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Wednesday, April 7, 2010 as of 11:14 AM ET

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UN Could Take a Lesson from South Dakota

March 12, 2010 - 10:22 AM | by: Ben Evansky

South Dakota is the latest state to have adopted terror-free investment policies that target companies doing business with Iran. It joins some 18 other states and the District of Columbia. Observers say these states can teach the UN Security Council a thing or two when it comes to punishing Iran. The South Dakota law will force its state controlled pension fund to divest itself from companies doing business in Iran.

The bill’s original sponsor is Republican State Representative Dan Lederman who says the bill will affect nine million dollars of stocks owned by the state pension fund. Those equities will be divested over the next fifteen months. Hardest hit companies include Royal Dutch Shell and Total S.A. Lederman says “if Iran loses these partners the financial impact would be massive.”

While Shell would not comment on the new South Dakota law, it announced Wednesday in a publicly released letter to the group United Against Nuclear Iran (UANI) that it’s ending all gasoline sales to Iran. United Against Nuclear Iran welcomed the news and its President Ambassador Mark Wallace said more is still needed, and that “Shell must end its hydrocarbon development business in Iran.”

David Williams, Shell’s spokesman, told Fox News that if a new international agreement can be agreed upon concerning “additional trade sanctions against Iran, we will of course comply as we would in the case of any country.” The French multi-national, Total S.A. did not respond to Fox News questions.

Christopher Holton is the director of the Center for Security Policy’s Divest Terror Initiative, the group credited with bringing the disinvestment campaign to the state level. Holton says companies such as Siemens, Conoco-Phillips and Halliburton have either chosen to end or wind down operations in Iran, “at least partly as a result of the divestment initiatives.”

Bill Reinsch, president of the National Foreign Trade Council, a group that lobbies against disinvestment campaign’s told Fox News in a written statement, that “public pension fund divestment is a clumsy and ineffective tool.” Reinsch says his organization doesn’t support governments that engage in “objectionable behavior”; however, he does not believe that “state or local government action that may harm retired firefighters, teachers and police officers and is highly unlikely to achieve its intended purpose is a wise policy choice.”

As a former Under-Secretary during the Clinton Administration, Reinsch says “foreign policy sanctions laws by states conflict with the constitution’s assignment of primacy in foreign affairs to the President.”

Holton disagrees with Reinsch’s assertions and says that “billions of dollars of state pension system money has exited shares of companies that do business in, or with Iran since this initiative started back in 2005.”

Right now there are three other states with similar bills to that of South Dakota; Alaska, Pennsylvania, and Mississippi. While the other two are gaining traction, Holton says he is particularly frustrated with the effort in Mississippi where one state representative, Johnny Stringer has refused to even give the bill a hearing. A request for comment to Stringer’s office was not returned.

South Dakota representative Dan Lederman wants more states to join his effort and says that divestment “only works on a macro-economic scale.” he explains, “the more dollars we divest the bigger impact we will have on these companies helping Iran’s leaders.” Lederman believes this sort of legislation sends a strong message to the Iranians and “lets it be known that Americans are not interested in their tax dollars going toward investments in companies which partner with our enemies who arm, train and sponsor the terrorists that our troops are locked in combat against every day.”

Mike Rounds, South Dakota’s republican governor , who supported the bill from early on is scheduled to sign the bill into law on March 29th.

As for any imminent UN Security Council action, that appears far off according to Fox News’ UN producer, Jonathan Wachtel. He says that’s because Iran’s major trading partner China continues to stymie efforts by the US and allies to punish the Islamic Republic. In addition, Lebanon, under increasing Iranian-Hezbollah political pressure, takes over the Presidency of the Security Council in May, and is expected to resist any efforts to put pressure on Tehran. Wachtel says a “resolution is weeks away at best.”

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