannuation and Retirement Income Act which requires “ethical investment”. They may also go against the Super Fund’s sustainable investment framework, which guides investments and “protects the reputation of the Fund”.

The framework states the fund may take account of international law and “the severity of the breach of standards” when making investment decisions. It also says the fund will exclude investment in the government bonds of any state where:

• there is widespread condemnation or sanctions by the international community
• and New Zealand has imposed meaningful diplomatic, economic or military sanctions aimed at that government.

The first requirement of “widespread condemnation” appears to have been met: 124 states (including NZ) voted in the UN General Assembly in September to call for an end to Israel’s unlawful occupation of East Jerusalem and the rest of the Occupied Palestinian Territory.

The second requirement is more difficult to satisfy because New Zealand has not yet “imposed meaningful diplomatic, economic or military sanctions” on Israel.

Ministerial direction

As Willis has made clear, the Super Fund is an autonomous crown entity with its own responsible investment policy.

However, if the fund is perceived not to be investing ethically or in accordance with the sustainable investment framework, the minister could take action.

Under section 64 of the act, the minister could issue a non-binding ministerial direction to the fund’s guardians directing them to consider divesting from sovereign bonds to avoid “prejudice to New Zealand’s reputation as a responsible member of the world community”.

The minister could also send an “enduring letter of expectation” setting out what responsible and ethical investment might look like. This has happened before, most recently in 2021 when the Labour government required Crown Financial Institutions to seek “zero carbon investment portfolios” by 2050.

The fund’s guardians might also strengthen the fund’s sustainable investment framework by making its language more emphatic. For example, by stating the fund “shall” – rather than “may” – take account of international law and “the severity of the breach of standards” by another state.

Calls for sanctions

Meanwhile, the humanitarian situation in Gaza and now Lebanon has become even more dire, with Israel accused of further violations of international law, including using civilians as human shields and targeting UN peacekeepers in Lebanon.

Internationally, calls for economic sanctions and divestment have been increasing, including from some Israeli citizens, as well as from the leaders of Spain and Ireland, and the European Union’s top foreign affairs and security diplomat.

New Zealand can impose sanctions, if they have been imposed by the UN Security Council, through regulations permitted by the United Nations Act 1946. But this is highly unlikely in the case of Israel, given the US power of veto.

‘Like a thousand-piece jigsaw puzzle, each member is vital to the whole picture. Join today.’

Calum Henderson
— Production editor

Donate today

Without UN sanctions, New Zealand would require a specific law similar to the Russia Sanctions Act. Or it could use the current crisis to create an “autonomous sanctions” regime that would allow it to impose sanctions unilaterally.

This was recommended by an independent advisory group in May 2023, after an autonomous sanctions bill was proposed but defeated in 2021. This puts New Zealand out of step with its Five Eyes intelligence network allies, which all have autonomous sanctions legislation.

In the absence of a meaningful ceasefire, divestment would be the possible next resort should the government choose to take a tougher line.

This article is republished from The Conversation under a Creative Commons licence. Read the original article.

Price hikes, disappearing products and sourcing struggles – could this be the new normal for the chocolate industry?

Last week, Whittaker’s announced its chocolate was changing. Its cacao will no longer be sourced exclusively from Ghana, with the global cocoa shortage forcing the company to get the key ingredient from “several” other African countries. Whittaker’s promised consumers wouldn’t notice any change in taste, but on the back of a series of disconcerting choc-related headlines this year, it’s a bit of a worry.

On top of this, another unsettling incident: at a North Shore Pak’nSave last week, a shopper was looking for chocolate chip brioche buns, a lunchbox staple for her fussy teens, but they were nowhere to be seen. When she asked a staff member, she was told they were no longer being baked, because chocolate prices had risen too high. When The Spinoff asked for more info, a Foodstuffs spokesperson said that individual stores made their own decisions, but there hadn’t been any “widespread impacts on bakery items that contain chocolate or cocoa”.  A quick search on the Pak’nSave website, however, shows chocolate chip brioche buns appear to be out of stock pretty much everywhere. 

Are these signs of a coming chocmageddon, or is this just the new normal? Here’s what you need to know. 

Why have cocoa prices skyrocketed?

For decades, humans around the world have been enjoying the rich velvety treat that is chocolate, picking up bars (or buns) of the good stuff for a couple of bucks. This is because the cost and supply of cocoa had remained relatively stable, so chocolate has been an accessible luxury. But now, a shift is occurring. The cocoa trees in West Africa, especially Ivory Coast and Ghana, which are estimated to provide 50-70% of the global cocoa supply, are having a hard time. They’re producing less because they’re ageing, and because they’ve been hit with black pod disease and irregular rainfall. Because their production has plummeted, there’s a global shortage of cocoa beans, which is driving prices up.

As well as these tangible pressures on the cocoa supply, market dynamics have been influenced by speculative investors. Prominent figures including hedge-fund managers known for oil trading have entered the cocoa market looking for profit. The influx of speculative investment has contributed to a dramatic increase in cocoa prices.

The price of cocoa reached an all-time high in April – they “shattered the calm of their previous trading range”, said research analyst Paul Joules. According to his report, which was released by agribusiness banking specialist Rabobank in September, prices hit the highest levels in nearly 50 years, nearly USD$12,000 per metric ton, in the first half of 2024. The report declared a “cocoa crisis”.

There’s a lag between the price of cocoa at the manufacturing level and the price we pay for our chocolate at the till, so while we’ve already seen some price increases and changes (RIP buns), it’s expected that more are on the way. Stats NZ data shows the price of a 250g block of chocolate this September was 20% higher than September last year.

Perhaps the price is right

New Zealand chocolate expert Luke Owen Smith looks at the so-called crisis from another angle. “The price of beans has always been too low,” he says. “That’s made it very difficult for cocoa farmers to make a decent living.” Issues with modern slavery and illegal child labour in the chocolate supply chain have been widely reported, particularly in the Ivory Coast and Ghana. Owen Smith doesn’t think the price of cocoa beans needs to go back down, instead saying “we need everyone to realise that cheap chocolate is made possible by a deeply unfair and unsustainable system”.

Owen Smith is an involved advocate in the world of bean-to-bar and craft chocolate. He says that craft chocolate makers have had a headstart in navigating the changed price of cocoa, as “New Zealand’s best makers pay well above the commodity (or even Fairtrade) price for their beans.” This is because they value quality over quantity (and hopefully the people producing their ingredients), because they’re creating chocolate designed to be savoured like fine wine.

In previous pieces of writing, Owen Smith has argued that price increases on chocolate bring it more in line with equivalent affordable luxuries, like wine or olive oil. It may be outside some budgets, but it reflects the product and the labour that goes into making it. “It’s time to rethink the system and accept that chocolate should cost a lot more than what we’re used to,” he says.

In September analyst Paul Joules said, “it does look like we’re in a higher-for-longer price environment”. It’s likely that prices won’t be the only thing to change. Chocolate manufacturers are likely to adopt strategies like shrinkflation – reducing package sizes while maintaining prices, and skimpflation – altering recipes to use less cocoa and more fillers. Or, if Owen Smith gets his way, chocolate consumers will instead treat chocolate like the luxury it is, buying ethical chocolate as a special treat, instead of wolfing down cheap nasty stuff.