By Jim Lobe, Inter Press Service

WASHINGTON -- Neo-conservative hawks who championed the invasion of Iraq
are leading a new campaign to persuade state and local governments, as
well as other institutional investors, to "divest" their holdings in
foreign companies and U.S. overseas subsidiaries doing business in Iran.

While stressing that U.S. military action against Iran's nuclear program
should not be taken off the table, they call their divestment strategy the
"non-violent tool for countering the Iranian threat."

And, like the run-up to the Iraq war, the campaign has attracted
bipartisan support. Democrats, including those who strongly oppose the
George W. Bush administration's Iraq policy, see divestment, as well as
other proposed economic sanctions against Tehran, as a way to look "tough
on Iran" short of going to war.

"I'm not yet ready to suggest the use of military force . . . but one has
to stay on alert that that time could come sooner rather than later,"
James Woolsey, who served briefly as former President Bill Clinton's CIA
director, told an Ohio legislative committee this week in support of a
bill that would ban investments by the state's pension funds in companies
operating in Iran or in any other country the State Department lists as a
state sponsor of terrorism.

"Terror-free investing will not solve the problems . . . but I think it's
an important part of the comprehensive package," added Woolsey, a
prominent neo-conservative associated with the like-minded Foundation for
the Defense of Democracies (FDD).

The new campaign, the brainchild of the far-right Center for Security
Policy (CSP), is designed to put pressure on the Islamic Republic to
abandon its nuclear program, end its support of anti-Israel groups like
Palestinian Hamas and Lebanon's Hezbollah, and "perhaps even to push (it)
toward collapse," according to FDD president Clifford May, by depriving it
of foreign investment and commercial ties with other countries.

According to a report released here Wednesday by the neo-conservative
American Enterprise Institute, which is collaborating with the CSP, Iran
has signed more than 150 billion dollars worth of investment and
commercial contracts with foreign companies based in more than 30
countries since 2000, including more than four billion dollars with U.S.
overseas subsidiaries.

The initiative, which is modeled after the anti-apartheid divestment
campaign against South Africa of the 1980s, is also backed by major
pro-Israel and Jewish groups, including the American Israel Public Affairs
Committee, the American Jewish Committee, the Anti-Defamation League, and
local Jewish Community Relations Councils whose membership is worried that
Israel will be threatened by a nuclear-armed Iran.

Potentially at stake are billions of dollars controlled by state pension
funds and other institutional investors that have invested money in
companies -- based mostly in Europe and Asia -- operating in Iran.
According to CSP, New York pension funds alone own nearly one billion
dollars of stock in three Fortune 500 companies tied to Iran.

"Iran's ability to fund its nuclear program and sponsor terrorism would
come to a grinding halt without revenue gained from foreign investors,"
according to CSP, which, along with the American Enterprise Institute and
FDD, was a leading advocate for the 2003 invasion of Iraq.

Last year, Missouri became the first state to order one of its pension
funds to divest its shares of all companies that do business with Iran and
other countries on the State Department's terror list. Last month, both
houses of the Florida legislature unanimously approved a bill banning the
investment of state funds in companies with commercial ties to Sudan and
Iran's energy sector.

Iran-related divestment bills are expected to be approved over the next
month by legislatures in Ohio, Louisiana, Pennsylvania, and California,
according to Christopher Holton, the head of CSP's "Terror-Free Investing"
programme. Similar bills are also being considered in the legislatures of
Texas, Georgia, Maryland, and New Jersey and will soon be introduced in
Michigan and Illinois, he told IPS.

The sudden proliferation of state divestment measures comes amid renewed
efforts in Congress to tighten and expand the scope of existing
legislation against Iran.

Under the 1996 Iran Sanctions Act (ISA), which, among other provisions,
bans U.S. companies from doing business in Iran, the president is required
to impose a range of economic sanctions against foreign companies that
invested more than 20 million dollars a year in Iran's energy sector,
which accounts for about 80 percent of its foreign-exchange earnings.

The same law, however, permits the president to waive such penalties if he
deems it in the national interest. Worried that imposing sanctions would
anger key U.S. allies, President Bush has consistently exercised his
waiver authority, as his predecessor, Bill Clinton, did before him.

But, as tensions with Iran have increased since the election of President
Mahmoud Ahmadinejad nearly two years ago, pressure, especially from
neo-conservative groups and the hawkish leadership of the so-called
"Israel Lobby," which includes the Christian Right, to take stronger
action has grown.

Congress is currently considering several bills that, if passed, would
reduce or eliminate the president's waiver authority and include language
encouraging divestment drives at the state level.

The administration, which is at least rhetorically committed to working
through the U.N. Security Council to impose multilateral sanctions against
Iran to rein in its nuclear program, appears ambivalent on both expanding
ISA and on the divestment campaign.

On the one hand, State and Treasury Department officials, using the threat
of tougher Congressional action, have informally -- and with some success
-- pressed foreign banks, companies, and governments, to forgo or freeze
new investments in Iran's energy sector over the past year.

On the other hand, the administration has opposed the pending legislation
both because it would reduce the president's flexibility in conducting
foreign policy and because imposing sanctions will almost certainly
produce a backlash in foreign capitals that would undermine Washington's
ability to sustain a united front with its allies and other powers against
Iran at the U.N. and in other forums.

"We could not support modifications to (ISA) now being circulated in
Congress that would turn the full weight of sanctions not against Iran but
against our allies that are instrumental in our coalition against Iran,"
Undersecretary of State Nicholas Burns told a Senate Committee in late

In this position, the administration has been strongly supported by the
National Foreign Trade Council (NFTC), a business lobby created by many of
the nation's biggest corporations, which has long opposed both unilateral
U.S. trade sanctions and state divestment initiatives.

"On one hand, we're asking Europe, Russia, China, and Japan to work
together with us on this, and, on the other hand, we're beating their
companies over the head with a stick," NFTC President William Reinsch told

In a letter to Ohio lawmakers considering divestment legislation, Reinsch
made much the same argument, noting also that, in a case brought by the
NFTC, a federal court judge recently struck down as unconstitutional a
Sudan divestment law in Illinois on the grounds that it interfered with
the federal government's ability to conduct foreign policy and regulate
foreign trade.

In his weekly column in the *Washington Times* published shortly after
Reinsch sent his letter, CSP's president, Frank Gaffney, denounced Reinsch
as "Terror's lobbyist," charging that the NFTC "favors doing business with
America's enemies and runs interference for those determined to do so."

"Iran is already in difficult economic straits; if fully brought to bear,
the power of America's capital markets could mightily affect corporate
behaviour, undermining -- hopefully, helping to bring down -- the
mullahocracy in Iran," wrote Gaffney.


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Foundation for the Defense of Democracies
May 4, 2007

On Thursday, May 3, James Woolsey, co-chair of the Committee on the
Present Danger and an FDD Distinguished Advisor, testified before the Ohio
House of Representatives in favor of a new bill that would prohibit the
state's public investment funds from investing in foreign companies that
have business ties or operations in Iran. Similar terror-free investing
bills have gained momentum in Florida, Maryland, Texas, and Colorado. Mr.
Woolsey’s prepared testimony is attached and is available at

“Terror-free investing won’t solve all the problems that Iran presents,”
said Woolsey. “But it’s an important part of a comprehensive program of
pressure on the regime, and engagement with the population, that could,
over time, generate the regime change that we should seek.”

The Committee on the Present Danger is dedicated to protecting and
expanding democracy by supporting policies aimed at winning the global war
against terrorism and the movements and ideologies that drive it. The
CPD’s mission is to educate free people everywhere about the threat posed
by global radical Islamist and fascist terrorist movements; to counsel
against appeasement of terrorists; to support policies that are part of a
strategy of victory against this menace to freedom and to support policies
that encourage the development of civil society and democracy in those
regions from which the terrorists emanate. CPD is a not-for-profit,
non-partisan 501(c)(3) organization. For more information, please visit


Committee on Financial Institutions, Real Estate, and Securities
May 3, 2007


Mr. Chairman, Members of the Committee, I am R. James Woolsey and I’m
honored to testify before you today on this important issue.

By way of background, I have served in the federal government on five
occasions, holding Presidential appointments in two Republican and two
Democratic administrations, most recently as Director of Central
Intelligence for two years during the first Clinton administration.

Today, I am Vice President of the consulting firm Booz Allen Hamilton,
where I work principally in the field of energy.

I also serve as co-chair of the Committee on the Present Danger, a
bipartisan organization that seeks to stiffen American resolve to confront
and defeat what we call “Islamist totalitarianism,” or “militant
Islamism,” and the terrorism it breeds. The other co-chair is former
Secretary of State George Shultz. We are an organization of over 100
former White House officials, Ambassadors, Cabinet Secretaries, academics,
and other foreign policy experts who have come together to educate free
people about this threat to the United States and the free world; to
counsel against appeasing terrorists and the states that sponsor them; to
support policies to confront this menace; and to encourage the development
of civil society and democracy in regions from which the terrorists

I am pleased to talk to you today about why we must use every possible
tool in the fight against this menace.


Mr. Chairman, the Iran Crisis now enters its 28th year. The totalitarian
and corrupt regime in Tehran does not differ in any fundamental way from
that which took power in the aftermath of the collapse of the Shah’s
regime in 1979.

To be sure, in the late nineties, at the beginning of the presidency of
Mohammad Khatami, for a year or so the optimistic could believe that the
forces of moderation might make substantial progress in Iran. But the
crackdown in the spring of 1998 on students and journalists, including the
imprisonment and killing of many, should have signaled clearly that these
hopes had been dashed. Khatami was always a creature of the regime. He
had passed the test of regime approval to be permitted to run for
President, a test honorably failed by dozens of more truly reform-minded
and brave Iranian political figures. He made no substantial changes in
the nature of the regime during his tenure.

Now the camouflaged mantle of “moderate” has passed from Khatami to Ali
Rafsanjani who, during his own Presidency, was responsible for the
execution and imprisonment of a great many regime opponents and the murder
abroad of a large number as well. If President Khatami might be compared
to Prime Minister Kosygin in the Soviet Union -- a man labeled “moderate”
largely because he didn’t use excessive rhetoric and smiled more than his
colleagues -- then Mr. Rafsanjani’s current characterization as a moderate
or pragmatist might be compared to the image of Mr. Andropov that the KGB
successfully sold to much of the world’s press: the evidence for Mr.
Andropov’s moderation was that he listened to jazz and drank Scotch. But
Mr. Rafsanjani, like the more notorious President Mahmoud Ahmadinejad, has
threatened the destruction of Israel; has been responsible, as noted
above, for many deaths, and is also famously corrupt.

The regime’s threats to destroy Israel and, on a longer time-scale, the
United States are part and parcel of its essence. Recent official
statements to this effect represent not a shift in policy. Iran’s regime
has defined itself for nearly 30 years by its fundamental hostility to the
West, and especially Israel and the United States, which it calls the
“Little Satan” and the “Great Satan,” respectively.

This fundamental hostility is now enhanced by a circle of fanatical
believers around Ayatollah Mesbah-Yazdi in Qum, a circle that includes
Ahmadinejad himself. This group expressly promotes the idea that
large-scale killing should be welcomed because it will summon the return
of the 12th Imam, or “Mahdi,” a messianic figure who disappeared in the
10th Century, which in turn will lead to the end of the world. Recently
the Islamic Republic’s Broadcasting web site has begun to assert that the
world is in its “last days” and that, as the world ends, Jesus will appear
with the Mahdi, as a Shi’ite and as his lieutenant. This rhetoric is not
limited to a small circle. Rafsanjani, for example, has utilized it as
well. To those of us in the West, of course, it sounds bizarre. But, we
ignore such ideology at our peril. As Enders Wimbush wrote recently in
the *Weekly Standard*, “Iran’s leadership has spoken of its willingness --
in their words -- to ’martyr’ the entire Iranian nation, and it has even
expressed he desirability of doing so as a way to accelerate an
inevitable, apocalyptic collision between Islam and the West . . . .”
Those in decision-making roles in the Iranian regime who believe such
things are certainly not going to be very inclined to negotiate in good
faith with us about Iraq, about Iran’s nuclear program, or indeed about
anything at all. Even deterrence is questionable as a strategy to contain
a nuclear-armed Iran, much less arms control agreements.

The Iranian regime does not restrict itself to hideous speech. As
President Bush, General Petraeus, and General Caldwell have noted, the
regime is helping terrorists infiltrate into Iraq and providing material
support to attacks on U.S. forces. It is clear, for example, that the
increasingly effective Improvised Explosive Devices (IEDs) are not so
improvised any more -- many now include sophisticated shaped charges that
penetrate armor. And they are of Iranian manufacture. Over the years,
directly and through its controlled assets such as the terrorist group
Hezbollah, Iran has killed and murdered hundreds of Americans and large
numbers of Israelis, French, and Argentinians as well. Torture has often
also been part of the picture. General Petraeus said last week that "The
Iranian involvement has really become much clearer to us and brought into
much more focus during the interrogation of the members -- the heads of
the Qazali network and some of the key members of that network that have
been in detention now for a month or more. This is the head of the secret
cell network, the extremist secret cells. They were provided substantial
funding, training on Iranian soil, advanced explosive munitions and
technologies as well as run of the mill arms and ammunition, in some cases
advice and in some cases even a degree of direction. When we captured
these individuals -- the initial capture, and then there have been a
number of others since then -- we discovered, for example, a 22-page
memorandum on a computer that detailed the planning, preparation, approval
process and conduct of the operation that resulted in five of our soldiers
being killed in Karbala. It also detailed -- there are numerous documents
which detailed a number of different attacks on coalition forces, and our
sense is that these records were kept so that they could be handed in to
whoever it is that is financing them. And there’s no question, again,
that Iranian financing is taking place through the Quds force of the
Iranian Republican Guards Corps."

The Persians invented chess, and if I were to characterize Iran’s
international behavior today in those terms, I would say that they are
actively deploying a number of pieces. One might call their nuclear
weapons development program their queen -- their most lethal and valuable
piece. No one should, by the way, discount their intention to obtain
nuclear weapons. The traces of highly-enriched (not just fuel-grade)
uranium, their deception, their heavy water plant, and other indicators
brand their program as one designed to develop nuclear weapons even in the
absence of their rhetoric about destroying Israel and ending the world.
The Sunni states of the region have become extremely alarmed at the
Iranian regime’s nuclear weapons program and six of them, including Saudi
Arabia and Egypt, have recently announced their intent to move toward
nuclear programs themselves, though they say that the purpose is
electricity generation. Needless to say, no one should believe that six
states, several with substantial oil and gas reserves, would
simultaneously determine that these reserves are inadequate for their
energy needs and that they can only obtain adequate electricity by moving
to develop nuclear power. In fact, of course, Iran has launched a
Shi’ite-Sunni nuclear arms race in this volatile region.

No degree of international disapproval -- or sanctions such as the tepid
ones that are achievable through the U.N. Security Council in the face of
Russian and Chinese opposition to strong ones -- will convince this regime
to abandon its nuclear weapons program. And even if Iran would need two
or three more years to develop enough fissile material through the
operation of its own centrifuges to fashion an entirely home-built nuclear
weapon, one must not forget its co-conspirator, North Korea. North
Korea’s principal exports today are counterfeit American currency, heroin,
and ballistic missile technology -- the Iranian Shahab and the North
Korean No Dong and Taepo Dong essentially constitute a joint missile
development program. Why would North Korea refrain from selling Iran
either fissile material or a crude nuclear weapon? Either is easily
transported by air. Such a purchase would substantially shorten the time
before Iran could have a nuclear weapon.

Iran moves four chess pieces of lesser value from time to time in part to
keep the United States and Israel off balance, in part to protect their
nuclear queen. The first three -- Hamas, Hezbollah, and Moqtadh al Sadr’s
forces in Iraq -- might be described as pawns; the fourth, Syria, perhaps
rises to the level of rook, since it is a nation-state and has a mutual
defense treaty with Iran. Iran cares little that the Alawite Syrian
regime needed special Iranian theological dispensation to be regarded as
part of Shi’ite Islam or that Hamas is Sunni. Iran’s regime, dating back
to the training that it’s of the very Shi’ite Revolutionary Guards
provided in the early 1970s in Lebanon by Yasser Arafat’s secular Fatah,
is quite willing to work with terrorist organizations, including al Qaeda,
that have all sorts of different ideological DNA.

Some believe that Shi’ites will not cooperate with Sunnis, or that either
will cooperate with secular groups -- that, for instance, there could have
been no collaboration between secular Baathist Iraq or Shi’ite Iran with
Sunni al Qaeda. Seventy years ago, conventional wisdom told us that
Communists and Nazis would never cooperate, and then came the
Stalin-Hitler Pact. The Iranian regime doesn’t just appreciate but more
or less lives the old Middle Eastern saying: “Me against my brother. Me
and my brother against our cousin. Me, my brother, and our cousin against
the stranger.”


Given the nature of the Iranian regime, what should we do?

First, because I am convinced that the Iranian regime is fundamentally
incorrigible, and because I am not ready to propose military force to
change the regime and halt its nuclear program, I believe we should opt
for trying to bring about, non-violently, a regime change. The hour is
late because we have wasted much time trying to engage and negotiate with
the regime. Nor is a non-violent approach guaranteed to work, or without
risks of unintended consequences. But I am convinced that it represents
our least bad option. We should state clearly that we support a change of
regime in Iran because of the irremediable theocratic totalitarian nature
of the current regime as it has been demonstrated over nearly 30 years,
together with its interference with the peace and security of its
neighbors -- especially Iraq and Lebanon -- and its nuclear weapons
program. I also believe that restiveness among Iranian minorities --
Arab, Kurdish, Azeri, and Baluch -- and the sullen opposition of many
young people indicate that a policy of stimulating regime change stands
some chance of success. In a poll taken at the behest of the Iranian
government some three years ago, over 70 per cent said that they wanted
improved relations with the United States. The Iranian government, of
course, imprisoned the pollsters.

Second, we should indeed engage, but with the Iranian people, not their
oppressors. Along the lines of recommendations by the Committee on the
Present Danger and by Iran experts such as Michael Ledeen, we should
target sanctions -- travel and financial -- on the Iranian leadership, not
on the Iranian people, and draw a sharp line between them. One
possibility is to seek to bring charges against President Ahmadinejad in
an international tribunal for violating the Genocide Convention in calling
publicly for the destruction of Israel. Our precedent would be the
charges brought against Charles Taylor, while President of Liberia, for
crimes against humanity before a special international tribunal in Sierra
Leon. Iran’s protectors in the United Nations would doubtless block the
establishment of such a tribunal, but clarity and principle have a force
of their own. Natan Sharansky and other Soviet dissidents then in the
Gulag have told us of the electrifying effect of President Reagan’s
declaration that the Soviet Union was an “evil empire.” We also should
engage in ways similar to the techniques we used in the 1980’s to engage
with the Polish people and Solidarity -- by communicating directly, now
via the Web and modern communications technology, with Iranian student
groups, labor unions, and other potential sources of resistance.

Third, Iran’s economy is driven by oil exports. This leaves it vulnerable
to several measures. Although Iran has reaped substantial financial
rewards from today’s high oil prices, we have begun to have some effect on
its oil production by our campaign to dry up its oil and gas development.
The Iranians are very worried about this. Deputy Oil Minister Mohammed
Hadi Nejad-Hosseinian recently said in an interview that "[i]f the
government does not control the consumption of oil products in Iran . . .
and at the same time, if the projects for increasing the capacity of the
oil and protection of the oil wells will not happen, within ten years
there will not be any oil for export."

At the appropriate time we could move toward a step that, although
drastic, is potentially very effective relatively quickly -- namely,
cutting off Iran’s imports of refined petroleum products. Iran has built
no refineries in many years and must import around 40 per cent of its
gasoline and diesel fuel.

Fourth and finally, by moving toward technology that can reduce
substantially the role of oil in our own economy and that of the world’s
other oil-importing states, we can help deprive oil exporters, including
Iran, of much of their leverage in international affairs. As Tom Friedman
of the *New York Times* puts it, the price of oil and the path of freedom
run in opposite directions. The attached op-ed piece of mine, published
in the *Wall Street Journal* on December 30 of last year, notes the
possibility of plug-in hybrid vehicles soon making it possible for
consumers to get around 500 miles per gallon of gasoline (since almost all
propulsion would come from much less expensive electricity and renewable
fuels, the latter mixed with only 15 per cent gasoline). This may seem an
extraordinary number. But when General Motors recently joined Toyota in
the plug-in hybrid race to market and unveiled its new Chevrolet Volt, one
of its executives used a figure of 525 miles per gallon. Five hundred and
twenty-five miles per gallon should give Iran a bracing degree of concern.

That’s what our government can do. But I want to end on a note about what
individuals and institutions in America can do.

Individuals, pension funds, foundations, universities, and other investors
make decisions every day about where to invest their dollars. Companies
need those investment dollars in order to expand. With terror-free
investing, investors would steer clear of public companies that do
business in Iran. U.S. companies already face restrictions on how much
business they can do in Iran and other terror-sponsoring states, so
terror-free investing is really designed to change the behavior of
foreign-based companies. Some of them have decided to stop doing business
there. If more do the same thing, that would increase the financial
pressure on the Islamic Republic, which suffers from a weak economy and
needs foreign investment, to change its ways. Terror-free investing won’t
solve all the problems that Iran presents. But it’s an important part of
a comprehensive program of pressure on the regime, and engagement with the
population, that could, over time, generate the regime change that we
should seek.

Mr. Chairman, members of the Committee, thank you. That concludes my
testimony. I would be pleased to respond to any questions that you may

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