[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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