Progress for terror-free investment index
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| Developments in Louisiana are bringing Americans one step closer to total terror-free investment. |
The bill, written by State Representative Pete Schneider and designated HB 864, passed resoundingly in both chambers of the legislature in the House of Representatives by a floor vote of 100-0, and the Senate by a tally of 35-0.
There are two reasons why HB 864 is of national significance. First, it will result in the establishment of a terror-free investment index for international investments. Once this index is established it will become available to public, institutional and perhaps even individual investors across America. This removes the biggest obstacle to terror-free investing in the 3 years of Divest Terror’s existence.
[More]Second, and in a sharp contrast to other states, the Louisiana pension systems took an active role drafting and supporting HB 864. The most noteworthy help came from the Louisiana Sheriffs Pension and Relief Fund and the Louisiana Firefighters Pension Fund. Both objected to their retirement funds being invested in terror-sponsoring states, and cast their lot with the Divest Terror program.
A Primer on Index Investing
Index investing is one of the most popular forms of investing in the US among individual and institutional investors. Literally tens of millions of Americans invest in different vehicles that are designed to track various indexes, in the form of Index Mutual Funds and Exchange Traded Funds (ETFs).
The most widely watched index, S&P 500, covers US companies and thus is not directly relevant to terror-free investing, since US companies are forbidden from doing business directly in Iran, Syria, Sudan and North Korea.
Foreign companies are not subject to the jurisdiction of US restrictions on business with terror nations. For that reason, the relevant index for terror-free investing is the EAFE Index, an index of European, Australian and Far East Companies that is popular for international index funds and ETFs.
The EAFE Index may be a convenient way for individual, institutional and public investors to invest internationally, but it has also proven an obstacle to terror-free investing and divestment from terrorist regimes because there is no way to simply divest a portion of an index b it’s all or nothing. Until an entire index goes terror-free, any attempts to wield them as Divest Terror tools will be only ineffective half-measures.
Progress, At Last
For some time now, Wall Street firms have averred that a terror-free international index can be created, but no entity has specifically requested that one be created.
HB 864 in Louisiana changes that. It will result in the creation of a terror-free index available to public, institutional, and individual investors across America. The bill mandates that fund managers with international experience create “an international terror- free index fund which identifies and excludes from the fund companies having facilities or employees or both in a prohibited nation.” The “prohibited nations” are Iran, Sudan, Syria and North Korea, each from the US State Department’s official list of terrorist sponsoring nations. The creation of this index must take place within 180 days of the bill’s passage, and it must replace the excised stock with those of equal value.
The Center for Security Policy cannot overemphasize the importance of this precedent and the attractiveness of this legislation as a model. Whereas some states have announced that they intend to divest from companies doing significant business in Iran’s energy sector, when a pension system shifts from its current international index to a terror-free index, many more companies that do business in Iran – and Syria, Sudan and North Korea will get left out, and we will be that much closer to victory in the War for the Free World.
Mr. Gaffney is the host of Secure Freedom Radio, a nationally-syndicated radio program heard weeknights throughout the country. He is an associate author of highly acclaimed Shariah: The Threat to America and the publisher of over a dozen other books and monographs from the Center for Security Policy Press.
In April 1987, Mr. Gaffney was nominated by President Reagan to become the Assistant Secretary of Defense for International Security Policy, the senior position in the Defense Department with responsibility for policies involving U.S.-USSR relations, nuclear forces, arms control, missile defense policy and U.S.-European defense ties. He acted in that capacity for seven months during which time, he was the Chairman of the prestigious High Level Group, NATO’s senior politico-military committee. He also represented the Secretary of Defense in key U.S.-Soviet negotiations and ministerial meetings.
From August 1983 until November 1987, Mr. Gaffney was the Deputy Assistant Secretary of Defense for Nuclear Forces and Arms Control Policy under Assistant Secretary Richard Perle.
From February 1981 to August 1983, Mr. Gaffney was a Professional Staff Member on the Senate Armed Services Committee, chaired by the late Senator John Tower (R-Texas). And, in the latter 1970’s, Mr. Gaffney served as an aide to the late Senator Henry M. “Scoop” Jackson (D-Washington) in the areas of defense and foreign policy.
Mr. Gaffney holds a Master of Arts degree in International Studies from the Johns Hopkins University School of Advanced International Studies and a Bachelor of Science in Foreign Service from the Georgetown University School of Foreign Service.
Mr. Gaffney’s leadership has been recognized by numerous organizations including: the Department of Defense Distinguished Public Service Award (1987), the U.S. Business and Industry Council’s Defender of the National Interest Award (1994), the Navy League of the United States’ Alfred Thayer Mahan Literary Achievement Award (1999), and the Zionist Organization of America’s “Louis Brandeis Award” (2003), the Western Conservative Summit’s Stephen H. Long Award (2015), the Council for National Policy’s George Washington Military Leadership Award (2016) and the IMPACT Award from Ginni Thomas and United in Purpose (2017).
Mr. Gaffney was born in 1953 and resides in the Washington, D.C. area.
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