Why is Senator Shelby holding the Iran divestment bill?

The facts are quite simple: Barack Obama's bill against Iran is stuck in the Senate. Senator Richard Shelby is putting a hold on it.

The explanation is more complicated, among other things because Shelby doesn't feel the need to explain his decision in detail. Supposedly, he is doing it for procedural reasons, but there's some suspicion among people familiar with the story that it's actually a favor he is doing to the Bush administration - which doesn't want the bill to pass.

Bottom line, there's no bill for now. But the Obama people think the Senator isn't going to give up on it so easily. If Shelby wants to block the bill, let him explain it - or maybe shame him into it.

The bill

The Obama bill would require the federal government to publish a list of companies that have an investment of more than $20 million in the Iranian energy sector, which would be updated every six months. This list is supposed to be a tool, providing investors with the knowledge they need to divest from the right companies. It will also authorize local governments to actually divest their pension funds, or any other funds, from companies on the list. Fund managers would be protected from lawsuits directed at them by investors who are unhappy with the decision to divest.

These measures were designed to meet possible challenges to decisions made by both legislators and managers. A couple of years ago the Supreme Court struck a Massachusetts law penalizing companies that do business in Burma. This is one outcome of the divestment movement that the Obama bill is set to prevent.

"The states need clarity on this issue, and this bill will give them such clarity," Obama told me in an interview when the initiative was announced. Since then, nothing much happened with it. The House version, sponsored by Barney Frank and Tom Lantos, has passed. Obama is waiting for Shelby.

The hold

Senator Richard Shelby of Alabama was never a leading voice in foreign affairs. He is Ranking Member of the Banking, Housing and Urban Affairs Committee and Ranking Member of the Commerce, Justice, and Science Appropriations Subcommittee. In addition, he is a member of the full Appropriations Committee and the Special Committee on Aging. Iran is not part of his portfolio; nevertheless, he is the one blocking the divestment bill from passing.

He has a procedural claim concerning the bill. Since it deals with a monetary issue, he says, it needs to go through the banking committee of which he is a member. This might pose a political problem for the passage of the bill, as the committee chairman is Senator Christopher Dodd, who's in no mood to help Senator Obama right now (Dodd, like Obama, is also running for president in case you hadn?t noticed).

The administration

Truth is, that nobody really believes Shelby when he says it is all because of the banking committee. He is suspected of holding the bill as a favor for a reluctant administration (I tried more than once, but Shelby's office refused to discuss this matter with Haaretz).

Why would the administration - no friend to Iran - want to stop this bill from passing? They actually do have a reason, as they think this is time for international cooperation and not for unilateral legislation. They're afraid that the huge effort they are now investing in convincing America's partners to act in unison against Iran might be sabotaged by Congress. Don't believe it? Read Danielle Pletka of the American Enterprise Institute in this morning's Washington Post:

"There is growing recognition that Iran's nuclear activities must be stopped, and the voluntary divestment movement is gaining ground. Yet this moment of harmonious convergence -- possible only because of the gravity of the threat from Iran - may come to an abrupt end if Congress has its way? As Congress watches the international community crawl toward a consensus, slapping down European firms that irresponsibly continue to underwrite Iran's energy sector will be tempting. To be sure, Europe could do much more. But the European Union has come a great distance since the 1990s, and with each month, Europeans are doing more to withdraw support from the Iranian economy? A more appropriate focus of congressional action would be Russian arms and nuclear sales to Iran and growing Chinese investment in Iran's energy sector. Closing loopholes that permit U.S. firms to do business with Tehran through subsidiaries would also show admirable consistency."

Update: There's a better proof now, published by Haaretz Tuesday evening. Read this story: Bush administration opposes Iran-Sudan divestment bills.

What's next

Obama believes in his bill and wants it to pass. In the House there were almost 400 legislators voting for it. In the Senate this will supposedly translate to 80-90 senators. If necessary, the Shelby hold can be removed. This will be a legislative showdown befitting a leading presidential candidate. The only one, as his people keep reminding, that has an anti-Iran bill on his name.

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