Objective: To dissuade public companies from continuing to provide vital life-support (i.e., revenues, equipment, technology, etc.) to terrorist-sponsoring states, thereby forcing those governments to choose between their ongoing sponsorship of terrorism and an economic meltdown.
The economies of terrorist-sponsoring states are almost entirely dependent on the revenues, expertise and advanced equipment and technology provided by global publicly traded companies in which millions of Americans own stock. Accordingly, a basic premise of DivestTerror is that some, if not all, of these governments would likely choose to end their support for terrorism before suffering an economic collapse catalyzed by the withdrawal of these public companies.
The federal government has made the interdiction of terrorist financing a top priority. This should come as no surprise since terrorists, like any organization, require safe harbor, logistic support and funding to train, coordinate and obtain weapons. The amount of money seized by the U.S. government going to terrorist organizations pales in comparison to the tens of billions of dollars worth of projects that more than 400 publicly traded companies are undertaking in terrorist-sponsoring states, such as Iran. Such activities provide critical life-support to odious regimes, such as the ruling ayatollahs in Tehran.
The need to curtail this life-support to terrorism underpins the DivestTerror campaign: As long as companies continue to provide large-scale revenues and advanced equipment and technology to terrorist-sponsoring governments like that of Iran, it will be impossible to stem the flow of funds, weapons and technology to terrorist groups such as al Qaeda, Hamas, Hezbollah, Islamic Jihad and their ilk.
The aim of DivestTerror is to complement, not impugn, the financial component of the federal government’s war on terror. It is a little-known fact that some 400 large multinational and American corporations have demonstrated their determination to place profits ahead of ethical and terrorism-related concerns. That calculation must be changed. Were the government to encourage, let alone to instruct public pension systems, private asset managers or individual shareholders to divest the stock of these 400 companies, it would be acting at odds with the basic tenets of free market capitalism. Such was the experience in an earlier application of financial leverage — the South African divestment campaign. Pressed by the withdrawal of public companies whose share value and reputations were under withering attack by anti-apartheid activists, the government in Cape Town ultimately abandoned its racist policies and surrendered power.
This campaign is designed, instead, to equip and empower average American investors to do what the federal government cannot: force companies to choose between their operations in terrorist-sponsoring states and their standing in the U.S. financial community. Given the choice, we believe public companies will select the latter – thereby greatly increasing the pressure on terrorist-sponsoring states to cease their practice of aiding and abetting terror lest they court economic collapse.
Toward that end, a grassroots campaign will be mounted to pressure leading institutional investors, asset managers and universities to use their financial leverage to divest the stock of any publicly traded company doing business in terrorist-sponsoring states. The campaign will seek to create sustained shareholder insistence that public companies that help underwrite terrorist-sponsoring governments are presented with a stark choice: Become part of the solution to state-sponsored terror or suffer significant financial consequences.
The South Africa Model
In the 1980s, millions of outraged Americans succeeded in bringing about a singular achievement — ending South Africa’s racist apartheid policy. There is little debate as to how this was accomplished: Where international sanctions, public condemnation and diplomacy fell short, a nationwide American divestment campaign triumphed.
The populist victory of the South Africa divestment campaign was achieved through unrelenting and coordinated activism. The targets were large institutional investors, especially this country’s public pension systems, university endowments and Wall Street asset managers. In addition to teaching Americans a valuable lesson in the power of a financially-based populist movement, the South Africa divestment campaign provided a blueprint for the DivestTerror campaign. The following description of the architecture, objectives and achievements of that campaign illustrates how every American can play a key role in defeating terrorism.
A central premise of the South Africa divestment campaign was that international efforts to end apartheid would remain ineffective in the absence of significant economic pressure. Put simply, as long as the government in Cape Town enjoyed economic stability, it could continue to enforce apartheid with impunity. Accordingly, divestment campaign architects correctly identified publicly-traded companies as the key source of leverage. In the case of South Africa, foreign-owned public companies served a vital role in the economy by creating revenues and offering technical support for the South African government. These companies also provided moral and political cover. After all, how bad could apartheid be if leading U.S., European and Asian companies were willing to do business in South Africa?
Today, public companies are even more significant to the economies of terrorist-sponsoring states due to the underdeveloped status of these countries. The moral and political cover argument holds true as well.
Lesson 1: By dissuading public companies from operating in South Africa [Substitute: terrorist-sponsoring states], its economy suffers and that country’s ability to disregard sanctions and public condemnation is greatly diminished.
Activists likewise recognized that leading companies would maintain “business as usual” in South Africa unless they were forced to pull out of that country. Accordingly, leading activists mounted a nationwide divestment campaign designed to highlight the moral repugnance of any company that partnered with South Africa. Today, companies partnering with terrorist-sponsoring states have proven their willingess to continue operations despite the threat of terrorism. They will not pull out unless forced to do so.
Lesson 2: When public companies were forced to choose between doing business in South Africa [SUBSTITUTE: terrorist-sponsoring states] and preserving their standing in the U.S. financial community, they chose the latter.
South Africa divestment campaign leaders also recognized that institutional investors such as public pension systems and university endowments are not inclined to use their substantial investments in public companies to advance social issues such as ending apartheid. Put another way, if left to their own devices, state public pension systems would have chosen to see apartheid go unchecked rather than disrupt their management of investments. Today, public pension systems are well aware that they hold investments in scores, if not hundreds, of companies that provide revenues, technology, equipment and moral and political cover to governments that sponsor terrorism. Only the New York City Police and Fire Fighter funds have done anything to address this matter. Most public funds cannot even identify which of their portfolio companies have such ties.
To combat this resistance, a highly disciplined and unified national divestment campaign was launched against every company that did business with South Africa:
- Concerned Americans lobbied state officials to legislate the divestment of state funds from companies operating in South Africa;
- College students targeted recalcitrant administrations and endowment officials;
- Teachers, police officers and fire fighters targeted their state and local public pension systems;
- Individual investors called their fund managers and divested the stock of offending companies;
- Church and synagogue leaders spread the word on the morality underpinning the divestment campaign.
All of these Americans advanced a single agenda: As long as South Africa has a policy of apartheid, our university endowment, state and local public pension systems or retirement portfolio will not invest in any company doing business in that country.
Lesson 3: Without a concerted, nationwide effort, pension officials, endowment managers and individual asset managers will do nothing to help defeat apartheid [SUBSTITUTE: terrorism]. It is YOUR money and you have to direct how it should be invested.
After a withering campaign directed against state legislators and officials and college administrations, the 50 states began passing laws to require divestiture of the stock of companies operating in South Africa. Given the choice between their business in South Africa and their stock price and corporate reputation, companies decided to cease operations in that country. Without the economic support and moral cover of public companies, South Africa did away with its policy of apartheid and the government that sponsored it fell from power.
Lesson 4: Companies will choose the protection of their share value and reputation over business in South Africa [Substitute: terrorist-sponsoring states] if state governments, public pension systems and the American people hold these companies accountable. Terrorism, like apartheid, can be defeated by leveraging the power of our wallets: It is our money and we can choose not to invest in companies that have business activities in terrorist-sponsoring states.