The Center for Security Policy’s Frank Gaffney had an item in today’s LA Times on the importance of investing in pension plans that steer clear of terrorist states. Gaffney may be a conservative, but his points are hard to disagree with. Unfortunately, he left out a pretty important detail from his argument.
Millions of people who invest in public pension plans can act to deny upward of $70 billion to nations that finance, train, arm and otherwise sponsor terrorist enemies of the United States. The Center for Security Policy, in a report titled “Terrorist Investment of the 50 States” (www.DivestTerror.org), identifies where much of this money goes and through which companies.
There can be little doubt about the effect of keeping such immense sums out of the hands of the Iranian, Libyan, Syrian, North Korean and Sudanese regimes. They would have less money to fund their terrorist allies, less money to buy or build weapons of mass destruction, less money to threaten U.S. interests and allies. It might even precipitate the sort of cash-flow crisis that ultimately destroyed the Soviet Union — catalyzing regime changes where they would do the most good without firing a shot.
How could American investors help bring about these sorts of desirable outcomes? The same way they helped cause an end two decades ago to apartheid in South Africa — divesting stock where it counted. This time, there are roughly 400 companies that could be targeted for doing business with terrorist-sponsoring regimes. The new report shows that the leading American public pension funds alone have invested about $200 billion in such companies, representing on average 15% to 23% of their respective portfolios.
So far, so good. Enemy states shouldn’t be receiving our investment dollars. If his report identifies instances in which public money is investing in companies that do business with dangerous foes, then Gaffney is raising an issue that warrants attention.
Unfortunately, Gaffney’s report is woefully incomplete. It details foreign companies, but ignores American businesses such as — you guessed it — Halliburton.
Gaffney’s report is available online (though you have to register to read it), but it details the hundreds of companies — overseas companies — that do business in countries believed to be state-sponsors of terrorism. I don’t doubt the conclusions of the research, but it seems clear the Center for Security Policy went out of their way to exclude its Republican friends from their report.
As Slate’s Daniel Gross mentioned the other day, this is a report with some “glaring omissions.”
Gaffney’s report tiptoes around the sleaziness practiced by American companies — including some with strong GOP ties such as Halliburton. While Gaffney’s report mentions that several U.S.-based companies conduct business with rogue states — especially Iran — it never names names of those companies or enumerates the holdings of pension funds in them. It only singles out foreign firms.
It’s hard to rely on the credibility of a conservative group that excludes a large subset of relevant companies, which coincidentally, happen to be owned and run by their ideological allies.
Despite U.S. sanctions against terror states, a loophole in the law permits American companies to conduct operations in countries like Iran through foreign-based subsidiaries.
[…]
Halliburton detailed its activities in terror-sponsoring countries in a report last fall. In undertaking work that contravenes U.S. foreign policy, the government contractor relies on convenient subsidiaries, such as Halliburton Products & Services, Limited, a Cayman Islands subsidiary with headquarters in Dubai. It describes its relationship with the subsidiary in hilariously convoluted terms. “Halliburton has taken care to isolate its entities that continue to work in Iran from contact with U.S. citizens or managers of U.S. companies, so as to insure that all work in Iran is undertaken independently, without any facilitation, authorization or approval from U.S. citizen managers,” it noted. (Hear no evil, speak no evil, see the profits.) Besides, the company noted, everybody else is doing it. “HPSL’s activities are parallel to, and competitive with the activities of the foreign affiliates of Schlumberger, Baker-Hughes, Smith International,” and other firms. Finally, Halliburton said, the subsidiary’s 2003 revenues were only projected to be about $40 million, an amount too small to make a material difference to Halliburton.
So an American policy group wants American investment dollars to steer clear of companies that do business with our enemies, so long as we’re not talking about American companies, because that’d be politically inconvenient. Conservative logic at its finest.