Ardeshir Arian, writing for Pajamas Media:
[…] legislation (AB-221) by Republican Joel Anderson of El Cajon, and Democrat Jose Solorio of Anaheim [requires] state pension funds to divest from companies that do business with the Islamic Republic of Iran.
The Iranian-American community and many exiled Iranians are supporting this legislation. Several prominent Iranian-American activists [testified] in support of AB-221, and Iranian groups as far away as Sweden and Turkey are backing the measure. Support for the bill has also come from the Prince of Iran, Reza Pahlavi but it is opposed by William Reinsch, Undersecretary of Commerce during the Clinton administration. IRI promoters and apologists like the NIAC are also opposing the legislation. (National Iranian American Council).
The California initiative is the nation’s first, and has inspired similar action in Massachusetts, Maryland, Georgia, Ohio and Missouri.
CBS “60 minutes†stated on January 4, “Just about everyone with a 401(k) pension plan or mutual fund has money invested in companies that are doing business in so-called rogue statesâ€Â. California’s colossal state pension funds, CalPERS and CalSTRS, have invested about $24 billion in hundreds of companies doing business with the Islamic Republic of Iran, according to figures released by private consulting group Conflict Securities.
On a federal level, Representatives Ileana Ros-Lehtinen (R – FL), and Tom Lantos (D – CA) introduced legislation a few weeks ago that would require all U.S. government pension funds to divest stocks of companies that have invested more than $20 million in the Islamic Republic’s oil and gas sector.
I must be honest here and state up front that I’m ambivalent about this kind of measure—not because I don’t think we should be imposing harsh sanctions on Iran, but rather because I am leary of divestment as a political tactic, given radically motivated calls in the past for its use against democracies like Israel, and given the likelihood for its potential future misuse, as well.
I’m also concerned that in the long run (and however laudable the short-term goals), such measures will have a chilling effect on global free trade—the advent of which, it seems to me, is the best longterm plan for the spread of freedom through an increase in the standard of living in many parts of the world.
And the question is, who would be most harmed by the measure? And who is California trying to punish, exactly? South Africa under Apartheid, for instance, was susceptible to western cultural pressures in addition to the financial punishments divestment wrought. Would the mullahs be similarly troubled—or would they be able to use such measures to spur on Iranian nationalism, particularly if the consequences are passed on to Iranian citizens who are themselves enemies of the mullacracy?
I honestly don’t know—but I’m concerned that, in addition to hurting the wrong Iranians and creating a template for dangerous political opportunism, the effect of divestment would be to punish US and other western businesses with long-term investment monies tied up in Iran, as well as investors whose retirement funds are tied up in diversified portfolios.
And in fact, the National Foreign Trade Council, a trade group representing 300 multinational corporations (headed by Reinsch), won a court battle last month that saw an Iowa law aimed at companies doing business in Sudan overturned on the basis of just such an argument.
As Reinsch told Bloomberg News:
“If public funds are forced to divest […] the real losers would be a bunch of retired policemen and firefighters.’’ That’s because pensions would have to sell international mutual funds, which have had high returns, he said.
Of course, the counter argument to Reinsch is to note that sometimes personal sacrifice—such as lower rates of return—is an honorable price to pay for taking a morally-responsible position.
But again, the question is, will divestment have a significant impact on the Iranian economy in such a way that they would change their behavior to alleviate the sanctions, or would it simply prove a feel-good symbolic gesture that in the long run actually hurts global markets, free countries, small investors—all while slowing the development of foreign economies that history has shown is the most effective method of bringing about a spread of freedom and an end to war?
Discuss.
Of course, our European “allies” will take advantage of any opportunities created by our disinvestment, so although we’ll feel good as Americans, the Iranians will never feel any pinch from our taking such a principled stand.
And should any tragedy befall Iran, we’ll be blamed by the media, just as we were to blame for the deaths all those innocent Iraqi children due to our boycott, while Saddam was busy
building multiple residences and rebuilding his military under the “Oil-for-Palaces” program.
Laws requiring divestment bother me, not because of who they may or may not be used against, but because I don’t think the government should be regulating who someone does business with. I would prefer requirements that businesses be more transparent with regards to who they are doing business with – that would give consumers the right to vote with their pocketbooks rather than the government doing it for us.
That said, I have no problem with prosecuting someone for funding illegal or terrorist acts, as long as the information is out there (and substantially in their faces) for them to know where their money is going.
And WTF is up with the snow, anyway?! I dressed my son all warm yesterday because it was supposed to be cold, and he ended up burning up. Then I wake up at 4 am unable to figure out why my toes are freezing – it’s because my husband left all the windows open to cool the house down from yesterday’s heat!
Hmmmm.
If they feel so hot about it why don’t they put together a fully divested international mutual fund.
And then if they don’t bankrupt themselves out of ignorance the pension funds can take a look and see if it’s worth a buck or two.
Otherwise it’s just moralizing using someone else’s dime.
Let the pension funds have an opt-out provision, so that people can put their money into a vehicle like this, instead.
I’m not sure divesting does any good in this case. You can put political pressure on a democracy this way, especially one whose people have a relatively high standard of living, but the less free the people are, and the less they have to lose, the less likely such pressures will work. Economic pressure taken to the extreme you will more likely increase political pressure to form or maintain totalitarian governments (e.g. communist, islamist), since that seems to have been the trend in poorer nations in the past.
Also, unless you can get a significant portion of investors worldwide to agree, you will not have much economic effect, since any time you sell you have a buyer, and a pragmatic investor might see the bargain you have created by your non-economically motivated selloff.
In short, this methodology only works if you can generate some shame in the countries you are trying to punish. In this case, I doubt that’s possible.
Yeah,
When are we gonna lift our trade embargo on Cuba?
Here is an interesting site that tracks FDI in the Middle East and elsewhere report on Iran (not sure how accurate it is).
Be a shame to have to dump shares in Tata, one of India’s oldest conglomrates just when their economy is taking off.
Also, how can California do this, isn’t it affecting forign policy, which the states can’t do one on one?
And, for the record, I’m for lifting the embargo on Cube exactly 120 seconds after Castro’s lifeless and embalmed corpse is finally trotted out to the Havanna masses.
Is someone here talking about divesting out of India? Trading w/ Cuba? Whaaaaaah? (tilts head to match precise angle of resident head-tilting f-cktard)
It’s mostly symbolic, since the Iranians already have our money and will do with it what they choose.
Say you own BP and you realize their “green” policy is pretty much bullshit. So you sell the stock. Too late, they already have your money and are bust raping the environment with it.
The only potential harm to the company is making it more difficult to issue stock the next time they come to market–that really will hurt if the reaction from investors is pronounced and lasting.
In the case of Iran, you’d be better off just prohibiting any future investment in the country or companies doing business there. Same effect without mandating what’s virtually certain to be a market loss.
It’s a direct yet indirect effect. The states can do as they please with their pension funds. My only concern with the idea is this:
Aside from that, I think it’s a fine idea. The Iranian economy is already in big trouble, and the standard of living is dropping. They’re rationing gas now. Iran. Rationing gas.
Iran is in a much better position to conduct a revolution than Iraq ever was. A regime that makes the people’s lives increasingly difficult is ripe for the picking, and if there’s a regime that could use some picking, this is it.
Have y’all seen many Persian girls? Dammit!
Jeff,
I think it is a worthy consideration to see what sanctions and the lack of investment did to Iraq’s middle class during the 90’s, and really evaluate if we are supporting an effective policy with regards to Iran.. Iraq actually had a thriving and substantial middle class before the Gulf War, however sanctions absolutely crippled their economy. This crippling their economy, secular leaders scrambled for what little cash was available, corruption became rampant, and the only people the now jobless and hopeless Iraqi middle class could turn to were the clerics and mullahs (Shia and Sunni).
Saddam was no dummy and his survival was at stake. The previously “secular” leader of Iraq sponsered a government wide program of religious revival. He provided carrots and sticks to clerics who preached fanatical Muslim, anti-Western hatred as long as they didn’t turn their anger towards his regime. Clerics were bribed, but also murdered if they spoke out of line. In any difficult times, people tend to get a little more spiritual out of necessity, so the actively sought out answers. However, unlike the Great Depression here, where Americans learned to peservere and have faith in deliverance by a loving Savior, Iraqis were getting earfuls of “look at what the Jews and Western infidels are doing to you. Let’s pray that Allah will kill them.”
In Iraq, sanctions were visable acts of “measured” responses that allowed the West to clear its conscience with a more moral decision because we didn’t continue the war and solve the problem. The unintended consequences were that, in aiming to punish Saddam, we ended up punishing the people. Saddam continued to fill his coffers and build palaces on the backs of Iraqis. While our response was well intentioned, it was ultimately disasterous when we finally went in to finish what we started 12 years later and met a populace that had swallowed heaping doses of anti-Western, fanatical Islam.
Iran’s middle class is in a little stronger position, but I think it is not only pragmatically prudent to question the efficacy of sactions, but morally so as well.
OT, but if you haven’t seen it, finally, an explanation for the existence of alphie:
Even Sayett at the Heritage Foundation. Long (45 mins), but well worth it.
http://multimedia.heritage.org/content/wm/Lehrman-030507a.wvx
Techie is right.
Foreign policy in this country is set (for better or worse) by the federal government. It should not be set by
some large third-world countrya large state, however many people may live there.In principle, individuals have the right to invest or refuse to invest anywhere they’re allowed to by law, but that should be federal and not state law.
Pablo,
Let’s see what the CIA says about Iran and America’s recent economic growth rates:
GDP – real growth rate:
Iran
2001 – 5.0%
2002 – 6.5%
2003 – 6.0%
2004 – 6.3%
2005 – 6.1%
2006 – 5.0%
U.S.
2001 – 0.3%
2002 – 2.45%
2003 – 3.1%
2004 – 4.4%
2005 – 3.5%
2006 – 3.4%
I don’t quite understand goal of the neocon fairy tale that Iran’s economy is “in big trouble.”
Can someone ‘splain that one to me?
Caifornias’ pensions already lost an assload of money when they divested tobacco stocks. The public employee unions have been opposing reform in the workers comp laws that are allowing lots of fraud. Not to mention they also opposed the whole slew of reform legislation that Ahhhnold put up in the special election in order to protect their benefits which are bankrupting the state.
As much as I love the emergency services guys, they made their bed on this stuff by siding with the socialists in the teachers unions in opposing the reform measures which were aimed at trying to bust up the stranglehold the CTA and other state public employee unions have on state politics and spending.
I say let em divest. Karma’s a bitch.
‘Cause you’re a fucktard who thinks a fucking Islamofascist dictatorship would release real statistics about it’s economy?
I’d could, but my time would be better spent trying to teach trigonometry to a ficus. So, I think I’ll just fetch myself a beer instead.
It isn’t individuals, Atilla. It’s state pension funds, which the state rightly controls. This is less a function of state governance and more an issue of the state as an employer. Any company could do the same with it’s pension funds, or not, including in California.
Hey . . . was that a “metal” bat question?
If the Cards have 12.49 Trillion base hits, a 3.4% increase over last season . . .
. . . and the Cubs have 181.2 Billion base hits, a 6.1% increase over their previous season . . .
then the Cubs will still come in as a “semi-developed” baseball team!
. . . and the guy who asked about percentages will get thrown out of the bar!
Pablo, I’d be very surprised if the state legislators behind this initiative didn’t admit that they’re trying to affect our foreign policy. I happen to think their views of foreign policy are right in this case, but I also think there’s a difference between personal moral decisions that you and I might make and attempts to dictate foreign policy. Given the fact that this is a state government, and given California’s sheer size, this is on the foreign policy side of the line.
My point about individuals was a broader one, roughly in response to earlier comments about how people should not be told where they can invest their own money (like this: “I don’t think the government should be regulating who someone does business with”).
Public Service Announcement:
“Ignore the Troll”
That is all
At this level divestment does nothing. The price of Iranian assets will decline somewhat and they will be purchased by others at the sale price. The Iranians won’t even know it happened. It’s 100% harmless feel good. (And divestment really have any effect in South Africa anyway?)
Now “feel good” is worth something. I do think the beneficiaries of the funds ought to have the opportunity to estimate the cost and determine whether that price is worth it. Having this strongarmed by a handful of politicians and interest groups for their own reasons is never a good thing. (And is the reason I move 401k funds to self-directed vehicles whenever possible.)
alf-
Stop. Think.
Go back to the CIA website and wonder why unemployment is at 15%. (good thing the mullahs don’t like to let women into the workforce)
Then mull over the 40% of the population there that lives below the poverty line.
Top it off with an inflation rate of near 16%
Discuss what all that means when compared to GDP
Couldn’t we just follow cheney’s advice and lift the sanctions?
Last years inflaton rate for Iraq was 70%, Steveg
And the per capita GDP of Iran($8900) is three times higher than the per capita GDP of Iraq($2900).
This despite the fact that the neocons have been pouring $100 billion a year into Iraq’s $50 billion a year GDP for the past 4 years.
Guess trickle down works about as well in Iraq as it does here in America.
Um, the Soviets released great stats on their economy, too. Right up until it collapsed.
Dictators don’t make real stats public, as a rule.
Alphie is right – Iran is the worker’s paradise, China is right behind as the Golden Land. We live in a dump and will be busy fighting each other for the last scrap of soylent green soon…
Ask an Iranian how they feel about their economy…
As for “divesting” – I always wondered about two things (first thought of when S.A) was the target) – instead of retaining common shares to influence the company, you dump them to someone who may not care at all? Next, it’s not like these shares are being destroyed or the company is going to be put out of business – if it is a reasonably stable outfit, the share price may go down a bit, but others will take adavantage of the bargain price that comes about and bid it right back up… you’d almost have to have embargo, rather than divestment to have any effect. Or blockade.
But then again, I am no practioner of the dismal science.
Or a very good typist.
That would be choice B, Jeff.
Iran, from the point of view of most of its citizens, already has an economy two sidesteps and a shuffle from collapse. The people this measure is targeted at will be the last to feel it. Some European governments will make deals on the sly, Russia and China will be moderately less sly in their deal-making, and the Great Satan will rape women, starve the little children, and kick puppies, which is our usual foreign policy in a nutshell. All while stealing their resources.
Ahmadinajad is crazy as a loon, and he’ll keep doing what he’s doing until someone kills him. His death would be the best possible solution for Iran and the world. Pity we’ve ruled out assassination.
Hmmm.
@ alphie
When Castro dies.
Which is also when I’m going to open some bottles of excellent hooch I’ve got reserved for the “Castro is dead and getting poked in the ass by the Devil” party.
In fact I’m probably going to take a week off and head down to Miami when Castro dies just to get in on the party there.
Even writing the words makes my spine tingle.
Castro is dead.
Woot!
Jeez, SteveG—tell the Gulf Stream to reverse itself and flow south while you’re at it.
Remember that Ahmadinijad was one of very few hand picked candidates. He may be batshit insane, but he can easily be replaced with someone else who is batshit insane by the mullahs who picked him in the first place. He is a symptom, not the disease.
That was funny.
I thought alf and I were talking about Iran and then all of the sudden he reversed course and started on Iraq.
Jeez….
Alf you asked why some people.. “neocons”.. think the Iranian economy is in trouble. I answered honestly.
My feelings are hurt.
Well not really, because we’ve met before…. but… jeez
Iraq has inflation pegged at 70%? I’ll take your word for it.
Pumping huge sums of money into an economy usually does cause inflation. There’s really no way for the US to run a low casualty war on the cheap either… not making a judgement there about whether this is a good war, or whether Bush lied. Just an observation.
I also think that in order to accurately compare military spending on the Iraq war vs. the economic impact (or lack thereof) on the average Iraqi, you’d have to honestly show me how much of the money we’ve “poured into Iraq” was ever in Iraq.
But if I were going to look for money that has stayed on Iraqi soil, I would either look for it in Kurdistan, or go ask Senator Feinstein.
Since Feinstein lives 300 miles north of me in San Francisco, I’ll go there… you take Kurdistan.
Have fun.
I’ll bet that there is more respect and gratitude for U.S. troops in Kurdistan than there is in San Francisco.