Cliff May

Investors do not need to sacrifice a chunk of their portfolios to invest terrorism-free. The Missouri Investment Trust actually generated higher returns after divesting from companies with ties to terror-sponsoring regimes. The Roosevelt Investment Group’s Anti-Terror Multi-Cap Fund also has done well compared to other mutual funds.

Rep. Brad Sherman (D-CA) and a few other members of Congress are looking for ways to further encourage Americans to get out of the terrorism-funding business, for example by passing legislation that would allow taxpayers to defer paying capital gains tax on any investment they sell due to a company’s terrorist connections.

“Divestment should be part of our strategy to isolate these regimes until they give up their drive for nuclear weapons and/or their support for terror," said Sherman, who chairs the House subcommittee on non-proliferation and terrorism. "Right now the door is open to American dollars going into the pockets of terrorist countries. Our job is to close that door one step at a time."

Who would argue against that? For one, the National Foreign Trade Council, a powerful lobby. Its president, William Reinsch, claims that disinvestment laws are unconstitutional because they interfere with the ability of U.S. presidents to conduct foreign policy.

Missouri Treasurer Steelman fires back: “We are not in the business of setting foreign policy. We were just implementing foreign policy set by the State Department” which designates which countries are terrorism-sponsors and therefore should not be America’s trading partners.

Terrorism-free investment alone will not end suicide-bombings in Israel, plots to blow up girls’ schools in Iraq, or attempts to bring down trans-Atlantic passenger jets using explosive sneakers. It will not stop conspiracies to kill American soldiers at Fort Dix. But it can play an important role in a comprehensive strategy to defeat those waging a terrorist war against the West.

Both lawmakers and Wall Street can help recruit investors to the struggle against America’s enemies. "It seems strange to me that we send men and women to defend freedom some of whom pay the ultimate sacrifice,” Steelman said recently, “however, we have not yet used our most powerful weapon, America's financial markets."

Cliff May

Clifford D. May is the President of the Foundation for the Defense of Democracies.