The state House of Representatives unanimously passed legislation this week that prohibits Pennsylvania’s public pension funds from investing in foreign companies with significant business ties to Iran and Sudan.
House Bill 1821, sponsored by Rep. Josh Shapiro (D-Montgomery), passed by a 193-0 vote. The Protecting Pennsylvania’s Investments Act would require the state Treasurer’s Office, Public School Employees’ Retirement System and State Employees’ Retirement System, within 22 months, to end investments in targeted foreign companies who choose to continue business activities in Iran or Sudan.
“It’s been a long battle,” said Shapiro. “Five years ago, we couldn’t even get a vote on the floor. Now, it passed unanimously, 193 to zero.”
The bill is now awaiting action by the Senate before it becomes law. The House passed a similar bill in June 2008, but it died at the end of the session due to Senate inaction.
This time, Shapiro is “very optimistic” that the Senate will pass the new bill by early next year, noting that the House addressed Senate concerns regarding clarification of targeted companies and narrowing the scope of the bill to cover “only direct investments such as stocks and bonds.”
“The president of the Senate, Joseph Scarnati, has told me that he strongly supports the bill,” Shapiro said. “There is no reason this can’t get passed.”
Shapiro said he believes states have a responsibility to use their economic power to weaken their enemies, and support their allies.
“Pennsylvania has $664 million in retiree savings going to foreign companies that are propping up Iran and Sudan,” Shapiro said. “This will have a dramatic effect on the economies of those rogue nations.”
Shapiro added that the new law is also financially prudent for investors.
“Subjecting retiree benefits to the geopolitical risks of Iran and the Sudan is not a wise investment strategy,” he said.
Nineteen U.S. states already have enacted divestment legislation, and nine more states have taken voluntary steps to divest their pension funds, or passed resolutions urging divestment.
“We’re not inventing the wheel here,” said State Rep. Dan Frankel, (D-Squirrel Hill), noting that the bill was modeled on those passed in other states mandating divestment over time, to avoid unnecessary exposure to financial losses.
Frankel believes states have a moral imperative to “do whatever we can” to end support to Sudan, a nation that practices genocide, and Iran, “a terrorist state that doesn’t support our interests.”
“I represent a community that has one of the larger groups of survivors of the Holocaust,” Frankel said. “It’s a shrinking group, but when I interact with them, they feel strongly that the United States needs to stand up to genocide.”
Frankel said that the United States has failed on other occasions to act against genocide, and cannot ignore now the situation in Sudan.
“We didn’t live up to our moral responsibilities when we knew about the Holocaust early on,” he said. “And the U.S. has been disappointing in terms of how it has responded to the situation in Rwanda. But we have an ethical responsibility to be responsive. And we can be responsive as it’s been done in other states.”
“I think it’s the least the state of Pennsylvania can do,” Frankel said.
(Toby Tabachnick can be reached at firstname.lastname@example.org or 412-687-1263.)