Thursday, July 26, 2007

Congress Could Consider Iran Divestment Bill Next Week

On July 26, H.R. 2347, which would enable state divestment from companies doing business in Iran, passed out of the House Financial Services Committee and could be placed on the Suspension Calendar as early as next Monday, a.k.a, the full House could vote on the bill as early as next week.

H.R. 2347 was introduced in May by Rep. Barney Frank (D-MA) and currently has 43 co-sponsors. Also called the Iran Sanctions Enabling Act of 2007, the bill includes the following provisions:

Directs the Secretary of the Treasury to: (1) publish biannually in the Federal Register a list of each person, whether within or outside of the United States, that has an investment of more than $20 million in the energy sector in Iran; and (2) maintain on the website of the Department of the Treasury the names of the persons on such list.

States it is the policy of the United States to support the decision of state and local governments and educational institutions to divest from, and to prohibit the investment of assets they control in, persons that have investments of more than $20 million in Iran's energy sector.

Authorizes a state or local government to adopt and enforce measures to divest its assets from, or prohibit investment of assets in, persons included on the most recent list.

Amends the Investment Company Act of 1940 to shield any registered investment company from civil, criminal, or administrative action based upon its divesting from, or avoiding investing in, securities issued by companies included on such most recent list.

Amends the Employee Retirement Income Security Act of 1974 to shield from treatment as breaching a fiduciary duty any person divesting plan assets from, or avoiding investing plan assets in, persons included on such most recent list.

Expresses the sense of Congress that the Federal Retirement Thrift Investment Board should initiate efforts to provide a terror-free international investment option among the funds of the Thrift Savings Fund.

According to the National Foreign Trade Council, H.R. 2347 poses potentially serious consequences for the conduct of U.S. foreign policy and will set a precedent of injecting social or political criteria into investment decisions that could lead to more attempts by State legislatures to divest from future hot-button social issues of the day. NFTC also argues that H.R. 2347 threatens to create a complex web of restrictions and regulations that interfere with the Constitutional right given to the President to conduct foreign policy.

Ironically, a measure in H.R. 180, the “Darfur Accountability and Divestment Act,” which also passed out of Financial Services and could be considered as early as next week, undercuts arguments in favor of H.R. 2347. According to H.R. 180: “Congress acknowledges that divestment should be used sparingly and under extraordinary circumstances,” and H.R. 180 “is based on unique circumstances, specifically, the reprehensible and abhorrent genocide occurring in Sudan.”

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