Divesting from Darfur

IV. Sudan has been historically responsive to economic pressure

While political pressure and diplomacy with Sudan have proven, by and large, fruitless, there is clear evidence that Khartoum responds to the economic "stick." The government of Sudan is an authoritarian regime formed by an alliance between the military and the National Congress Party (NCP), formerly the National Islamic Front. As an integral part of Sudan's governing alliance, the Sudanese military has resorted to strong-arm tactics, including the genocide in Darfur, to help maintain control over a diverse population.24 Because Sudan relies on foreign direct investment for military spending, and because the military is critical to Khartoum's control over its disaffected populace, it is not surprising that Sudan has demonstrated a clear historical susceptibility to economic pressure.25 Two recent examples demonstrate this reality:

In 1997 the Clinton administration imposed sanctions on Sudan because of its support for terrorism. Since then, the country has made an almost 180° shift in its terrorism policy, including detainment of Al Qaeda suspects, transfer of evidence recovered in raids on suspected terrorists' homes, expulsion of extremists, and interdiction of foreign militants moving through Sudan.26

A North American divestment campaign that started in the late 1990's in protest of human rights abuses committed by Khartoum during its civil war with the South eventually led to the withdrawal of Canadian-based Talisman Oil from Sudan. Within six months, oil giants Lundin Petroleum and OMV also left. These withdrawals closely correlated with Sudan's decision to finally enter into peace negotiations with the South that eventually ended the country's twenty-one year civil war.27

In light of Khartoum's consistent refusal to allow a robust UN peacekeeping force to enter Darfur and Russia and Chinas' undermining of multilateral sanctions on the country, individuals and institutions are left with divestment as the last major economic tool of influence over Khartoum's behavior. Already, the burgeoning divestment movement, encompassing dozens of nations, states, cities, and universities, has attracted the attention of mainstream asset managers, many of whom are now offering or developing Sudan-free investment tools. For an overview of the status of divestment across the country and an assessment of emerging Sudan-free investment opportunities, please see the following reports released (and continuously updated) by the Sudan

Divestment Task Force:
State of Sudan Divestment
Options and Resources for Sudan Divestment

There is also evidence that the divestment movement has already altered company behavior towards Sudan. A March 2006 Forbes magazine investigation reported that Xerox "is terminating [its] relationship with its Khartoum distributor in response to the situation in Darfur and specter of divestment" while 3M has "ceased sales [in Sudan] except to UN for relief efforts."28 The French oil firm Total has responded to shareholder pressure by joining forces with the Corporate Engagement Project sponsored by the non-profit group Collaborative for Development Action. This partnership aims to help Total staff develop "management options to ensure the company's operations have a positive, rather than a negative, impact on local communities" in Sudan.29 Several other large multinationals with operations in Sudan have either curtailed operations or reevaluated potentially problematic business practices in the country.30

Furthermore, there is evidence that the situation in Darfur is discouraging foreign direct investment in Sudan, possibly tempering the economic boom Khartoum has enjoyed in the past decade. According to Osama Daoud Latif, owner of Sudan's DAL Group and one of the country's wealthiest businessmen, "Darfur has…really had a major impact. The boom would be a lot bigger, a lot stronger if there was no problem in Darfur."31 While Sudanese businesses are aware of the impact the Darfur genocide is having on Sudan's economic boom, it is the divestment movement that has caught the attention of the government in Khartoum. Perceiving the movement as a clear threat, Khartoum authorized the Sudanese Embassy in the United States to issue a press release and an op-ed in 2006 condemning divestment from Sudan. Khartoum also placed a six-page ad in the New York Times extolling Sudan as a peaceful country worthy of foreign direct investment. 32 33 In direct correspondence with the Task Force, the Sudanese Ambassador to the United States attempted to discourage divestment. Sudan researcher Eric Reeves comments, "The fact that the regime is responding so distinctly to the movement means they certainly understand the implications."

*All information provided by the Sudan Divestment Taskforce, www.sudandivestment.org

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