Lawmakers want to block state investment in firms that deal with Iran

PHOENIX — More than two dozen Republican lawmakers want to constitutionally block state and local governments from buying items or investing in any company that does business with the government of Iran, even as sanctions against that country are being eased.

The proposal crafted by House Majority Leader Steve Montenegro, R-Litchfield Park, specifically bans investment in any company that does business “with the government of a country that is designated by the U.S. Department of State on or after Jan. 1, 2015, as a state sponsor of terrorism.”

At the moment that includes Syria, Sudan and Iran. And until last year it used to include Cuba until the Obama administration moved to normalize relations with that country.

But Montenegro made it clear his measure, introduced just days after the United Nations said Iran is complying with a new nuclear treaty, is aimed at that country.

The move is drawing concern from the Arizona State Retirement System which has $34 billion in investments in private companies.

Spokesman Nick Ponder acknowledged HCR 2040 is limited to prohibiting investment in companies that do business directly with the government.

But he pointed out that many Iranian firms, ranging from the oil industry to Iran Air are partly owned by the government. And he said that would force Arizona to sell off investments in companies like Boeing to Freeport McMoRan if they decide to do business with those Iranian companies as sanctions are lifted.

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Montenegro said he expects the deal with Iran to slowly loosen the restrictions that now exist. But he said that doesn’t mean Arizona should follow suit.

“I think that it’s important for us as a state to be able to decide where the public money is going,” he said. And that means not having Arizona dollars somehow winding up in the hands of terrorists.

Montenegro quoted from a recent statement by Secretary of State John Kerry who said that it is likely that some of the financial relief granted to Iran under the deal will go to groups the United States considers terrorists, like the Iran Revolutionary Guard Corps.

Ponder said the problems with what Montenegro wants to do go beyond the problem of the Iranian government having its hands in many industries in which American firms would like to invest, like oil and gas.

He said he doubts that any of these firms will avoid doing business with Iran solely out of fear that Arizona retirement system will sell off its shares.

By contrast, deputy state Treasurer Mark Swenson, whose office has control of various trust funds, said he is hoping it doesn’t come to that.