(First published in Norwegian 22 Feb 2007)
By Pia Gaarder
More than 45 countries were gathered in Norway on 22nd and 23rd February for a big conference on cluster weapons. The object of the conference was to launch the process of getting into place an international prohibition against cluster weapons.
But the road ahead is long, and one measure that will be necessary is a total prohibition against investing in cluster weapon producers. This is the opinion of Christophe Scheire, who has written the report “Explosive Investments: Financial Institutions and Cluster Munitions” for the Belgian organisation Netwerk Vlaanderen. During the Oslo conference he chaired a parallel seminar on cluster weapons and the financial world, with Gro Nystuen, head of the Advisory Council on Ethics.
In his report Scheire shows that social responsibility and ethical investment policy so far have not had any great influence on the large cash flows and investment decisions made by banks and other financial institutions. On the contrary, the greater part of the financial market has no qualms about either financing or investing in cluster weapon producers.
Scheire has analysed how 68 international bankers, managers, and insurance companies have contributed to ensure 6 cluster weapon producers a stream of money from the whole world. During the years 2004-2007 the financial institutions obtained credit for no less than $US12.6 billion for the 6 cluster weapon companies GenCorp, Lockheed Martin, Raytheon, Thales, Textron, and EADS (which until last year produced cluster munitions).
Cluster weapon companies thus have no problems receiving injections of great amounts of new capital from the market, and the report analyses how the investments represent a direct support for the companies and their general product profile. When enormous capital resources are channelled to cluster weapon companies, this legitimizes both the companies as a whole and their production in general. Banks and financial institutions for their part make active decisions that maintain and promote cluster weapon production as business.
Gro Nystuen told Norwatch that weapon withdrawal constitutes a class of its own and believes it is too soon to say what effects the withdrawals will have.
“So far we know nothing about what effect withdrawals have in this area. In theory, there is less reason for the companies to worry about our withdrawals with regard to weapons. That is an objective withdrawal criterion, which does not constitute a more specific criticism of the individual company. It is a totally different story to withdraw from companies like, for example, Wal Mart, which entails a much stronger element of criticism of the company”, Nystuen said.
But there exists an example of a company – EADS – that was excluded because of cluster weapon munitions and which asked the Advisory Council on Ethics to change the reason for the withdrawal. EADS itself wrote to the Advisory Council after it had withdrawn from the company that produced cluster weapons, Nystuen said. EADS was still producing nuclear weapons and could therefore in any case not be included in the portfolio. Nevertheless, the company wanted the reason for the withdrawal changed.
“It is interesting that EADS felt it was more stigmatizing to be associated with cluster weapon production than with production of components for nuclear arms. It is interesting that some companies feel this to be more stigmatizing, but it does not provide a basis for drawing massive conclusions”, Nystuen said.
Alliant Tech Is Proud
Norwatch has recently been in touch with seven of the eight cluster weapon companies that have been excluded from the Government Pension Fund – Global. So far, only one company has answered, Alliant TechSystems, and they emphasized precisely the importance of the high stock value as a strong support.
“We are very pleased with the support and enthusiasm we receive from the investor community, both domestically and internationally. We are raising the bar on our financial performance and the results have been very well received by Wall Street. As you may have noticed, our stock closed at an all-time high last week. Our focus is, and always has been, on providing U.S. troops and our allies with the most advanced technology available anywhere in the world. We are proud of the role we play in defense of our nation and many other countries around the world”, writes Alliant TechSystems VP Corporate Communications, Bryce Hallowell in an e-mail to Norwatch. The question was what the company means about the Norwegian withdrawal and whether the divestmenst will have any consequences for the company’s cluster weapon production.
Read also the Norwatch article Smart Cluster Weapons in the Government Pension Fund – Global.
The Belgian organisation Netwerk Vlaanderen runs the campaign “My Money. Clear Conscience”, which works to make banks’ investment policies public and to strengthen depositors’ participation in how their money is invested. The organisation is a member of Cluster Munition Coalition (CMC), which works internationally against cluster munitions, and of the international movement “BankTrack”, which works for a sustainable financial sector.
In July 2005 the European Parliament passed a resolution urging the EU countries to prohibit financial institutions to invest, either directly or indirectly, in companies involved in the production, storage, or transfer of anti-personnel landmines or other similar controversial weapons systems, such as cluster weapons.
Towards the end of 2006 the Belgian senate passed a law prohibiting Belgian financial institutions from investing in cluster weapon producers. If the lower chamber of parliament also passes this law, Belgium will be the first country to prohibit investment in cluster weapons. Belgium prohibited the production of cluster weapons already in 2005.