Neo-cons drive Iran divestment
campaign By Jim Lobe
WASHINGTON - Neo-conservative hawks who
championed the invasion of Iraq are leading a new
campaign to persuade state and local governments,
as well as other institutional investors, to
"divest" their holdings in foreign companies and
US overseas subsidiaries doing business in Iran.
While stressing that US military action
against Iran's nuclear program should not be taken
off the table, they call their
divestment strategy the
"non-violent tool for countering the Iranian
threat".
And, like the run-up to the Iraq
war, the campaign has attracted bipartisan
support. Democrats, including those who strongly
oppose the George W Bush administration's Iraq
policy, see divestment, as well as other proposed
economic sanctions against Tehran, as a way to
look "tough on Iran" short of going to war.
"I'm not yet ready to suggest the use of
military force ... but one has to stay on alert
that that time could come sooner rather than
later," James Woolsey, who served briefly as
president Bill Clinton's Central Intelligence
Agency director, told an Ohio legislative
committee this week in support of a bill that
would ban investments by that state's pension
funds in companies operating in Iran or in any
other country the State Department lists as a
state sponsor of terrorism.
"Terror-free
investing will not solve the problems ... but I
think it's an important part of the comprehensive
package," said Woolsey, a prominent
neo-conservative associated with the like-minded
Foundation for the Defense of Democracies (FDD).
The new campaign, the brainchild of the
far-right Center for Security Policy (CSP), is
designed to put pressure on the Islamic Republic
to abandon its nuclear program, end its support of
anti-Israel groups such as the Palestinian Hamas
and Lebanon's Hezbollah, and "perhaps even to push
[it] toward collapse", according to FDD president
Clifford May, by depriving Iran of foreign
investment and commercial ties with other
countries.
According to a report released
in Washington on Wednesday by the neo-conservative
American Enterprise Institute, which is
collaborating with the CSP, Iran has signed more
than US$150 billion worth of investment and
commercial contracts with foreign companies based
in more than 30 countries since 2000, including
more than $4 billion with US overseas
subsidiaries.
The initiative, which is
modeled after the anti-apartheid divestment
campaign against South Africa of the 1980s, is
also backed by major pro-Israel and Jewish groups,
including the American Israel Public Affairs
Committee, the American Jewish Committee, the
Anti-Defamation League, and local Jewish Community
Relations Councils whose membership is worried
that Israel will be threatened by a nuclear-armed
Iran.
Potentially at stake are billions of
dollars controlled by state pension funds and
other institutional investors that have invested
money in companies - based mostly in Europe and
Asia - that operate in Iran. According to the CSP,
New York pension funds alone own nearly $1 billion
of stock in three Fortune 500 companies tied to
Iran.
"Iran's ability to fund its nuclear
program and sponsor terrorism would come to a
grinding halt without revenue gained from foreign
investors," according to the CSP, which, along
with the American Enterprise Institute and FDD,
was a leading advocate for the 2003 invasion of
Iraq.
Last year, Missouri became the first
state to order one of its pension funds to divest
its shares of all companies that do business with
Iran and other countries on the State Department's
terror list. Last month, both houses of the
Florida legislature unanimously approved a bill
banning the investment of state funds in companies
with commercial ties to Sudan and Iran's energy
sector.
Iran-related divestment bills are
expected to be approved over the next month by
legislatures in Ohio, Louisiana, Pennsylvania and
California, according to Christopher Holton, the
head of the CSP's Terror-Free Investing Program.
Similar bills are also being considered in the
legislatures of Texas, Georgia, Maryland and New
Jersey and will soon be introduced in Michigan and
Illinois, he said.
The sudden
proliferation of state divestment measures comes
amid renewed efforts in the federal Congress to
tighten and expand the scope of existing
legislation against Iran.
Under the 1996
Iran Sanctions Act (ISA), which, among other
provisions, bans US companies from doing business
in Iran, the president is required to impose a
range of economic sanctions against foreign
companies that invested more than $20 million a
year in Iran's energy sector, which accounts for
about 80% of its foreign-exchange earnings.
The same law, however, permits the
president to waive such penalties if he deems it
in the national interest. Worried that imposing
sanctions would anger key US allies, Bush has
consistently exercised his waiver authority, as
his predecessor, Bill Clinton, did before him.
But as tensions with Iran have increased
since the election of President Mahmud Ahmadinejad
nearly two years ago, pressure to take stronger
action has grown, especially from neo-conservative
groups and the hawkish leadership of the so-called
Israel Lobby, which includes the Christian Right.
Congress is considering several bills
that, if passed, would reduce or eliminate the
president's waiver authority and include language
encouraging divestment drives at the state level.
The administration, which is at least
rhetorically committed to working through the
United Nations Security Council to impose
multilateral sanctions against Iran to rein in its
nuclear program, appears ambivalent both on
expanding the ISA and on the divestment campaign.
On the one hand, Department of State and
Treasury Department officials, using the threat of
tougher congressional action, have informally -
and with some success - pressed foreign banks,
companies and governments to forgo or freeze new
investments in Iran's energy sector over the past
year.
On the other hand, the
administration has opposed the pending legislation
both because it would reduce the president's
flexibility in conducting foreign policy and
because imposing sanctions would almost certainly
produce a backlash in foreign capitals that would
undermine Washington's ability to sustain a united
front with its allies and other powers against
Iran at the UN and in other forums.
"We
could not support modifications to [the ISA] now
being circulated in Congress that would turn the
full weight of sanctions not against Iran but
against our allies that are instrumental in our
coalition against Iran," Under Secretary of State
Nicholas Burns told a Senate committee in March.
In this position, the administration has
been strongly supported by the National Foreign
Trade Council (NFTC), a business lobby created by
many of the United States' biggest corporations,
which has long opposed both unilateral US trade
sanctions and state divestment initiatives.
"On one hand, we're asking Europe, Russia,
China and Japan to work together with us on this,
and on the other hand we're beating their
companies over the head with a stick," NFTC
president William Reinsch said.
In a
letter to Ohio lawmakers considering divestment
legislation, Reinsch made much the same argument,
noting also that, in a case brought by the NFTC, a
Federal Court judge recently struck down as
unconstitutional a Sudan-divestment law in
Illinois on the grounds that it interfered with
the federal government's ability to conduct
foreign policy and regulate foreign trade.
In his weekly column in the Washington
Times on Wednesday, the CSP's president, Frank
Gaffney, denounced Reinsch as "terror's lobbyist",
charging that the NFTC "favors doing business with
America's enemies and runs interference for those
determined to do so".
"Iran is already in
difficult economic straits; if fully brought to
bear, the power of America's capital markets could
mightily affect corporate behavior, undermining -
hopefully, helping to bring down - the
mullahocracy in Iran," wrote Gaffney.
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