Disinvestment, sometimes referred to as divestment, refers to the use of a concerted economic

boycott, with specific emphasis on liquidating stock, to pressure a government, industry, or

company towards a change in policy, or in the case of governments, even regime change. The
term was first used in the 1980s, most commonly in the United States, to refer to the use of a
concerted economic boycott designed to pressure the government of South Africa into abolishing
its policy of apartheid. The term has also been applied to actions targeting Iran, Sudan, Northern
Ireland, Myanmar, and Israel.

Contents
[hide]

 1 Targets
o 1.1 Nations
 1.1.1 Iran
 1.1.2 South Africa
 1.1.3 Northern Ireland
 1.1.4 Cuba
 1.1.5 Sudan
 1.1.6 Israel
 1.1.7 Others
o 1.2 Industries
o 1.3 Companies
 2 Criticism
 3 References
 4 See also

[edit] Targets
[edit] Nations

[edit] Iran

Eighteen American states have passed laws requiring the divestment of state pension funds from
firms doing business with Iran.[1]

[edit] South Africa

Main article: Disinvestment from South Africa

The most frequently-encountered method of "disinvesting" was to persuade state, county and
municipal governments to sell their stock in companies which had a presence in South Africa,
such shares having been previously placed in the portfolio of the state's, county's or city's
pension fund. Several states and localities did pass legislation ordering the sale of such securities,
most notably the city of San Francisco. An array of celebrities, including singer Paul Simon,
actively supported the cause.

Many conservatives opposed the disinvestment campaign, accusing its advocates of hypocrisy
for not also proposing that the same sanctions be leveled on either the Soviet Union or the
People's Republic of China. Ronald Reagan, who was the President of the United States during
the time the disinvestment movement was at its peak, also opposed it, instead favoring a policy
of "constructive engagement" with the Pretoria regime. Some offered as an alternative to
disinvestment the so-called "Sullivan Principles", named after Reverend Leon Sullivan, an
African-American clergyman who served on the Board of Directors of General Motors. These
principles called for corporations doing business in South Africa to adhere to strict standards of
non-discrimination in hiring and promotions, so as to set a positive example.

[edit] Northern Ireland

There was also a less well-publicized movement to apply the strategy of disinvestment to
Northern Ireland, as some prominent Irish-American politicians sought to have state and local
governments sell their stock in companies doing business in that part of the United Kingdom.
This movement featured its own counterpart to the Sullivan Principles; known as the "MacBride
Principles" (named for Nobel Peace Prize winner Sean MacBride), which called for American
and other foreign companies to take the initiative in alleviating alleged discrimination against
Roman Catholics by adopting policies resembling affirmative action. The effort to disinvest in
Northern Ireland met with little success, but the United States Congress did pass (and then-
President Bill Clinton signed) a law requiring American companies with interests there to
implement most of the MacBride Principles in 1998.

[edit] Cuba

Though in place long before the term "disinvestment" was coined, the United States embargo
against Cuba meets many of the criteria for designation as such — and a provision more closely
paralleling the disinvestment strategy aimed at South Africa was added in 1996, when the United
States Congress passed the Helms-Burton Act, which penalized owners of foreign businesses
which invested in former American firms that had been nationalized by Fidel Castro's
government after the Cuban revolution of 1959. The passage of this law was widely seen as a
reprisal for an incident in which Cuban military aircraft shot down two private planes flown by
Cuban exiles living in Florida, who were searching for Cubans attempting to escape to Miami.

[edit] Sudan

During the late 1990s and early 2000s several Christian groups in North America campaigned for
disinvestment from Sudan because of the Muslim-dominated government's long conflict with the
breakaway, mostly Christian region of Southern Sudan. One particular target of this campaign
was the Canadian oil company, Talisman Energy which eventually left the country, and was
supplanted by Chinese investors.[2][3]
There is currently a growing movement to divest from companies that do business with the
Sudanese government responsible for genocide in Darfur. Prompted by the State of Illinois - the
first government in the U.S.A. to divest - scores of public and private-sector entities are now
following suit. In New York City, Councilman Eric Gioia recently introduced a resolution to
divest City pension funds from companies doing business with Sudan.

The recent divestment of assets implicated in funding the government of Sudan, in

acknowledgment of acts of terrorism and genocide perpetrated in the Darfur conflict. In the
United States, this divestment has taken place at the state level (including Illinois, which led the
way, followed by New Jersey, Oregon, and Maine). It has also taken place at many North
American Universities, notably Cornell University, Harvard University, Case Western Reserve
University, Queen's University, Stanford University, Dartmouth College, Amherst College, Yale
University, Brown University, the University of California, the University of Pennsylvania,
Brandeis University, the University of Colorado, American University, University of Delaware,
and Emory University. The Sudan Divestment Task Force [4] has organized a nationwide group
which advocates a targeted divestment policy, to minimize any negative effects on Sudanese
civilians while still placing financial pressure on the government. The so-called 'targeted
divestment approach' generally permits investment in Sudan, and is thus radically different from
the comprehensive divestment that ended apartheid in South Africa. Because targeted divestment
permits investment in hundreds of multinational corporate and private-equity firms that support,
lend legitimacy to, and pay taxes and graft to the government of Sudan, policy experts suggest
that this "feel good" approach will have little impact on the Sudanese government's sponsorship
of terrorism and genocide. Because of the massive deficiencies in the so-called 'targeted
divestment approach,' human rights advocates recommend the more comprehensive approach to
divestment that has been taken by the State of Illinois.[citation needed] Under this approach, sponsored
by State Senator Jacqueline Collins, public pensions are prohibited from investing in any
corporation or private equity firm that conducts business in Sudan, unless authorized to do so by
the U.S. Government.

[edit] Israel

Main article: Disinvestment from Israel

[edit] Others

Myanmar (formerly Burma) has also been the target of disinvestment campaigns (most notably
one initiated by the state of Massachusetts.) Divestment campaigns have also been directed
against Saudi Arabia due to allegations of "gender-apartheid." The University of California,
Riverside's Hillel chapter has a Saudi Divestment petition circulating as of 2007.

Since 2007, several major international and Canadian oil companies had threatened to withdraw
investment from the province of Alberta because of a proposed increase in royalty rates.[5][6]

[edit] Industries

 Tobacco industry [7][8]

  Arms trade [9][10]

[edit] Companies

 Talisman Energy - because of its status as the main Western oil company in Sudan in the
early 2000s.

[edit] Criticism
Some hold that divestment campaigns are based on a fundamental misunderstanding of how
equity markets work. John Silber, former president of Boston University, observed that while
boycotting a company's products would actually affect their business, "once a stock issue has
been made, the corporation doesn't care whether you sell it, burn it, or anything else, because
they've already got all the money they're ever going to get from that stock. So they don't care." [2]

Regarding the more specific case of South Africa, John Silber recalled:

...when the students were protesting the South African situation, I met with them, and they said
BU must divest in General Motors and IBM. And I said, "Why should we do that? Is it immoral
to own that stock?" Absolutely immoral to own it. And I said, "So then, we're supposed to sell it
to somebody? We can't divest unless we sell it to somebody. And if we burn the stock, that just
helps General Motors, because it reduces the amount of stock outstanding, so that can't be right.
If we sell it to somebody, we have just gotten rid of our guilt in order to impose guilt on
somebody else." [2]

The common perception about the effectiveness of divestment lies in the belief that institutional
selling of a certain stock lowers its market value. Therefore, the company's networth becomes
devalued and the owners of the company may lose substantial paper assets. In addition,
institutional divestment may encourage other investors to sell their stocks for fear of lower
prices, which in turn lowers prices even further. Finally, lower stock prices limits a corporation's
ability to sell a portion of their stocks in order to raise funds to expand the business.