A leading constitutional rights attorney calls the action "21st century McCarthyism."
The Democratic governor expects state agencies to divest all public funds from any company or individual with ties to the movement known as Boycott, Divestment and Sanctions.
BDS was founded in 2005 to protest Israel's actions toward Palestinians by boycotting Israeli products and companies.
Cuomo says New York will boycott anyone who is boycotting Israel.
"This order sends the message that this state will do everything in its power to end this hateful, intolerant campaign," the governor said yesterday. "New York and Israel share an unbreakable bond and I pray that the Israeli and Palestinian people will find a way to live side by side and find peace, prosperity and security."
Based on the governor's action, state officials must now compile a list of businesses and groups engaged in any "boycott, divestment or sanctions targeting Israel, directly or through a parent or subsidiary."
The list will be assembled using "credible information available to the public," according to the order, and those who end up on the list may appeal.
Baher Azmy, the legal director of the New York-based nonprofit Center for Constitutional Rights, said that with the executive order, Cuomo bypassed the state legislature and what Azmy called "the possibility of a bona fide debate on the American tradition of boycotting in support of social justice."
"Cuomo's action has the ugliest attributes of McCarthyism: identifying organisations that engage in speech we dislike and, 'Let's blacklist them,'" said Azmy.
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