For the first time since Sept. 11, Americans have a chance to do something that millions of us have yearned to do: help win the war on terror.

Millions of people who invest in public pension plans can act to deny upward of $70 billion to nations that finance, train, arm and otherwise sponsor terrorist enemies of the United States. The Center for Security Policy, in a report titled “Terrorist Investment of the 50 States” (www.DivestTerror.org), identifies where much of this money goes and through which companies.

There can be little doubt about the effect of keeping such immense sums out of the hands of the Iranian, Libyan, Syrian, North Korean and Sudanese regimes. They would have less money to fund their terrorist allies, less money to buy or build weapons of mass destruction, less money to threaten U.S. interests and allies. It might even precipitate the sort of cash-flow crisis that ultimately destroyed the Soviet Union – catalyzing regime changes where they would do the most good without firing a shot.

How could American investors help bring about these sorts of desirable outcomes? The same way they helped cause an end two decades ago to apartheid in South Africa – divesting stock where it counted. This time, there are roughly 400 companies that could be targeted for doing business with terrorist-sponsoring regimes. The new report shows that the leading American public pension funds alone have invested about $200 billion in such companies, representing on average 15% to 23% of their respective portfolios. The largest, the California Public Employee Retirement System, has about $18 billion invested in 201 such companies.

In a recent letter to the heads of the top 100 American public pension funds and the state officials responsible for them, Sen. Frank R. Lautenberg (D-N.J.) called the business these firms are doing with state sponsors of terror “unconscionable.”

The good news is that subscribers to American public pension plans and other institutional and private investors have real leverage. They can demand that their money be invested only with companies that choose not to do business with hostile governments – through shareholder resolutions, for instance. Should even one of this country’s large public pension funds divest in this fashion, an unmistakable signal would be sent to companies the world over: You can enjoy the benefits of being highly regarded in the American capital market or you can do business with those who sponsor our terrorist foes.

The bad news is that so far almost none of the 87 public pension systems in the center’s study appears to be even interested in acquiring data about which companies in their portfolios have business activities in these rogue states. Worst of all, those with fiduciary responsibility for these funds continue investing heavily in companies partnered with governments helping U.S. enemies.

This situation should be intolerable to all Americans. Correcting it clearly should be part of a comprehensive strategy for winning the war on terror. Investors must do their part.

To read an analysis of the Divest Terror campaign from Thursday’s Washington Times click here.

Frank Gaffney, Jr.
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