'Terror-free' investing gains ground in US
When New Jersey legislators introduced a bill this month that would ban state pension funds from investing in companies doing business with Iran, it was part of an emerging battle cry across the country for "terror-free investing."Skip to next paragraph
Subscribe Today to the Monitor
Surveys show that most Americans like the idea of deploying investment dollars to assist in the war on terror. And so a growing number of state officials – and a few at the national level – are promoting divestment from companies dealing with countries that the US considers state sponsors of terror.
"This is an empowering action for Americans who have looked for a way to do their part about terrorism and the countries sponsoring it," says Missouri state treasurer, Sarah Steelman, whose efforts have resulted in what is considered the first state-level "terror-free" financial-management program.
The push for terror-free investing has gained intensity over the past year – both as attention to Iran has grown and as the investing technique has ridden on the coattails of a successful grass-roots campaign to encourage divestment from Sudan.
Local steps to divest from companies doing business with Iran mirror efforts of the international community to isolate Iran over its nuclear ambitions. Just this weekend, the United Nations Security Council approved new sanctions intended to force Iran to stop enriching uranium.
And ever since 2004, when the US government implicated the Sudanese government in what it calls genocide in the province of Darfur, human rights groups have pressed states and funds to get out of business with Sudan.
A half-dozen states, including New Jersey, last year adopted measures divesting billions of dollars from companies doing business in Sudan.
The idea of using divestment as a grass-roots political tool has deeper origins. Starting with apartheid in the 1980s, divestment drives spawned by social movements have targeted everything from guns and gambling to global warming. Besides Darfur, international targets include Israel over its settlements in the occupied territories.
"Terror-free investment is a train that we believe is picking up steam," says Frank Gaffney, president of the Center for Security Policy in Washington and a force behind the effort. He says analysis of the largest pension funds in the US shows that about a fifth of their portfolios are in companies doing business in countries listed by the US as state sponsors of terrorism: Cuba, Iran, North Korea, Sudan, and Syria.
While that may be true, it is not a movement without critics. Promoters' references to "hitting back at the terrorists who hit us" give the false impression that divestment is aimed at the perpetrators of 9/11, some observers say. Yet as a nonstate actor, Al Qaeda is more difficult (though not impossible) to target, financial analysts say.
In addition, the US government is not enthusiastic about the effort. That's because the United States has adopted a strategy of working with allies and partners to go after specific companies involved in the targeted countries and activities. Officials in the State and Treasury departments fear that broad divestment efforts could cause a backlash if these cooperating countries feel a wide range of their companies are under attack.