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POLITICS-US: Terror-Free Investments Gain Momentum

Khody Akhavi

WASHINGTON, Apr 4 2007 (IPS) - As the United Nations toughens sanctions on Iran for its failure to suspend its nuclear activities, a growing number of U.S. state lawmakers – and a few Congresspersons – are responding to a grassroots campaign to divest in companies that do business with countries that the State Department considers state sponsors of terrorism.

In the last year, state lawmakers in California, Missouri, Florida and New Jersey have introduced bills that specifically seek to ban investment in Iran’s oil and natural gas infrastructure. The “terror-free” investment movement – spearheaded by the neoconservative think tank Centre for Security Policy (CSP) – aims to force mutual funds, pension funds, and endowments to pull their investments from international companies that do business with Iran.

U.S. companies are already barred from dealing directly with the Iranian government, but a report from CSP, entitled “Terrorism Investments of the 50 States,” claims that, on average, the U.S.’s top 100 pension systems invest between 15 and 23 percent of their portfolio in “companies that do business with terrorist-sponsoring states.” Of these 100, 73 companies are doing business with Iran, according to the same report.

“Terror-free investing is an idea whose time has come,” wrote Frank Gaffney Jr., president of CSP, in an op-ed in the Washington Times.

The precedent for divestment was set in the early 1980s, when human rights advocates launched a campaign to tighten the purse-strings on U.S. investments in South Africa to protest the country’s legally mandated racial segregation, or apartheid.

More recently, divestment measures have been adopted by several states against the government of Sudan in response to the government’s policy of large-scale massacres and displacement of local populations in the Darfur region, where outside observers say 200,000 people have been killed in the last four years.

The irony is that the current “terror-free” investment movement is being championed by some of the same Ronald Reagan-era officials who opposed divestment from South Africa 25 years ago. At the time, the Reagan administration pursued the controversial policy of “constructive engagement” – changing the country’s apartheid system through dialogue with the white minority leadership.

Gaffney, the founder of the ultra-hawkish CSP, temporarily acted as assistant secretary of defence under Reagan before his appointment was blocked by the U.S. Senate. CSP’s advisory council also includes current and former high-level aides in the George W. Bush administration, such as Eliot Abrams and Douglas Feith.

The “Divest Iran” campaign is gaining momentum in part as an alternative for lawmakers weary of a direct military confrontation with Iran. In Congress, Democratic Representative Tom Lantos, who chairs the House Committee on Foreign Affairs, proposed a bill to limit pension fund investment in companies that invest in Iran’s energy industry.

“We are far from having exhausted all diplomatic and economic options for stopping Tehran’s headlong pursuit of nuclear weapons,” said Lantos at a committee hearing last month. “Talk of military intervention is unwise and unsupported by Congress and the American people.”

Florida’s Ilena Ros-Lehtinen, the top Republican on the House Foreign Affairs committee, has also introduced legislation that would require federal pension plans to sell holdings in foreign companies that have put more than 20 million dollars into Iranian energy development, and would prohibit private and public pension funds from future investment with those companies, according to a report from the Congressional Quarterly.

In March, New Jersey lawmakers introduced a bill that would ban state pension funds from investing in international companies doing business with Iran. A recent bill introduced by California State Assemblyman Joel Anderson, a Republican from San Diego, would force two of the nation’s largest pension funds, which includes the state’s Public Employees Retirement System, or CalPERS, to do the same.

In June of last year, Missouri also ordered state employee pension funds to sell shares of companies with economic interests in Iran, North Korea, Syria and Sudan, all countries accused of sponsoring terrorism.

However, Gaffney believes that divestment targeted at Iran’s energy industry falls short of the real goal of strangling Iran’s economy.

“[It] would leave unaffected the roughly 325 mostly foreign-owned and operated companies also helping Iran’s regime build its infrastructure, develop dual-use (that is, military and civilian) industrial capabilities, heavy manufacturing,” he wrote in the Washington Times.

Opponents of the divestment effort argue that, while morally commendable, the campaign could undermine international diplomatic efforts to isolate Iran.

“The companies that would be divested would be European and Asian companies,” said William A Reinsch, president of the National Foreign Trade Council, as quoted in the New York Times. “It sticks a stick in the eye of the very countries we are trying to get to cooperate with us.”

For example, Missouri’s bill prohibits pension funds from owning shares of foreign companies that are rebuilding Iran’s oil infrastructure, including Anglo-Dutch giant Shell, France’s Total, Italy’s ENI, Russia’s Gazprom, Germany’s Siemens and China’s Sinopec and China National Petroleum – countries the U.S. needs in order to apply continued pressure on Tehran.

In February, a federal judge struck down an Illinois law that called for Sudanese divestment, saying it interfered with the federal government’s ability to conduct foreign policy, according to the same report.

The Bush administration has quietly been warning energy companies, as well as the governments of China, India, Pakistan, and Malaysia, that penalties are possible if they pursue energy deals with Iran, but has stopped short of taking action that would divide the U.S. from its allies, according to a March New York Times report.

The divestment effort has also gained attention because of the involvement of pro-Israel interest groups. The “Divest Iran” campaign was one the main messages delivered at the American Israel Public Affairs Committee (AIPAC) convention in Washington last month.

“Divestment against Iran is right because Iran is openly in contravention of international law, preaching the destruction of an entire people,” Likud Party Chairman Benjamin Netanyahu told an audience at the AIPAC convention.

“It is now being in the Sudan and there’s no reason why we shouldn’t join forces with those who want to stop the killings in Darfur and talking about divestment from Sudan. I say fine; divest Sudan, divest Iran. Invest in peace.”

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