There is only one president at a time … and it's not Florida state Sen. Ted Deutch!
President-elect Barack Obama advocates direct but tough diplomatic efforts to address Iran's nuclear ambitions. Deutch, a principal figure behind passage of the Protecting Florida's Investment Act that limits state investments in companies doing business in Iran and Sudan, apparently wants to set the country's foreign policy agenda from Delray Beach and Tallahassee even before Obama takes office.
Deutch's latest efforts include calling on Gov. Charlie Crist to put pressure on Vitol Inc., whose $125-million Seaport Canaveral development is projected to generate $1-million to $5-million annually for Port Canaveral once it is completed next year — revenues that will be badly needed in this recession. Even though Vitol says it has no impermissible dealings with Iran, or any other country targeted by U.S. sanctions, Deutch is apparently concerned that its parent company in Switzerland, Vitol S.A., has dealings with Iran. As a $100-billion global energy trading conglomerate, the Vitol Group deals with all the major oil producing states, including Iran, as it is permitted to do under European and foreign laws.
Deutch's efforts are typical of increasing calls for "terror-free investing." While these are generally well-intentioned measures aimed at addressing serious international problems, and certainly politically appealing to many local constituencies, these efforts are misplaced, counterproductive and quite probably illegal.
They are misplaced because they typically do not impact the objectionable foreign governments that are the ostensible object of these measures. Instead, these measures primarily affect U.S. businesses that are not themselves engaged in any impermissible activity other than being owned by foreign companies or investors — beyond the legitimate reach of U.S. laws.
These efforts are also counterproductive and adversely affect both our local and national interests. As with the Port Canaveral example, the costs of even the most laudable of these sorts of political statements are borne here — by the communities that must pay more for the goods and services they acquire, or that must do without the revenues that might otherwise be generated by businesses that are penalized for their foreign ownership — and not abroad. Even more significantly, they greatly complicate the federal government's conduct of its foreign policy. The U.S. Treasury Department's Office of Foreign Assets Control already administers two economic sanctions programs aimed at Iran, and another aimed at Sudan, along with several other economic sanctions programs. Iran's nuclear program, and its role in the Middle East, are among the most significant and complicated foreign policy challenges facing President-elect Obama's administration.
These state and local foreign policy measures are also illegal. Under the Constitution, our national government is vested with the power to conduct foreign affairs and to regulate commerce with foreign nations, and the Supreme Court has recognized the importance of the president's ability to speak for the entire country when conducting foreign policy. Moreover, when Washington acts, as it has done with the Treasury's Iran sanctions programs, it pre-empts any state and local measures.
Although proponents of these types of local measures often cite the example of state and local government antiapartheid sanctions passed in the 1980s aimed at South Africa, they ignore the fact that in 2000 the Supreme Court unanimously struck down a similar measure: Massachusetts' law prohibiting state purchases from companies deemed to be doing business in Burma because of that country's human rights abuses.
Additionally, in 2003 the Supreme Court struck down California's Holocaust Victim Insurance Relief Act because it conflicted with an executive agreement the president signed with Germany establishing the International Commission on Holocaust Era Insurance Claims. The lower federal courts have followed suit, including a decision as recently as this past August striking down the Florida Travel Act's prohibition on using state funds for travel to Cuba or other designated "terrorist states."
While these measures address important issues, it is President-elect Obama's administration that should determine what is the best policy to pursue in our national interest and the best mix of unilateral and multilateral steps to take when dealing with a country like Iran — and not thousands of state and local officials around the country, like Delray Beach's Sen. Deutch.
Peter Fitzgerald teaches at Stetson University College of Law in Gulfport. He has appeared before the congressionally created Judicial Review Commission on Foreign Assets Control.