Cliff May

What can you, an average citizen, do to help defend America against terrorists sworn to our destruction? How about not investing in them?

A campaign to cut off such investments is gaining momentum. The Center for Security Policy, a Washington think tank, has organized a “Divest Terrorism Initiative” ( http://www.DivestTerror.org ) -- a campaign to persuade pension funds, college endowments, 401(k) plans, retirement account managers and individual investors to make sure their money is not used to support regimes that underwrite terrorism.

Highest on the priority list: Iran, Sudan, Syria and North Korea. “These countries have been sanctioned by the United States government as sponsors of terrorism,” said Sarah Steelman, the Treasurer of Missouri, the first state in the nation whose pension fund has divested from companies doing business with terrorist masters. “Investing in terrorist … countries is not acceptable to the citizens or the public employees of Missouri.”

In Florida last month, the state Senate unanimously passed legislation that would lead to divestment of its $150 billion pension fund from foreign companies investing in Sudan and Iran. Lawmakers in California, Ohio, Pennsylvania, New Jersey, and several other states also are attempting to have their pension funds stop putting money into companies working hand in glove with those who slaughter innocent men, women and children for political purposes.

About 100 public pension systems in the US currently have an estimated $200 billion invested in publicly traded companies – American and foreign -- that conduct commerce with terrorist masters. Drying up this cash flow is more than a way to make a statement. It’s a way to pressure regimes to change their behavior, and perhaps even to push them toward collapse.

Without foreign investment, the government of Sudan, responsible for the genocide of black Muslims in Darfur, can’t get its oil out of the ground.

Iran’s oil is flowing, but output will decline steeply over the next few years if foreign investment in technology and equipment can be turned off. What’s more, foreign firms are now selling Tehran petroleum products – including about 40 percent of its gasoline and diesel fuel – that Iran hasn’t the refineries to produce on its own. Without that fuel, Iran’s highways become parking lots.

Syria’s economy is weak and dependent on Iran. North Korea is an economic basket case whose principal exports are counterfeit American money, heroin, and ballistic missile technology.

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.