Monday, September 11, 2006

At a moment when things are not going particularly well in the War for the Free World — the global conflict with Islamofascism and its aiders and abettors in which, like it or not, we are currently embroiled — there is a bit of very welcome good news: America is employing at last a powerful new “weapon,” one that may help turn the tide.

Interestingly, this weapon is not being wielded by our men and women in uniform on the far-flung battlefields of this war. Yet, it has the potential not only to help them prevail there, but to avoid the need to use military force on other, present and future fronts in the War for the Free World.

Instead, a powerful new “force-multiplier” has begun to be brought to bear by government officials at both the federal and state levels, in corporate board rooms and by individual Americans across this country. In various ways but with a common purpose, we are starting to unleash our financial power to hurt freedom’s enemies and those who are enabling them.

Consider the following examples of revolutionary developments in this country’s practice of financial warfare in recent months:

• Nearly two years after the Center for Security Policy first published an analysis showing roughly 100 U.S. public pension funds had invested some $188 billion in companies doing business with terrorist-sponsoring states (, Missouri’s formidable State Treasurer, Sarah Steelman, took the first of such funds — the Missouri Investment Trust (MIT) — “terror-free.” She did so by divesting the stocks held in portfolio whose issuing companies are involved with countries like Iran, North Korea, Sudan and Syria.

Importantly, Treasurer Steelman took this first-in-the-nation step to divest terror after a rigorous market analysis. It demonstrated conclusively that MIT’s beneficiaries could not only support the war effort by investing terror-free. They could actually make more money in the process. Thanks to her courageous and visionary leadership, a model has been created that should be followed by every public pension fund in the country — starting with the many-billion dollar Federal Thrift Savings Plan for which all executive branch, congressional and other federal government employees are eligible.

• The first terror-free mutual fund, Abacus Bull Moose Growth Fund (, has been established to offer investors a place to put their 401(k), individual retirement account (IRA) and other savings that will not enrich our enemies or expose them to what the Securities and Exchange Commission calls “global security risk.” GSR is defined as a material risk arising from investments that involve business dealings with terrorist-sponsoring regimes. To date, unlike other material risks, companies have not generally disclosed such dealings — leaving investors unwittingly exposed to the distinct possibility of not only moral hazard from doing business with terrorists that they may find unacceptable, but also the possibility they could suffer financially if the investment blows up on them, figuratively if not literally.

• The Abacus Bull Moose Growth fund — which shows a three-year average annual return of some 141/2 percent — uses a product called the Global Security Risk Monitor to do what financial institutions have done for 20 years, going back to the heyday of the South Africa divestment campaign. Instead of screening for “socially responsible” investing (for example, avoiding investments in companies involved with tobacco, gambling, gun-manufacturing, alcohol, and environmental degradation), however, the Monitor makes a “security responsible” filter possible. The creation of my brilliant friend, former Reagan National Security Council senior economist Roger Robinson, it offers institutional and private investors alike a way to ensure their savings are terror-free.

• One of the world’s largest international investment banks with trillions of dollars under management (which, for its own reasons, wishes for now to remain unacknowledged) has recently adopted a global corporate policy to prevent its activities from funding or otherwise enabling the predations of the Free World’s enemies. With a rigorous set of lending and investing procedures in place and aggressively monitored at the highest levels of the corporation, it is setting a gold-standard for good governance and financial responsibility that could — if adopted throughout its industry and others — deny our enemies much of the access to funding they rely upon today and, thereby, transform this war.

• Last, but hardly least, the U.S. government has begun to wield the financial weapon with considerable effect. Thanks to the leadership of senior officials such as Treasury Undersecretary Stuart Levey and one of his State Department counterparts, Robert Joseph, American-led initiatives have been launched in the last year to constrict the cash-flows of nations like North Korea and Iran.

By going after financial institutions that do business with these regimes — for example, in the case of North Korea, the Banco Delta Asia in Macao was sanctioned and effectively electrocuted for laundering Pyongyang’s exceedingly high-quality counterfeit U.S. dollars and other abuses — the feds have begun applying a tourniquet to our enemies’ economic life-blood.

With advice from Roger Robinson, President Reagan proved such counter-cash-flow weapons could take down the Soviet Union; it is high time to apply them systematically to today’s totalitarian threats.

Amidst the mood of defeatism and highly publicized war reverses, primarily on the political front at home, it is heartening to see public and private sector efforts that wield anew what, arguably, continues to be this nation’s most formidable weapon — our financial power. Those leading this effort deserve our profound thanks, and our prayers that their efforts will prove to be but the leading edge of the needed mobilization of this country and its ultimate victory over freedom’s foes.

Frank J. Gaffney Jr. is president of the Center for Security Policy and a columnist for The Washington Times.

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