Our Nuclear Sovereign Wealth


Australia’s Future Fund last month dropped a raft of cluster bomb and landmine producers from its investment portfolio. But stock listings (pdf) obtained through freedom of information laws have shown that 15 companies involved in the manufacture of nuclear weapons — devices of far greater destructive potential — are still in the mix. The International Campaign to Abolish Nuclear Weapons has revealed that the Future Fund’s investments in nuclear weapons companies up to April 2011 totalled $135.4 million.

Why the distinction between these inherently inhuman weapons, all of which pose a grave threat to civilians and the environment? Through their ordinary use, nuclear weapons — like cluster munitions and anti-personnel mines — violate fundamental principles of customary international law, as well as treaty law.

If the Future Fund is to comply with its own stated policy (pdf) not to finance companies involved in activities that are unlawful in Australia, it should exclude nuclear arms makers from its investment universe.

The Future Fund would not be the first sovereign wealth fund to do so. The Norwegian Pension Fund and the New Zealand Superannuation Fund have both deemed it unethical to finance nuclear weapons companies, winding up all investments they once had.

When quizzed in Senate Estimates last week, the Future Fund’s investments chief appeared unaware that nuclear weapons are banned under Australian law. A Commonwealth statute implementing our commitments under the South Pacific Nuclear-Free Zone Treaty explicitly prohibits the acquisition, development, manufacture, testing and use of nuclear explosive devices in Australia. It also makes it a crime to facilitate the production of nuclear weapons, whether here or overseas.

In addition, the 1995 Weapons of Mass Destruction (Prevention of Proliferation) Act — which applies to biological and chemical arms as well — makes it an offence for companies or individuals to provide goods and services to anyone producing nuclear weapons.

Financing the nuclear weapons business, either directly or indirectly, hampers disarmament efforts by providing material support for the indefinite retention of these devices by a small number of governments. And it could facilitate the use, one day, of a nuclear weapon by design, miscalculation or accident.

Any such use would have catastrophic humanitarian consequences. Nuclear weapons are unique in their destructive capacity and the human suffering they cause. A single nuclear bomb dropped on a large city could kill millions of people.

No adequate medical response would be possible, and the lingering effects of radiation on human beings would cause death and suffering many years after the initial explosion, with genetic damage passing from generation to generation. Supporting the industry that produces these instruments of terror is grossly unethical.

The fund’s biggest holding is in Honeywell International (A$76.8 million), a company in charge of conducting simulated nuclear tests for the US government and helping to extend the lifecycle of America’s Trident II nuclear weapons. Other Future Fund stocks have large stakes in joint ventures to build medium-range nuclear missiles for France and maintain Britain’s ageing fleet of Trident submarines. One company, Larsen & Toubro, has a contract to construct nuclear-armed submarines for India, a country outside the nuclear Non-Proliferation Treaty (NPT).

It is no excuse for the Future Fund that these companies are also involved in legitimate enterprises. Certainly the cluster bomb and landmine companies excluded from the Future Fund’s portfolio derive some of their profits from other, non-controversial activities.

The Future Fund has defended its investments on the basis that "conventions dealing with nuclear weapons are focused on non-proliferation" rather than disarmament, and should therefore be viewed differently from conventions establishing universal prohibitions on particular weapons.

But disarmament is at the heart of the NPT, which — according to its preamble — seeks to "facilitate the cessation of the manufacture of nuclear weapons, the liquidation of all their existing stockpiles, and the elimination from national arsenals of nuclear weapons and the means of their delivery".

This grand bargain, brokered in 1968, requires the five original nuclear weapon states to do away with their nuclear arsenals completely, and in exchange every other state party commits never to acquire them. It is wrong to suggest that the NPT’s disarmament provision, Article VI, is somehow peripheral to the main agreement.

Judging by its public statements, the Future Fund appears poorly informed about Australia’s obligations under international conventions relating to nuclear weapons and the domestic legislation that implements those obligations. It would do well to seek formal legal advice and consult with relevant government departments.

All financial institutions in Australia — banks, super funds and asset managers — have an ethical responsibility to divest from nuclear weapons companies. Doing so will help to stigmatise nuclear weapons and make this industry less viable. It will be a significant and tangible contribution towards nuclear disarmament.

It is both ironic and disturbing that, while Foreign Minister Kevin Rudd travels the world building political support for the complete elimination of nuclear weapons, back home the Future Fund is very much undermining that objective.

Its support for the nuclear weapons industry raises an important question for the Australian public: What kind of future is our Future Fund investing in?


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