Wednesday, July 8, 2009

The hypocrisy of Western capital: divestment from Iran, investment rises in Turkey

Last week one of the largest institutional investors of the United States, the New York State Pension Fund, stated they were divesting US$86 million from companies conducting business in Iran and Sudan. The complete news release can be found here.

The State Comptroller, Thomas DiNapoli stated that, "....they [investors] don't want us investing their future in excessively risky markets. And they shouldn't have their pension fund dollars jeopardize by regimes that support genocide and terrorism".

The sentiments expressed by DiNapoli are part of a growing movement amongst pension funds and other large investors such as foundations, endowments and high net worth/family offices in the United States and elsewhere towards making investment decisions within an environmentally and socially conscious framework.

Obviously, these sentiments are noble and honourable - every decent human being would like a better world. However, like all Utopian adventures, they can be abused by influential people and institutions for ends which are less than idealistic.

For example, leaving aside the case of Sudan, Iran is not currently occupying any foreign country with its armed forces, has not uprooted 200,000 people and refused to hand back their property and livelihood, has not destroyed the civic and religious architectural remains of a 4,000 year old civilisation and does not threaten a neighbouring country with low flyovers over inhabited areas in order to challenge its sovereignty. In addition, Iran does not deny the genocide of three important ethnic groups that surround it. However, there is one country which is currently doing all these, Turkey.

Absurdly, not only have pension funds not decided to divest from Turkey but they appear to be increasing their investments in Turkey judging by this article printed in the Turkish daily, Hurriyet earlier this year. For example, the total number of U.S. companies operating in Turkey was 834 in 2007 and those companies helped raise the total capital inflow from the United States to Turkey to around US$9.2 billion in 2007. Undoubtedly, the asset allocation decisions of some of the abovementioned institutional investors have contributed to this flow of capital.

Obviously, there is one rule for some and another rule for others. As mentioned before, investing according to environmentally and social responsible frameworks is theoretically sound but in reality power-relations determine who is socially acceptable and who is not.

Source: Huffington Post, Hurriyet, Antipodes

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