PIERRE -- South Dakota should join other states in applying economic pressure aimed at dissuading Iran from developing nuclear weapons and supporting insurgents who harm American troops in Iraq and Afghanistan, former CIA director James Woolsey said.
Woolsey, who was head of the CIA from 1993 to 1995, said Friday the South Dakota Legislature should pass a pending measure that would require the state to get rid of its investments in some oil companies that do business in Iran. The House of Representatives could vote on the bill as early as Monday.
Iran supports insurgents in Iran and Afghanistan who kill U.S. military personnel, and it will become even bolder in the region if it poses a threat to use nuclear weapons, Woolsey said in a telephone interview with The Associated Press.
If investment decisions by state pension systems persuade some oil companies to pull out of Iran, the economic damage could cause Iran to abandon its nuclear weapons program and stop interfering in other countries in the region, Woolsey said.
"One of their big vulnerabilities is they need to have foreign finance for companies that are doing business with them, particularly in the area of oil and gas," said Woolsey, who now is a partner in a venture capital company that promotes clean energy and other technology.
About 20 states have passed similar measures restricting investment of state funds in some companies that operate in Iran, Woolsey said. The publicity generated by those state actions can cause companies to leave Iran, he said.
Supporters of the South Dakota bill asked Woolsey to help promote the measure.
Rep. Dan Lederman, R-Dakota Dunes, one of the main sponsors of the South Dakota divestment bill, said Iran has helped supply insurgents in Iraq with explosive devices that have killed military personnel from South Dakota. If Iran has nuclear weapons, it would present a much larger threat to U.S. safety and security, he said.
"This bill can be summed up in one line: You don't help your enemies," Lederman said in a recent House committee hearing.
Nearly half the members of the South Dakota Legislature are sponsors of Lederman's bill, which has already passed the Senate.
The measure would require the State Investment Council to get rid of its stock in companies that do substantial business in Iran and are subject to sanctions under the 1996 federal Iran Sanctions Act. The council would urge those companies to stop such operations in Iran, and the state would dump the stock within 15 months if the companies did not leave Iran.
State Investment Officer Matt Clark has said that as of last fall, South Dakota held about $68 million in three oil companies identified by federal law as improperly doing business in Iran. One of those companies has since been removed from the list, and the state now owns only $9 million in two sanctioned companies, Netherlands-based Royal Dutch Shell PLC and France's Total SA.
That $9 million is a tiny part of the $9 billion in assets held by the South Dakota Retirement System and several state trust funds, Lederman said.
The South Dakota Retirement System and the Investment Council, which is responsible for investing money from the public pension system and state trust funds, have proposed their own bill dealing with the subject. Instead of dealing specifically with Iran, it sets out a procedure for handling similar situations in the future.
The Retirement System's bill emphasizes its duty to invest in a way that benefits its members, and it would forbid so-called social investing, such as directing money toward social goals. But it also would require the Investment Council to promote compliance with federal divestiture laws and recognize the risk associated with companies doing business in those nations identified in federal law.
Both bills are expected to pass.
State investment officer Matt Clark recently told a House committee that the Retirement System has earned more on its investments than other public pension plans because it has focused on maximizing returns for its members. He said he is worried that Lederman's proposal sets a precedent that could lead to more investment decisions based on politics or social goals.
Officials of the Retirement System and Investment Office are patriotic and support U.S. troops, but they doubt selling stock in oil companies operating in Iran will have any effect on that nation, Clark said.
"Studies have shown these kinds of divestment actions have never done any good. They've only satisfied people sense of wanting to express outrage over an issue," Clark said.
The Investment Council and Retirement System would prefer to follow a policy of encouraging companies to end their activities in places like Iraq.
