Dealing with the Devil: Are Your Investments Supporting Terrorism or Genocide?

"The extent of the power of money is the extent of my power." -- Karl Marx

The above quote, from the "The Power of Money" manuscript of Economic & Philosophic Manuscripts of 1844, is part of Marx's explication of the following passage from a speech made by Mephistopheles, the Devil, in Goethe's 1808 tragic play Faust, a classic morality tale about temptation and seduction:

"Six stallions, say, I can afford,
Is not their strength my property?
I tear along, a sporting lord,
As if their legs belonged to me."


What Mephistopheles knows is that money is power. If you can buy six stallions, then you own and command their strength. And that's why it's illegal for American companies to do business with nations that are on the U.S. State Department list entitled "State Sponsors of Terrorism." To get on that list, a nation must have "repeatedly provided support for acts of international terrorism are designated pursuant to three laws: section 6(j) of the Export Administration Act, section 40 of the Arms Export Control Act, and section 620A of the Foreign Assistance Act." Currently, there are four countries on the list: Cuba (added in 1982), Iran (added in 1984), Sudan (added in 1993) and Syria (added in 1979).

But while U.S. firms are not allowed to do business with these nations, foreign companies can. And American citizens are enabling many of these foreign firms. "The economies of terrorist-sponsoring states are almost entirely dependent on the revenues, expertise and advanced equipment and technology provided by global publicly traded companies in which millions of Americans own stock," according to, a project of the non-profit Washington, DC-based think tank Center for Security Policy. "etail brokerages do not want you to know which companies are effectively enabling terror. Consequently, the first objective of individual investors is to threaten to take your business elsewhere if your broker or portfolio manager won't provide a list of such companies."


But it's not just individual investors who are implicated. State governments are part of the problem as well. Alaska, for example, has recently been placed squarely in the center of the geopolitical firestorm of the Middle East because of a new bill that is making its way through the state senate. Proposed by Senator Bill Wielechowski (D-AK), the bill seeks to outlaw Alaska from investing in companies that do more than USD 20 million worth of business with Iran. Currently, Alaska has around USD 79 million invested in several foreign companies that do business there, including China Petroleum and Chemical; Sasol Ltd., a South African mining and energy company; and Gazprom, the state-controlled Russian energy giant that is the world's largest natural gas company. The investments were made by the state's various retirement and benefit funds, as well as its USD 38 billion Permanent Fund. The bill, supported by Governor Sean Parnell, has passed through the Senate State Affairs Committee and is now with the Senate Finance Committee.

"I understand some believe free markets, rather than government policy, should direct our investment choices, but this very real threat requires action," wrote Parnell in a letter to the executive director of the Alaska Permanent Fund Corp., the state Revenue commissioner and the chair of the Alaska Retirement Management Board, urging a "policy of divestiture." He added, "No free markets exists when one nation builds a nuclear arsenal while it continually and steadfastly advocates for the eradication of an entire nation, with our own not so far behind."


According to United Jewish Communities of Metrowest New Jersey, "Millions of investors are unaware that their savings are invested in companies that help fund state-sponsored terrorism and nuclear proliferation in Iran, and genocide in Darfur," the latter of which has claimed around 400,000 lives and displaced over 2.5 million people. According to the United Human Rights Council, around five thousand people are killed in Darfur every month.

To help individuals interested in ethical investing divest from companies connected to state-sponsored terrorism and genocide, UJC Metrowest has produced a Divestment Tool Kit, which includes lists of Sudan's oil companies and those firms investing in Iran's oil and natural gas sector, as well as sample letters to that socially responsible investors can send to their mutual fund managers and investment advisors.

Faust made a deal with the Devil. For millions of unwitting Americans seeking financial gain through their investment portfolios, they may have made one too. Money may be power, but so too is knowledge. For socially responsible investors, understanding—and acting—on that critical distinction can help keep powerful stallions out of the Devil's reach.



United States Department of State. State Sponsors of Terrorism. February 5, 2005. Accessed February 27, 2012. Premise & Objectives. August 20, 2004. Accessed February 27, 2012. For Individual Investors. August 20, 2004. Accessed February 27, 2012.
Coyne, Amanda. "Alaska divesting from Iran?" Alaska Dispatch. February 3, 2012. Accessed February 27, 2012.
Bohrer, Becky. "Parnell wants Alaska divested from Iran." Associated Press, via KINY Radio. February 1, 2012. Accessed February 27, 2012.
United Human Rights Council. Genocide in Darfur. February 27, 2012. Accessed February 27, 2012.
United Jewish Communities of Metrowest New Jersey. Divestment Tool Kit. May 11, 2008. Accessed February 27, 2012.

image: Poster for Goethe's "Faust," by Richard Roland Holst, 1918, Wikimedia Commons