The U.S. government has ramped up its efforts to rein in Iran’s nuclear ambitions. In February, the Obama administration expanded sanctions against companies affiliated with Iran’s Revolutionary Guard Corps. Secretary of State Hillary Clinton urged neighboring countries to up the pressure on Iranian elites.
But government action hasn’t stopped Iran’s nuclear pursuits. That’s why the private sector has a vital role to play. By severing economic ties with Iran, Western companies can reinforce the international community’s efforts to stop Iran’s nuclear weapons program.
And by insisting that companies fully disclose their interests in Iran, investors can hold firms accountable for their dealings.
Lest we forget, Iran’s government provides financing and safe harbor to terrorists. It violently suppresses political dissent. In January, more than 1,000 protestors were arrested during demonstrations in Tehran and other major cities. At least eight were killed.
Iran would be emboldened and far more dangerous with nuclear weapons.
Foreign investment flowing into Iran lines the pockets of political elites who use the lucre to strengthen their grip on power and further the regime’s dangerous activities.
Despite these realities, multiple Western companies conduct business in Iran. Such activity isn’t just morally suspect, it also could hurt shareholder value.
Investors should not stand by in the face of such risks. They should urge companies to change their behavior and give a full account of their exposure in Iran. To aid such efforts, United Against Nuclear Iran, a nonpartisan coalition dedicated to preventing the Iranian regime from acquiring nuclear weapons, has launched the Iran Disclosure Project.
By law, publicly traded companies — not just American businesses, but also international firms that avail themselves of U.S. capital markets — must disclose all “material information” related to foreign investments in their annual reports to shareholders and in their annual filing with the Securities and Exchange Commission. The law stipulates that any investments that might affect firm performance are “material,” but the firms themselves are largely responsible for making that determination.
So companies effectively police themselves. Not surprisingly, many are less than transparent about their involvement in Iran.
Eighteen states have taken steps to divest public pension funds from Iran. Other investors must follow their lead. They can start by demanding that firms accurately publicize their interests in Iran.
Such public pressure can prompt firms to act. In 2008, General Electric agreed to cease doing business in Iran. Just recently, both the German giant Siemens and the Italian energy company Eni committed to stop doing business in Iran once current contracts expire. In March, Shell announced it would halt all gasoline sales in Iran, and Ingersoll Rand said it would prohibit its foreign affiliates from selling products to Iran. Caterpillar, too, recently announced plans to sever ties with Iran.
Unfortunately, some companies are rebuffing calls for transparency. Other companies admit to doing business in Iran but claim they aren’t working with the government. That’s unlikely. The Revolutionary Guards are involved in virtually every sector of the economy, particularly those with substantial foreign interest, like oil, gas and engineering. Doing business in Iran is effectively impossible without doing business with the Revolutionary Guards.
Private economic pressure is an important weapon in the global community’s drive to stop Iran from obtaining nuclear weapons. Trade sanctions already have left the country with sky-high inflation, unemployment and poverty. The Iranian people are deeply dissatisfied with their government. Choking off the stream of foreign dollars would weaken the regime and set the stage for reform.
Sunlight is said to be the best disinfectant. Nowhere is that truer than in Iran.
We must have transparency with firms doing business in Iran. When confronted with the choice of admitting to their profiteering in the world’s major state sponsor of terror or pulling out, responsible firms will pull out. Economic pressure on Iran may be our last hope for preventing the country from developing nuclear weapons.
(Mark Wallace is the president of United Against Nuclear Iran. Most recently, he was the U.S. representative for U.N. Management and Reform.)