Divest South Africa, Israel--Why Not Terrorism?

In the 1980s, students from around the country, including Harvard, led a national grassroots effort to end investments in companies operating in Apartheid-era South Africa. In 2002, students again petitioned university administrators to divest from companies with business ties to Israel for its apparent violations of international law. Today, Harvard students have a unique opportunity to do something that will help defeat terrorism: urge Harvard University’s endowment to divest from companies that operate in terrorist-sponsoring states.

Students can pressure their university endowments to think twice about investing in companies with commercial activity in Sudan, Iran, Syria, North Korea, and Libya. Congress has already introduced bipartisan legislation (H.R. 5061) that would limit Sudan’s access to US capital markets and mandate disclosure of all US commercial activity in Sudan. And in August, a Washington, D.C.-based think tank, the Center for Security Policy, released a report entitled “The Terrorism Investment of the 50 States” demanding more security responsible investing by America’s top public pension systems.

The report claims that 87 leading American public pension funds alone have invested roughly $188 billion in companies with business operations in terrorist sponsoring states. The Massachusetts Pensions Reserve Management Board, the state’s largest pension, is no exception. It has more than $18 billion invested in nearly 178 companies operating in terrorist-sponsoring states.

Although the report addresses America’s top public pension funds, the insights—and action items—associated with a counter-terror divestment campaign can be easily applied to university endowments, as well. Like public pension systems, endowments comprise one part of what is known as the institutional investor community. (Institutional investors are investment funds with more than $500 million under management.)

The Harvard University endowment, managed by the Harvard Management Company, is one of the nation’s largest investors, with total assets valued at more than $22 billion. Like other institutional investors, college and university endowments typically hold stock in scores of the roughly 400 publicly traded companies that provide the life-blood of terrorist-sponsoring states.

To be clear, these companies are legally doing business in these countries. Accordingly, the endowment investments of universities in these companies are likewise legal. That doesn’t make such investments ethically prudent or financially sound, though.

More importantly, by divesting the stock of these companies, Harvard would send a clear signal to companies that provide large-scale revenue flows and advanced technologies, equipment and expertise to governments that support terrorism: Choose between your business in countries that threaten American security interests and our investment in your company. I believe they will choose the latter.

How could college students help bring about these sorts of desirable outcomes? The same way they helped end the injustices of apartheid in South Africa two decades ago. Dedicated students from colleges across the country demanded that their schools stop investing in companies that did business in South Africa. These students, along with the rest of the world, were rewarded for that passion. Harvard’s endowment, after sustained student and community pressure, selectively divested $160 million in companies operating in South Africa in 1986. Apartheid was consigned to the dustbin of history.

This time, there are multinational corporations that could be targeted for doing business with terrorist-sponsoring regimes. The results can be much the same as the South Africa example. Moreover, universities have already set a precedent that they will divest to right injustices. Will university administrators, who already endorsed a selective divestment campaign against South Africa, be able to argue that apartheid was a greater evil than terrorism is today? I suspect not.

This situation should outrage students regardless of political party affiliation. We are at war, and this strategy is aimed at protecting all Americans. This time around, like defeating apartheid in South Africa, college students must take a stand for a just cause.

Bryan J. Auchterlonie is a first year graduate student at the Johns Hopkins University School of Advanced International Affairs in Washington, D.C. and is a part-time employee at the Center for Security Policy.