DIVESTMENT DIVISION: Oregon divested from South Africa in the ’80s, and Sudan in 2005. Is Iran next?

The latest tool in America’s cold war with Iran could be the state of Oregon’s $79 billion investment portfolio.

The Jewish Federation of Greater Portland wants to change state policy so that funds controlled by the Treasury, such as public-employee pension money, would stop being invested in companies that do business in Iran’s energy sector.

Sanctions from the Clinton era already ban Americans from directly trading with Iran. But it’s perfectly legal to buy stock in a European energy company that profits from Persian Gulf oil wells, for example.

At least 17 states are considering divestment legislation that would supplement America’s economic boycott of a country the State Department calls a sponsor of terrorism. Late last month, California Gov. Arnold Schwarzenegger signed a law requiring state pension funds to divest from companies that do business in Iran’s nuclear, defense, oil or gas industries, beginning in 2009. The California law could require the reinvestment of billions of dollars and leave taxpayers holding the bag if the revised portfolio can’t cover all of its legally obligated payouts.

In August, Oregon Treasurer Randall Edwards met with the Jewish Federation to discuss Iran divestment. “I did make it pretty clear at the time that legislation is not the appropriate way to manage this,” Edwards says. “We’re not the State Department, and that’s where this gets challenging.”

The Federation’s community relations director, Bob Horenstein, says the group dropped its original plan to introduce divestment legislation and is instead working with Edwards’ office on formulating a policy. The Federation also hopes to bring Christian groups on board.

In 2005, Oregon pulled out of Sudan, in a dollar-driven protest of the government-sponsored genocide in Darfur. In the 1980s, Oregon was among the first states to divest from South Africa, one of many such moves that apartheid’s opponents credit with hastening its end.

Divesting from Iran would likely prove more controversial. America wouldn’t bomb South Africa in a million years, but we haven’t ruled out bombing Iran within the next year.

“I’d have to take a good look at” an Iran divestment proposal, says state Sen. Margaret Carter (D-Northeast Portland), who spearheaded the divestments in South Africa and Sudan.

The idea behind divestment is simple. It tells companies: “If you do business with people we don’t like, we won’t do business with you.” (Of course, somebody else probably will.)

Public pension funds are some of the biggest pots of money around, and they have a major influence on markets around the world. The Oregon Public Employees Retirement Fund is worth about $62.5 billion. That money, which keeps retired government workers from having to take jobs as Wal-Mart greeters, is invested in everything from African mines to Las Vegas casinos.

A little more than 1 percent of its public equity holdings—$742 million, by WW’ s calculation—may be invested in corporations that do business in Iran. Our list was based on a list compiled by the right-wing, D.C.-based Center for Security Policy, a list provided to the Oregon Treasurer’s office by the Jewish Federation, and press accounts of companies working in Iran or negotiating deals there.

The companies that would be affected by Iran divestment are mainly foreign oil and gas giants like Royal Dutch Shell, Russia’s Gazprom and Lukoil, France’s Total SA and China’s state energy corporations. But WW’ s analysis also included telecoms like France’s Alcatel-Lucent and manufacturers like Korea’s Hyundai. And it includes Dick Cheney’s old company, Halliburton, which has avoided U.S. sanctions by working in Iran through foreign-based subsidiaries. (Halliburton recently moved its corporate headquarters to Dubai.)

“The strategy here is to develop a finite list of companies that are investing in the energy sector,” says Horenstein. “We’re not targeting Hyundai because Hyundai sells cars to the Iranian people. Our beef is with the regime.”

Figuring out where multinationals are putting their money on any given day is a massive challenge. “There’s not a magic list out there, which was the problem with the Sudan legislation,” says Kate Richardson, the Oregon Treasurer’s chief of staff. “It’s even more complicated when you move it over to Iran.”

And divestment isn’t always popular with the people who implement it. “We oppose all divestment legislation just on principle,” says Clark McKinley, spokesman for CalPERS, the California pension fund. “It’s not in the best interests of the people we’re stewards for. We’re trying to get maximized investment returns. We also don’t believe that selling our shares and walking away from the table is the best way to achieve change.”

Goudarz Eghtedari, of Portland’s American-Iranian Friendship Council, agrees that divestment would weaken America’s leverage with Iran.

“It doesn’t have much financial impact on the Iranian economy, or on the Europeans’ investment in Iran,” says Eghtedari, an Iranian exile, one of an estimated 10,000 Iranians in Portland. “It basically creates more enemies.”

South Africa, Eghtedari says, was a different case.

“The problem with Iran is that the world cannot ignore the oil. There are so many countries that need it—China, Japan, Russia, Turkey,” he says. “The U.S. is not in a position to be able to dictate to everybody.”

This is the list of companies the Oregon Public Employees Retirement Fund invested in as of June 30, and that WW figured may be doing business in Iran.

Alcatel Lucent: $42.5 million
BNP Paribas: $28.8 million
Beni Stabili SpA: $1.2 million
Gazprom: $47.3 million
Hyundai: $32.3 million
LG Engineering: $47.5 million
Lukoil: $37.8 million
Norsk Hydro: $34.9 million
Petrobras: $5.3 million
Petronas: $683,000
Royal Dutch Shell: $101 million
Siemens AG: $71.4 million
Statoil ASA: $22 million
Total SA: $107 million
CNOOC: $51.4 million
Sinopec: $651,000
PTT: $15.8 million
Thai Oil Plc: $2 million
Petrol Ofisi: $712,000
Halliburton: $4.2 million
Repsol YPF: $50.1 million
ENI: $33 million
GS Holding Corp: $2.3 million