The Darfur conflict began in early 2003, when rebel groups took up arms against the Arab-led Islamic government in Khartoum for what they said was discrimination against the region’s black Muslim tribes.
For more than three years, Sudanese government-backed Janjaweed forces have burned and pillaged Darfur’s tribal villages, while the government itself has bombed the region.
Now the ethnically targeted destruction is expanding into Chad, as Sudanese rebels seek cover there.
Those seeking to oust Chad’s president, Idriss Déby, are also using Sudan and the Chad-Sudan border region as a base.
The United Nations estimates that four million people inhabit the region of Darfur and eastern Chad.
In Darfur, as many as 400,000 people are estimated to have been killed and two million displaced in the violence, which the US has called genocide.
Recently, the violence has escalated and UN relief officials say more than 300,000 people have been cut off from aid on the Chad border in western Darfur.
And despite a peace agreement signed by the largest rebel group on 5 May, two smaller factions are holding out for more concessions. Diplomatic experts in the region say an end to the fighting may still be a long way off.
The UN Security Council has voted to begin the process to bring UN peacekeepers to the region, but the Sudanese government has repeatedly said it will block such a force unless a peace agreement can be reached with all of the rebel groups.
In the US, university students, religious leaders, politicians and entertainers are calling for action to halt the killing. They are lobbying the Bush administration – and investors – to turn the tide in Sudan.
Selling out
The US government has had sanctions against American companies doing business in Sudan since 1997 because of the country’s ties to terrorism. And with increased pressure, the Bush administration recently announced it had frozen the assets of four Sudanese leaders accused of war crimes, saying the order could be extended to others.
But as UN and other government-sponsored diplomatic efforts in the region continue to stall, some investor activists say that it is time to “take foreign policy private”.
And in what analysts are calling the largest divestment campaign in 20 years, US states, cities, universities and private pension funds are committing to sell their Sudan-linked investments to pressure the government in Khartoum to end the violence.
States join in
The states of Illinois, New Jersey, and Oregon have recently passed divestment legislation. Non-binding divestment resolutions have been adopted in Ohio and Vermont. Legislation is also pending in Massachusetts, New York, California and Texas.
Providence, Rhode Island, and New Haven, Connecticut, have become the first US cities to pass divestment legislation. And to date, eight universities have taken action to divest from companies operating in Sudan, while many more have active campaigns pushing in that direction.
Other private and public pension funds are also joining the divestment wave. Most recently, CalSTRS, the California State Teachers’ Retirement System, announced plans to divest its Sudan-linked holdings.
In a unanimous decision in April, the CalSTRS board voted to sell $14 million worth of stock in five companies – China Petroleum and Chemical, PetroChina, Tatneft of Russia, Petronas Dagangan and Petronas Gas of Malaysia.
The action follows and closely mirrors a March vote by the University of California Board of Regents to divest holdings in nine companies operating in Sudan.
UC’s action is the first socially based divestment at the university since 1986. And although the university’s regents voted to keep some Sudanese investments in an effort to “avoid harming civilians unintentionally”, they said they would pressure those companies not to enrich government-backed ethnic violence.
And Calpers, the $200 billion California Public Employees’ Retirement System, is talking with five companies in its portfolio that run subsidiaries in Sudan – Royal Dutch Shell, Total, Siemens, ABB and Alcatel – and expects updates on their activities in the region by June.
Other public and private pension funds, like TIAA-CREF, are feeling the heat to follow suit.
Can divestment stop the killing?
According to Peter Kinder, of KLD Research and Analytics, fewer than 12 Standard & Poor’s 500 ranked companies have a presence in Sudan.
Most of the 130 publicly traded companies doing business in the region, he says, are Asian – mostly Chinese – and unlikely to be influenced by attempts at engagement on the issues in Sudan.
Because Sudan is “already cut off from much of the world’s economic activity”, trade sanctions would have little effect, Kinder says. Therefore, he believes divestment becomes a significant part of bringing pressure on the Khartoum government.
Today, US public pension funds have more than $91 billion invested in holdings with ties to Sudan. And that, many activists argue, gives funds a responsibility to act.
According to student activist members of Stand, Students Taking Action Now: Darfur, 90% of Khartoum’s funding of the Janjaweed comes from oil, and 80% of that funding goes into buying weapons.
Purpose of campaigns
The central purpose of divestment campaigns must be to force complicit companies to suspend all business with Khartoum until the genocide in Darfur ends and a lasting peace agreement is signed and implemented, says Eric Reeves, a professor at Smith College in Massachusetts who closely tracks the situation in Sudan.
But some critics of divestment say pulling investments out of the region does more to hurt the people on the ground than it does to help.
A spokesman for ABB’s US subsidiary says the human rights specialists and non-governmental organisations it has consulted have encouraged the company to stay in Sudan to help build the infrastructure it believes will foster economic and social development.
Siemens agrees and says that although it takes concerns for the Darfur region very seriously, it believes “engagement is more beneficial for the country than disengagement”.
Sudan’s ambassador to the US, Khidir Haroun Ahmed, says engagement will promote peace, unity and development and cautions against divestment as a strategy to effect change, saying it will have negative impacts on job creation and social projects.
But many student activists say depriving Sudan’s government of investments and infrastructure will not cause further harm to the people in Darfur, because the government is not spending money to help them – only to kill and isolate them.
A recent editorial in the Los Angeles Times argues that the UC regents were wise to narrow their focus to companies directly benefiting the Khartoum government.
Most of the victims in Darfur, the Times says, are rural farmers and herders – not potential employees of multinational corporations.
But can it hurt?
Many proponents concede that the effects of divestment are largely symbolic in the beginning.
“Nobody’s really under the impression that divestment is going to be a cure-all for genocide,” one student activist says.
But supporters of divestment say they hope the pressure will begin to affect companies’ stock prices and lead them to revaluate their business ties. At the very least, they say, divestment campaigns help draw international attention and can be a “catalyst for change”.
Nelson Mandela, Kinder says, has “given every indication” that divestment “aided his cause” during apartheid in South Africa.
But Kinder is also quick to point out that shareholder activism and divestment are only part of what should be a much larger campaign to effect change in Sudan.
“Sudan is not South Africa,” Ahmed says. “Divestment did not cause the demise of apartheid; economic and political realities in South Africa did.”
Steven Bainbridge, a corporate law professor at UCLA, agrees and says social activist divestment tends to have little impact on its targets, but does reduce returns to investors who divest.
Filling the vacuum
And who will replace companies like ABB and Siemens if they leave Sudan? Some say China will exploit the situation and monopolise the oil in the region.
When Talisman left Sudan and Premier Oil pulled out of Burma, they were replaced by state-owned companies with little interest in or reason to entertain the concerns of shareholders or other stakeholders.
While there is no time to lose in turning the tide on genocide in Darfur, divestment’s proponents may get what they ask for and inadvertently open the door to less responsible and responsive companies waiting in the wings.
who will replace companies like ABB and Siemens if they leave Sudan? Some say China will exploit the situation and monopolise the oil in the region.
Big investors in Sudan
• Germany’s Siemens is currently building the world’s largest diesel-powered electric
generation plant outside Khartoum
• Switzerland’s ABB is upgrading the electrical grid for Khartoum and surrounding
urban areas and is doing automation work for the Greater Nile Petroleum
Operating Company, a major oil production consortium
• France’s Alcatel offers commercial telecommunications support to Khartoum and
surrounding areas
• Russia’s Tatneft and China’s PetroChina are important participants in Sudan’s oil
sector
Source: Smith College, Massachusetts
www.ucdivestdudan.com
www.divestsudan.org
www.sudandivestment.com