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After Long Haul, Divestment Legislation Passes in State

June 24, 2010 By:
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Josh Shapiro
After a five-year legislative and lobbying effort to use the commonwealth's economic prowess to help isolate rogue regimes, the Pennsylvania General Assembly passed Iran and Sudan divestment legislation.

And Jewish groups played a significant role in the effort.

All that's required for the bill to become law is for Gov. Ed Rendell to sign it. He is expected to do so, pending a thorough legal review, according to spokes-man Gary Tuma.

On June 22, the Pennsylvania House unanimously passed, without amendment, the exact bill that the Senate approved in May. In the past, the House had championed the measure, only to see it stall in the Senate, where questions arose about its implications for many retirees' pensions.

The Protecting Pennsylvania Investments Act, introduced by State Sen. Mike Stack (D-District 5) of Philadelphia requires the State Treasurer's office, along with the state's largest public pension systems, to end financial ties with foreign companies that do at least $20 million in investments in Iran's energy sector or aid the country's military supply.

The affected funds are the Public School Employees' Retirement System, State Employees' Retirement System and Pennsylvania Municipal Retiree System.

The law would make Pennsylvania the 19th state to enact legislation requiring divestment from companies that do business in Iran or Sudan. The aim is to halt Iran's nuclear capability and stop Sudan's genocidal policies.

The nationwide divestment effort has led some firms, like the Italian energy corporation Eni SpA, to either cease or dramatically scale back their activities in Iran.

The Pennsylvania legislation comes just weeks after the U.N. Security Council announced new sanctions targeting Iranian companies and individuals with ties to the Iranian Revolutionary Guard.

Congress is also working on a new round of American sanctions that focus on disrupting Iran's gasoline supply and banning American banks from dealings with foreign banks that serve Iran's Revolutionary Guard.

According to State Rep. Josh Shapiro (D-District 153), who first introduced a version of the divestment bill in 2006, the law would mandate that the pension funds divest an estimated $379 million in affected funds.

That's a far cry from the $3.5 billion estimated to have been affected in 2004, illustrating that some divestment has already taken place and how badly the pensions have been hurt by the recession, said Shapiro.

"A combination of national and international sanctions, coupled with state divestment, will hopefully bring Iran to its knees and end the genocide in Sudan," said Shapiro. "The bottom line is: If you want to do business with the commonwealth, then you'd better sever your ties with these terrorist nations."

A Top Priority
Other Jewish House members who played a significant role in getting the legislation through include State Rep. Babette Josephs (D-District 182) and State Rep. Dan Frankel (D-District 23) of Allegheny County.

The Pennsylvania Jewish Coalition, which represents federations across the state, had made the measure a top priority and worked behind the scenes for years to make this happen.

Locally, the Jewish Community Relations Council had sent several e-mails in recent weeks urging Jews to contact lawmakers in support of the measure.

"It is a very big victory for the Jewish community," said Robin Schatz, director of government affairs for the Jewish Federation of Greater Philadelphia.

Schatz, who rushed to Harrisburg for the final vote on Tuesday, added: "It makes a statement. We are no longer the largest state that does not have a divestment policy."

Hank Butler, executive director of the Pennsylvania Jewish Coalition, who has worked on the issue nearly full-time for the past four years, said that he won't celebrate until the governor actually signs his name in ink.

Down to Two
The House first passed a version of the bill in 2008, but the economic recession hit just as the Senate was about to consider the measure; afterwards, few wanted to tamper with the retirement system's holdings.

Early in the process, Shapiro and other advocates pushed for divestment from all countries on the U.S. State Department's list of terrorist sponsoring nations, which includes Cuba and Syria -- North Korea was removed several years ago.

But in the end, the more targeted bill that focused on the two nations drew more widespread support.

Among the compromises that helped finally get the bill through both chambers was a change to the newest Senate version -- the one the House ratified -- which extended the amount of time companies have to divest from 22 months to 36 months.

Another provision included in the final measure requires the state to reimburse the pension funds if divestment results in a financial loss.

In a May 28 editorial, The Patriot-News of Harrisburg said that taxpayers could unwittingly foot the bill in the legislature's attempts to make foreign policy.

"The Pennsylvania legislation will have little to no impact on Sudan and Iran, but it could easily backfire here at home," stated the editorial. "American companies already are prevented from doing business in Iran and Sudan, so any divestment would be from only a few foreign companies."

But in the end, the 200-0 vote in the House proved a rare moment of bipartisanship in an often cantankerous town.

Steve Miskin, spokesman for the House Republican Caucus, said: "We do not want in any shape or form any of our dollars supporting terrorism or terrorist states." 

 

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