At least five states in the U.S. are following Missouri's lead with proposals to divest public pension funds of shares in companies that do business with Iran. On Capitol Hill, proposed amendments to the Iran Sanctions Act could make it harder for foreign-owned companies to invest in countries that the U.S. State Department considers "sponsors of terror." VOA's Mil Arcega reports.
Iran's defiance of international demands to suspend its uranium enrichment program is creating momentum in the United States for initiatives aimed at further isolating the oil-rich country.
At a recent Congressional hearing on foreign affairs, committee chairman Tom Lantos outlined new initiatives to limit U.S. investments in companies that do business with Iran. "A variety of means will be used for this purpose from ‘name and shame’ for private funds to mandating divestment of public funds," he said.
Although U.S. companies are already restricted from trading or investing in Iran, Lantos' amendments to the Iran Sanctions Act would eliminate U.S. waivers given to foreign companies that pour money into Iran's energy sector.
"If Dutch Shell moves forward with its proposed $10 billion deal with Iran, it will be sanctioned,” said Lantos. “If Malaysia moves forward with a similar deal, it too will be sanctioned. The same treatment will be accorded to China and India should they finalize deals with Iran."
Congresswoman Ileana Ros-Lehtinen of Florida says the aim is to undermine Iran's primary source of income. "Iran's oil sector, which provides for about 85 percent of export revenues, is projected to shrink without huge injections of foreign investment, technology and expertise," the Republican congresswoman says.
"We call it, in my business, chicken soup diplomacy. It sounds good, it makes you feel better but doesn't really cure anything," says Bill Reinsch, the president of the National Foreign Trade Council. He says although the proposals are well intentioned, mixing politics with business could lead to bigger problems.
"If you're going to inject political criteria into the investment process, it's not very long before you're going to have people saying we should be divesting from China, we should be divesting from Russia,” says Reinsch. “Any country that has a problematic human rights record is going to be fair game for divestment. Pretty soon there won't be any countries left to invest in.”
Reinsch adds that similar divestment proposals for so-called "terror-free public pension funds" from at least five states will also hurt retirees who can expect to see smaller returns on their investments.
A recent market report shows more than 400 publicly traded companies have financial dealings with countries on the State Department's terror list. They include Iran, North Korea, Sudan and Syria.