    [House Hearing, 110 Congress]
    [From the U.S. Government Publishing Office]

                      H.R. 180, THE DARFUR ACCOUNTABILITY
                           AND DIVESTMENT ACT OF 2007

    =======================================================================

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                           DOMESTIC AND INTERNATIONAL
                     MONETARY POLICY, TRADE, AND TECHNOLOGY

                                     OF THE

                        COMMITTEE ON FINANCIAL SERVICES

                         U.S. HOUSE OF REPRESENTATIVES

                           ONE HUNDRED TENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 MARCH 20, 2007

                                   __________

           Printed for the use of the Committee on Financial Services

                               Serial No. 110-16

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                     HOUSE COMMITTEE ON FINANCIAL SERVICES

                     BARNEY FRANK, Massachusetts, Chairman

    PAUL E. KANJORSKI, Pennsylvania      SPENCER BACHUS, Alabama
    MAXINE WATERS, California            RICHARD H. BAKER, Louisiana
    CAROLYN B. MALONEY, New York         DEBORAH PRYCE, Ohio
    LUIS V. GUTIERREZ, Illinois          MICHAEL N. CASTLE, Delaware
    NYDIA M. VELAZQUEZ, New York         PETER T. KING, New York
    MELVIN L. WATT, North Carolina       EDWARD R. ROYCE, California
    GARY L. ACKERMAN, New York           FRANK D. LUCAS, Oklahoma
    JULIA CARSON, Indiana                RON PAUL, Texas
    BRAD SHERMAN, California             PAUL E. GILLMOR, Ohio
    GREGORY W. MEEKS, New York           STEVEN C. LaTOURETTE, Ohio
    DENNIS MOORE, Kansas                 DONALD A. MANZULLO, Illinois
    MICHAEL E. CAPUANO, Massachusetts    WALTER B. JONES, Jr., North
    RUBEN HINOJOSA, Texas                    Carolina
    WM. LACY CLAY, Missouri              JUDY BIGGERT, Illinois
    CAROLYN McCARTHY, New York           CHRISTOPHER SHAYS, Connecticut
    JOE BACA, California                 GARY G. MILLER, California
    STEPHEN F. LYNCH, Massachusetts      SHELLEY MOORE CAPITO, West
    BRAD MILLER, North Carolina              Virginia
    DAVID SCOTT, Georgia                 TOM FEENEY, Florida
    AL GREEN, Texas                      JEB HENSARLING, Texas
    EMANUEL CLEAVER, Missouri            SCOTT GARRETT, New Jersey
    MELISSA L. BEAN, Illinois            GINNY BROWN-WAITE, Florida
    GWEN MOORE, Wisconsin,               J. GRESHAM BARRETT, South Carolina
    LINCOLN DAVIS, Tennessee             JIM GERLACH, Pennsylvania
    ALBIO SIRES, New Jersey              STEVAN PEARCE, New Mexico
    PAUL W. HODES, New Hampshire         RANDY NEUGEBAUER, Texas
    KEITH ELLISON, Minnesota             TOM PRICE, Georgia
    RON KLEIN, Florida                   GEOFF DAVIS, Kentucky
    TIM MAHONEY, Florida                 PATRICK T. McHENRY, North Carolina
    CHARLES A. WILSON, Ohio              JOHN CAMPBELL, California
    ED PERLMUTTER, Colorado              ADAM PUTNAM, Florida
    CHRISTOPHER S. MURPHY, Connecticut   MICHELE BACHMANN, Minnesota
    JOE DONNELLY, Indiana                PETER J. ROSKAM, Illinois
    ROBERT WEXLER, Florida               KENNY MARCHANT, Texas
    JIM MARSHALL, Georgia                THADDEUS G. McCOTTER, Michigan
    DAN BOREN, Oklahoma

            Jeanne M. Roslanowick, Staff Director and Chief Counsel
    Subcommittee on Domestic and International Monetary Policy, Trade, and
                                   Technology

                     LUIS V. GUTIERREZ, Illinois, Chairman

    CAROLYN B. MALONEY, New York         RON PAUL, Texas
    MAXINE WATERS, California            MICHAEL N. CASTLE, Delaware
    PAUL E. KANJORSKI, Pennsylvania      FRANK D. LUCAS, Oklahoma
    BRAD SHERMAN, California             STEVEN C. LaTOURETTE, Ohio
    GWEN MOORE, Wisconsin                DONALD A. MANZULLO, Illinois
    GREGORY W. MEEKS, New York           WALTER B. JONES, Jr., North
    DENNIS MOORE, Kansas                     Carolina
    WM. LACY CLAY, Missouri              JEB HENSARLING, Texas
    KEITH ELLISON, Minnesota             TOM PRICE, Georgia
    CHARLES A. WILSON, Ohio              PATRICK T. McHENRY, North Carolina
    ROBERT WEXLER, Florida               MICHELE BACHMANN, Minnesota
    JIM MARSHALL, Georgia                PETER J. ROSKAM, Illinois
    DAN BOREN, Oklahoma                  KENNY MARCHANT, Texas

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on:
        March 20, 2007...............................................     1
    Appendix:
        March 20, 2007...............................................    43

                                   WITNESSES
                            Tuesday, March 20, 2007

    Bacon, Kenneth H., President, Refugees International.............    24
    Brownback, Hon. Sam, a U.S. Senator from the State of Kansas.....     8
    Ismail, Omer, Fellow, Kennedy School of Government at Harvard's
      Carr Center for Human Rights Policy............................    19
    Lee, Hon. Barbara, a Representative in Congress from the State of
      California.....................................................     2
    Morrison, J. Stephen, Director, Africa Program, Center for
      Strategic & International Studies..............................    28
    Payne, Hon. Donald M., a Representative in Congress from the
      State of New Jersey............................................     6
    Prendergast, John, Senior Advisor, International Crisis Group....    21
    Sterling, Adam, Director, Sudan Divestment Task Force............    26
    Williams, Michael L., Commissioner, Railroad Commission of Texas.    22
    Wolf, Hon. Frank, a Representative in Congress from the State of
      Virginia.......................................................     5

                                    APPENDIX

    Prepared statements:
        Bacon, Kenneth H.............................................    44
        Ismail, Omer.................................................    48
        Morrison, J. Stephen.........................................    53
        Prendergast, John............................................    59
        Sterling, Adam...............................................    64
        Williams, Michael L..........................................    68

                  Additional Material Submitted for the Record

    Sherman, Hon. Brad:
        Statement of the Armenian Assembly of America................    79

                     H.R. 180, THE DARFUR ACCOUNTABILITY
                           AND DIVESTMENT ACT OF 2007

                                  ----------

                            Tuesday, March 20, 2007

                 U.S. House of Representatives,
                           Subcommittee on Domestic and
                         International Monetary Policy,
                                 Trade, and Technology,
                               Committee on Financial Services,
                                                       Washington, D.C.
        The subcommittee met, pursuant to notice, at 1:05 p.m., in
    room 2128, Rayburn House Office Building, Hon. Luis Gutierrez
    [chairman of the subcommittee] presiding.
        Present: Representatives Gutierrez, Maloney, Sherman,
    Meeks, Moore of Kansas, Clay; Paul, Castle, and Roskam.
        Chairman Gutierrez. Good afternoon. The Subcommittee on
    Domestic and International Monetary Policy, Trade, and
    Technology of the Committee on Financial Services will come to
    order.
        Today's hearing is a legislative hearing on H.R. 180, the
    Darfur Accountability and Divestment Act of 2007, introduced by
    Representative Barbara Lee. In this hearing, the subcommittee
    will closely examine divestment strategies for the region and
    hopefully help this committee and the House in to determine the
    best way forward.
        With violence and atrocities in Darfur getting worse on a
    daily basis, it is important that we explore all of the
    available options we have at our disposal to put a stop to the
    barbaric slaughter of innocent men, women, and children. In my
    opinion, H.R. 180 should be an integral part of our overall
    strategy to put an end to genocide in Darfur, and I commend
    Congresswoman Lee for her efforts on this legislation.
        Before I go to our first panel, I ask unanimous consent
    that all members of the Committee on Financial Services who are
    not members of this subcommittee be permitted to participate in
    today's subcommittee hearing. Per committee rules, we have
    agreed to limit opening statements to 10 minutes per side, but
    without objection, all members may submit written statements.
        I am going to introduce the members of our first panel
    first, and then we will go back to opening statements, if there
    is no objection.
         Hearing no objection, that's what we will do.
        We could not ask for a more distinguished panel on this
    issue than our first panel today. Joining us we have
    Congresswoman Barbara Lee, a relentless advocate on Darfur
    issues, and the author of the Darfur Accountability and
    Divestment Act of 2007. Thank you, Congresswoman Lee, for all
    of your work on this issue.
        We are also joined by Congressman Frank Wolf, a tireless
    and widely respected advocate for human rights around the
    globe. He is a senior member of the House Appropriations
    Committee, where he serves as ranking member of the State
    Foreign Operations Subcommittee, which has oversight of the
    State Department and other international programs and
    organizations including the Peace Corps.
        Congressman Wolf is also co-chairman of the Congressional
    Human Rights Caucus, a bipartisan organization of over 200
    House Members that identifies and works to alleviate human
    rights abuses worldwide. I welcome you both, and I recognize
    Congresswoman Lee for her testimony.

      STATEMENT OF THE HONORABLE BARBARA LEE, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Ms. Lee. Thank you very much, Mr. Chairman, and let me
    thank you and the ranking member and Chairman Frank for holding
    this very important hearing today, and also for your
    leadership.
        As a former member of this very subcommittee, it is truly
    an honor to come before you today to testify on my bill, H.R.
    180, the Darfur Accountability and Divestment Act, better known
    as DADA.
        I also want to thank Congressman Wolf for his steadfast
    leadership, and for helping to make sure that the world knows
    that--here, at least, in the House of Representatives--this is
    a bipartisan issue. Genocide knows no party line, and we have
    worked together on many, many issues relating to Darfur and
    genocide. So thank you, Congressman Wolf, and I would also like
    to thank all of the panelists who will be here shortly.
        Twelve years ago, Mr. Chairman, the world stood by as
    nearly one million people were slaughtered in the genocide in
    Rwanda. The best our country could do then was, after the fact,
    to apologize for our failure to act. Many of us swore that
    another Rwanda would never happen again on our watch. But
    today, Mr. Chairman, it is happening again.
        Nearly 3 years ago, on July 22, 2004, Congress formally
    declared that the ongoing atrocities in Darfur constituted
    genocide. Again, this was a bipartisan initiative. Congressman
    Payne led the way with many Republicans, and we were able to
    finally do this monumental pronouncement, which--it still,
    unfortunately, is a genocide that we are witnessing.
        Since the start of the conflict, it is estimated that
    nearly 450,000 people have been killed, and 2.5 million
    innocent civilians have been displaced. I witnessed this
    ongoing tragedy firsthand in January of 2005, when I visited
    the refugee camps in Chad, and went into Darfur with two great
    humanitarian leaders, Don Cheadle, the brilliant Academy Award
    nominee, star of Hotel Rwanda, and Paul Rusesabagina, whose
    courage in Rwanda saved many lives. That delegation was led by
    Chairman Ed Royce of California. It was a bipartisan
    delegation. And, again, we all witnessed the horrific acts of
    genocide, and the results of those acts of genocide in the
    camps.
        In February of 2006, under the very bold leadership of
    House Speaker Nancy Pelosi, I visited the refugee camps again
    in another region of Darfur, and we saw all of the suffering
    around us. It had not gotten any better. We heard from people
    who had witnessed, and fled from, the ongoing genocide.
        I can remember going into one of the camps where children
    had drawn pictures of airplanes bombing the refugee camps, of
    men on horseback with machetes and rifles, and of village huts
    blowing up in smoke, and in flames. And these kids, of course,
    were traumatized. The men and women were also traumatized by
    what they had seen. And I was convinced, then, that these
    children did not lie. They told the truth. The Khartoum
    government was coordinating, with the Janjaweed, to conduct the
    rape and the slaughter that was taking place in these camps.
        Although a tentative peace agreement was signed in May of
    last year, it was not accepted by all parties. Rather than
    following through on this obligation, the Khartoum government
    has remained defiant--quite defiant--to this day. Meanwhile,
    the killings continue, the rapes, the starvation, the
    dislocation, they all continue.
        The genocide is real, and it is happening on our watch. The
    credibility of the United States is on the line. We have to be
    about action, not just talk. We must use all of the tools that
    we have available to end this genocide. And I believe, at this
    point, that we have to hit Khartoum where it hurts, and that's
    in their pocketbooks.
        As many of you know, divestment was a successful tool in
    ending apartheid in South Africa. It put our country on the
    right side of history when we finally, after many, many years,
    imposed sanctions on the apartheid regime in South Africa. My
    predecessor, Congressman Dellums, led that fight, and I believe
    the bill was introduced for at least 12 years before the
    Congress overrode President Reagan's veto in the early 1980's.
        Today, State legislatures, colleges, and universities are
    all leading targeted divestment campaigns against companies
    doing business with the Khartoum regime. State legislatures in
    California, Vermont, Oregon, New Jersey, Maine, Connecticut,
    and of course, your State, Illinois--which I believe was the
    first State, or Mr. Payne's State, great competition there; we
    were a little slow, but California did come, finally--we have
    all passed legislation mandating divestment of State funds from
    companies that conduct business in Sudan. And many more States
    are starting to follow in their lead.
        Divestment campaigns are ongoing in over 17 other States.
    Additionally, students, young people, such as Students Taking
    Action Now: Darfur, better known as STAND, are driving their
    respective colleges and universities to divest from companies
    doing business with investments in the Sudan from Harvard
    University and Yale, to the University of California, my alma
    mater, and Stanford University, and many schools have all
    divested their funds from--or placed restrictions on
    investments of their funds in--certain companies that conduct
    business in the Sudan.
        In April 2006, the House passed H.R. 3127, the Darfur Peace
    and Accountability Act, by a near unanimous vote of 416 to 3.
    And I have to commend Congressman Payne for working so
    diligently and effectively, in a bipartisan way, to make sure
    that this did pass and become the law of the land.
        Among a number of important provisions, the House went on
    record in support of specific language that I added in section
    11 of the bill, which empowered States to enact divestment
    legislation targeted at the Sudan, without fear of being pre-
    empted by Federal laws.
        Unfortunately, Mr. Chairman, a single Senator in the other
    body objected specifically to this language, and in the
    interest of passing the larger bill, we compromised and pulled
    it out. Now there are signs that the divestment movement at the
    States may be in trouble, and may need our help. And so, this
    bill, the DADA bill, seeks to rectify this problem by including
    language that protects State divestment efforts from being pre-
    empted by Federal law.
        My bill takes the divestment movement to the next logical
    step, and that is, of course, the Federal Government. This bill
    requires the Securities and Exchange Commission to take steps
    to identify companies listing securities on the U.S. capital
    markets that are also doing business in the Sudan, and to
    require these companies to declare the nature of their business
    operations.
        If these companies are propping up the Khartoum government
    in any way, or if they are engaging in the sale of military
    equipment or dual-use technology, like radar systems, then my
    bill would prohibit the Federal Government from entering into
    new contracts or renewing any existing contracts with those
    companies.
        Already, just the introduction of my bill alone has
    convinced two companies, Siemens AG and ABB, to suspend their
    business operations in the Sudan because of this contracting
    requirement, which is a positive step in the right direction.
        Let me be very clear, though. Companies that do not support
    the government of Sudan or the government-backed militias, or
    that are working for peace and security, or providing
    humanitarian assistance in Darfur, will be exempted from this
    requirement. We want to get at those who are the worst
    offenders in the Sudan--by and large, those companies that are
    engaged in, of course, the petrochemical and natural resource
    extraction industries, and who rely on government complicity to
    allow them to operate.
        My bill would also charge the Government Accountability
    Office with investigating the investments made by the Federal
    Retirement Thrift Investment Board, which manages a pension
    plan for 3.6 million people with over $186 billion in assets. I
    don't believe the American people, especially Federal
    employees, want their blood on the hands of those who are
    getting killed in Darfur.
        Think about the potential impact that $186 billion could
    have on the marketplace. That would be a huge accomplishment,
    and would guarantee to all of our Federal Government employees
    that their savings and their pension funds will not be used to
    fund genocide. We have a moral obligation to do everything in
    our priority in the genocide in Darfur, and we have a fiduciary
    responsibility, also.
        And this is not a partisan issue. Currently, we have over
    80 co-sponsors on the DADA bill, and I am willing to work with
    the committee, Mr. Chairman, and members on both sides of the
    aisle, to move this legislation forward. I am open to--
        Chairman Gutierrez. Thank you.
        Ms. Lee.--any suggestions to strengthen it. The bottom line
    is that we must keep up the pressure on the Khartoum government
    in any way we can. We must insist on real political settlement,
    a peace agreement that goes far beyond the May 6th agreement,
    and we must ensure that Darfurians can return home to their
    villages and reclaim their lives. We must bring the
    perpetrators of the state-sponsored genocide to justice.
        Thank you, Mr. Chairman. I look forward to answering any
    questions.
        Chairman Gutierrez. Thank you. And now we have our
    distinguished and dear friend, Congressman Frank Wolf.

      STATEMENT OF THE HONORABLE FRANK WOLF, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF VIRGINIA

        Mr. Wolf. Thank you, Mr. Chairman. I also want to thank
    Congresswoman Lee and Congressman Payne for their efforts on
    this.
        I have been to the Sudan five times. Sam Brownback and I
    led the first group that went in there, back in the summer of
    2004. I think everything that Congresswoman Lee said--there is
    not much more that you can say.
        These people have been living in camps, sometimes for
    almost 4 years, on 900 or 1,000 calories a day, with no
    medicine, and human feces and animal feces all over the place.
    And this institution that we're all honored to be part of has
    talked a lot about this.
        But, really, fundamentally--and I can get into it on
    everything from the helicopters coming in, the bombers bombing,
    the Janjaweed outside, coming in and shouting and hollering,
    and they hang around the camps all morning, early in the
    morning. When the women go out to the camps, they rape the
    women. And the U.N. has done fundamentally nothing. China has
    blocked the security council, so I'm not even going to read my
    statement.
        What she says is true. It's the only thing that made the
    difference with regard to South Africa. You ought to report
    this bill out, get it on the Floor, bring it up under
    suspension, and anyone prepared to vote no, let them vote no,
    and get it over to the Senate. But we have really done a lot of
    talk.
        It was 3 years ago that Congress called it genocide,
    Secretary Powell called it genocide, President Bush called it
    genocide. And in reality, life is no better, and in some
    respects even worse, because if you've been in a camp for 3- to
    3\1/2\ years, your system is down, your children haven't had
    any education, and you have had death and everything else.
        So, I think the sanction issue is the only issue. The
    diplomatic efforts have pretty much failed. President Bush has
    appointed Andrew Natsios, and Andrew is doing a good job,
    working his heart out trying, but overall, diplomacy has
    failed. And other than Barbara Lee's idea, there is nothing
    facing this Congress that will really bring this thing to a
    conclusion.
        So, I will submit my statement, and I support the passage
    of the bill quickly, because again, it's been going on now for
    4 years.
        Chairman Gutierrez. Thank you so much, Congressman Wolf.
        Congressman Donald Payne is a recognized expert on African
    issues, and a distinguished member of the House Committee on
    Foreign Affairs, where he is now chairman of the Subcommittee
    on Africa and Global Health. Mr. Payne was a driving force
    behind the passage of a resolution declaring genocide in
    Darfur, and we ask him to please give us his statement. We are
    so happy to have him here this afternoon.

    STATEMENT OF THE HONORABLE DONALD M. PAYNE, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF NEW JERSEY

        Mr. Payne. Thank you, Mr. Chairman and Ranking Member Paul.
    It's a pleasure to be here before your subcommittee, and I
    appreciate the opportunity to have some comments on this very
    timely and very important issue of the divestment of public
    funds from entities doing business with Sudan.
        Let me begin by commending Representative Lee for this
    legislation. She was a very valued member of the Africa
    subcommittee until her ascension, I guess, to the
    Appropriations Committee, and we do appreciate the work that
    she continues to do.
        Of course, there is no greater champion on Sudan than
    Congressman Wolf. He has been fighting the battle of Sudan
    since before I even came to Congress. He worked on the north/
    south situation, where for 21 years, it was a civil war where 2
    million people died, and 4 million people were displaced, but
    Congressman Wolf was there the entire time, pushing for what
    finally became the comprehensive peace agreement. There is no
    person who has done more over the period of time than he has.
        And he has current legislation that will have an institute
    on agriculture named after the late Dr. John Garang, who
    actually fought for 21 years to have Sudan recognize the rights
    of the people of the south, fought for 21 years, and was killed
    in a helicopter crash, mysteriously, 21 days after the
    agreement was signed, and the new government went into effect.
        So, we have a lot of tragedy in the story of Sudan, but we
    have to continue. in 2004, I, along with others, introduced a
    resolution calling the violence in Darfur by its rightful name,
    genocide. And calling on the international community to take
    action to stop it, Congresswoman Barbara Lee must certainly be
    commended for her work on divestment. Her bill, the Darfur
    Accountability and Divestment Act of 2007, is critical to the
    fight to end genocide in Darfur.
        Included in the bill is language which would protect States
    who divest from legal action. State senator Jackie Collins
    championed divestment legislation in Illinois, which has been
    mentioned. However, the National Foreign Trade Council, a
    Chicago-based group, Mr. Chairman, filed suit against the State
    of Illinois, and actually won their case earlier this month.
    Many States would face the same fate, without the lead bill.
        I believe that there are a number of things the Bush
    Administration can and should do to end genocide, including
    enforcing, along with our allies, a no-fly zone over Darfur,
    which I have asked for in a bill that had several hundred
    sponsors. But then, former-Chairman Hyde had my bill tabled,
    and a new bill came out that took out the no-fly zone. I think
    if that legislation would have been able to go through, we
    would have seen different results in Sudan now. But that's the
    past, and we have to move forward.
        We need to continue to push sending U.N. and NATO troops to
    help the Africa union. Just yesterday, Bashir said he wants to
    renegotiate the agreement in which he first said that U.N.
    troops could come in. He said then that it had to be a hybrid
    force, and now he is saying we have to renegotiate, and maybe
    there will be no force at all.
        And so, we need to continue to push the United Nations to
    impose international sanctions on leaders of the National
    Congress Party. I shared these points with President Bush last
    month, when the Congressional Black Caucus met with him, and he
    indicated a strong interest in trying to move forward on these
    issues.
        At the same time that we pursue military and diplomatic
    options to address the crisis in Darfur, we should apply
    economic pressure on the regime in Khartoum. In 2005, as Ms.
    Lee mentioned, New Jersey became the first State in the union
    to introduce legislation, actually offered by my brother, State
    assemblyman William Payne, which requires New Jersey companies
    with an equity tie in Sudan to redeem, sell, divest, or
    withdraw their investments.
        New Jersey was really the second State to enact the
    legislation, but our legislation said in 3 months. And all
    money, pension funds in New Jersey, and companies doing
    business with Sudan--17 foreign corporations, $2.16 billion--
    have been identified, and equity ties have been severed
    completely in 3 months--90 days. So it can happen.
        Six other States have enacted similar legislation, and
    there are campaigns in 20 more States to do this. Why? Because
    history has shown that economic pressure helps change policies.
    You should know that in 1985, New Jersey was the first State in
    the union to divest from South Africa, divesting over $4
    billion in State pension funds from private companies. And as
    Congressman Wolf mentioned, that really hit where it hurt, in
    South Africa.
        This proved to be a watershed event, as States and
    universities across the United States also divested. The
    action, in conjunction with the Congress's--Ron Dellum's
    Comprehensive Anti-Apartheid Act, the CAAA was widely credited
    with helping to bring an end to apartheid in South Africa--not
    only did economic pressure bring change in South Africa, it has
    caused the Sudanese government to change its behavior.
        In 1997, when President Clinton enacted sanctions by
    executive order due to Sudan's complicity with terrorists, the
    Sudanese actually took action, shutting down terrorist camps.
    We are told that the government continues to cooperate with the
    U.S. counterterrorist effort, though I fear that the
    counterterrorist assistance is inflated, and our government has
    grown too close to Khartoum. I think they're telling us what
    they want to tell us to make us feel they are really
    cooperating, but I doubt very seriously if that government can
    tell the truth on anything.
        I should mention that the president--that President Omar
    al-Bashir and the National Congress Party in Khartoum, Sudan,
    which was formerly known as the National Islamic Front, came to
    power in a military coup in 1989, and from 1991 to 1996, this
    regime gave safe haven to Osama bin Laden. So these are some
    very horrible people we're dealing with, as I conclude, since
    our Senator is here.
        In addition to what I have stated about divestment, the
    divestment campaign has helped discourage international
    companies from investing in Sudan. As Ms. Lee said, I
    understand that Siemens, a well-known German company, decided
    to halt its operations in Sudan, and others are questioning
    going in.
        One factor that led to the decision was the effort that
    doing business in a country against which there is an active
    divestment campaign had a reputation that was a stain on the
    company. And so, less investments mean less revenue for the
    National Congress Party. Less revenue means fewer resources
    from which they can buy weapons for their military and the
    murderous Janjaweed militia.
        On the issue of weapons, China is a major supplier of
    weapons to the regime in Khartoum, and the largest oil
    developer in Sudan. The Congressional Black Caucus has met with
    the Chinese ambassador, and we will meet with him again after
    the break to, once again, insist that China stop their holding
    up of actions in Sudan.
        As I conclude, Mr. Chairman, Congress cannot do less in the
    face of genocide than State governments have done. We must take
    similar action, and soon. It has been 4 years and 400,000
    deaths since the tragedy in Darfur began. It is long past time
    that decisive action is taken. While we all recognize that
    divestment will not resolve the conflict by itself, it is
    important that we keep the pressure on.
        I am expecting a call in an hour from Sol Vikir, who is
    working with, now, the rebel groups, because they have no
    single leader, and he is trying to bring them together, so that
    they can negotiate as a unit. That's another issue that we have
    to get moving. But with that, I appreciate the opportunity, and
    I yield back. Thank you.
        Chairman Gutierrez. Thank you very much. Quickly, to
    Congressman Wolf, this issue of priority--and I know I speak
    for the chairman of the full committee--we will act on this
    quickly. I assure you, your comment to us, and your
    encouragement, was well taken.
        I would like to now introduce a colleague from the other
    body--I don't know why we can't say ``the Senate,'' but anyway,
    Senator Sam Brownback.
        Senator Brownback, also a long-time advocate on this issue,
    has recently called on State pensions to divest in Darfur, and
    as a co-sponsor of the Darfur divestment legislation, Senate
    831, the Sudan Divestment Authorization Act of 2007, a bill
    introduced by Senator Durbin, that would authorize States and
    local governments to prohibit investment of a State's assets in
    any company that has a business relationship with Sudan.
        And with that, we are happy to have you, Senator. Thank you
    so much. Please.

       STATEMENT OF THE HONORABLE SAM BROWNBACK, A UNITED STATES
                    SENATOR FROM THE STATE OF KANSAS

        Senator Brownback. Thank you, Chairman Gutierrez, it is
    good to see you. Both Congressmen Wolf and Payne and I have
    traveled together to the Sudan, and these are the lead
    individuals who know this topic better than anybody else, and I
    think probably are more frustrated than anybody else in the
    entire Congress, and possibly the entire country, about how
    long this has gone on.
        And this is the second genocide; it's not the first one. We
    didn't call it that in the south, but there were two million
    people killed by the same murderous government that is in
    Khartoum, that is doing this now in the west, in Darfur.
        So, this just keeps going on. And the frustration level
    keeps building, and the inaction continues. And now you see
    that the government in Khartoum is saying, ``Well, we're not
    going to allow U.N. troops in this time. We said we would, we
    said we would work with people, and now we're not going to do
    it.''
        I think this is a simple proposition, this particular bill
    on divestment, that says, as one of the other people said--and
    perhaps it has already been quoted--``Not on our watch, not on
    our dime.'' We are not going to continue to fund this
    government in its second genocide off of money and resources
    from the United States, period. And we should move these
    forward aggressively.
        And the States--and I applaud New Jersey for leading in
    this area. My State is--now the State senate has voted to
    divest, and the house is considering it. We need to make sure
    it's clear that they can do this. I think these are bills
    intended to clear up any sort of questionable category, if
    there really is. I don't know that there particularly is, but
    this is something we need to clear up, and we need to make a
    clear statement on it.
        And if we can get a wave of States doing this, and then
    encourage private individuals to do the same with the
    statements that the States are doing, individuals to look at
    their own resources and see if they are investing in any
    companies that are doing business in Sudan. And if this
    government continues to desire to have a genocide conducted,
    it's not going to be with our money, period. I think we have to
    be very clear and very strong about that.
        I don't think that, in and of itself, is sufficient. I met
    with my colleague from Illinois last week, twice. Senator
    Durbin, who--he and I have traveled to Africa, not to the
    Sudan--but to talk about what else could we put together of
    action items for as far as supporting of peace-keeping troops,
    as far as reviewing other possible options of no-fly zones, and
    looking at other sanctions that we can do of individuals
    traveling in and out of Sudan, or key individuals.
        And I would hope that we could start pulling together a
    list of these items that we could do together, like Congressmen
    Payne and Wolf, in particular, in the past have been very
    successful at getting us pulled together around a series of
    items that we can and should do, and then let's start hitting
    it.
        Every minute we waste, somebody else gets killed. More
    people die, and more people are left in the carnage that has
    been caused by this government. We're not powerless. There are
    things we can do, even if the Khartoum government doesn't agree
    with the troops being there, there are things we can do.
        And I just--I hope we find the will and the gumption and
    the time, because that's generally what it is, more than
    anything, is us just finding the time to get together to figure
    out what it is we want to do. Because once we do, we can move
    it, and it can happen. And I just--I pledge my own effort and
    time to do that, because each minute is somebody else getting
    killed in a place, a region in the world where it shouldn't
    happen, and it shouldn't happen on our watch, and it shouldn't
    happen on our dime. Thank you, Mr. Chairman.
        Chairman Gutierrez. Thank you, very much. I will yield
    myself 5 minutes for questions of the panel, but I will yield
    the first minute to my friend, Congressman Moore.
        Mr. Moore of Kansas. Thank you, Mr. Chairman, and thank you
    to the four witnesses who are testifying today. I think the
    American people would be proud to see this, to see two
    Republicans and two Democrats sitting at this table, all in
    agreement about what's happening, as far as genocide, and
    people being killed in Darfur. And I am very proud of all four
    of you.
        I say to the senior Senator from Kansas, we have many
    political differences, but I have told him before that I am
    very proud of the position he has taken on human rights
    violations, and he has been a consistent supporter of trying to
    stop human rights violations, and especially genocide, in
    places around the world.
        And the same to Congressman Wolf, to Congresswoman Lee, and
    to Congressman Payne. Thank you very, very much for what you
    are doing here, and I want to support you.
        Chairman Gutierrez. Thank you. Let me, first of all, say to
    the four of you how proud I am to be a member of this
    institution, being able to see the four of you, the diversity,
    you know, East Coast, West Coast, middle of the country, and to
    see all of you come together on this issue of Darfur.
        I think I echo the comments of my friend from Kansas--and I
    say that sincerely--Congressman Moore, to see the four of you
    working together, I just know we can get this done.
        I have a question for Representative Barbara Lee. You know,
    it's fairly widely acknowledged that divestment and economic
    sanctions generally do not work, as they are many times
    intended. Our embargo against Cuba and sanctions against Burma
    are two examples that come to mind. We can point to success
    against white rule in South Africa in the 1980's, but even in
    that instance, one byproduct was greater hardship for black
    South Africans.
        Why is this situation different? Why do you believe that
    divestment will work in Darfur, Congresswoman Lee?
        Ms. Lee. Sure. First, thank you very much, again, for this
    hearing, Mr. Chairman. And I think divestment will work. It has
    worked. You cited examples where it hasn't worked, but it has
    worked throughout the world, really.
        When it came to South Africa, I think that is probably the
    best example of how it did work, and it's very similar to the
    strategies that we are mounting here. The first States--I
    believe California was the State to divest of its pension fund
    holdings in South Africa--then States followed the California
    model. Subsequent to that, the United States Congress imposed
    sanctions against South Africa, and this was a long-term
    process, but it did work.
        With regard to Sudan, first of all, there are many foreign-
    owned companies that are heavily invested because of the
    petrochemical and resource extraction industries in the Sudan,
    and many of these companies are considered the worst offenders.
    We want to find out, first of all, we want to know who they
    are. I mean, I think--and what we have seen already, with two
    companies, just with the bill being introduced, Siemens and ABB
    having said, ``No more,'' they know that this is going to
    happen.
        I think genocide is taking place, which again, is a big
    difference, in terms of other divestment efforts. We have
    450,000 people who have been killed, and we have major
    companies that need to be--we need them listed, and the SEC is
    responsible for listing these companies.
        And so, the first step under this bill is just to know who
    these companies are, first of all, and then, to make sure that
    they are not afforded Federal contracting opportunities. I
    think those two factors: one, that genocide is taking place,
    450,000 people have been killed; and two, that there are
    companies that are in these two industries that need to be
    squeezed, because the Khartoum government is relying on these
    investments, because of their industrial base. And I think that
    this is a strategy that will work.
        Chairman Gutierrez. Thank you. Let me just end with saying
    this. I have been a Member here for 14 years, this is my 15th
    year, and I have to say that I will never see Congressman Frank
    Wolf or Senator Brownback in the same way, after listening and
    learning a lot more and preparing for this hearing, about what
    you have done.
        That may be a shame of me, and a shame on our lack of
    relationship, but I just thought I should share that with you.
    So, if anything else, I think these hearings--like-minded
    people come together on the situations they might not
    otherwise. Yes, Congressman Payne?
        Mr. Payne. Yes, just on the point, as Congresswoman Lee
    mentioned, you know, you need a number of tools when you come
    to a complicated situation like we have in Sudan, and no one
    tool is really going to work. That's why divestment--and it
    did, it wasn't divestment alone, it was then the boycotts and
    the isolation from the Olympics--in South Africa--it was a
    number of issues, and then it started an internal debate with
    South Africans. They were an island unto themselves. They
    couldn't participate in international organizations, still,
    with the divestment going on.
        You know what investment does. Taiwan, Korea--people
    invested in them, and they became strong and robust. So,
    therefore, the whole question of investment and divestment
    definitely has its place. If we can hold back investment to
    slow down and retard the economic growth and development, I
    think that it's very good.
        The question about the poor people suffering, in South
    Africa we asked South Africans, just like we have asked
    Sudanese, and they said they're suffering anyway, they're dying
    anyway. And so, to have a little more pain that indirectly
    falls on them, they're willing to suffer a little more, because
    if it means regime change, or weakening their government up in
    their capitals, whichever country it was, they support that.
    And so--
        Chairman Gutierrez. Thank you.
        Mr. Payne. That's what I would like to say.
        Chairman Gutierrez. I would now like to recognize my acting
    ranking member, and my good friend, Mr. Castle, Congressman
    Castle, please, for questions.
        Mr. Castle. Well, thank you, Mr. Chairman. Let me--I am
    also impressed by the knowledge that the four of you have about
    this, and I think it's very helpful to know that there are
    Members of Congress who have taken this kind of interest. I
    think all four of you deserve tremendous credit for dealing
    with a very difficult problem.
        I would like, Congressman Wolf, to ask you this. You
    indicated that the U.N. has done nothing, and I think back on
    Iraq, when the U.N. didn't do much, and various other
    circumstances. I was wondering if you could expand on that, in
    terms of if--and I'm assuming your statement is correct, and we
    are all generally familiar with the problems of Sudan.
        But if they have done nothing, why have they done nothing?
    Is it a lack of will, or a lack of enforcement mechanism? And
    then you went on to say that diplomacy has failed, as well, and
    you might comment on that, as well. Based on what's happening
    there, I assume these statements are absolutely correct. But I
    am wondering why, when it was such an obvious problem,
    something hasn't happened before now.
        Mr. Wolf. The powerful really just don't hear the
    powerless, at times. The very reality is when--if you read
    Samantha Power's book, ``A Problem from Hell,'' it's an--and I
    will have my office call your office to give you the title, and
    make sure I have it right--you will see that the U.N. stood by.
    And Kofi Annan was head of peacekeeping when the Serbs were
    standing there, and the Muslims were marched out, and they did
    nothing. And the fact is, the U.N. forces actually pulled back.
        In Rwanda, the cables were coming back and forth to the
    State Department, and also the U.N., with regard to the
    genocide taking place. In Rwanda, the U.N. peacekeeper wanted
    to do something and was told to back off. And as a result of
    that, we lost 700,000 to 800,000 people.
        In Sudan, the U.N. pretty much stood by when the north/
    south--as Senator Brownback said, this is the second genocide.
    There were 2.1 million--mainly Christians, but a large number
    of Muslims--who were killed in a north/south war. And as
    Congressman Payne said, bin Laden lived in Sudan from 1991 to
    1996. And like the old Simon and Garfunkel song, ``The
    Boxer,'': ``The man hears what he wants to hear, and disregards
    the rest.''
        The way the U.N. is set up, the Chinese have an absolute
    veto. When you go to Khartoum, the largest embassy in Khartoum
    is the Chinese embassy. There are Chinese government officials
    all over the place. They're getting roughly 6 percent of their
    oil coming out of Khartoum. They are using that money to buy
    the Soviet helicopters, the bombers.
        So, the U.N. has been just locked up, if you will. When
    Senator Brownback and I were there, the first call we made when
    we got back was to ask Kofi Annan to go. He then went, went
    back again, but still, the security council is set up in such a
    way that no one wants to take on the Chinese government.
        And, quite frankly, this Congress has not been particularly
    courageous in taking on the Chinese government. The violation
    of human rights in China is unbelievable. I mean, it is
    beyond--conditions are worse today in China than they were when
    they got MFN, and yet the world just doesn't want to go against
    them.
        So, the U.N. is tied up in that way. Security council has a
    veto. For a long period of time, the Russians weren't
    cooperating. Now they are beginning to participate.
        But read Samantha Power's book, ``A Problem from Hell.''
    This genocide, and types of activities like this, have gone on
    for a long, long period of time--and ethnic cleansing--until it
    kind of reaches a consensus. And we have a museum down on the
    mall that says, ``Never again,'' and yet during that period of
    time, it has taken place over and over and over. And when Sudan
    and other governments see that nothing really happens to the
    people, it emboldens others to do it. But I will call your
    office, Mike, and make sure that you get a copy of the book.
        Well, I was going to ask something else, but that leads me
    to another question, and that is the relationship of China and
    Sudan. I understand that China is one of their biggest
    customers, one of their biggest economic factors. What is our
    relationship, in terms of dealing with China, vis a vis Sudan?
    Are we engaged in that, ourselves?
        Mr. Wolf. Andrew Natsios has spoken to the Chinese. If you
    recall, President Hu--and maybe Don will have the exact date--
    was in Sudan about a month or a month-and-a-half ago, and
    announced--the big announcement was not that they were going to
    deal with the issue of genocide, but that they were going to
    build him a new palace. You remember that?
        Mr. Payne. Yes.
        Mr. Wolf. That China is building Bashir a new palace.
    Parade Magazine did a piece a month ago, saying the number one
    dictator in the world is President Bashir, and China's activity
    was that they're going to build him a palace. So they just
    really haven't really done very much. They get a lot of oil
    from them.
        Mr. Castle. Congresswoman Lee?
        Ms. Lee. Thank you very much for that question, because I
    think that is a very key question, and a key policy perspective
    we have to have, in terms of our foreign policy. I always
    remind my colleagues and others that we did grant most favored
    nation status, and there are many trade preferences that we
    provide, and there are many economic preferences and
    relationships we have with China. I believe we need to call in
    a chit, and I don't know why the Administration doesn't use its
    leverage to call in this chit, when 450,000 people have been
    killed.
        I think we need to up the ante on the Administration, as
    well as the Chinese government, because the United States
    should be, given what we have done with regard to China, we
    should be in the driver's seat.
        Senator Brownback. If I could just respond, part of this
    divestment--not a part of it--a big part of this divestment
    effort is aimed right at the Chinese. Because this is the
    leverage point, this is the--the investment is being done
    primarily by Chinese companies, not exclusively, but primarily
    by Chinese companies, and sometimes, or a lot of the time, with
    Western resources.
        That's where the pressure point is, and that's what we need
    to hit, and the Chinese have no hesitancy whatsoever--indeed,
    it seems as if part of their business model is to associate
    increasingly with somewhat rogue regimes, where perhaps you can
    get better business arrangements, because the rest of the world
    won't deal with them.
        I think we should make them pay a price for their business
    plan model. This is part of it, and it's something we need to
    do soon. We need to do it now.
        Mr. Payne. And they are absolutely right. You know,
    Talisman Oil Company, from Canada, was a part of the oil
    movement in Sudan. We started divesting from our State
    pensions--once again, in New Jersey, we do this sort of thing--
    so we pulled pension funds out of Talisman, sent the word up to
    Talisman that we were going to get this moving. Talisman sold.
    They said, ``We're out of here.'' Of course there was someone
    to buy it.
        But that is a clear example of how pressure really works.
    And as Ms. Lee said, you know, we had this MFNS, the most
    favored nation status, which sounded too nice, because we knew
    China was evil, so they changed the name to PTR, I mean, what
    is it, permanent trade relations. That doesn't sound so nice,
    you know. And we have a way of doing that with words, you know.
        But we have this relationship with China. The militaries
    are getting too strong, they send up satellites. But our big
    corporate entities can't get to China fast enough. They're
    waiting for that 380, I guess, that holds 500 people, so they
    could put all the businessmen on the rush to China to get the
    good deal. On the other hand, China is fueling the worst
    dictators in the world.
        And so, another instance of how this country needs to come
    up with a policy. Where do we stand? Do we love them or hate
    them? Is it Defense that hates them and the business that loves
    them? I mean, we can't have a national position on China. So
    they are on the security council, they have threatened any time
    a strong resolution would come up, they say, ``We're going to
    veto it. So, water it down, and we may let it go through.''
    That's what has been happening in the security council, those
    five permanent members.
        Chairman Gutierrez. Thank you, Mr. Castle. I want to go
    quickly to Congressman Roskam, a freshman member from Illinois,
    for questions, please.
        Mr. Roskam. Thank you, Mr. Chairman. The--I was pleased to
    hear State senator, Jackie Collins, mentioned, from Illinois,
    who really led the charge in the Illinois general assembly, and
    I was pleased, when I served with her, to co-sponsor that
    measure.
        Just a question to all of you, who have a lot more depth
    and background on this--anybody who can just answer a couple of
    questions. How is this distinguished from the South African
    effort? It seems to me that this bill does two things: number
    one, it requires disclosure to the Securities and Exchange
    Commission for those publicly-traded companies that are doing
    work; and number two, it says that the U.S. Government is not
    going to contract with any of those companies.
        Is that all we did in South Africa? Or was the South
    African sanction actually a broader sanction, which was an
    actual prohibition against other companies from doing business
    in South Africa? Do you understand my question?
        In other words, is this incremental? Is this a baby step?
    Sort of junior varsity sanctions, to put it that way? Or is
    this as good as it gets?
        Mr. Payne. In my opinion, this is as good as it gets. It
    deals with what we have authority over. As you know, because of
    the 1997 sanctions, U.S. companies can't do business with
    Sudan, anyway.
        Mr. Roskam. Okay, that's the piece that I am missing.
        Mr. Payne. Yes, so--
        Mr. Roskam. Can you just explain that a little more in
    detail to me?
        Mr. Payne. Well, during the Clinton Administration, there
    was a strike, you recall, on the drug factory. And because
    Sudan was violating laws, the Executive Branch put sanctions on
    the government of Sudan. So, that is why there are no U.S.
    companies in Sudan. Don't you know they would be running around
    there, too, if it wasn't for our sanctions.
        Now, the--so the United States had sanctions on U.S.
    companies. Also, Charlie Rangel had legislation, a double
    taxation, that anybody who was in South Africa had to pay
    double taxes. It was a quiet thing that was there, in addition
    to the Comprehensive Anti-Apartheid Act, which was another
    thing, so it was a combination of different sanction bills.
        But this is, I believe--and I'm not, you know, a financial
    guy--but I think this is about as much as we can do, saying
    that our public pension monies cannot be invested in any of
    those companies doing business in Sudan. U.S. companies are
    restricted anyway, so--and one other thing that we have done.
        I have been working on language which I am going to
    introduce, because we have to figure out different ways that
    would block oil tankers who dock at the port of Sudan from
    entering U.S. ports. That's where they come.
        So, I would like to talk to you about some--yes, language
    where--it was in our--it was in 1434 last time, last session,
    which didn't go through. But this would primarily hurt China,
    because of course, they're off-loading the oil in Sudan, and
    coming into U.S. ports.
        So, if we continue to get the word out--I mean, people
    never thought about diamonds until blood diamonds, and that
    whole question about Kimberley Process, and now people are
    saying, ``Well, we want to make sure that these diamonds are
    real.'' So, believe me, to bring attention, economic pressure
    is about the only thing we could do.
        I would like to see a force go in, you know, but that is--
    no one is going to do that.
        Mr. Roskam. Anybody else, in terms of an observation on
    that? Yes, ma'am.
        Ms. Lee. Yes. Let me say--I was very involved, as a
    student, in the anti-apartheid movement, and an additional
    measure in California that we mounted was prohibiting the
    unloading of cargo through our ports from South Africa. I'm not
    sure if that became a national effort, but that certainly
    occurred in California.
        Also, with regard to the preemption provision of this
    legislation--and I will get back to you with regard to how--
    what the law was at that point--because now, what we're finding
    is there are lawsuits being--and, you know, that are
    challenging the States in their divestment efforts. I don't
    recall those challenges during the anti-apartheid movement. But
    we decided in this bill that we would definitely put a
    provision in that would allow States to do what they need to
    do.
        Finally, Mr. Chairman, let me just say with regard to the
    bill, I wanted to make this general statement. I think I said
    earlier, this is going after the bad actors, the companies that
    are perpetrating genocide, or using their investments, which
    allow the Khartoum government to perpetrate genocide in the
    Sudan.
        We have a section of the bill on pages 10 and 11 that does
    allow for some exceptions, and that is for those companies that
    are not doing this, but also those companies that are working
    to implement the Darfur peace and accountability--Darfur peace
    agreement in May of 2006. Also, those companies that are
    providing humanitarian assistance, that are working with the
    people in the south.
        And so, this is a bill that is very narrowly crafted to go
    after the bad actors, the most egregious companies that are
    allowing, either by design or not, or through their
    investments, you know, the genocide to continue to be
    perpetrated.
        Chairman Gutierrez. Thank you--
        Mr. Payne. One last point on that.
        Chairman Gutierrez. Oh, sure.
        Mr. Payne. We had capital market sanctions pass.
    Congressman Tancredo, Congressman Wolf, all of us supported
    capital market sanctions, which meant that if you did business
    on Wall Street, you couldn't--if you did business in Sudan and
    went to Wall Street, you were out. Now, that was really--that
    was the hammer. Greenspan came up and met with the Senators and
    said, ``You just can't let this go on. It will just disrupt--
    it's just too--it's not our place.''
        And our capital market sanctions, which we passed--we
    passed it in the House. Like I said, one of my biggest
    supporters on that bill was Congressman Tancredo, who stood up
    and fought--you remember, Frank? And we passed it. It took
    Greenspan from--Wall Street sent him here to say, ``Kill that
    bill that Payne and Tancredo and those guys are pushing.''
        So, you know, we have a lot of business people that just--
        Chairman Gutierrez. Thank you.
        Mr. Payne.--feel that they have to move on.
        Chairman Gutierrez. We have about 7 minutes left before the
    next vote on our side. I want to say thank you to Senator
    Brownback for being here, to Congressmen Payne and Wolf, and my
    good friend, Barbara Lee, for introducing the bill. We are
    going to get this done.
        We will recess, and 5 minutes after the last vote, we will
    reconvene for the second panel.
        [Recess]
        Chairman Gutierrez. Let me--the subcommittee will come to
    order. I want to thank the witnesses for their patience, as we
    get about voting here, in the House of Representatives. And we
    will proceed with opening statements by members of the
    subcommittee before turning to the second panel for their
    comments.
        I would like to yield to the ranking member, Dr. Paul, for
    any opening statement he might have.
        Dr. Paul. Thank you, Mr. Chairman. I have just a brief
    statement that I would like to make.
        Mr. Chairman, H.R. 180 is premised on the assumption that
    government-mandated divestment, sanctions, and other punitive
    measures are always effective in influencing repressive regimes
    when in fact this has not been proven.
        Proponents of such methods fail to remember that where
    goods and services don't cross borders too often, the troops
    will. Sanctions against Cuba, Iraq, and numerous other
    countries failed to topple their governments. Rather than
    weakening dictators, these sanctions strengthened their hold on
    power, and led to more suffering on the part of the Cuban and
    Iraqi people.
        So, to the extent that divestment effected changes in South
    Africa, it was brought about by private individuals working
    through the market to influence others. No one denies that the
    humanitarian situation in Darfur is dire. But the United States
    Government has no business entangling itself in this situation,
    nor forcing divestment on unwilling parties.
        Our witnesses should be commended on their actions to date
    in publicizing the horrendous situation in Darfur, and
    influencing people around the world to divest themselves of
    investment in Sudan. Any further divestment action, however,
    should be undertaken through voluntary means, and not by
    government force.
        H.R. 180 is an interventionist piece of legislation which
    will extend the power of the Federal Government over American
    businesses, force this country into yet another foreign policy
    debacle, and do nothing to alleviate the suffering of the
    residents of Darfur.
        The exceptions made for contracting with companies that
    provide arms to NGOs, and with companies operating in the oil-
    rich Abyei province, would result in the exact opposite of the
    bill's intended effect.
        The regime in Khartoum would see no loss of oil revenues,
    and the civil conflict would eventually flare up again.
        The unintended consequences of this bill on American
    workers, investors, and companies needs to be considered as
    well. Cutting American citizens off from any involvement with
    companies who may be only tangentially related to supporting
    the Sudanese government could have serious economic
    repercussions which need to be taken into account.
        And that concludes my statement, and I yield back.
        Chairman Gutierrez. Thank you to my ranking member. And
    now, our second panel is comprised of some of the most
    recognized experts on Africa, genocide, and the Darfur region.
        Looking down the list of witnesses, I am pleased by the
    diverse backgrounds our witnesses will bring to this issue, and
    I look forward to a vibrant debate. I will briefly introduce
    all of our witnesses now, and then we can proceed to their
    testimony, uninterrupted.
        First, we have Omer Ismail, who was born in the Darfur
    region of Sudan, and has spent over 20 years working both
    independently, and with international organizations on relief
    efforts. Omer fled Sudan in 1989, as a result of his political
    views. He then helped found the Sudan Democratic Forum, a think
    tank of Sudanese intellectuals, working for the advancement of
    democracy in Sudan, as well as co-founding the Darfur Peace and
    Development organization, to raise awareness about the crisis
    in his troubled region.
        He currently works as policy advisor to several agencies,
    working in crisis management and conflict resolution in Africa.
    He is a fellow at the Kennedy School of Government at Harvard
    University's Carr Center for Human Rights Policy.
        Next, we have John Prendergast, senior adviser to the
    International Crisis Group, and co-founder of the Enough
    Campaign. Previously, John worked at the White House and the
    State Department during the Clinton Administration, where he
    was involved in a number of peace processes throughout Africa.
        John has also worked for Members of Congress, the United
    Nations, human rights organizations, and think tanks. He has
    co-authored eight books on Africa, the latest of which he co-
    authored with actor/activist Don Cheadle, entitled, ``Not on
    Our Watch.'' John travels regularly to Africa's war zones on
    fact-finding missions, peace-making initiatives, and awareness-
    raising trips, involving network news programs, celebrities,
    and politicians.
        Next, we are joined by Michael L. Williams, chair of the
    Texas Railroad Commission. Commissioner Williams was appointed
    by former Governor George W. Bush, in December 1998, to serve
    the unexpired term of Carole Keeton Rylander, and he was
    elected by his fellow commissioners in September 1999 to chair
    the Commission.
        In November 2000, the people of Texas elected him to
    complete the term expiring in the year 2002, and in November
    2002, they re-affirmed their support by electing him to a term
    expiring in 2008. He is the first African American in Texas
    history to hold an executive statewide elective post, and is
    the highest ranking African American in Texas State government.
        Our next witness is Kenneth Bacon, president of Refugees
    International. An expert in international affairs and security
    issues, Mr. Bacon has concentrated on expanding refugees'
    international capacity to promote more effective ways for the
    international community to meet the needs of refugees and
    displaced people.
        Mr. Bacon is co-chairman of the Partnership for Effective
    Peace Operation, and he serves on the boards of the American
    University in Cairo, Population Action International and
    Interaction. He is an emeritus trustee of Amherst College, and
    Folger Shakespeare Library, and a member of the Council on
    Foreign Relations and International Institute for Strategic
    Studies.
        Mr. Bacon also serves as Assistant Secretary, Public
    Affairs, at the United States Department of Defense, and served
    as Pentagon spokesman from 1994 to 2001.
        Next, we have Adam Sterling, the director of the Sudan
    Divestment Task Force, a project of the Genocide Intervention
    Network. As the coordinating entity for the Sudan divestment
    movement, the Sudan Divestment Task Force is actively involved
    in dozens of successful and developing targeted Sudan
    divestment campaigns around the world, at the university, asset
    manager, city, State, and national levels.
        Adam is a recent graduate of the University of California,
    Los Angeles, with degrees in African American studies and
    political science. Adam has received a number of humanitarian
    awards, and serves as an advisor on Sudan engagement issues to
    numerous State pension, State legislators, and Federal
    representatives.
        Finally, we have J. Stephen Morrison, director of the
    African program at the Center for Strategic & International
    Studies at CSIS. Mr. Morrison has overseen the revitalization
    of the Africa program. In his role as director of the Africa
    program, he has co-chaired two recent CSIS working groups that
    examine the United States' rising energy states in Africa, and
    the implications for U.S. foreign policy.
        Since late 2001, he has also directed CSIS's task force on
    HIV Aids, a multi-year project co-chaired by former Senator,
    Bill Frisk, and Senator Russell Feingold. Currently, he is
    leading the establishment of CSIS Nigeria, launching a project
    on China and Africa, and carrying on CSIS work on the Sudan.
    Please, Mr. Ismail?

    STATEMENT OF OMER ISMAIL, FELLOW, KENNEDY SCHOOL OF GOVERNMENT
            AT HARVARD'S CARR CENTER FOR HUMAN RIGHTS POLICY

        Mr. Ismail. Thank you, Mr. Chairman, and Ranking Member
    Paul, for this opportunity. I was born and raised in Al Fashir,
    the capital of greater Darfur. My personal memories of Darfur
    are in sharp contrast with the Darfur of today that has been
    turned into killing fields by the government of Sudan and its
    proxy militia, known as the Janjaweed.
        I grew up in a region that was a picture of tolerance and
    peaceful co-existence. It is true that environmental
    degradation and the competition over meager resources has been
    the cause of clashes between the different communities in the
    region. These clashes, however, were limited in their scope,
    and their impact is less destructive than what we have seen
    today, and in recent years.
        Furthermore, the local communities have their own organic
    mechanism that dealt with the conflicts without extensive
    intervention. As if the historical neglect of the region by the
    successive national governments and the lack of meaningful
    investment and delivery of services were not enough, the
    current government has applied policies since the mid-1990's
    that deepen the rift between the Darfurian communities,
    resulting in the catastrophe that is unfolding there today.
        The pressure imposed by the international community on the
    government of Sudan resulted in the signing of the
    comprehensive peace agreement between the government of Sudan
    and the SPLM that has stopped war in the south and the Nuba
    Mountains. Yet, Darfur is still a gaping wound, and a theater
    to what is rightly called by this honorable institution,
    genocide. If left to its own devices, this conflict will not
    only destroy Darfur, it will threaten the CPA and, hence, the
    future of the country as a whole.
        The current situation in Darfur is like this. Today,
    killing of civilians, rape, and sexual violence are widespread
    and systematic. Torture continues, arbitrary arrest and
    detention are common, as is repression of political dissent and
    arbitrary restrictions on political freedoms. Mechanisms of
    justice and accountability, where they exist, are under-
    resourced, politically compromised, and ineffective.
        Since May of last year, I have taken five trips to several
    countries neighboring Sudan. I met with refugees fleeing the
    devastated region who spoke of the continuation of the horrors
    of war and abuse of human rights. I have met with aid workers,
    human rights observers, African officials, and rebel leaders.
    They all agree that the level of violence has increased, and
    the protection of the refugees and the internally displaced
    people has become almost impossible.
        With access to the victims becoming more and more
    difficult, and the attacks on the aid workers increasing, as
    many as 400 of the 1,300 international aid workers in Darfur
    have been either evacuated or relocated, putting more pressure
    on an already tenuous situation.
        What can we do? And faced with all this? I urge the United
    States, as the only superpower in the world today, and with the
    interest that it has in the security and stability of the
    world, to do the following.
        One, to work urgently with the Security Council to ensure
    the implementation of the three-phased package agreed upon by
    the government of Sudan and Mr. Kofi Annan in November of last
    year in Addis Ababa, Ethiopia. The deployment of the United
    Nations and AU peacekeeping or protection force is essential to
    provide security to the citizens of Darfur, and the aid workers
    assisting them.
        And two, to consider the--considering the instrumental role
    of the United States in the outcome of the DPA--that is, the
    Darfur Peace Agreement--signed in May of last year, the United
    States should also lead an international effort towards the
    expansion of the DPA, to include the non-signatory rebel
    groups, in addition to the representatives of civil society and
    other stakeholders in the region.
        And according to the reports of several human rights
    groups, the United States has information that will be useful
    in bringing those who have committed horrendous crimes in
    Darfur to justice. With the utmost respect, and full
    understanding of the position of the United States government,
    vis a vis the ICC, as a Darfurian, who strives for justice for
    my people, I urge the United States to avail that information
    to the ICC, should that information in question be in the
    custody of the United States.
        There is no question that divestment also is an effective
    tool in bringing pressure on the Sudanese government and
    cutting off the funding that feeds the genocide. Many believe
    that the campaign against Talisman Energy in 2001 accelerated
    the signing of the 2003 comprehensive peace agreement with the
    south.
        Mr. Chairman, finally, I thank this committee and I thank
    this institution. And I believe the freedom and security that
    are enjoyed by the citizens of this country are universal
    principles for dignity and the pursuit of happiness. With the
    help of this body, and the representatives of the people of the
    United States, I dream that one day the people of Sudan will
    enjoy the same. Thank you.
        [The prepared statement of Mr. Ismail can be found on page
    48 of the appendix.]
        Mr. Clay. [presiding] Thank you very much for your
    testimony, Mr. Ismail. Mr. Prendergast, you may proceed.

     STATEMENT OF JOHN PRENDERGAST, SENIOR ADVISOR, INTERNATIONAL
                              CRISIS GROUP

        Mr. Prendergast. Thank you very much, Mr. Chairman, and all
    the members of the subcommittee, for taking time out of your
    schedules to look at this incredibly important issue.
        News flash. After 4 years of unrelenting failure on the
    part of this Administration's policy towards Darfur, President
    Bush has finally decided that the present course of U.S. policy
    is inadequate, and must be buttressed by more robust measures.
    The heads of U.S. agencies, the principles committee has met 6
    times in the last 3 months, and no decisions have been
    announced yet, though we have been told that targeted sanctions
    are going to be expanded against a few members of the Sudanese
    government and rebel and militia--Janjaweed militia leaders and
    a few companies linked to the Khartoum regime.
        Consideration is also being given to how to restrict
    Sudanese oil transactions, using U.S. dollars, which could add
    some economic pressure on the regime. However, without
    significant will and resources to expand and enforce such
    measures, and without rapid follow-up with European and other
    allies to prevent the Sudanese regime from switching to the
    Euro or Yen in their transactions, these measures may prove to
    be relatively fruitless.
        In addition to divestment, I think there are three main
    economic instruments that the United States and the broader
    international community have at their disposal, but are not yet
    utilizing.
        Like divestment, none of these is likely, on its own, to
    actually have a major economic impact. But the objective of
    these sanctions is not only economic, it's political. These
    measures would place a scarlet letter on the shirts of senior
    officials who are responsible for atrocities, and are
    undermining peace efforts, and hit them where it counts, in
    their wallets.
        The bet, based on empirical evidence from past efforts, is
    that calculations of regime officials will change with the
    introduction of real economic costs, combined with increased
    isolation, globally. This isn't the Taliban. The Khartoum
    regime wants to play ball internationally, and it doesn't want
    to be an international pariah.
        So, the regime's economic base won't collapse with the
    introduction of these measures, but their political will to
    continue will collapse, instead.
        Beyond divestment, I think that the United States could
    lead on three separate tracks. First, the United States can
    lead on increasing, ramping up targeted sanctions against a
    number of senior officials in Khartoum through the United
    Nations Security Council, not just the small handful that the
    United States is currently considering.
        Second, the United States could take the lead in passing a
    Security Council resolution establishing a panel of experts to
    quickly ascertain where the assets of the largest Sudanese
    companies owned by the ruling party officials are located, and
    quickly move to freeze those assets.
        Third, the United States could work with other countries to
    develop a coalition that would notify certain banking
    institutions that if they choose to continue conducting
    business with the government of Sudan, or companies affiliated
    with the ruling party, they will be cut off from the financial
    systems of participating countries by a pre-determined date.
        The United States recently imposed similar unilateral
    measures on banks doing business with the regimes in Iran, and
    they have had a direct impact. I think even more of an impact
    would happen in the case of Sudan, if it was multi-lateral.
        Finally, the central paradigm shift in U.S. policy must be
    to move away from the current policy of constructive engagement
    without any real leverage, to a more muscular policy focused on
    walking softly and using a much bigger stick. Unfulfilled
    threats and appeals should be replaced quickly with punitive
    measures and policies that support a robust peace and
    protection initiative.
        Ultimately, with the right policies and increased levels of
    engagement regarding Darfur, there is potential for the region
    to be stabilized within a year. If not, it is almost a foregone
    conclusion--and Omer and I have traveled together a number of
    times in rebel-held areas of Darfur--it is a foregone
    conclusion that if present trends continue with the restriction
    of humanitarian access and increased insecurity, hundreds of
    thousands more Darfurians will perish in 2007 on our watch.
    Thank you.
        [The prepared statement of Mr. Prendergast can be found on
    page 59 of the appendix.]
        Mr. Clay. Thank you for that chilling testimony. Mr.
    Williams, you may proceed.

       STATEMENT OF MICHAEL L. WILLIAMS, COMMISSIONER, RAILROAD
                          COMMISSION OF TEXAS

        Mr. Williams. Mr. Chairman, Congressman Paul, it is good to
    see you again. It is always good to be in this city and see
    another Texan.
        Thank you for this opportunity to address you and I am
    grateful that you are considering this most important issue. As
    you have just mentioned, my name is Michael Williams, for the
    record.
        And back in 1998, as was mentioned in the introduction, my
    good friend, then the Governor of Texas, George W. Bush,
    appointed me to a vacancy on the Railroad Commission of Texas.
    Since that time, I have been elected statewide by the people of
    Texas, both in 2000 for--to complete the unexpired term of my
    predecessor, and then in 2002, for the full 6-year term.
        And despite our name--and it's probably important to say on
    the record that the Texas Railroad Commission has absolutely
    nothing to do with railroads. Since 1981, the Texas Railroad
    Commission has been, for the State of Texas, the principal oil,
    natural gas, chemicals, and mining regulatory agency in the
    State. And it's because of oil and gas, it's because of energy
    that brings me to this issue.
        I have been concerned about what has been happening in
    Sudan dating back to the beginning of this decade, when I began
    hearing the heart-wrenching stories of--regarding the decades-
    long civil war between the government of Khartoum and the
    southern rebels. That continued with conversations with
    Sudanese who were living in Texas, regarding their experience
    either back home, or what they were hearing from home, and
    continued with the conversations with Dr. John Garang, who
    obviously is now departed.
        And hearing about those, and recognizing that in large part
    what was fueling the devastation in Sudan was oil, obviously
    each and every day that I get up I have the opportunity to make
    sure that Texas and this country has abundant supplies of
    affordable, clean, and reliable energy--primarily, in large
    part, coming from crude. But in Sudan, crude is not used for
    those purposes; crude is used for the propagation of
    devastation.
        And what I would like to do in the short time that I have
    is to talk about what is happening in Texas today, beginning
    with the leadership of the Governor of the State of Texas, who,
    both in his state of the state address and his inaugural
    address, came out in support of Texas joining a half-dozen
    other States that have already moved to pass divestment
    legislation across this country, and almost two-plus dozen
    States who are now considering similar legislation.
        I will also say that just today, as I have been here with
    you, the Texas senate has taken up senate 247, the Texas
    divestment bill, and it passed out of the Texas senate 29 to 0.
    We have one senator who is ill, and who has not been able to
    join the members of the Texas senate. We have another that I
    understand was out of the city. So, it unanimously passed the
    Texas senate.
        And I think what it says is that it is extremely important
    to Texans that we be on the right side in this issue. The Texas
    divestment legislation impacts two of our large public pension
    funds, the Teacher Retirement System of Texas--by its name,
    obviously, all of our State teachers--the Employment Retirement
    System of Texas, and together, it is estimated there may be
    some $500 million to $600 million that might be covered there.
        And I think it's also important to recognize that this is a
    narrowly tailored bill that is designed to deal with only the
    active direct holdings that are in the Texas--those two Texas
    retirement funds. It does not impact mutual funds, it does not
    impact the individual accounts that individual Texans have with
    their 401(k)s, or their 457 plans.
        But it is specifically directed at two areas that you heard
    discussed earlier in your earlier panel, and even thus far in
    this one. For all contracts, companies that have contracts with
    the government of Sudan, or companies that have an equity
    interest with the government of Sudan.
        And I think, notably, the Texas divestment statute says
    that a company that, in terms of its Sudanese activity, is
    receiving 10 percent or more of its revenue from all activity,
    and less than 75 percent of its activity is with the southern
    Sudanese, or the marginal peoples of Sudan, that is a company
    that would be identified and targeted. Similar, if more than 10
    percent of its power generation was with the government of
    Sudan, and less than 75 percent of the benefit of the
    generation of that electricity is benefitting the people,
    marginalized peoples, whether they be in Darfur, southern
    Sudan, or elsewhere in the country.
        The other thing that I think is notable about the Texas
    legislation is that social development companies, those that
    have provided humanitarian aid, whether it be medical supplies,
    or education, or building orphanages are not covered here.
        And I think, finally, because we recognize that the
    construct and the deployment of foreign policy is the priority
    and the privilege of the national government and not for State
    government, there are certain exclusions. And one exclusion of
    coverage would be for any company. The Federal Government
    affirmatively exempts from its Federal sanctions, from your
    Federal sanctions.
        And, secondly, the law would expire if the President or the
    Congress were to declare that the genocide has ended for 12
    months, or that the United States invokes its sanctions on
    Sudan.
        Mr. Clay. Excuse me. The gentleman's time has expired.
        Mr. Williams. I look forward to answering your questions.
        [The prepared statement of Mr. Williams can be found on
    page 68 of the appendix.]
        Mr. Clay. Thank you so much, Mr. Williams. Thank you for
    that testimony.
        Mr. Bacon, please.

          STATEMENT OF KENNETH H. BACON, PRESIDENT, REFUGEES
                             INTERNATIONAL

        Mr. Bacon. Thank you very much, Mr. Chairman, Mr. Clay, and
    Mr. Paul, for holding this hearing. Ever since the United
    States, led by the House in 2004, declared the government of
    Sudan guilty of genocide, the world has been waiting for the
    United States to act.
        Article 1 of the 1948 genocide convention says, ``The
    contracting parties confirm that genocide is a crime,'' which
    they undertake to prevent and punish. The Darfur Accountability
    and Divestment Act of 2007 is a small step in that direction.
    In light of the continuing death and displacement in Darfur,
    the subcommittee may want to consider other, more painful,
    financial interventions.
        In September 2004, Secretary Powell accused the government
    of Sudan of genocide, but he said that U.S. policy would not
    change, meaning that the United States would take no military
    action to stop the genocide. Instead, we have relied on
    diplomacy and economic sanctions. So far, our policies have
    failed.
        What message has our inaction sent? Earlier this year,
    Roger Winter, who advised the State Department on Sudan, told
    the House subcommittee that impotent reactions to genocide by
    the United States, the U.N., and Europe had no impact on
    Sudan's leaders. Talk alone does not work, he said. Only
    credible threats that cripple their agenda, or deprive them
    personally of their power and ill-gotten riches will work.
        In his classic book, ``The Roots of Evil,'' Ervin Staub, a
    professor at the University of Massachusetts, says of the
    Holocaust, ``The inaction of other countries, and their
    unwillingness to help Jews confirmed the Nazis in the rightness
    of what they were doing.''
        The United States was silent and inactive in the face of
    genocide in Rwanda in 1994. General Romeo Dallaire, the
    commander of the U.N. force there, asked for authority to take
    action to prevent the killing. On April 21st, after an
    estimated 100,000 people had been butchered in Rwanda, Dallaire
    said that with a force of 5,000 well-armed, well-trained
    soldiers, and a clear mandate to act, he could stop the
    genocide.
        But on that same day, April 21st, the U.N. Security Council
    voted to cut the U.N. assistance mission in Rwanda from 2,500
    to 270. Even this was too large a force for then-United States
    Secretary of State Warren Christopher. He instructed our
    ambassador to the U.N. to vote for a full and orderly
    withdrawal of all U.N. forces as soon as possible.
        After Rwanda, a Senator said that if just two people in
    every congressional district had told their elected
    representatives that the United States should help stop the
    genocide, U.S. policy might have been different. Yet, there was
    silence.
        At about the same time, the United States was also averting
    its gaze to genocide in the Balkans, where 200,000 Muslims were
    murdered by Serb forces between 1992 and mid-1995. Throughout
    1993, confident that the U.N., the United States, and the
    European community would take no military action, Serbs in
    Bosnia freely committed genocide against Muslims, according to
    the United Human Rights Campaign.
        It was not until Serb forces systematically slaughtered
    7,000 Muslim men and boys in Srebrenica that the United States
    and its NATO allies employed decisive military force to end the
    war.
        We know today what is happening in Darfur. The estimated
    number of people dead of war-related causes ranges from 200,000
    to 500,000. There were 232,000 refugees from Darfur in Chad,
    and 2.2 million Darfurians have fled to camps within Sudan.
    Many of the displaced are Africans, whose villages have been
    attacked by primarily Arab government and militia forces. The
    destabilizing impact of the war is spreading to Chad, and the
    central African republic.
        In the last several months, the violence in Darfur has
    worsened dramatically. Displacement is increasing, not
    decreasing. Humanitarian workers are facing more attacks and
    harassment from government forces, allied militias, rebel
    groups, and bandits. Both the U.N. and major relief agencies
    have warned that rising danger to their workers and operations
    may force them to pull out of Darfur.
        Every action by Sudan shows that it believes it can get
    away with murder--and, in fact, it is. It is time to make clear
    that Sudan will pay a price for the continued death and
    displacement. H.R. 180 moves in that direction.
        However, the subcommittee may also want to explore the
    possibility of legislation that would directly or indirectly
    bar banks used by Sudan and its leaders from access to the U.S.
    financial system. That would sharply increase the cost and risk
    of financial transactions by the government of Sudan or its top
    officials.
        History shows that we can't leave genocide unanswered, so I
    encourage the subcommittee to take the strongest possible
    measures against Sudan as soon as possible.
        [The prepared statement of Mr. Bacon can be found on page
    44 of the appendix.]
        Mr. Clay. Thank you, Mr. Bacon, for that testimony.
        And, Mr. Sterling, your turn.

      STATEMENT OF ADAM STERLING, DIRECTOR, SUDAN DIVESTMENT TASK
                                 FORCE

        Mr. Sterling. Thank you, Mr. Chairman, and members of the
    subcommittee. My name is Adam Sterling, and I am director of
    the Sudan Divestment Task Force, a project of the Genocide
    Intervention Network.
        The Sudan Divestment Task Force has developed a unique
    approach, focusing its efforts on the most egregiously
    offending companies in Sudan. This approach, termed ``targeted
    divestment,'' helps to maximize impact on the Sudanese
    government, while minimizing potential harm to both innocent
    Sudanese civilians, and investment returns here in the United
    States.
        I would like to first recognize Congressman Sherman, whom I
    see here today. He was one of the first members to endorse
    targeted divestment, not only at the University of California,
    which became the first public school to divest from Sudan in
    March of last year, but also one of the first members to
    endorse targeted divestment for the entire State of California.
        I would also like to recognize Congresswoman Lee for her
    continuing efforts to support and encourage the divestment
    movement. My organization supports H.R. 180, which authorizes
    but does not mandate States and local entities to adopt
    divestment programs, which requires further disclosure from
    companies operating in Sudan, and then would prohibit U.S.
    contracts only to those companies identified as being worst
    offenders.
        With my testimony today, I would like to briefly address
    two issues. First, what is the current status of the Sudan
    divestment movement? And, second, will Sudan divestment be
    effective in changing the behavior of the Khartoum government?
    In closing, I would like to highlight aspects of H.R. 180 that
    I believe require additional attention, and would help address
    the issues brought out by Congressman Paul.
        First, what is the status of the Sudan divestment movement?
    The States of New Jersey, Illinois, Oregon, Maine, California,
    and Vermont have all approved divestment plans. North Carolina
    State treasury and the Kentucky State teachers' retirement
    system have independently divested a selection of Sudan-related
    holdings. Many of these States have left open the option of
    subsequent divestment.
        Additionally, over 20 States now have active divestment
    movements, with varying levels of involvement from State
    officials. A large number of these have already begun
    consideration of divestment in this year's legislative session.
        Religious international campaigns have also gathered steam,
    including an examination of the issue by Canadian universities
    and provinces, and other active campaigns in Europe. Cities and
    municipalities have begun consideration of divestment, as well.
        At the university level, over 30 institutions have enacted
    restrictions on their Sudan investments. At the company level,
    engagement and divestment campaigns targeting fidelity in
    Berkshire and Hathaway have been initiated. Finally, several
    Sudan-free mutual funds have also recently been introduced.
        Second, is divestment from Sudan effective? The Sudanese
    government has a long history of susceptibility to economic
    pressure, with a foreign debt nearly as large as its GDP. More
    than U.S. diplomacy, the country has responded to U.S. economic
    pressure in the past.
        Despite this historical responsiveness, the regime has
    faced little in the way of economic consequences for its
    perpetuation of genocide in Darfur, heavily protected by a
    small set of international protectors, whose commercial
    interests in Sudan are very strong.
        Indeed, while the regime has been brutal towards its own
    citizens, it has been a shrewd attractor of foreign investment.
    It currently ranks in the top 20 countries in the world in
    attracting foreign investment dollars as a percentage of its
    GDP, and it holds international investor conferences, even as
    the genocide is ongoing.
        This is a government acutely attuned to the country's
    finances, but facing little challenge from the international
    community. As if to emphasize this point, Sudan's president,
    Omar Al-Bashir recently stated to the international press,
    ``When countries gave us sanctions, God gave us oil.''
        Ironically, the number of countries propping up this
    genocidal regime is relatively limited. While there are over
    500 multi-nationals operating in Sudan, only a few dozen play a
    truly detrimental role in the country. Moreover, the companies
    that fiduciaries are beginning to choose as replacements may
    very well perform better than the offending companies, since
    over 20 U.S. States are currently considering divestment from
    those very companies.
        For example, one of the top targets of the divestment
    campaign, PetroChina, is down 19 percent for the year. The
    emerging Sudan divestment movement has already caught the eye
    of the Sudanese government, which has spent considerable time
    and energy attacking the campaign, even going so far as to
    purchase a six-page ad for more than $1 million in the New York
    Times to counteract the divestment movement.
        Several major companies operating in Sudan have also
    recently altered their business practices, largely in response
    to the divestment movement.
        Chairman Gutierrez. Mr. Sterling, you have 30 seconds left.
        Mr. Sterling. Okay. While we strongly support the intention
    of H.R. 180, we believe it would benefit from further attention
    to the targeting of companies so that the worst offenders are
    subject to punitive measures, and those companies without any
    substantive business relationship with the government of Sudan,
    and companies that may actually be providing tangible benefits
    to Sudan's underserved periphery, are exempt from them. The
    companies I have in mind are those already exempted from
    existing U.S. sanctions by the Office of Foreign Asset Control.
        We believe that H.R. 180 can effectively support the
    growing divestment movement and create important disincentives
    for companies contemplating or currently engaged in problematic
    operations in Sudan. Thank you again for the opportunity to
    address you today.
        [The prepared statement of Mr. Sterling can be found on
    page 64 of the appendix.]
        Chairman Gutierrez. Thank you, Mr. Sterling.
        Mr. Morrison, please.

      STATEMENT OF J. STEPHEN MORRISON, DIRECTOR, AFRICA PROGRAM,
              CENTER FOR STRATEGIC & INTERNATIONAL STUDIES

        Mr. Morrison. Thank you, Mr. Chairman, Mr. Paul, Mr.
    Sherman. Thank you for the opportunity to be here today. My
    remarks are going to be focused on China and its economic
    stakes, and the approach it has taken, diplomatically, with
    respect to Sudan, and the question of the U.S. dialogue with
    China on Sudan.
        In terms of the economic stakes, in our estimation, Sudan's
    contribution to China's total energy needs is important, but
    not strategic. It represents about 5 to 7 percent of China's
    oil consumption, which translates into about--one of its oil
    imports--which translates into about 1 percent of its total
    consumption, total energy consumption. Its oil fields are
    modest. There have not been major new discoveries. Its oil
    fields will decline fairly rapidly in the next decade.
        China's accumulated economic stakes in Sudan are
    significant, but not strategic. About $8 billion of sunken
    investment, about $3 billion in annual 2-way trade--that's in a
    context in which Africa represents, last year, about $50
    billion in 2-way trade, growing very rapidly up to about $100
    billion by 2010.
        As far as China's evolving approach, the fundamental
    approach has been one of pretty strong, staunch adherence to
    the principle of national sovereignty and non-interference,
    which is fundamental to China's foreign policy globally, and
    has been the basis for China's tough opposition to U.N.
    sanctions against the Sudan. And that became most obvious in
    the Security Council debates, and intensified in the beginning
    of mid-2004.
        What we have seen, though, is stress upon China's adherence
    to that principle, and that stress has come from several
    sources. One is internal. There is an internal policy debate
    that has been ongoing within China over the merits of this, and
    that is fed by Chinese think tanks, academics, and global
    business enterprises who are questioning why is it in China's
    national interests to be an uncritical supporter of Khartoum
    while China is attempting to establish itself as an ethical
    global leader, global power?
        The current minister of foreign affairs, Li Zhaoxing,
    former ambassador to the United States, has been very much in
    the lead, internally, in attempting to air these critical
    opinions.
        Second is the sensitivity and awareness of the power of
    the--within the United States and northern Europe of many of
    the representatives here today of the campaigns that they have
    launched, and the fact that they have voiced allies in
    Congress, access to media, internal organization, in pressure
    for sanctions and other measures. This could extend,
    potentially, to the 2008 Beijing Olympics.
        A third factor is simply the opposition that China faces
    within Africa itself. You have powerful African states--most
    notably, South Africa, Rwanda, and Nigeria--with troops on the
    ground in Darfur under AU mandate. They are blocked from
    converting to more sustainable operations because of Khartoum's
    intransigence.
        Most recently, you have had the appointment of U.S. special
    envoy Andrew Natsios who has opened a high-level dialogue with
    the Chinese that did result in a shift in November towards
    support of the Annan plan, the three-step phased plan which has
    shown some minor progress, but more recently been blocked.
        We have seen, in this most recent period, an
    intensification of dialogue around what might be done next. In
    this regard, we have seen some modest steps taken by the
    Chinese, most importantly the statement issued after--issued by
    the Chinese ambassador to the U.N., Wang Guangya, after
    Bashir's letter was sent to the U.N. Secretary General, backing
    away from the commitments made in November.
        Our--in closing, our view is that there is an important
    consensus that has taken place as to what needs to happen next
    with respect to Darfur. That is full implementation of the
    Annan plan, full deployment of the UN/AU hybrid force, a stable
    cease fire, and effective political negotiations.
        International sanctions that are on the table take many
    different forms, and could have different impacts, both on
    Chinese calculations and on the status of the U.S.
    collaboration with China in trying to bring about greater
    pressures upon Khartoum. We can go into the different forms of
    those sanctions. Some are less threatening, and others are more
    threatening to the Chinese stake.
        There are immediate steps that we should be pushing the
    Chinese on, one of which is to press them to move forward in
    putting on the table deployment of specialized military units
    for deployment into Darfur under the AU--in support of the AU/
    U.N. force, using its public voice in the Security Council to
    hold Khartoum to account, and adjusting its own economic
    policies and instruments to distance itself, as it has most
    recently in one of the downgrading steps it took on the access
    to credit. Thank you very much.
        [The prepared statement of Mr. Morrison can be found on
    page 53 of the appendix.]
        Chairman Gutierrez. Thank you very much. I would like to
    recognize the gentleman from California for unanimous consent,
    and share with my ranking member, Mr. Paul, that we haven't
    used any of our 10-minute opening statements, so I would yield
    to him 5 minutes of opening statements for the majority side.
        Mr. Sherman. Thank you, Mr. Chairman. First, I would like
    unanimous consent that the written testimony of the Armenian
    assembly be entered into the record of today's hearing.
        Chairman Gutierrez. Without objection, so ordered.
        Mr. Sherman. Thank you, Mr. Chairman, for allowing me to
    make an opening statement.
        First, putting our country in perspective, there have been
    three genocides aimed at Muslims in the last decade. They are
    in Bosnia, Kosovo, and now Darfur. In each case, you can say
    that America didn't do as much as we should have. But in every
    one of those cases, we did more than anyone else. And those
    around the world who claim that America has an anti-Muslim bias
    will have to explain why, in focusing on Darfur, a Muslim
    population subject to genocide, other countries aren't doing
    even more than the United States.
        Looking at H.R. 180, we should look at this current draft
    as a floor, not a ceiling. I look forward to having similar
    legislation with regard to Iran, and perhaps companies doing
    business with any of the countries identified on the State
    Department list of terrorist-supporting states.
        But I will not encumber H.R. 180 with any amendment dealing
    with any country other than Sudan. We ought to pass this bill
    as quickly as possible, and then use it as a model, and again,
    as a floor, not a ceiling, for what we do with other states
    that are supporting terrorism, genocide, or other terrible acts
    around the country or around the world.
        This bill has two immediately effective provisions: naming
    and shaming; and a ban on Federal contracts. We can do far more
    to facilitate individuals who don't want to see their money
    invested in companies that are investing in Sudan.
        With TSP, this bill requires a study. We could, at minimum,
    do more and say TSP must create a mirror image fund. So, for
    those Federal employees who want to invest in the S&P 495--that
    is to say the 500 minus those--and I don't know if it will be 5
    or some other number, but whichever S&P 500 companies don't
    invest in Sudan--that they have an opportunity to do so, rather
    than waiting until some other mandatory decision is made.
        Now, I wish TSP simply stopped investing in these
    companies, and imposed that on all Federal employees and their
    pension plans. But until that happens, at least those of us who
    want to take an affirmative action to stop this ought to be
    given the opportunity, while still investing in roughly 490
    major American companies.
        We ought to allow all private pension plans and trust funds
    to divest, and to do so, we ought to, at the Federal level,
    indicate that the fiduciary duty that a trustee has to
    beneficiaries, or to pension plan participants, does not limit
    that fiduciary in divesting from those who do business. Doing
    the right thing is not something that you should be subject to
    a lawsuit for.
        We ought to perhaps require private pension plans to create
    a mirror image fund. So if they don't take all their money out
    of offending companies, at least where employees are given an
    option there is a choice between the S&P 500 and what I am
    calling the S&P 495.
        We should change our tax law--I realize that's outside the
    scope of this committee, by far--but there should not be a
    capital gains tax if you move money from an offending company
    into an equivalent investment in a non-offending company, or
    move money from an S&P 500 fund to what I am calling an S&P 495
    fund. We shouldn't tax people for doing the right thing.
        We should allow public entities--namely, State and local
    governments--to not contract with those companies doing
    business in Sudan, just as we mandate the Federal Government do
    that, we should at least allow--perhaps require--State and
    local governments do the same.
        Going beyond the voluntary, there are a couple of very
    strong measures we could take. We could delist any offending
    company, and not allow them to get any capital from Wall
    Street, and we could prevent our banks from doing--especially
    the Federal Reserve Board of New York--from doing dollar
    business with banks doing business with Sudan, particularly
    banks based in Sudan.
        One thing you can do in China--because we're not going to
    act on China any time soon--is identify for interested
    Americans a particular Chinese company or companies, or a
    particular Chinese product--you're not going to get Americans
    to boycott everything made in China. But if you decide to focus
    on one thing, we can get--you know, if the way to stop genocide
    is to get the tennis shoes made in Indonesia, rather than the
    ones made in China, my feet will do whatever you want them to
    do.
        Finally, if sanctions don't work in changing the Sudanese
    government's policy, or they're not allowed to work, because
    they're not tried on an effective basis, we may be in a
    position where we either have to allow continued genocide, or
    we have to consider such military actions as a no-fly zone, or
    even more extreme, to arm the rebels. Both of those things are
    things I would want to avoid, but I hope no one in Khartoum
    believes that they are impossible. They ought to be
    negotiating, knowing that those two possible violent actions,
    or non-peaceful actions are on the table, and they ought to
    come to the table and stop the genocide. Thank you.
        Chairman Gutierrez. Thank you very much. Dr. Paul, please?
        Dr. Paul. Thank you, Mr. Chairman. In my opening statement,
    I expressed some lack of enthusiasm for sanctions. I like the
    idea of voluntary sanctions, and I know you are willing to work
    that way, and that is good.
        And one of the reasons is there is not absolute proof that
    they work. Some of the individuals in the Congress who are
    strongly supportive of the sanctions under these circumstances
    in Darfur don't like it for Cuba, and they didn't like it for
    Iraq. So it is not an on-again, off-again.
        I sort of think that the consistent position is that we
    shouldn't do it. But I don't want to debate that issue as much
    as the type of things, and what I see as a problem, because in
    supporting certain groups we make a decision, and I think they
    tend to come back to haunt us. There was a time, of course,
    when we were allies with Osama bin Laden and Saddam Hussein,
    and all these things come back to haunt us.
        Too often, there are other motives, other than genocide.
    And I don't know whether that is true or not, but I know that
    we didn't send much help to Rwanda. We didn't send troops in
    there to stop it, and we didn't have regime change, but they
    didn't have oil, either. So I do want to talk about oil a
    little bit, and Mr. Williams is probably the oil expert here.
        The thing is, in this bill there is an exception that would
    allow the United States to contract with companies that supply
    arms to combatants, and that bothers me. So that means we're
    going to pick sides. Now, there was a time when we picked sides
    in Somalia, and things went badly. And now, just recently,
    we're back in Somalia. We staged a coup there, and we invaded,
    through our proxy army of Ethiopia, and we put in charge, once
    again, the war lords that dragged our men through the streets.
    And I would like to do my best to avoid those kinds of
    problems.
        And I see this as a potential, because with this military
    exception--and also there is an exception that allows the
    government to contract with companies that work in the one
    area, Abyei, in the oil rich area. And it was mentioned earlier
    in the testimony by Mr. Morrison that the Chinese are very,
    very much involved in there, so, it seems to me like oil might
    be a big issue.
        There was a writer on this subject, John Laughlin, who
    wrote a couple of years ago, whom I consider an expert in this
    area. He says, ``According to Arab sources quoted by the
    Turkish paper Zaman, `Oil is the basis of the crisis in
    Darfur.'''
        And so, there is genocide, but it might have started
    because of oil. We may be going there for oil. And we didn't
    get into Rwanda, and sometimes we get on the wrong side, and
    it's already been indicated that if these sanctions don't work
    we have to consider a regime change. Regime change is pretty
    serious stuff, in my book. I mean, that's what we have been in
    the business of doing too often. So, I would want to be
    careful.
        Now, if Mr. Williams, or maybe anybody--or Mr. Morrison
    might comment on that, I would like to hear from you.
        Mr. Williams. Well, Congressman Paul, let me see if I could
    do two things. In terms of the way particularly the Texas
    statute is structured, and I think many of the other State
    statutes that are now going through their legislative processes
    are structured, there is an attempt to draw a fairly--to the
    extent that one can--a fairly bright line as to when we would
    deploy these kinds of strategies, and when we wouldn't.
        In the Texas statute, it says that when there is a
    declaration of genocide by this body, the Congress, or by the
    President of the United States--as you know, back home we have
    had conversations about divestment for tobacco and pornography
    and other things. But there is an attempt to draw a fairly
    bright line and say that the only time that we will use this
    kind of mechanism is in the genocidal area.
        As it relates to oil, and as it relates to sort of allowing
    for contracts that are in the southern region of the country,
    or in Darfur, or in other parts of the country, but not with
    the government of Sudan and Khartoum, the idea, quite frankly,
    I take it, is--sort of shared with your opening comments--that
    one way that we can be helpful is, obviously, to encourage
    investment, but to encourage investment that does not benefit
    the government of Sudan.
        And so, when it is with the regional government in the
    south, or when it's with one of the other areas, that does--
    that would allow for those crude revenues to be used for the
    people of Sudan, not for the government of Sudan, in the way
    that they're using it in order to be warring against the--its
    own people. That is the way we have tried to structure the
    Texas bill.
        And that is sort of--I think we have to recognize that
    crude does play a role. But we also, I think, have to recognize
    that there is a way to use crude, quite frankly, that is
    beneficial. And we want to allow the beneficial use of crude.
        Mr. Morrison. Yes, Mr. Paul, just a couple of corrections,
    I think, to the record. I mean, the big oil discoveries were
    undertaken--Chevron, in the period 1979 to 1983, there was $1
    billion invested, about 90 exploratory efforts that were--many
    of which were successful, and they were able to prove some
    modest deposits over an area that was a transition zone between
    the north and the south. And this had a big trip wire effect in
    setting off the north/south war, which began in 1983.
        The oil sector laid dormant until 1996, 1997. Chevron
    withdrew. It was dormant until the Chinese came in, along with,
    subsequently, the Indians and the Malaysians. There was a
    Canadian private sector involved. Oil began to flow in the fall
    of 1999 out of these deposits. Oil is now up to about half-a-
    million barrels a day.
        It is not really emanating in any significant degree from
    Darfur, and has not been a factor, directly, in stirring
    conflict in Darfur. It has been a direct factor in stirring the
    war between the north and the south. It went on between 1983
    until January of 2005, when the north/south peace accord was
    consummated.
        The continued production of the oil sector, and the wealth
    sharing agreement under the north/south peace accord, in which
    there is a 50/50 split in earnings, the continued production of
    oil sustains not just players in the north, but the government
    of southern Sudan, which is the direct beneficiary of 50
    percent of the oil earnings coming out of that.
        Now, you can argue, as many have, that the implementation
    of that wealth sharing agreement remains very flawed and
    ambiguous, and needs much further improvement. And as you move
    towards full implementation, and the possibility of a vote on
    secession by the south, you are likely to see quite a bit of
    conflict around where the border area is demarcated, and some
    of the actions taken within the three special zones.
        But as with respect to Darfur, it's not a driving factor.
    The Darfur conflict is not an oil-driven conflict. It's much
    more than a conflict between the north and the south.
        Dr. Paul. I just want to make one brief comment, but I
    still find it interesting that the one exception is to allow
    the government to contract with the companies that are in the
    oil-rich region. It seems to me that if we were dealing with
    only the genocide, we could delete that part, and just deal
    with that, as a whole, instead of looking like we're pumping in
    weapons into an area that we may become obligated to. And I
    yield back.
        Chairman Gutierrez. Thank you, Dr. Paul. Mr. Ismail, first
    of all, I would like to share with you that my grandson,
    Luisito, I asked him where his mom was last week, and he said,
    ``She is at a meeting about Darfur.'' And I share that with
    you, because I know how important it has been to me and to
    others, as you fight for things, to know that your message is
    getting out, and that when 4-year-olds report to their
    grandparents where their daughters are at, and refer to the
    meeting about Darfur, you know that it's significant.
        And so, I wanted to share that with you, that your
    message--keep working, it's getting out there. People, 4-year-
    olds, are talking about it. And I think that speaks volumes
    about where we are going with this issue.
        Mr. Ismail, you make several policy suggestions in your
    testimony, and I want to thank you for being specific in your
    suggestions. One item you mentioned is having the U.S. State
    Department develop a list of ``worst offenders.'' What would
    the criteria be for the list, and would the State Department
    develop the list on its own, or do you recommend requiring the
    Department to work with NGOs, or other outside groups?
        Mr. Ismail. Thank you, Mr. Chairman. And the fact that a
    lot of people here and outside of this institution are working
    on the effort of Darfur is refreshing to see.
        However, we all understand what is at stake. There is a
    genocide going on. We hope that this awareness will be
    translated into policies that are going to stop the genocide.
    Talking about it is important; doing something to stop it is
    even more important. And my, you know, respect to your family
    for being part of this.
        Chairman Gutierrez. Thank you.
        Mr. Ismail. Yes. The worst offenders, as alluded to by Mr.
    Sterling and others, and in the bill itself, these are the
    people who are doing direct investment or indirect investment
    with the companies that are working with Sudan. And they are
    the companies that are feeding this genocide.
        If we can--because of the name-calling, or the shaming of
    these companies is concerned, if we can have that list out
    there, and people see that these companies are working there.
        The criteria can be that these are the companies that are
    working directly with the oil industry in China, for example,
    because we understand, from the presentation by everybody
    here--Dr. Morrison included--that this oil that is coming out
    of Sudan, shared 50/50 between the government of Sudan to the
    north and the government of the south, they all report that 70
    percent of that money that is coming out of this is used by the
    government of Sudan in buying arms to kill its own people, and
    to join in this genocide that is going on.
        So, if we can make a direct link between these companies
    who are working in this very, very important sector, and we
    publish that out there, and let the investors see it, and even
    the public, they will know that these are the worst offenders,
    and then they will stop dealing with these companies. And then
    we will see the effect of that.
        The ad that the government of Sudan took in the New York
    Times shows clearly that the government of Sudan is paying
    attention to this divestment campaign. So if we can make the
    same thing, counter to what the government of Sudan has done,
    we publish our own information about these companies, I think
    that will be very effective.
        Chairman Gutierrez. Let me share with all of the members of
    this panel that Chairman Barney Frank was working on the bill
    on the House Floor on Hurricane Katrina. That's why he wasn't
    here, and he wanted me to express his apologies for not being
    here, but stated once again--and he is--Mr. Ismail, mark my
    words, we will work on this quickly. It will be more than--we
    are gathering the information today, important testimony and
    work today, we will work on it quickly here, in this committee.
        Let me ask Commissioner Williams. In your testimony, you
    discuss broad support in Texas for a State divestment law. We
    also had broad support in my State of Illinois for a Darfur
    divestment law, which was enacted, but in February, was struck
    down by Federal district court as unconstitutional. Are you
    concerned that the same fate awaits the eventual Texas law, if
    the Darfur Accountability Divestment Act is not passed by
    Congress? And if not, why not?
        Mr. Williams. Mr. Chairman, I am not, but for two reasons.
    These are things that have happened since the State of Illinois
    passed its legislation.
        The first one is that, obviously, there is a provision in
    the bill that you are now considering that will provide some
    degree of--that would remove the cloud over State and local and
    university divestment programs. So, obviously, we would
    encourage the passage of that. That is one way that the
    Congress could surely help States like Texas, and the others
    that are considering it.
        The other thing, as I mentioned in the opening remarks, is
    that there are a number of things that we have done in the
    Texas legislation that we think recognize that the Federal
    Government has the pre-eminent responsibility for foreign
    policy. And so--and there is language in the bill that says
    that if there is anything in the bill that conflicts with the
    Federal Government's responsibility to conduct foreign policy,
    then that provision of the bill is inapplicable.
        And even though I don't think there is anything in there,
    we say that if the Congress were to remove sanctions, then at
    that time the bill would expire, that if the President or the
    Congress were to declare that the genocide has ended, and it
    has been more than 12 months, then the bill would expire. So I
    think there have been safeguards built into the bill.
        Chairman Gutierrez. Let me ask Mr. Morrison. So, China.
    What advice do you give us? What do we do with China?
    Specifically, what can the Congress do? What can the Federal
    Government do? What can the President do? What can the
    executive branch--ideas of what we can do, if these investments
    are strategic?
        I just kind of look at China, and I can't recall the last
    time they were affirmative about human rights when it came in
    conflict with their quest for raw materials. And so I know you
    have stated that these are--that the oil and the raw materials
    and the investments are small, but it seems as though China is
    so hungry for steel and machinery and technology and oil, and
    its consumption of all of those--and it's only going to
    expand--what can we do? How do we sit down with the Chinese and
    reach an agreement?
        Because they seem to be, from everything we have heard here
    today, and everything I have read, a huge impediment to ending
    the genocide in Darfur. Mr. Morrison?
        Mr. Morrison. I think you need to attempt to intensify
    the--from multiple directions, intensify the discomfort around
    an uncritical embrace of Khartoum's position.
        I have mentioned that they are vulnerable and sensitive on
    several fronts. One is the reputational and image damage that
    has been suffered in North America and Europe, and within
    Africa. A second is the discontent that is beginning to surface
    internally, among elite foreign policy circles within China
    itself.
        You can play on that. You can play on the desire to be seen
    as a rising ethical global power within the Security Council,
    within major institutional institutions, international
    institutions. You can begin to put forward incremental critical
    tests around whether the Chinese are prepared to divert from a
    rigid adherence to this non-interference respect for
    sovereignty which has been the sort of blockage, or the
    ideological, or the veil behind which China could stand and
    say, ``Well, this is too far, we don't want to go there.''
        You can test that in some of the ways that I have talked
    about: overt public criticism within the Security Council of
    the positions that have been taken by Bashir and others in
    defiance of the Annan plan; bringing it back into focus around
    the elements of the Annan plan; the three-phased deployment of
    the AU/U.N. force; the need for a cease fire; and the need for
    accelerated political negotiations within Darfur.
        There is a consensus around the way forward, and what needs
    to happen, that is shared by the United States and the Chinese,
    and others, around what the ultimate fix is going to be for
    Darfur. We should be pushing the Chinese to get more vocal
    around those issues, and to begin to use its own internal
    economic policies and instruments to signal to Sudan that its
    ardor for the opportunities that are there is declining, and
    more can be done along those fronts. Thank you.
        Chairman Gutierrez. Thank you. For a second round, Dr.
    Paul?
        Dr. Paul. I don't have any questions.
        Chairman Gutierrez. Dr. Paul doesn't have any more
    questions. Mr. Sherman, do you have any further questions, sir?
        Mr. Sherman. Oh, yes. Section three of the proposed bill
    says that States and cities that have divested or are in the
    process of divesting State and city funds are recognized and
    supported by Congress.
        Is this enough to eliminate all of the constitutional
    attacks that could come against cities, counties, and school
    districts, as well as State governments who choose to divest?
    Does this solve the legal problem completely, or do we need to
    make it stronger?
        Mr. Sterling. We would encourage the sponsors of this
    legislation to meet and connect with the sponsors of the
    legislation in the Senate. Senators Durbin and Cornyn recently
    introduced the Sudan Divestment Authorization Act, which
    exclusively looks at the issue of authorization, and deals with
    it in a more comprehensive manner.
        Mr. Sherman. Okay.
        Mr. Sterling. So I know there has been some--
        Mr. Sherman. Going on, what I see is missing here is most
    of these funds that sub-national governments have are pension
    plans. And the trustees of those pension plans--at least one of
    you may be a trustee of the pension plans--have a fiduciary
    duty to seek the highest rate of return.
        Do we need a provision in this bill indicating that
    fiduciaries, at least of governmental pension plans, and
    perhaps all trusts and all pension plans, may divest without
    being subject to lawsuits or other claims for, arguably,
    receiving a lower rate of return?
        Mr. Sterling. I think it's definitely something to look at.
    The legislation that is in Texas that we developed and now is
    currently the leading model in the country, has a specific
    section that excludes the fiduciaries for this specific case
    from conflict with their constitutional fiduciary obligations.
        So, we have dealt with that in the State legislation, but
    it may--in other models, it may be something to look at for--
        Mr. Sherman. And I do think we have to research whether the
    Federal Government can change the fiduciary duties of trustees
    of trusts which are usually established under State law. I
    would think so, since we do have the constitutional right to
    create American foreign policy, and that's what we are doing.
        Our goal here is kind of to create a chain reaction. The
    goal is to change the behavior of the government of Sudan by
    denying it certain foreign investment. And then, we are trying
    to change the behavior of corporations and business entities by
    afflicting them with various disadvantages here in the United
    States if they don't change their behavior in an effort to
    change the Sudan government's behavior.
        First, what is the Achilles heel of the Sudanese
    government? What kinds of foreign investment--denial of foreign
    investments--would cause them to come to the negotiating table
    seriously, to not only accept, but welcome UN-led troops, and
    to do the other things necessary to stop this genocide?
        If we had to take some type of foreign investment away from
    Sudan, what would it be?
        Mr. Prendergast. I want to make--give you a political
    argument while my colleagues think of the economic one, because
    it's a great question, it's the central question. Where is the
    leverage, and where can we influence change?
        My view is, having negotiated and worked in Sudan, and
    negotiated with the Sudanese regime in the last Administration
    directly with Bashir and Taha, and the rest of them, is that
    they don't want to be singled out in the way that some of these
    economic instruments would single them out, target them,
    tarnish their image internationally, with very specific--
    particularly, if it's done through the United Nations Security
    Council. It's much easier for them to dismiss, if it's only the
    United States doing these things unilaterally. If we work
    multi-laterally--
        Mr. Sherman. But the things we're considering in this bill
    aren't going to pass a U.N. resolution unless we start, I
    guess, boycotting Chinese companies in an effort to get that
    government to change its actions. This bill is focused--its
    naming and shaming is being done by the United States, a
    country whose naming and shaming is laughed off in some
    quarters.
        Mr. Prendergast. Yes. Some of the instruments that you have
    mentioned in your own first introductory comments were what I
    was referring to. But with respect specifically to divestment,
    as we worked on this 15 years ago, and with respect to South
    Africa, and globalized the divestment movement, I think the
    kind of--the naming and shaming actually will take on quite
    substantial portions if we're only talking about divestment.
        Of course, as anyone will tell you, it's not--this isolated
    and only by itself, divestment will mean very little. But if
    there is an array of instruments--
        Mr. Sherman. I will ask whether any of your colleagues have
    an economic answer. Obviously, the--
        Chairman Gutierrez. Thirty seconds.
        Mr. Sherman.--Sudanese government is going to love this
    bill, because of its political connotations, but economically,
    what can't they afford to lose?
        Mr. Sterling. I mean, as I mentioned in my testimony, they
    have a debt larger than their GDP. They cannot afford the way
    oil consortiums are established in Sudan. They don't have the
    resources or capital to extract, refine, and distribute the
    revenue on the open market, so they need their partners, the
    Chinese, Malaysians, Indians, to establish these consortiums.
    So they're definitely dependent--
        Mr. Sherman. They need cash to be invested in the royal
    sector. And I yield back.
        Mr. Sterling. Correct.
        Chairman Gutierrez. Thank you, Mr. Sherman. I want to go
    back to Mr. Bacon, please, for a moment, and especially given
    your unique situation on the panel, having worked on--at the
    Pentagon for 7 or 8 years, during the Clinton Administration.
        In your testimony, in addition to Darfur, you mentioned
    Rwanda and Bosnia. I think it's appropriate to mention recent
    instances of genocide in other parts of the world, and our
    inaction or delayed actions. Why are we, the United States, the
    Congress, the White House, so reluctant to stop these
    genocides? Why are we so slow to respond? And what can we do to
    change that?
        Mr. Bacon. Well, it's a very good question, and I think
    that Mr. Sherman--we should give him credit. He framed it in a
    very interesting way. He said that we didn't do enough, but we
    did more than anybody else.
        If you look at what happened in the Balkans--we did nothing
    in Rwanda. I don't think we can give ourselves credit there.
    But in the Balkans, we finally did act, and we acted relatively
    quickly in Kosovo. It took us longer to react to protect the
    Bosnians.
        I think, you know, the history shows that there is a great
    inclination to avert our gaze to ugly events taking place in
    other parts of the world, to explain them away as age-old
    political rivalries, tribal rivalries, problems we don't
    understand and can't influence very well. And then, before we
    know it, while we're looking away, suddenly the death toll
    mounts very rapidly, and it's hard to get in.
        Clearly, we are learning. We learned in Somalia, and we
    learned--we are learning today in Iraq, that we shouldn't use
    force in a casual way. It has to be well thought-out. We have
    to do it with determination, and we have to do it with a fair
    amount of skill. So that--of course, force should not be used
    casually. It should only be used as a last resort.
        I think that what is significant today about Darfur is that
    there is a nationwide movement. If you travel through
    Washington, D.C., or through Austin, Texas, or through parts of
    Illinois, you will see signs outside of synagogues and churches
    for ``Save Darfur.'' As you pointed out, your grandchild is
    talking about it, and there are children and college students
    all around the country talking about it.
        This Administration is the first Administration ever to use
    the term ``genocide'' to describe a contemporaneous killing--
    not historical, but contemporaneous. And yet, it has found it
    very difficult to act according to the genocide convention,
    which obligates signatories to prevent and punish genocide. We
    haven't been able to do enough.
        These aren't easy problems. But the one thing that you can
    count on is that they always get worse by waiting, and a quick
    intervention almost always has a much better chance of
    succeeding than a late intervention. So those are my thoughts
    on your question, which I think is a very good question--
        Chairman Gutierrez. Thank you.
        Mr. Bacon.--a question that I wish more politicians asked.
        Chairman Gutierrez. Thank you. Mr. Prendergast, in your
    testimony you mentioned that economic pressure, through the
    restriction of Sudanese oil transaction using U.S. dollars will
    not be effective without follow-up to prevent the Sudanese
    regime from switching to Euro or Yen transactions.
        Specifically, how would the United States conduct this
    follow-up, and is there any risk that Sudan would switch to
    the--
        Mr. Prendergast. I think if we're going to go down this
    path--and this appears to be the direction that the plan B
    threatened escalation part of the Administration is going,
    which is a set of financial measures that would increase
    pressure and restrict access for Sudanese companies from doing
    business internationally, I think that we are going to have to
    dedicate a lot more.
        I think the implication from this committee is that there
    is going to have to be more resources committed to implementing
    these decisions, because OFAC--the Treasury is stretched to
    capacity to oversee and monitor the implementations of the
    sanctions regimes we have against various individuals,
    terrorist organizations, and some of the state-sponsored
    terrorists.
        So, if we're going to expand the restriction of businesses,
    Sudanese businesses or transactions by Sudanese companies doing
    business with international financial institutions, there is
    going to have to be increased resources to monitor, and we're
    going to have to do more diplomacy, economic diplomacy, to get
    other nations to go along with the plan, because it's very
    simple for the government of Sudan, over time, to use other
    instruments of economic exchange.
        Chairman Gutierrez. Mr. Morrison, would you care to comment
    on this?
        Mr. Morrison. I would like to comment--
        Chairman Gutierrez. On the previous question. I'm sorry.
        Mr. Morrison.--on what Ken was talking about. Just to
    emphasize that, we have had this remarkable mobilization within
    American society around Darfur, and around--it seems to be a
    fairly broad consensus that what has happened there constitutes
    genocide.
        It has been a difficult sell, outside--well, within the
    United States, within the professional human rights community,
    which has not signed on to that notion of genocide, if you look
    at the careful sort of determinations made by groups like Human
    Rights Watch, Amnesty International--if you look at
    international organizations, the international criminal court,
    the U.N. Investigative Commission, they refrained from reaching
    that conclusion, and used other language having to do with war
    crimes, crimes against humanity.
        No doubt looking at heinous acts repeated at the
    instigation of the government of Khartoum, but it didn't push
    through the threshold of becoming genocide, which evokes
    another level of emotion and response.
        It's not that--the genocide designation has not been taken
    up by governments within Europe, by the AU, and certainly this
    has been complicated within the Arab world by the hangover
    effects of the Iraq debacle, in which this is played to the
    advantage of Khartoum and its allies in painting this as some
    sort of regime change proxy. And so it's been used as a defense
    against seeing the realities of what has been going on, in
    terms of the carnage on the ground.
        All of these factors have been very important in dulling
    the response. And it has called into question, you know, what
    happens when you're in a situation like this, where there is
    such a concentrated consensus around genocide within our own
    borders, but it does not extend very effectively outside, even
    though there is a shared consciousness that there is something
    horrible that has been happening.
        Chairman Gutierrez. Thank you.
        Mrs. Maloney. I want to thank the panelists, and I want to
    thank the chairman, and I would just like to ask any of the
    panelists how effective do you think this approach will be in
    influencing the Sudanese government to change its policies, and
    how will it directly affect the government's standing and
    tenure?
        Mr. Bacon. Well, I think it will be a step. It will be one
    piece of pressure that will, I hope, add up with other pieces
    of pressure. I said in my testimony that I think it would be
    great if the committee would look at stronger measures, maybe
    add stronger measures to H.R. 180.
        We have just seen, in the last few months, how effective
    interventions through the banking system and the payment
    systems have been on North Korea, a country that many of us
    thought was beyond influencing. And yet, using section 311 of
    the Patriot Act, we were able to really shut down their work in
    the international financial system, and make trade much more
    difficult for them. It makes all financial transactions much
    more costly and much riskier.
        This would apply not only to the country, but it would
    apply to people in leadership positions, who may have set up
    bank accounts around the world with gains, whether honestly
    gotten or ill-gotten, but it would be a way of increasing
    pressure dramatically on the country and the regime.
        I think we have to look at a galaxy of actions, a
    constellation of actions, not just one. And I think we need to
    do it relatively quickly, because the situation in Darfur today
    is getting worse. The displacement is increasing, the inability
    to deliver humanitarian aid is increasing. There are many, many
    more obstacles to the relief organizations and to the U.N., so,
    if we don't act soon, we could be looking at a much greater
    death rate in the future than we have seen in the recent past.
        Mrs. Maloney. Would anyone else like to comment?
        Mr. Ismail. I would like to say that none of these measures
    taken, in itself, or any of the recommendations that we make,
    after looking at the reports that are coming from out there,
    and analyzing them, and talking to the people on the ground
    almost on a daily basis, then we make these recommendations.
        However, isolated from being a package, it is--none of
    these is going to work. So the divestment has to be working
    with other things. It's a tool in a tool box that we will have
    to use together, in order to be effective.
        And also, people having in the back of their minds that
    this divestment campaign is only meant to target companies that
    are working with China, or just working in the oil industry,
    that is not the whole picture. Because being a Sudanese, and
    knowing the ties of this government with the Arab world, for
    example, there is a lot of Arab money--hard and soft money--
    that is being invested inside Sudan, not only in the oil
    industry, but for example, in tourism. There are two hotels.
    The best hotels are giving, you know, the Sudan--the first
    five-star hotels, these are built with Libyan and monies from
    the United Arab Emirates.
        There are other monies that are working in the
    infrastructure, on the road system, and telecommunication. This
    is all money that is coming from the other side of the Red Sea.
    And people don't see that, because it's the direct kind of
    investment that is coming from across the Red Sea without
    coming through the bigger financial institutions, or being part
    of the--of Wall Street, or the--sometimes one single sheik who
    has billions of dollars can just tell the government of Sudan,
    ``Here is $200 billion. Build the presidential villas'' that
    they spent millions of dollars, or the yacht that Omar Bashir
    is enjoying today.
        So, that is not part of all this. And we have to look at it
    in that respect, as well.
        Mrs. Maloney. Now, my time is almost up, but I would also
    like to ask if anyone would like to comment on what are your
    concerns about how divestment would affect the people of Sudan,
    from an economic point of view.
        Do you think it will hurt the people, or--what are your
    comments on that?
        Mr. Ismail. If I may?
        Mrs. Maloney. Sure. Anyone.
        Mr. Ismail. I don't think--because the investment that the
    government of Sudan is investing in the rest of the country
    outside of Khartoum is almost meager. If you look at the
    figures from the Bank of Sudan, for example, last year the
    government of Sudan invested .5 percent in the south, .5
    percent. Not even 1 percent in southern Sudan.
        So, if you look at the education, if you are looking at the
    health care sector, if you are looking at any other--the
    infrastructure sector, there is none of that. That has been
    invested in the rest of the country outside of Khartoum, and
    that is where 80 percent to 90 percent of the Sudanese are, and
    these are the lower income groups, anyway.
        Mrs. Maloney. Any other comments?
        Okay. My time is expired. Thank you.
        Chairman Gutierrez. I thank the gentlelady for joining us.
    Let me just share that Congresswoman Maxine Waters sends her
    regrets. Unfortunately, the Financial Services Committee has
    under its charge Katrina, and the bill was marked up and it's
    on the House Floor today. So there is a lot of conflict
    between, obviously, Darfur and taking care of our own domestic
    issues in Louisiana that we want to--and Mississippi--that we
    want to--and Louisiana that we want to address today, too.
        I want to thank you all for being here. You have been
    wonderfully educational to all of us. And on behalf of this
    subcommittee, and everyone on the full committee, thank you so
    much. And Godspeed to you, Mr. Ismail, and your people. Thank
    you.
        [Whereupon, at 4:22 p.m., the hearing was adjourned.]

                                A P P E N D I X

                                 March 20, 2007

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