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Amid war in Israel, Florida lawmakers propose blacklisting companies with Iran business

Florida lawmakers filed legislation on Thursday that would discourage businesses in the state from dealing with Iran, proposing a broad blacklist of companies that have business ties in the country in light of Hamas’ attack on Israel last month.

Gov. Ron DeSantis in recent days encouraged state lawmakers to draft the legislation ahead of next week’s special session in Tallahassee, an initiative his presidential campaign has promoted as an example of his leadership.

But at least one independent expert says the broad language of the bill could cause more harm than good to Florida businesses, whose banks and shipping companies could refuse to work with them on the mere risk of being stigmatized by the new blacklist policy.

The proposed legislation would require the State Board of Administration to create a new list, titled the “Scrutinized Companies with Activities in Iran Terrorism Sectors List,” by January, to identify Florida companies that meet the state’s new, expanded criteria for business dealings with Iran. It would prohibit public entities in Florida from making contracts worth $1 million or more with blacklisted companies, and prevent state pension funds from being invested in companies linked to Iran.

The proposed changes would open up a longstanding Florida statute that also deals with blacklisted companies in Sudan.

That could lead institutions such as banks and shipping companies to refuse dealings with companies like travel agents, booksellers, pharmaceutical companies, and food wholesalers who in turn work with companies in Iran or Sudan, “even though those activities are clearly permitted by U.S. law,” said Patrick Clawson, director of the Viterbi Program on Iran and U.S. Policy at the Washington Institute for Near East Policy.

“A potent instrument for convincing companies to stay away from business dealings with a given entity is to raise the risk of reputational damage,” Clawson said. But “the effect of such legislation could then be to impede educational and religious activities with Iran and Sudan, as well as commerce in foods and medicines, even though that the law may not target such activities.”

It remains unclear how many Florida businesses would be impacted by the proposed measure. The proposal’s reach is still being calculated, said Republican state Rep. John Snyder, the sponsor of the House bill.

But the goal would be to prevent state funds from being invested in companies that either directly or indirectly do business with “every sector of the Iranian economy,” Snyder explained.

READ MORE: DeSantis says Iran culpable in attack on Israel, proposes new Florida sanctions

“If a private business wants to do business with the government of Iran, as long as they’re not violating federal statute, we can’t tell them they can’t do that,” Snyder said. “But what we can tell them is that you’re not allowed to contract with the state of Florida or be a part of our investment portfolio.”

The proposed sanctions emerged in the wake of Hamas’ attack last month that killed over 1,400 Israeli men, women and children. Israel has retaliated with a broad air campaign and ground invasion of the Gaza Strip that has taken the lives of thousands of Palestinians, according to Hamas’ health ministry.

The United States and European Union have designated Hamas a terrorist organization.

Iran is a longtime benefactor of Hamas, supplying the organization with military support. But the country’s role in the Oct. 7 attack is unclear. Officials in Tehran have denied involvement in the attack, but have praised Hamas. Secretary of State Antony Blinken has said the United States has so far found no evidence Iran was directly involved but has characterized Tehran as “complicit” in the attack due to its ongoing support for the group.

Despite hesitancy from U.S. intelligence, DeSantis has zeroed in on Iran as a way to show support for Israel. He has called Iran a “clearinghouse for terrorist funding in the region” and vowed to sign the “strongest sanctions against Iran by any state in the nation.”

The governor did not reveal anything specific about his plan for sanctions. And it is not yet known how involved his office was with the drafting of the proposed measures.

Sen. Bryan Avila, a Miami Springs Republican sponsoring the Senate bill, said the measure “sends a strong message that the state of Florida will not do business with countries that finance terrorism.”

To make it onto the state’s list of “companies with activities in Iran,” the company would need to have more than 10% of its total revenue or assets linked to Iran or have an investment of $20 million or more in oil-related or mineral-extraction activities in the Middle Eastern country.

Rug and clothing businesses that export their product from Iran, jewel and precious metal dealers, financial entities that are based in Iran, and shipping businesses that fly the flag of Iran or that are operated indirectly by the government of Iran would be impacted by the new requirements, according to the bill language.

“Published lists of entities described as supporting terrorism is certainly a way to press Florida companies not to deal with those entities,” Clawson said, noting that the approach could prompt companies to err on the side of caution out of concern of having their reputation tarnished by association.

While the proposed legislation would prevent a public entity from contracting with a scrutinized company, the staff analysis of the bill says “an agency or a local governmental entity may permit a company on the Iran Terrorism List to bid on a contract if the goods or services cannot be obtained elsewhere.”

The proposal could also raise constitutional questions because the federal government, not states, are in charge of foreign affairs issues, according to the staff analysis.

“As such, state laws relating to foreign affairs may be unconstitutional, even if not preempted by a federal treaty or statute, if the state’s policy potentially disturbs foreign relations,” the analysis states.