Don't rush divestment of Florida's shares in Russian companies | Editorial

It's tempting to say Florida should join the rush to divest from Russian companies to protest the Ukraine invasion. 

The move to rid the state retirement plan of its Russian shares would fit within the broader international effort to punish Russia for its aggression, deprive it of money to prolong its unprovoked war and isolate it in shame from the community of nations outraged by Vladimir Putin's bloodlust.

However, by divesting too quickly, the state would shoot itself in the foot financially, enrich those it wants to punish and do little to force Russia's military to stand down.

Florida's retirement system is valued at $200 billion. Of that investment portfolio, the Russian holdings, in such companies as energy giant Rosneft and major lender Sberbank, represent a tiny share. These holdings, worth $300 million as of Jan. 31, have dropped significantly in value since then, as international sanctions took hold, non-Russian companies pulled out or shrunk operations and calls for divestment rang out around the world.

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Squeezing Russia economically is the right move, one that has a practical chance of pressuring Putin to consider the war's cost without jolting him into even more-extreme military moves that threaten world peace.

Shame also is a valuable weapon, allowing no harbor to an autocrat who fancies himself a world leader but who finds himself with fewer and fewer friends or admirers anywhere in the world. And shame is what divestment wields. It's a symbolic force but an effective one and a cause that can further unite the community of man against aggression.

However, financial experts advise against an immediate sell-off now, as that would put even more downward pressure on the shares' value and cost Florida even more than it has lost to date by failing to act quickly.

What's more, past divestment efforts have shown that those who will snap up these shares at rock-bottom prices — in this case, oligarchs, most likely — stand to profit wildly at the end of the day, when normal market conditions return and share prices rise.

So, while a handful of states have shed shares, others, such as New York and Michigan, have announced divestment plans to be implemented at a prudent pace. That sends the appropriate moral message while allowing state investment managers to strategize an effective approach.

That's what Florida should do.

Gov. Ron DeSantis has been slow to act, weakly suggesting that the Legislature draft a bill that would let the state divest holdings in countries that "are hostile to American interests," as the Tampa Bay Times reported.

DeSantis, along with Chief Financial Officer Jimmy Patronis and Attorney General Ashley Moody, is a trustee of the State Board of Administration, which manages the retirement system. The Governor has shown time and time again that when he wants something, he hardly needs his obeisant Legislature to make a decision for him. So, whatever his political calculus is, clearly he is distancing himself from this issue.

At the same time, those who hammer him for not divesting all the state's Russian holdings immediately are playing a graceless domestic game. They're playing off the horror in Ukraine to score local political points — while supporting a foolish financial approach, to boot.

When circumstances call on a state to participate in foreign policy, the state's leaders should forge a united, bipartisan front to do so and not dull the spearhead with internecine squabbling.

And if Florida is to be a leader among American states, it should neither hide from this issue nor leap into it without thinking, just for a headline. It should balance moral imperatives with financial sense, help the world and protect Florida retirees.