JUNEAU — Alaska is preparing to join a global movement by corporations and governments to sell their investments in Russia as punishment for its invasion of Ukraine.
On Thursday, a committee of the Alaska House of Representatives is scheduled to consider legislation that would require the state to divest and would block future investments through the start of 2024.
Rep. Jonathan Kreiss-Tomkins, D-Sitka, leads the committee and is formally the author of the bill. He said there is broad support for quick action.
“It’s a priority to move it through, but not at the expense of half-assing the policy,” he said, explaining that legislators want to make sure that targeted action doesn’t have unforeseen effects.
Alaska has no policies or laws that set political, social or moral guidelines for its investments, and the Alaska Permanent Fund has never before sold investments for political reasons, a Permanent Fund Corp. official said earlier this month.
“We want to really aggressively vet this legislation because of the lack of precedent and no prior action to learn from,” Kreiss-Tomkins said.
The state’s various investment accounts held assets worth $333 million in Russia, according to Permanent Fund values as of Dec. 31 and treasury division values as of Jan. 31.
The value of those investments has plummeted since the Russian invasion of Ukraine earlier this month, and they are a small slice of the state’s estimated $130 billion investment portfolio. Elected officials say it’s important for the state to join the economic pressure being placed on Russia.
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While Gov. Mike Dunleavy has called for the state to divest from Russia, Mahoney told reporters this week that the Alaska Permanent Fund and state pension fund managers need legislation to take a political act.
“I believe it requires legislation, because both of those organizations are not able to make a social decision,” she said.
“I‘ve been in contact with other states. And there are 27 other states that are currently either evaluating this or have already made decisions to freeze their state money and their pension funds, such that they do not go to Russian companies, Russian investments, or oligarchs,” Mahoney said.
In prior divestment discussions, Alaska legislators have debated whether divestment is worthwhile if it costs the state investment earnings. The Alaska Permanent Fund is now the main source of general-purpose revenue for the state, with earnings paying for dividends and state services.
“It becomes a question of how you weigh the moral and political costs against potential economic benefit,” Kreiss-Tomkins said.
The key difference between the current debate and prior ones, he said, is the extent of the Russian invasion, which is unprecedented since World War II.
“The scale of evil we’re talking about is, in my mind, far greater,” he said. “And so is the extent that it warrants action.”