California Gov. Arnold Schwarzenegger has signed a bill that would require the state’s public retirement pension fund to divest itself of holdings in foreign companies that invest in Iran. Said the Governator shortly before signing: “California has a long history of leadership and doing what’s right with our investment portfolio. Last year, I was proud to sign legislation to divest from the Sudan to take a powerful stand against genocide. I look forward to signing legislation to divest from Iran to take an equally powerful stand against terrorism.”
While the Iranian regime arms Iraqi militias with deadly roadside bonds and ships weapons to the Taliban in Afghanistan, argues Christopher Holton, director of the “Divest Terror” initiative at Center for Security Policy, it makes no sense for an American to invest in companies that do business with Iran.
Which brings us to the question, well, what’s happening in Virginia? According to “The Terrorism Investments of the 50 States,” the Virginia Retirement System has invested $4.3 billion of its $24.7 billion in equity assets in some 213 companies with ties to terrorist-sponsored states. The largest exposure was Iran, with 154 companies. Other such states, according to this 2004 document, which is based on 2003-2004 data, included Sudan, Libya, North Korea, Syria and “Saddam’s Iraq.”
Sample holdings included Alcatel SA (French), BNP Paribas (French), ENI (Italian), Hyundai Heavy Industries (Korean) and Total SA (French). Companies with terror ties contituted more than 17 percent of the VRS equity portfolio.
This January, Sen. Ken Cuccinelli, R-Fairfax, sponsored legislation that would have required VRS to divest itself of companies with active business operations in the Sudan, on the grounds that they directly or indirectly enabled the genocide in Darfur. As I interpret the General Assembly bill tracking, the House and Senate passed separate bills but conferees could not reconcile the two versions. No one, to my understanding, has yet proposed ordering the VRS to divest itself of companies doing business in Iran.
I’m of mixed minds on whether Virginia should follow in California’s footsteps. On the one hand, I approve of any measure designed to punish Iran economically. Not only is the Mullahcracy killing American soldiers, it is developing nuclear weapons and the means to deliver them long distances, oppressing its people and exporting instability to neighboring states like Azerbainjan. Furthermore, economic sanctions would have an effect. More moderate elements of the regime (if you can call them “moderate,” perhaps it would be better to say, “less odious”) want to dial back tensions with the United States and other western countries on the very grounds that its confrontational diplomacy is isolating the country.
On the other hand, I am reluctant to set a precedent for requiring the VRS to pursue socially conscious investing. Today the Sudan and Darfur, tomorrow Iran. What’s next? Divest companies that do business with Israel, as some leftist groups are agitating for? Divest from companies that pollute? Divest from companies that fail to pay a “living wage?” Divest from companies that peddle alcohol, smut and rap lyrics? At some point, you’ve narrowed the field so much that the VRS has very few companies to choose from. Then investment returns suffer — and taxpayers are on the hook to make up the difference.
