Boycotts and sanctions are two key tools that activists and governments use to target corporations who do business with "unsavory" regimes. There is a long history of progressive activists calling for boycotts, for example, against companies doing business in South Africa in the 1980s, Burma and Nigeria in the 1990s, and most recently Sudan in an attempt to topple or change regimes with a history of human rights abuse.
In the old days, activists created boycott flyers to target companies that were wheat-pasted on walls, they picketed stores that sold goods from the offending companies, and most recently many activist groups have created websites created to encourage consumers to vote with their dollars: such as Ethical Consumer in the UK or tools to track companies in specific countries such as the Sudan Divestment Network.
The U.S. government has followed a similar but more heavy-handed tactic to enforce its anger against other governments, by passing laws forbidding companies from doing business in countries ranging from Cuba in the 1960s, South Africa in the 1980s, Iraq in the 1990s and most recently in Syria. (A State Department official suggest that sanctions have been imposed on foreign countries well over 100 times since the First World War.) Of course, unlike activists, the U.S. government has the power to prosecute companies who fail to comply.
Some of the targets of boycotts and sanctions have been one and the same: South Africa being a notable example.
How successful have these boycotts and sanctions been? Activists argue that the South African apartheid regime was felled by such pressure, undertaken in solidarity with local movements, although one might argue that anti-apartheid protests within South Africa itself played an even more significant role. A variety of think-tanks (mostly conservative) have argued that sanctions don't work.
In May, Christopher Dodd, a Democrat from Connecticut and the chairman of the Senate Banking Committee, called on the U.S. Securities and Exchange Commission (SEC) to make it easier for "shareholders to access reliable information regarding publicly traded companies' business transactions involving Iran and Sudan."
In June, the SEC decided to copy activist tactics by putting up a Web tool that tracks corporations with investments in countries considered by the U.S. to sponsor terrorism -- specifically Cuba, Iran, North Korea, Sudan and Syria. "No investor should ever have to wonder whether his or her investments or retirement savings are indirectly subsidizing a terrorist haven or genocidal state," Christopher Cox, the SEC chairman, said. In three weeks the site got "exceptional public interest," with more than 150,000 hits.
The tool generated some odd results: Reuters, the media company, had reported news-gathering activities in Cuba, Iran and Syria, so it made all three lists!
Not surprisingly, the Web tool provoked a storm of protest. "The list was fraught with distortions that could have actually harmed investors instead of informing them," Todd Malan, the president of the Organization for International Investment, which represents such companies, told reporters. "It was basically just a word search with no context, scale or reference."
Barney Frank, a Democrat from Massachusetts, called the list "unfair and perhaps counterproductive." He said some companies "apparently have investments that are so negligible they could not be considered material either to investors or the economy of the terrorist-financing state."
On Friday the SEC took the web page down and promised to rethink the idea -- either to return with a new, more sophisticated, tool or to figure out another way to achieve the same results.
"Our role is to make that information readily accessible to the investing public, and we will continue to work to find better ways to accomplish that objective," says the SEC. We await the results eagerly -- will the SEC try picketing the listed companies or dropping protest banners? If so, we just might know some folks who might be able to help.