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 In a little known aspect of Iran's international isolation, around
two dozen states have enacted measures punishing companies operating
in certain sectors of its economy, directing public pension funds
with billions of dollars in assets to divest from the firms and
sometimes barring them from public contracts.
In more than half those states, the restrictions expire only if Iran
is no longer designated to be supporting terrorism or if all U.S.
federal sanctions against Iran are lifted - unlikely outcomes even
in the case of a final nuclear accord. Two states, Kansas and
Mississippi, are even considering new sanctions targeting the
country.
The prospect of unwavering sanctions at the state level, or new
ones, just as the federal government reaches a landmark agreement
with Iran risks widening a divide between states and the federal
government on a crucial foreign policy issue.
Though U.S. states have often coordinated their measures with
federal sanctions on Iran, their divestment actions sometimes take a
tougher line on foreign firms with Iran links than is the case under
federal policy.
 "Our investment sanctions are not tied in any way to President
Obama's negotiations with the Iranians," said Don Gaetz, a
Republican Florida state senator who sponsored legislation in 2007
punishing companies with investments in Iran's energy sector.
"They would have to change their behavior dramatically and we would
not be necessarily guided by President Obama or any other
president's opinion about the Iranians," Gaetz said.
(Map of U.S. states with sanctions against Iran:
http://graphics.thomsonreuters.com/15/04/IRAN-NUCLEAR-STATES.jpg)
A final accord, which is still being negotiated ahead of a June 30
deadline, would likely lift U.S. sanctions on Iran's crude oil sales
to other countries and loosen restrictions on Iran's financial
system. Federal sanctions on Iran tied to issues such as human
rights and terrorism would remain in place.
Among around a dozen states contacted directly by Reuters,
legislators in Georgia, Florida, and Michigan said they had no
intention of changing their Iran policies even in light of a federal
deal. State officials in Connecticut and Illinois said new local
legislation would be needed to change their divestment policies,
even if a deal were signed.
Officials in New York and Oregon told Reuters they would look to
changes in law at the federal level in the case of a nuclear deal to
determine how it would affect their policies.
Officials at Iran's mission to the United Nations did not
immediately respond to a request for comment from Reuters on the
state policies. White House spokeswoman Bernadette Meehan did not
respond directly to a Reuters query about states' sanctions
policies, but stressed that only sanctions related to Iran's nuclear
program would be affected by a deal.
The first divestment campaigns gathered steam in 2008 and 2009, and
received a federal stamp of approval in 2010 with passage of the
Comprehensive Iran Sanctions, Accountability, and Divestment Act,
which encouraged states to pass such measures.
 BIPARTISAN SUPPORT
The divestment measures typically enjoy broad bipartisan support
within the legislatures, and have been signed into law by Republican
and Democratic governors alike.
Critics of the laws say they are an unnecessary interference in a
crucial area of U.S. policy by states that usually have little
expertise in foreign affairs.
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"Foreign policy is uniquely a case where the government needs to act
with one voice," said William Reinsch, president of the National
Foreign Trade Council, which represents major U.S. companies and
advocates against unilateral sanctions.
Foreign companies are the main target of the rules since U.S. firms
are largely barred from working in Iran by federal law.
Florida's law led to the State Board of Administration (SBA), which
oversees Florida public investments, pulling more than $1.3 billion
out of companies such as PetroChina and Russia's Gazprom for their
involvement in either Sudan or Iran. As of 2014, the SBA had $177
billion in assets.
Like Florida, Michigan was an early adopter of divestment policies
targeting Iran. It has divested $185 million of its pension funds
from companies including Royal Dutch Shell <RDSa.L>, Vodafone
<VOD.L>, HSBC <HSBA.L>, and Nokia for their activities in Iran.
In 2013 and 2014 Michigan divested $45 million from Becton Dickinson
and Co. <BDX.N>, a U.S. medical supplies company that sells to Iran
legally under federal regulations.
A Becton Dickinson spokesman said the firm was unaware it was a
target of divestment by Michigan until contacted by Reuters. It said
in a statement that its trade with Iran is authorized by the U.S.
Treasury Department's Office of Foreign Assets Control, which
oversees federal sanctions.
Marty Knollenberg, a Michigan state senator who sponsored a
divestment bill in 2008, said the legislation was based in part on
model legislation provided by the American Israel Public Affairs
Committee (AIPAC), a lobbying group that advocates for further
sanctions on Iran.
"Many other states followed suit, and I think with that pressure the
federal government finally acted," said Knollenberg, a Republican.
"We're all affected by this, not just the federal government."
Richard Nephew, the former principal deputy coordinator for
sanctions policy at the U.S. State Department, said the main losers
in divestment actions are the companies and local governments,
rather than Iran or other target countries.
"The degree to which such decisions can be made at lower government
levels than the federal government generally makes the United States
a more complicated, unattractive place to do business," said Nephew,
now with the Columbia University Center on Global Energy Policy in
New York.
"This is a feel-good measure that, in the end, probably doesn't feel
all that great given the costs it imposes at home."
(Reporting By Yeganeh Torbati; editing by Bruce Wallace and Stuart
Grudgings)
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