Two dozen states have enacted their own sanctions intended to punish Iran, measures that won’t come off regardless of what deal is signed between Iran and the Big Six.
And it isn’t clear that Iran really cares. The sanctions don’t hit Iran directly. They order state government pension funds to divest themselves of stock in firms that do business in Iran. Some states also forbid the issuance of contracts to such firms.
These state laws target foreign companies, since American firms, with a few exceptions, have been barred from doing business with Iran.
The Iran Times has not heard of even a single foreign firm saying it would pull out of Iran because some state pension fund wouldn’t buy its stock. Iran has just ignored the slow growth in the number of such laws, which now sees half the states banning such investments.
Reuters this month surveyed the 24 states with such laws. It said that in more than half those states, the restrictions expire only if Iran is no longer designated to be supporting terrorism or if all federal sanctions against Iran are lifted—unlikely outcomes in any final nuclear accord. In other states, the state legislature will have to take action to change or repeal the law.
Among around a dozen states contacted directly by Reuters, legislators in Georgia, Florida, and Michigan said they had no intention of changing their Iran policies even in light of a federal deal.
Officials in New York and Oregon told Reuters they would look to changes in law at the federal level in the case of a nuclear deal to determine how it would affect their policies.
The divestment campaign gathered steam in 2008 and 2009, and received a federal stamp of approval in 2010 with passage of the Comprehensive Iran Sanctions, Accountability, and Divestment Act, which encouraged states to pass such measures.
The divestment measures typically enjoy broad bipartisan support within the legislatures, and have been signed into law by Republican and Democratic governors alike.
Pension fund administrators have almost uniformly opposed the laws, in part because they require research work that pension funds aren’t equipped to do. They also fear making a mistake and buying a stock in a firm they were unaware works in Iran, thus opening them to charges of violating the law.
Florida’s law led to the State Board of Administration (SBA), which oversees Florida public investments, pulling more than $1.3 billion out of companies such as PetroChina and Russia’s Gazprom.
Michigan sold off $185 million in stock in companies including Royal Dutch Shell, Vodafone, HSBC, and Nokia for their activities in Iran.
Michigan also sold its stock in Becton Dickinson and Co., a US medical supplies company that sells to Iran. But such medical sales are not only legal under federal regulations, they are actually encouraged.
That stock sale also raises a question as to whether these state laws make any difference whatsoever. A Becton Dickinson spokesman said the firm was unaware it was a target of divestment by Michigan until contacted by Reuters!
Richard Nephew, the former principal deputy coordinator for sanctions policy at the US State Department, told Reuters the main losers in divestment actions are the state governments, rather than Iran.
“This is a feel-good measure that, in the end, probably doesn’t feel all that great given the costs it imposes at home.”
