SUDAN: Investing in Atrocity: The Cost of Doing Business with Khartoum

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FindLaw's Writ

Over the past year, the continuing devastation in Darfur, western
Sudan, has slipped in and out of the news, and on and off the agenda of
world leaders. The crimes of the Khartoum government and its allied
Janjaweed militias have been condemned in the press, in the corridors
of the United Nations, and in the U.S. capitol.

But at the U.N.
Security Council, which has the power to impose meaningful sanctions
against Khartoum, strong words have not been matched by decisive
action. Although the council has passed four resolutions on Sudan in
less than a year, none has touched the country's business interests.
The multinational oil companies that help Khartoum reap over a billion
dollars in annual oil revenues continue to operate without hindrance.

Still, Sudanese officials attentive to the
bottom line may yet have reason to worry. In an effort that hearkens
back to the fight against apartheid in South Africa, lawmakers in
Illinois and other states are taking steps to exert financial pressure
on Sudan. Last week, the Illinois state assembly passed legislation to
bar the state from investing in companies that do business with
Khartoum.

If the governor signs the new law, Illinois will
become the first state in the country to divest from Sudan. And its
example may well be followed in states like Massachusetts, Maryland,
New Jersey, and Texas, which have lately been considering similar
measures.

U.S. Investment in Companies that Do Business in Sudan

According
to the website DivestSudan.org, which defines business ties broadly,
U.S. state and local pension funds alone have more than $91 billion in
investments in companies doing business with Sudan. The companies at
issue are foreign ventures, since under U.S. federal law American
companies are already barred from direct economic involvement in Sudan.

Besides oil companies, the list of firms linked to Sudan is
dominated by agricultural and engineering concerns. Names like
PetroChina and Tafneft (a Russian enterprise) suggest why the U.N.
Security Council, where China and Russia exercise veto power, is so
reluctant to impose economic sanctions against Khartoum.

Illinois,
according to two state legislators who sponsored the divestment
legislation, currently has some $1 billion in investments in companies
with business ties to Sudan. Under the new draft law, which had
unanimous support in the Illinois Senate and passed by a wide margin in
the House, the state will be barred from depositing funds or
contracting with financial institutions that work in Sudan. State
retirement systems and pension funds will also be prohibited from
investing in any company that does business there.

Complementing
state government efforts in Illinois and elsewhere are student-led
divestment campaigns on campuses across the country. At Stanford, Yale,
Williams, Duke, and the University of Pennsylvania, among others,
groups of students have been pressing their schools' endowments to cut
ties with companies that do business in Sudan.

Harvard
University has led the way in the academic divestment drive. Last
month, its $23 billion endowment decided to cut all of its shares in
PetroChina, a subsidiary of the Chinese Natural Petroleum Company with
major operations in Sudan. "Oil is a critical source of revenue and an
asset of paramount strategic importance to the Sudanese government and
PetroChina is a leading partner of the Sudanese government," the
university explained in a statement.

The South African Precedent

Proponents
of divestment, who recall apartheid-era efforts to pull funding from
companies doing business in South Africa, are convinced that economic
pressure of this sort is an effective tool. In the 1970s and 1980s,
they note, the withdrawal of financial support from companies working
in South Africa went from being a radical idea to a widely accepted
goal. By 1994, when democracy was finally established in South Africa,
more than 100 states, counties and cities in the United States had
adopted partial or full divestment policies.

In the 1990s,
similarly, a campaign by conservative Christians to divest from oil
companies operating in Southern Sudan led three major oil companies to
quit Sudan. It is likely that the financial pressure represented by the
companies' exodus was instrumental in creating conditions for the peace
agreement later negotiated between the Sudanese government and southern
rebels.

So hats off to the lawmakers in Illinois. Not only are
they sending a strong message to Khartoum, they are keeping state
monies free of the taint of Sudanese repression. And it is somehow
fitting that the financial power of state pension funds should be
harnessed to help the hundreds of thousands of Africans in Darfur who,
without international help, may never reach old age themselves.

AMP Section Name:Human Rights