AIPAC and divestment

I would like to respond to Caroline Glick's column attacking my efforts to encourage state divestment from Iran's energy sector.

By THEODORE DEUTCH
February 12, 2008 20:09
3 minute read.
AIPAC and divestment

Iranian Oil 224.88. (photo credit: AP)

As the senate sponsor of Florida's legislation divesting our pension funds from Iran and Sudan, I would like to respond to Caroline B. Glick's Friday column ("AIPAC's mystifying behavior") attacking my efforts and those of other state legislators to encourage state divestment from Iran's energy sector. Glick prefers divestment from any company doing business in any terror-sponsoring state. While that goal is laudable, it is an enormously complicated undertaking, requiring pension systems to divest up to 25% of their portfolios - an effort that would take years to successfully pursue, if in fact it could be done at all. But genocide continues in the Sudan, and Iran's nuclear program is an imminent threat requiring action now, and that means pursuing legislation that can be passed quickly in order to have an impact while there is still time. State pension administrators vociferously oppose any divestment effort, no matter how targeted or limited, just as they fought us every step of the way. But when the legislation requires divesting a significant percentage of the pension fund, the pension boards receive sympathetic responses from their shareholders - state employees and retirees. Our pension managers fought hard against our targeted legislation. But because divesting from Iran's energy sector was limited to only 19 possible companies, it permitted us to make the other powerful arguments in support of divestment. We were able to argue, successfully, that divesting from companies that have invested $20 million or more in Iran's petroleum and natural gas sector was responsible: all the companies which have done so are subject to sanctions under United States law (the Iran Sanctions Act), unlike all of the other companies whose investments are legal. Hence, there was a sound fiduciary reason for divesting from these companies: why hold onto a company's stock whose value would be in jeopardy if the company were sanctioned, when you could sell it and invest in equally profitable energy companies that are not subject to sanctions? We also successfully argued that divesting from these companies was the most effective measure that any state could take to prevent the development of nuclear weapons by Iran. Iran's energy exports account for 80 percent of its hard currency earnings, and the country is desperate for more foreign investment. Iran is able to export only slightly more than half of what it was able to export during the Shah's time, while the population has doubled. Without foreign investment, Iran faces a very bleak future. DIVESTMENT, in combination with other federal and international efforts to press Iran economically, is working. The federal government has imposed onerous financial sanctions on Iran's banking system, countries in the European Union have begun to limit the insurance they give their own companies to do business in Iran, and even the United Nations Security Council has twice imposed mandatory sanctions on Iran. All of these efforts are beginning to have an impact on Iran. Despite reported agreements between various companies and Iran, for example, no new investment in Iran's energy sector has taken place since Florida (now followed by several other states) passed its legislation last spring. The Protecting Florida's Investments Act met three vital tests in forcing divestment from companies investing in Iran's energy sector: (1) it is targeted; (2) it is responsible fiduciary policy; and (3) it is an effective component of a larger strategy to impose economic pressure on Iran. Without all three being true, I do not believe that divestment legislation could have passed in Florida in one legislative session, and I would be surprised if it could pass quickly in many other states. Given the urgency of the Iranian nuclear issue, I believe that every state and local government should divest from Iran now. On this point, there can be no debate. The writer is a Florida state senator representing Boca Raton.


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