By Karina Rusk

Mar. 28 - California lawmakers took the first step toward dumping $24 billion dollars in investments in companies that do business with Iran. Iranian television showed pictures of the British sailors Iran captured last week, and late Wednesday a government minister said Britain must admit they were trespassing before they will be freed.

Dr. Abbas Milani is the Director of Iranian studies at Stanford University and the co-director of the Iran Democracy Project at the Hoover Institution. He says Iran's capture of 15 British Sailors over a minor boundary dispute is foolish and disturbing.

Dr. Abbas Milani, Iran Democracy Project: "Even if the British had mistakenly come into Iranian waters, this is not the way to solve the problem."

Britain insists the boat was in Iraqi waters. In an emergency statement to Parliament, Britain's Foreign Secretary announced a freeze on all bi-lateral business with Iran until the situation is resolved.

Margaret Beckett, British Foreign Secretary: "But I regret to say that Iranian authorities have failed to meet any of our demands or responded to our desire to resolve this issue quickly and quietly though behind the scenes diplomacy."

The hostage drama takes place as California legislators are building bi-partisan support for a bill that will require state pension funds to divest from companies that do business with Iran.

Assembly woman Fiona Ma is a co-author of the bill.

State Rep. Fiona Ma (D) San Francisco: "Yes, we want to get the highest return on our money but we also want to make sure that we are socially conscious and responsible."

Dr. Milani fears radicals within the Iranian regime are deliberately escalating tensions hoping for a military confrontation. For the first time since 2003, the U.S. has two carriers in the region conducting military exercises. Dr. Milani hopes there are no missteps on either side.

Dr. Abbas Milani, Iran Democracy Project: "My earnest wish is that the west does not fall into this trap because I think for the radicals in Iran if the U.S. takes the bait this will be the trap they want."

Doctor Milani commends the British response to far. He's optimistic cooler heads in the Iranian regime will prevail, and there will be a diplomatic resolution.

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