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5 Things to Know in Alaska Politics: Russia rebuff and a focus on Alaska’s wealth fund

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Gov. Mike Dunleavy is urging the Alaska Permanent Fund Corp. to divest of Russian holdings.

Managers of the $81 billion investment fund are increasing real estate holdings, including with a recent purchase in Texas.

And Alaska is drawing interest as a refueling stop by international airlines no longer traveling through Russian airspace.

There is more news in “Five Things to Know.”

Governor calls for divestment of Russian assets

Gov. Mike Dunleavy is calling on the Alaska Permanent Fund Corp. (APFC) to divest from Russia over the country’s attack against Ukraine.

“I have directed state agencies to identify and divest, if and when appropriate, from Russian assets, and I call upon our state-owned corporations, the Permanent Fund board of trustees, to do the same,” Dunleavy said Friday.

About $160 million, or .2% of Alaska’s $81 billion investment fund, is invested in Russian stocks, bonds and private market assets, according to the Alaska Permanent Fund Corp.

APFC officials had said earlier in the week that they are reviewing the impact to the portfolio “during these dynamic and unpredictable times.”

The House State Affairs Committee is expected to introduce legislation Monday that would require the APFC to divest from holdings in Russia.

Dunleavy also is directing state agencies to identify Russian products or contracts for services with Russian companies “for the purpose of divesting from these relationships.”

Jeff Turner, the governor’s spokesman, said that Dunleavy has asked Alaska commissioners to identify and stop any purchases or services with Russian companies. “That process is still underway,” Turner said.

An independent investigation

State lawmakers investigating the firing of Angela Rodell have sought documents and testimony about the dismissal of the Alaska Permanent Fund Corp. (APFC) director, who led the $81 billion fund through record growth.

The Legislative Budget and Audit Committee received a response this week from the Alaska Department of Law that urged lawmakers to appoint an independent third party, such as a retired judge, to look into the issue and make a report to the Legislature.

In the five-page letter dated March 1, 2022, attorneys representing the Alaska Permanent Fund Corp. and its board of trustees stated that “sometimes personnel decisions are not popular either with the employee or with others who are not responsible for managing an organization. This has been the case with the dismissal of Ms. Rodell.”

The letter is signed by Benjamin J. Hofmeister, Alaska senior assistant attorney general, and William E. Milks, chief assistant attorney general. Their signatures appear under Attorney General Treg Taylor’s name.

In the letter, the attorneys write that the APFC trustees believe that the legislative committee has exceeded its authority. The trustees have “serious concerns about [the] fairness and impartiality,” according to the letter. “A fair and independent investigation, devoid of politics and without litigation, benefits all Alaskans,” the letter states.

Attorneys object to the committee’s decision to give the committee chair subpoena power to compel testimony, even though the decision to fire Rodell was done in executive session as a personnel matter.

The letter also alleges a conflict of interest for Sen. Natasha von Imhoff, the committee chair, who disclosed in a December 2021 committee meeting that she is friends with Rodell.

“Certainly Alaska can be a small place and friendships among public officials are not uncommon. But no one in a position of authority can serve as judge or juror or investigator in a proceeding involving their friend,” according to the letter.

New investments by Alaska’s Permanent Fund

The Alaska Permanent Fund Corp. will increase its real estate allocations by 1% a year over the next three fiscal years, according to IPE Real Assets, which reports on global property markets and institutional assets.

The investment fund has increased real estate holdings in its portfolio from 7% to 8% for fiscal year 2022, which ends June 30. The annual increase will be at the same rate until fiscal 2025.

Callan & Associates, the investment fund’s consultant, said that the slight adjustments are likely to improve the risk and returns for the $81 billion fund.

IPE Real Assets reported that in December 2021, the Alaska Permanent Fund Corp. paid $172 million for an apartment complex in Dallas, Tex. The Christopher is a 309-unit complex that is part of a mixed-use development in uptown Dallas, which includes a 21-story office building and 85,000 square feet of retail space.

Will international airlines refuel in Alaska?

Several international airlines are considering Alaska as a stopover for refueling as the U.S., European nations and Canada have closed their airspace to Russian air traffic. Russia retaliated by closing its airspace to carriers from those countries.

Impacted airlines are any carriers with routes through Russian airspace.

Airlines are contacting ground handlers to get a better understanding of capacity. “As a result, a number of international airlines are looking for alternative stopping and refueling sites,” said Megan Peters, spokesperson for the Ted Stevens Anchorage International Airport (ANC).

While there have been queries at ANC and Fairbanks International Airport, most of the interest has been focused on Anchorage, airport officials said.

“Fairbanks International Airport (FAI) may also be able to provide assistance with technical stops – gas and go,” Peters told the News-Miner.

The Fairbanks airport “serves as the diversionary airport for ANC cargo flights and can also accommodate large aircraft. Currently, ANC has approximately 115 wide-body landings a day,” she said.

Peters said that the Anchorage airport will accommodate any passenger or cargo airline as resources allow. Needs may include aircraft fuel, aircraft parking, overnight accommodations, customs assistance and food.

The Anchorage airport is strategically situated within 9 ½ hours of 90% of the industrialized world, Peters said.

In 2021, there were 33,000 passenger aircraft landings and 53,000 cargo aircraft landings at the airport.

Russian aggression and the Arctic Council

U.S. Sens. Lisa Murkowski (R-Alaska) and Angus King (I-Maine) recognized the Arctic Council for its joint statement condemning Russia’s war against Ukraine.

All member nations participated in issuing the joint statement, except for Russia.

Since 2021, Russia has chaired both the Arctic Council and the Arctic Economic Council for a term of two years. Other Arctic Council member nations are Canada, Denmark, Finland, Iceland, Norway, Sweden and the United States.

The Arctic Council has paused all meetings and engagements in Russia, according to Murkowski’s office. 

Murkowski and King co-chair the Senate Arctic Caucus. 

“Russia’s unprovoked and devastating war on Ukraine has both direct consequences and global ramifications that no country or institution can ignore,” Murkowski said.

“It’s important that we send a clear, united message to Russia that its current actions are inhibiting its ability to lead as the chair of the Arctic Council and the Arctic Economic Council right now. The rest of the region must remain united in strident opposition to its deadly aggressions,” Murkowski said.

“The Arctic Council and other intergovernmental agencies’ suspension of activities due to Russia’s invasion is entirely consistent with the standards and expectations of the region, and the United States will work to make sure any restoration of ties comes with the high, peaceful standards the Arctic Council has demonstrated for a generation,” King said.

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