DIVESTMENT from enterprises in countries beset with politically noxious regimes is a well-regarded and popular impulse. Such proposals always draw upon the experience of American campus activism pushing for divestment from apartheid South Africa in the 1980s. But not all divestment ideas are created equal, nor have equal merit. A bill to divest from Iran, now before the Massachusetts Legislature, is an empty gesture and likely to be counterproductive.
Where divestment and similar campaigns (such as boycotts) work best is when the major states are reluctant to criticize, much less punish, bad behavior on the part of the target regime. South Africa is the perfect example. The US government coddled apartheid South Africa for decades, President Reagan mostly notably; he embraced the Botha regime as "an ally and friend." Set against such a reprehensible policy, and with the support of the post-Colonial front-line states, calls for divestment and sanctions were powerful. They also had the support, at long last, of America's European allies.
The bill on Beacon Hill would remove all state pension funds from investments in Iran's energy industry as a means of punishing Iran for bad behavior. Of course, the US government has imposed sanctions and other trade barriers on Iran for nearly 30 years. The government is strict about enforcing these rules and regulations, and they extend broadly to foreign corporations that do business with Iran.
So, unlike the case of South Africa, the US government has been the leader in imposing sanctions. Unlike South Africa, the sanctions are supported by few of our allies, including countries in the Persian Gulf. And, unlike South Africa, there is no evidence that sanctions are changing the behavior of the Iranian state.
Because of the broad, longstanding, and punitive sanctions on Iran, the divestment bill will have virtually no practical effect. The likelihood that any possible investment in Iran's energy industry would not already be prohibited by US law is low. In the globalized economy nowadays, such strategies are less effective anyway, because tracking the flow of money and goods is increasingly difficult.
The result is that this bill is essentially a political gesture. Now, political gestures can be important. And here is where this legislation moves from the practically vacuous to the symbolically counterproductive. In other words, it cannot have a beneficial impact as a divestment instrument. It can have a deleterious impact as a political statement.
Conservative Iranians - those opposed to better relations with America, and often those who generate mischief, or worse, at home and in the region - turn US hostility into a rallying cry, much as Fidel Castro has done in Cuba for nearly 50 years. That is a relatively easy thing for them to do, because Iranians see the United States as a bully - we overthrew their democratically elected prime minister in 1953; supported the illegal and ruthless regime of the Pahlavi clique for more than 30 years; lavishly aided Saddam Hussein in the bloody Iran-Iraq war of the 1980s; and have attempted to isolate and punish the Islamic Republic for three decades. These, among other policies, have had no positive results for America.
At the same time, the Iranian public remains open to better relations and demonstrates a liking for Americans. They oppose US sanctions. In a recent poll, two-thirds of Iranians cited improved trade relations as one route to a better relationship. They are right.
So this is a gesture that should not be made. It is useless and possibly harmful. It tangles the pension fund managers in needless red tape. For those seeking comity among nations in that region and beyond, we know from hard experience that sustained and creative engagement is a far more promising strategy.
John Tirman is executive director and principal research scientist at the MIT Center for International Studies, where he also heads the Persian Gulf Initiative.
