Douglas Goldstein: Sarah Steelman is from the Economics Department at Missouri University
of Science and Technology.
She was the 44th state treasurer of Missouri dealing with over $19 billion in annual revenue.
You had spoken in the Wall Street Journal about the deal that the United States is making
with Iran and the thing that really caught my eye was your approach or you are looking
at it from the point of view of the individual states, now sitting here in Israel, so often
we feel that there’s no concept of individual states in the United States but rather it’s
all kind of just a mass directive from Washington D.C.
Is that true or can you disavow me of this opinion or this feeling that I have.
Sarah Steelman: I can definitely disavow you of that feeling.
Yes, we have individual states that all pass different kinds of legislation and that’s
exactly what happened with the article that I wrote at the Wall Street Journal.
What I was describing was what I call a care-free movement and we started it in the State of
Missouri when I was the state treasurer and what I decided back then was that we should
not be investing any tax payer dollars in companies that do business with state sponsors
of terrorism and it took a couple of years actually to battle this thing and get policies
change so that I could actually implement this but I was successful and then after Missouri
did it, 30 other states have now followed our lead and enacting different kinds of legislation
to do that.
Douglas Goldstein: You came up with this idea, dozens of American states have passed laws
prohibiting the state and local governments from doing business with companies that are
involved in Iran but how does that restrict the White House or does the deal with Iran
override what you’ve done?
Sarah Steelman: That’s the interesting thing about this agreement because in paragraph
25 as I mentioned in the OpEd in the Wall Street Journal, it actually addresses that
issue and if I may read it because it’s kind of interesting and people don’t know,
it’s very short, it’s a lot of states or local level in the United States is preventing
the implementation of the sanctions listing specifying this agreement, the United States
will take appropriate steps taking into account all available authorities with a view of achieving
such implementation, the United States will actively encourage the officials at the state
or local level to take into account the changes in United States policy reflected in the listing
of sanctions under this agreement and to refrain from actions and consistent with this change
in policy.
So basically what it’s saying is that states are not supposed to do what they are doing
now in following their laws or policies that were duly enacted over the past five years.
Douglas Goldstein: If we can look at that language, the word you said is that the government
will encourage the states, does encourage mean force or just cajole?
Sarah Steelman: This is a legal question, usually federal law, well always federal law
preempt state law but in this case of course, this agreement isn’t even a treaty so it’s
not a federal law so I don’t believe that it will preempt the state.
However, we have a president who I think will take that paragraph very seriously and there’s
actually – he could do a number of different kinds of things to put pressure on individual
states not to follow their law or policy changes that put this in effect.
For example, he could withhold money, federal money if a big state like California didn’t
go along with what his official sector of state is doing in this agreement.
Douglas Goldstein: When you say he could withhold money, could he do that with a stroke of the
pen or would he need congress to agree with that?
Sarah Steelman: I would say that most presidents would need congress to do that, but this president
has been very proactive in doing things with executive power that I think that he would
probably do it just to demonstrate that he could and there are number of other ways that
he could influence it
as well.
Douglas Goldstein: I’d like to dig in a little bit further on one point as you mentioned
the state of California, are they an anti-terrorist state as well?
Sarah Steelman: Yes they are and as you probably know they have a huge pension fund in that
state as most states do but I mean California it’s very large and so what these policies
actually do is you cannot then invest your pension fund in a company that’s doing business
let’s say Iran, you know, Axon or Petrol China or UBS.
Douglas Goldstein: So any company that’s investing there, helpers for example would
have to sell their shares in that stock according to this rule.
Sarah Steelman: Yes, exactly and that’s why it’s been a very powerful tool and I
didn’t realize to tell you the truth how powerful until I see this paragraph and the
agreement where they actually address it.
Now I think a lot of it frankly might be coming from Wall Street as well because they are
dying to get back into Iran and they don’t like the fact that these
kinds of rules exist at the state level.
Douglas Goldstein: Let’s say this deal does go through and that the White House encourages
these states to drop their sanctions.
What could then happen if Iran were to re-nag on its side of the agreement, would states
be able to instantly reenact this or it’s like a water fall, it’s too late once you
let it go?
Sarah Steelman: My opinion on that is that states should not give into this, that they
should follow their duly enacted legislation and they shouldn’t change regardless of
whether this agreement exist or not, yeah, assuming a state does cave to the president,
yes, it is very, very difficult to get these back.
They refer to it as a snapback provision.
These sanctions were an unbelievably difficult fight to get in place.
Douglas Goldstein: You mean originally when you did it.
Sarah Steelman: Originally when I did it and you know in your previous statement there
you talked about how it seems very reasonable that you wouldn’t want tax dollars going
to companies that are investing and states sponsored terrorism but actually you couldn’t
believe how many people didn’t care who were in control, who have the power to make
the decisions.
Now generally speaking the public was completely in support of it but as you know, that is
not necessarily what reflects what happens in politics and particularly with pension
fund managers and they do not like to have their power taken away from them to decide
what they can and cannot invest in, in any way, shape or form and obviously you shouldn’t
be putting you know, supporting these kind of activities.
Douglas Goldstein: So how long ago was it that you came up with the idea not to invest
money with bad guys?
Sarah Steelman: In 2006, when I took over state treasure I guess beginning in 2005 and
realized you know what was going on and started asking some questions because I was also on
the employee’s board of trustees, the pensions on board of trustees in Missouri, I couldn’t
get any answers.
I also looked at my office who the previous treasurer had been using his broker dealers
to invest the state’s money and the list spreads like who’s who, who was investing
in Iran.
One of the first ones I kicked off of our list was UBS because they were doing so much
business over there and B&T, you know big global financial institutions.
So it was not an easy task, people were not happy about it, I got called all kinds of
names, I know it’s hard to believe, it really is, it’s difficult for people to believe
this but that’s the way it is, that’s why I believed it.
Once they’re off, it’s going to be really difficult to get them back on at any level
unless you have a strong leader, a strong president who is saying we’re going to do
this, you know we’re going to get the sanctions back and use every tool at his level to do
that which you know is eventually what happened and why they were working well here at the
end.
Douglas Goldstein: How can people keep track of you or get in touch with you?
Sarah Steelman: I can give you my email address at the university which is www.steelmanas@mst.edu,
I teach microeconomics there.