Monday, March 8 2010 – John McCain, Claudia Rosett, Suzanne Scholte

Frank Gaffney analyzes the appalling willingness of foreign companies and foreign subsidiaries of U.S. companies to provide technology, investments and other forms of support to the Iranian regime. Frank then talks to Sen. John McCain about Don’t Ask Don’t Tell and why he is against its repeal at this time. Claudia Rosett joins Frank with important information on a new book. Suzanne Scholte of the North Korea Freedom Coalition calls “the worst place on earth.” She tells Frank some of the great things she is doing to change things over there.

MONOLOGUE – March 8, 2010

But first, I want to talk to you about a story that appeared in the New York Times above the fold on Sunday, it was a story about a subject that we’ve been thinking about, writing about, and working on or years at the Center for Security Policy; specifically I want to do a hat tip my colleague Christopher Holden who has been absolutely indefatigable in trying to counter the very thing the New York Times is reporting on in its Sunday editions, namely as the headline puts it: “US Enriches Companies defying its policies on Iran.”

The short form of a very long piece is that there are governments, companies that are publicly traded or US-owned subsidiaries that are operating inside Iran, enriching, empowering and otherwise emboldening the regime in Tehran that is like its friends in North Korea, a threat to its own people and to us. Now how is this being done? Because these companies are operating overseas, the Iran Sanctions Act does not apply.  It’s considered to be what they call “extra-territorial” to try to impose sanctions that the United States government has adopted onto these foreign subsidies, whether they’re foreign-owned or simply foreign-operated subsidies of American companies.  Most of the ones that are in violation of this set of sanctions that American companies are supposed to observe are foreign-owned, but some are foreign subsidiaries of American firms operating from overseas locales and thereby helping for example the Iranians exploit their energy resources or build their infrastructure, including by the way, in ways that are military relevant.

For example, there are air traffic control capabilities and fiber-optic systems that have inherent dual-use applications.  But most of these efforts are in the energy sector, where these companies are assisting the Iranians in tapping into and thereby  getting to market their oil and natural gas, both of which they have in considerable quantity.  Now the point of the piece that makes it doubly outrageous is that quite a number of these companies do business with the United States government, to the tune of $107 billion to be precise in contract payments, grants, and other benefits over the past decade for such companies while they are doing business with Iran.

Now we at the Center for Security Policy have had what I’ve thought is a very creative approach to dealing with this problem of extraterritoriality.  What is it?  Well when you’re dealing with publicly traded companies, particularly those that are privately-owned (not government owned and operated) companies, you have the ability by telling those companies that for example, large public pension funds in this country will not hold their stocks, will not do business with them in other words with them; most especially if the federal government were to do that as well, it would have a very powerful effect on these companies.

It would in effect, force them to choose: do business with Iran, or do business with the Americans. And I think, where we’ve put this to the test, we have seen results.  Indeed, Chris Holden and others have helped persuade 17 legislatures around the country, state legislatures, that they don’t want their state public pension funds used for this purpose—and in a number of cases, we’ve seen companies including General Electric and Halliburton saying you know, we’re not going to do more business in Iran; in some cases they’ve actually stopped doing business in Iran, which is the ideal.

But there’s talk that some of these companies are involved in ways that directly defy the actions that the Congress has recently adopted by overwhelming, bipartisan majorities; namely to cut off the importation of refined petroleum products to Iran, a place where they have real vulnerabilities.  But we’ve seen that as in the story, one of these companies, Honeywell, through its offshore subsidiary has been doing business building a refinery for Iran that would in other words reduce its vulnerability to precisely that kind of pressure.

That is crazy; we should not be encouraging it, we should not be underwriting it with our tax dollars—and yet, that’s what we’re doing right now.

If you think this is outrageous, join us; let us know what you think here or on the Frank Gaffney twitter or facebook accounts.  Find out more about the Center’s Divest Terror Initiative by going to the Center for Security policy’s website or otherwise learn about what’s going on here, and raise your voice in protest—because there are few things that are more self-defeating than propping up, enriching, and emboldening the government of Iran at this very dangerous moment.