Future Fund betting on the nuclear arms race

Future Fund betting on the nuclear arms race

James Norman

Australia’s Future Fund invests in nuclear weapons development and our banks are happy to provide capital as well.

On August 9, 2013, Future Fund CEO Mark Burgess
encountered some unexpected visitors at his Melbourne office. A group of
about 20 protesters gathered outside his office doors, some dressed
from head to toe as nuclear missiles, before being escorted away by
police. The human missiles turned up again a few weeks later at the
fund’s Sydney office, demanding answers about its investment portfolio,
which includes nuclear weapons.

The protesters were drawing attention to the fact that the federal
government’s $101 billion Future Fund invests more than $260 million in
foreign companies involved in the manufacture of nuclear weapons (and
that figure has increased by $33 million since last June).


“There are clearly many different views on what should be invested
in, but the Future Fund takes a disciplined approach to considering
exclusions that reflects best practice,” a fund spokesperson told The Saturday Paper.


“Our policy and process considers the fund’s legislation, mandate and
investment strategy, as well as conventions and treaties ratified by
Australia and consideration by the board. While we have excluded
entities connected to tobacco, landmines and cluster munitions, our
policy has not led us to identify other categories for exclusion.”


The Future Fund’s nuclear weapons investments only came to light in
2011 when Tim Wright, director of the International Campaign to Abolish
Nuclear Weapons (ICAN) Australia, issued a series of
freedom-of-information  requests that uncovered the investments.
According to Wright, the Future Fund argues that the investments are
justified because the nuclear non-proliferation treaty (NPT) doesn’t
establish a ban on nuclear weapons.


“They say they are taking a disciplined position, but it’s hardly a
disciplined approach to exclude tobacco, landmines and cluster
munitions, but not nuclear weapons. The fund argued that, given the lack
of a global prohibition on nuclear weapons, it was perfectly legitimate
for them to invest in these weapons,” he says.


“The Future Fund has consistently mischaracterised the NPT as a
treaty permitting certain states, including the United States, Britain
and France, to possess nuclear weapons. In fact,” Wright says, “the
treaty compels these and other states to pursue negotiations in good
faith to eliminate their nuclear weapons. The substantial upgrades they
are now making to their arsenals – with plans to retain them for decades
to come – are clearly incompatible with the aims of the NPT.”

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Banks' investments

However, Australia’s Future Fund is a relatively small player in the
global trend that has seen 411 international investors making an
estimated $US402 billion available to the nuclear weapons industry since
2011, either as investments or loans.


These figures are contained in the report “Don’t Bank on the Bomb”,
released earlier this month by Dutch peace organisation IKV Pax Christi
(PAX). It details how Australian banking institutions, including ANZ,
the Commonwealth Bank, Macquarie Group, Platinum Investment Management
and Westpac, have financed an estimated $US4.6 billion for nuclear
weapons producers since 2011.


The money is used to modernise old nuclear warheads and assemble new
ones, build missiles and launchers, and update the technology that
supports them. While most of that money comes directly from taxes
collected in nuclear-armed countries, private-sector investors and banks
from non-nuclear-armed countries (including Australia) provide the
missing financing to maintain nuclear arsenals.


ANZ and Westpac have both provided sizeable loans (totalling more
than $US200 million) to Honeywell International, a US company that
manufactures components for nuclear weapons, as well as being involved
in tritium production and the life-extension program for the US Navy’s
Trident II nuclear missiles. Westpac has also made $US380 million in
loans available to companies such as Boeing, the manufacturer and now
maintenance supplier of the US’s Minuteman III nuclear intercontinental
ballistic missiles arsenal, and URS, which manages US nuclear weapons
facilities such as Los Alamos National Laboratory and provides
electronics systems support for the Trident missile program.


A Westpac spokesperson referred to the bank’s “Financing the Defence
Sector” policy, which states: “Westpac will not provide direct financing
for controversial weapons.” The policy further notes that these
“include those weapons which are banned by international arms control
treaties ratified by Australia, such as cluster munitions and
anti-personnel landmines”.


However, the spokesperson said this policy “does not preclude us from
having banking relationships with organisations in this sector as it
relates to other parts of their business. For example, the development
of aircraft used for peacekeeping missions or production of equipment
used for working with communities after natural disasters.”


Susi Snyder, a “Don’t Bank on the Bomb” co-author, says the loans and
investments are generally organised by financial conglomerates that
call on cashed-up foreign banks to sign up to a financing package for
these companies. She describes these transactions as “more Secret of My Success than Wolf of Wall Street.”


“The drama is when someone inside a financial institution realises
just what types of things this company is up to,” Snyder says. “Most
everyone knows what Raytheon or Lockheed Martin do – militarism is their
core business – but when it comes to Boeing or Airbus … you need to dig
deeper to find the link with weapons.”


“It’s great that Westpac recognises the challenges with financing the
defence or military sector. It is unfortunate that their policy has
loopholes which allow for the financing of companies involved in
producing indiscriminate and inhumane weapons. A comprehensive policy
would prohibit all types of financing, both direct and indirect.”

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Cormann confirms of FF backs nuclear weapons

On August 28 this year, Greens senator Scott Ludlam put a number of
questions on notice to the minister for finance, Mathias Cormann, on the
question of the Future Fund’s nuclear weapons-related investments.


Although the fund is governed by an independent board headed by
former treasurer Peter Costello, Cormann is ultimately responsible and
the fund’s investment decisions are not always free from political
interference. For example, Labor health ministers Nicola Roxon and Tanya
Plibersek were influential in the Future Fund’s 2013 decision to divest
from tobacco stocks.


However, to Ludlam’s questions, Cormann responded, “The Future Fund
has not excluded any companies on the basis of involvement in the
design, manufacture and/or maintenance of nuclear weapons.”


Pressed on the issue’s potential reputation damage, the minister
continued: “The Future Fund protects its reputation by establishing
policies and procedures designed to enable it to operate to standards
that are of international best-practice for institutional investment and
to comply with the requirements established by law and its investment
mandate.”


Ludlam says these types of investments point to a bigger failure
around the way markets are currently structured. “Investment decisions
need pay no heed whatsoever to human welfare or risks to the
environment. They operate in a complete moral vacuum,” he says.


“Australia states support for nuclear disarmament, yet we sell
uranium to nuclear weapons states, and our very own Future Fund is up to
its neck in nuclear weapons investments. That’s the broader hypocrisy
that is beyond the remit of the board of governors of the Future Fund –
we’re in it up to our necks.”


In 2009 in Prague, US President Barack Obama raised the hopes of the
global disarmament movement by vowing he would take “concrete steps
towards a world without nuclear weapons”. It proved to be a hollow
promise – the US has in fact increased its military spending under the
Obama administration to about $US600 billion annually (more than three
times China’s defence spending and more than six times Russia’s, and
about 40 per cent of the world’s total defence spending).


However, as we have seen recently at the G20 in Brisbane, while
climate change is rightfully recognised as the key threat facing the
survival of the planet, a growing number of international governments
are starting to raise the issue of divestment from nuclear weapons. In
February 2014, more than 140 governments, including Australia’s,
participated in a conference in Mexico to discuss the humanitarian
impact of nuclear weapons, with many countries calling for a global
treaty banning them.


Former prime minister Malcolm Fraser has joined former senior US
defence and government figures including Henry Kissinger, George Shultz,
William Perry and Sam Nunn in calling for the complete elimination of
nuclear weapons.


“I believe nuclear weapons don’t add to the security of any country
and they make every country less secure,” Fraser said. While he allowed
that investment in companies involved in nuclear power for peaceful
purposes could be acceptable, Fraser said he would like to see Australia
divesting from companies solely involved in nuclear arms. He sees it as
part of a larger question about defence policy.


“What I would like to see in Australia is a proper examination by the
federal government of where our defence policies support a nuclear
weapons industry or support the use of nuclear weapons,” Fraser said.
“There is no doubt there are defence arrangements between Australia and
the United States that support or add to the capacity of America to fire
nuclear weapons. We need to enter into a negotiation with America so
that our defence arrangements only relate to conventional arms and that
we do not make it easier for the United States to use nuclear arms. This
would build a stronger momentum toward the ultimate abolition of
nuclear weapons.”

Tags: 

Future Fund International Campaign to Abolish Nuclear Weapons (ICAN) Mathias Cormann Peter Costello Susi Snyder Westpac Malcolm Fraser

This
article was first published in the print edition of The Saturday Paper
on Nov 22, 2014 as "Betting on the nuclear arms race". Subscribe here.