Missouri Pioneers Iran Divestment Efforts State pension funds are under pressure to stop investing in businesses that have ties to Iran. Missouri has taken action to divest from such companies, as well as those who do business with other nations on the State Department's list of countries that sponsor terrorism. Other states are considering similar action.

Missouri Pioneers Iran Divestment Efforts

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ROBERT SIEGEL, host:

Iran's president issued a warning yesterday. Mahmoud Ahmadinejad said Western nations will not stop Iran's nuclear program even, quote, "if all of you gather and also invite your ancestors from hell." The U.N. Security Council is closed to increasing the pressure on Iran. The five permanent members of the Security Council agreed on a draft resolution. It would add more individuals and companies to a blacklist and would ban Iranian arms exports. Some Americans are trying to pressure Iran their own way, and NPR's Michele Kelemen has a story about a divestment campaign.

MICHELE KELEMEN: It all started back in 2004 when a conservative former Defense Department official, Frank Gaffney, put together a report on state pension funds and their links to countries on the State Department's terrorism list.

Mr. FRANK GAFFNEY (President, Center for Security Policy): Roughly 100 of the leading public pension funds of the United States had about $188 billion invested in companies that were doing business with one more of those sorts of state sponsors of terror.

KELEMEN: The first activists to pick up on this were those interested in punishing Sudan, not because of its links to terrorism, but because of the war in Darfur. That divestment push has been fairly successful with several states and universities dumping shares of companies that do business in Sudan.

Missouri Treasurer Sarah Steelman told a news conference in Washington this week that she hopes states will now follow her lead and start what she calls terror-free pension funds.

Ms. SARAH STEELMAN (Treasurer, Missouri): It seems strange to me that we send young men and women to defend freedom, some of who pay the ultimate sacrifice. However, we have not yet used our most powerful weapon, America's financial markets.

KELEMEN: Though supporters of this campaign portray it as a broad battle against terrorism, there is no evidence that it could pressure al-Qaida. Its main target is Iran, as well as other countries on the U.S. blacklist, including Sudan, Syria and North Korea. Steelman says it was an uphill battle in her state to divest from companies doing businesses in those countries.

Ms. STEELMAN: We heard the argument about performance. The performance is going to suffer. And I think that we proved that is simply not true. We heard that states shouldn't be in the business of setting foreign policy, which is complete nonsense. We are not in the business of setting foreign policy. We were just implementing foreign policy that's already been set by the State Department and American businesses can't do business in those countries.

KELEMEN: Most of the companies dropped from the Missouri state pension fund were European, but she says the list also included Halliburton, the company Vice President Dick Cheney used to run, because one of its subsidiaries' business dealings in Iran's oil sector. Several members of Congress, including Democrat Brad Sherman of California, want to close all the loopholes for American companies.

Representative BRAD SHERMAN (Democrat, California): Right now, the door is wide open to American dollars going into the pockets of terrorist countries. And our job is to close that door one step at a time.

KELEMEN: He joined Steelman at the news conference and said the idea is to put maximum possible pressure on countries accused of sponsoring terrorism.

Rep. SHERMAN: We need, therefore, to put the maximum possible pressure on major corporations of the world to get them to stop providing necessary capital to these terrorist states. In particular, Iran is very susceptible to a cut-off of investment in its oil sector, and we have to devote our efforts to trying to hit that Achilles heel.

KELEMEN: With some key members of Congress working this issue and the pro-Israel lobby, AIPAC, starting a campaign to pressure states to divest, this movement is likely to pick up some steam in the months ahead.

Michele Kelemen, NPR News, Washington.

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