Divest Terror breakthrough? Or a bait-and switch?

Since August 2004, public pension funds across the United States have, with few exceptions, steadfastly refused to participate in an effort to deny terrorist-sponsoring states the wherewithal such regimes use to support attacks on Americans, here and abroad.   In fact, since the Center for Security Policy first unveiled its Divest Terror initiative in that month with the publication of its landmark report The Terror Investments of the Fifty States, a number of these funds have: gone to considerable lengths to attack the Center and its allies in this fight; worked tirelessly to defeat legislation aimed at taking state and local pension funds’ portfolios terror-free; and otherwise striven to insulate this country’s enemies from any financial pressure that legislators, pension fund beneficiaries or taxpayer-underwriters might try to impose.

A Sea-Change?

It is against this historical backdrop that indications of a sea-change in public pension fund attitudes must be viewed.  For example, yesterday’s Wall Street Journal featured an article entitled, "Pension Funds Weigh in on Iran."  A similar article appeared in today’s New York Times. Both describe a new "coalition of large public funds" that, as the Journal put it, "has begun pressuring companies to reconsider their ties" to Iran.  

The Times report describes a letter recently sent by a coalition of funds to the following foreign oil companies doing business in Iran: Royal Dutch Shell, Total of France, Repsol of Spain, Eni of Italy, Gazprom of Russia, the China National Petroleum Corporation, the Oil and Natural Gas Corporation of India and Inpex Corporation of Japan.

As of now, this coalition includes pension funds of California, New York, Illinois and North Carolina.  Collectively, the Journal notes that the coalition controls "$570 billion in assets – or nearly a fifth of all public pension fund assets nationwide – including $3.7 billion invested in energy companies doing business in Iran."

No Accident, Comrade

The latter statistic is particularly noteworthy because, as the Journal makes clear, the funds in this coalition are explicitly responding to pressure from the Divest Terror movement at the state level: "In what has become a popular issue for lawmakers, more than a dozen state legislatures have passed laws or are working on measures that could compel public pension funds to divest holdings in companies doing business in Iran."  

In a number of cases, these legislative initiatives have been narrowly defined, focusing exclusively on the Iranian energy sector’s foreign corporate enablers.  In other states, though, lawmakers have taken up true terror-free investing legislation – namely, bills that would bar pension fund investments in all but humanitarian activity in Iran and in three other officially designated state-sponsors of terror: Sudan, North Korea and Syria.

Given the past, aggressive hostility of big pension fund systems like the California Public Employee System (CalPERS) and Illinois State Teachers Retirement System (ISTRS) to the idea that their funds could be used as leverage to help defeat our terrorist foes, the question occurs: Is their new coalition’s apparent "conversion" the welcome development it would appear to be?  Or is it merely a deflection, a cynical ploy designed to relieve the rising tide of popular and legislative demands for such action?

How to Tell if It’s the Real Deal

Fortunately, financial security initiatives like terror-free investing lend themselves to quantification.  If the pension fund coalition is an authentic effort on the part of that community to help win the War for the Free World, their efforts will involve the following:  

• The coalition should actively seek to include every major public pension fund in this country.  After all, when a similar effort was mounted against the apartheid regime in South Africa two decades ago, nearly two-hundred public pension funds participated in that campaign.  Odious as that racist regime was, it was not seeking to kill Americans or destroy this country.  Since the same cannot be said of Iran and its fellow terrorist-sponsoring regimes, the least we can expect is the full participation of the public pension funds in an effort akin to the South African divestment initiative.

  In this connection, a website should be established that shows the public which of their pension funds are " signing up " to security-minded shareholder activism and which continue to stonewall this initiative (i.e., as determined by their absence from the "membership list").

• The coalition should demonstrate its seriousness of purpose by eschewing the limited approach involved in focusing on just eight companies doing business in Iran’s energy sector.  There are hundreds of companies providing legitimacy, material assistance and financial life-support to the odious regime in Tehran and scores more helping its fellow state-sponsors of terror and strategic allies in Khartoum, Damascus and Pyongyang.  They should each be put on notice: You can do business with America’s public pension funds or with those trying to kill our countrymen and destroy our way of life – but not both.
• Those publicly traded companies that are induced by the coalition to cease doing business with our enemies should be listed on the coalition’s website, both to recognize publicly that fact and to demonstrate that the pension funds’ effort is achieving concrete results.
• The coalition’s communications with companies held in their respective portfolios should be transparent and posted on its website so that the nation’s public employees and other investors can judge the seriousness of this effort on the part of the pension funds as well as empirically evaluate the results.

• Coalition members should cease immediately and publicly disavow their historic opposition to their respective state’s legislative initiatives to rid their portfolios of firms offering material life-support to these odious regimes.
• The coalition should develop and publish on its website a timetable or clearly defined process for this security-minded shareholder initiative – including specific milestones – so that targeted companies can anticipate with certainty the consequences (i.e., actual divestment) if they fail to comply with this process.  These timelines should be relatively short given the peril created by a nuclear Iran, continued Sudanese genocide, etc.

The Bottom Line

The Center for Security Policy and like-minded Americans across this country will be extremely gratified if the effect of their efforts to promote terror-free investing translate, in fact, to behavior-modification on the part of publicly traded companies that are currently doing business with – and thereby enabling – state-sponsors of terror.  Such a change can deny the regimes in question cash-flow they currently use to underwrite behavior that threatens this country, its interests and/or other freedom-loving peoples.

This necessary step to our success in the war for the Free World must not be diminished, let alone undermined, by false efforts – designed not to advance terror-free investing and its potential contribution to enhanced U.S. security but to dissipate the pressure for the financial sector to do its part.  

Debra Burlingame, the remarkable sister of Capt. ‘Chic’ Burlingame, whose aircraft was hijacked and flown into the Pentagon on 11 September 2001, observed at a Center for Security Policy press conference on the Divest Terror initiative last March: "The U.S. financial community was the first to be targeted by the perpetrators of the 9/11 attacks.  It is time for Wall Street to do its part to help win the war."  The American people will neither forget nor forgive the public pension funds if their current, apparent willingness to enlist in that fight proves to be a subterfuge.