Targeted divestment to influence the government of Sudan


National experts have advised that divestment is one of the most effective tools for influencing the government of Sudan. Targeted divestment is a strategy, closely linked with the idea of ethical investing, to address problem companies, only.

Targeted divestment removes invested money from companies that are directly or indirectly helping the Sudanese government perpetuate genocide. Since the ultimate intent of Sudan divestment is to protect the victims of genocide, it is important to tailor divestment to have maximal impact on the government of Sudan's behavior and minimal harm to innocent Sudanese. Divestment should therefore be targeted to those companies that provide revenue (or arms) to the government, impart minimal benefit to the country's underprivileged, and have expressed no significant corporate governance policy regarding the Darfur situation.

If an institution divests from companies (that meet targeted divestment criteria), demand for their stock falls and the price of shares decline. To protect the value of shareholder investments, these company executives will make it clear to the Sudanese government that the perpetuation of genocide in Darfur is making the country an undesirable place to do business. As a result, either government behavior will change (in order to keep businesses in Sudan) or companies will leave Sudan, also withdrawing money that is used to purchase military equipment for the genocide.

- From the Sudan Divestment Task Force, SudanDivestment.org
  • Click here for "Arguments for the Efficicacy of Targeted Divestment from Sudan" - July 19, 2007 report from the Sudan Divestment Task Force.

Targeted divestment might be right tool to curb Darfur horror

- Commentary published in the Chicago Sun Times on April 1, 2007 - original link here

What to do, after all this time, about the genocide in Darfur? About the Sudanese government ignoring United Nations resolutions and resisting diplomatic pressure to stop the killings and rapes and tortures? About the government denying visas to a delegation from the U.N. Human Rights Council led by Nobel laureate Jody Williams -- and then dismissing a scathing report by these investigators because they didn't observe conditions firsthand?

As this crisis deepens, with 400,000 deaths and counting -- and food running out and living conditions worsening for the more than 2 million refugees in Chad -- there is no relief in sight. There is still a shameful lack of urgency on the part of world powers to stop the atrocities. But for the first time, there are signs that efforts are being stepped up to unplug Khartoum's killing machine, to stop roving militia groups from doing its unconscionable bidding, to make it obey international law even if it coldly insists there is no genocide.

However assailable the Human Rights Council has been in its criticism of Israel, and however late its indictment of Sudan is in coming, it is an important turning point. Members of the European Union, which has been loath to impose economic sanctions against Sudan, now seem poised to do so. British Prime Minister Tony Blair is pushing the U.N. to declare a no-fly zone over Darfur to prevent the government from continuing to bomb villages -- frequently from military planes disguised as U.N. humanitarian aircraft. And Arab leaders, joining with U.N. Secretary General Ban Ki-moon, announced last week they have persuaded Sudanese President Omar al-Bashir to allow a peacekeeping team of U.N. and African Union forces in Darfur. He has barred them before, claiming they would violate his country's sovereignty.

The United States, skeptical that al-Bashir will keep his word, likely will step up its economic sanctions, as it promised to do months ago. Having banned American companies from doing business with Sudan, it will seek to exert more pressure by barring more firms with ties to Sudan's government from doing business with the United States or doing dollar transactions with U.S. financial institutions.

There is also an intensifying grass-roots effort in this country to get corporations, universities and states to withhold their pension funds from foreign companies that do business with Sudan: China, for example, in buying oil -- which constitutes 70 percent of Sudan's export revenues -- funds the genocide by providing money for weapons and ammunition. A 2005 Illinois law targeting companies with ties to Sudan was struck down as unconstitutional for being too sweeping. But a corrected proposal would enable the state, already 60 percent divested from Sudan, to complete the process.

A campaign of targeted divestment played a key role in ending apartheid in South Africa. Sanctions such as they are will not end the killings in Darfur, but a concerted effort to choke al-Bashir's regime where it hurts -- in its funding sources -- will help thwart him as well. It also signals to the world this is an outrage that won't be ignored.

A personal view of the logic of a divestment campaign


- From Professor Eric Reeves at SudanReeves.org

Why a divestment campaign? Why a relentless effort to ensure that many tens of billions of dollars of stock (equity), held in various US pension funds, college and university endowments, and mutual funds are sold? There are two answers.

First, it is immoral to own shares in companies that now willingly engage in commerce with a regime that is guilty of ongoing genocide. Such investment is no different in character from investment in German industry during World War II and the Holocaust. However high the threshold might be for divestment---what will inevitably be labeled by some as the “politicization of investment decisions”---genocide must surely cross it.

Secondly, there are precious few ways in which to bring meaningful pressure to bear on this brutal and intransigent regime. The UN Security Council gives no sign of imposing sanctions on Khartoum, and China has already made explicit threats to use its veto to ensure that no effective sanctions are contained in any UN resolution. China will have ample diplomatic support from Russia, Algeria, and perhaps others. The Arab League and the Organization of Islamic Conference have also made clear their opposition to any UN pressures on Khartoum.

At the same time, though the European Union has previously spoken of sanctions, including an “oil embargo,” there has been no meaningful commitment to the former and absolutely no indication of how the latter could be enforced. And indeed, with Sudanese crude refined mainly domestically and in East Asia, and completely without “Sudanese identity” once refined, it is not at all clear what intelligibility the notion of an “oil embargo” has. Moreover, the dominant players in Sudan’s oil development and production are the state-owned oil companies of China, Malaysia, and India. These countries are among the least likely to participate in an “oil embargo.”

In China’s case, we may be certain that there is no willingness to have any international pressure brought to bear on Sudan’s “petroleum sector.” China is now a net importer of oil, and petroleum consumption grows by over 10 percent per year (and China’s economy is especially sensitive to oil “price shock”); Sudan is China’s premier off-shore source of oil. There are simply no human rights concerns---even massive genocidal destruction---that will lead the Chinese regime to accept an embargo or any other threat to its production and development activities in Sudan.

Even so, however, intense divestment pressure will lead Beijing, if only for reasons of economic self-interest, to lean on its partners in Khartoum to halt genocide. Sharply declining share prices for PetroChina and Sinopec will cost China billions of dollars in equity value, and will also have a deeply chilling effect on future Initial Public Offerings (IPOs) in the US capital markets, even as China desperately needs Western capitalization for dozens of its domestic behemoths struggling to compete under the terms of the World Trade Organization that China has committed to.

Eric Reeves' testimony


Professor Eric Reeves made the case for divesting from Sudan in his testimony at a recent hearing for the Massachusetts state pension divestment bill:

To be sure, there will be some who offer a form of “slippery slope” argument: “genocide in Darfur is certainly horrific, but divestment is not a strategy that we can endorse as a matter of law---we can’t ethically screen our investments without risking making every political cause a potential occasion for a divestment campaign. The purpose of state-controlled funds is to secure the maximum return on investment, not to change the world.”

But the answer to this “slippery slope” argument is what I might call the “threshold argument.” It asks: “Is there no threshold beyond which we do begin to screen our investments on a political or moral basis? What about a hypothetical Swiss company that in 1944 was shipping Zyklon-B (Prussic acid) to the Nazis, for use in the death camps? What if this Swiss company traded on the New York Stock Exchange, and benefited from US capital investment? Does anyone claim that under such circumstances it would not have been morally obligatory for Massachusetts to divest from any holdings in this hypothetical company?”

But how is the present situation different? Companies like Germany’s Siemens, France’s Alcatel, Switzerland’s ABB Ltd., and China’s PetroChina and Sinopec---all of which trade on the New York Stock Exchange and are found in a great many portfolios with international exposure---help sustain a genocidal government in Khartoum by means of massive capital and commercial investments. Given Khartoum’s overwhelming external debt, these investments are a financial lifeline---the essential supplement, economically, to the oil wealth that the National Islamic Front has devoted in profligate fashion to military purchases and to genocide as a domestic security policy. Why are investments in Siemens, Alcatel, ABB Ltd., PetroChina, and a great many others acceptable by the Commonwealth of Massachusetts?

I must argue that massive ongoing genocidal destruction---what we are witnessing in Darfur according to the US Congress and the most senior officials of the Bush administration---should incinerate concerns about inappropriate precedents. Corporate complicity in the ultimate human crime should always be an occasion for divestment.

Perhaps a few, even stipulating genocide and corporate complicity in that genocide, will argue that the Commonwealth must be concerned only about its fiduciary responsibility to the citizens of Massachusetts. But such fiduciary responsibility certainly entails taking cognizance of the potentially devastating effects on share-price of a successful divestment campaign. During a similar divestment campaign against Canada’s huge Talisman Energy---a campaign animated by the company’s clearly demonstrated complicity in the genocidal clearances of the oil regions of southern Sudan---Talisman share price declined by 35% according to Canadian oil analysts. This example demands current fiduciary attention, given the rapidly growing national strength of the Darfur divestment campaign.

Morally and financially, Darfur presents a case for divestment that could not be more compelling.